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Exhibit 10.2 INDEMNIFICATION AGREEMENT      This Indemnification Agreement (this “Agreement”) is made as of the 3rd day of February, 2009, by and between Magellan Petroleum Corporation, a Delaware corporation (the “Company”), and William H. Hastings, an individual residing at 2 Thurston Lane, Falmouth, Maine 04105 (the “Indemnitee”). Recitals      A. The Indemnitee became a director, officer and employee of the Company on December 11, 2008 (the “Effective Date”) and in such capacities is performing valuable services for the Company.      B. The Delaware General Corporation Law, as amended from time to time (the “DGCL”), permits the Company to indemnify the officers, directors, employees and agents of the Company.      C. The Company desires to hold harmless and indemnify the Indemnitee to the fullest extent authorized or permitted by the provisions of the DGCL, or by any amendment thereof or other statutory provisions authorizing or permitting such indemnification which hereafter may be adopted.      D. The Company has entered into this Agreement and has assumed the obligations imposed on the Company hereby in order to induce the Indemnitee to serve or to continue to serve as a director, officer and employee of the Company, and acknowledges that the Indemnitee is relying upon this Agreement in serving or continuing to serve in such capacities. Agreement      Accordingly, in consideration of the Indemnitee’s agreement to serve or continue to serve as a director and/or officer of the Company, the Company and the Indemnitee agree as follows:      1. Initial Indemnification.           (a) General. From and after the Effective Date, the Company shall indemnify the Indemnitee to the fullest extent permitted by applicable law whenever he was or is, or is threatened to be made, a party to or a participant in any threatened, pending or completed action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company to procure a judgment in its favor), by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in any such capacity, against any and all expenses (including, without limitation, attorneys’ fees and expenses), judgments, fines, amounts paid in settlements and other amounts actually and reasonably incurred by the   --------------------------------------------------------------------------------   Indemnitee or on his behalf in connection with such action, suit or proceeding and any appeal therefrom or any claim, issue or matter therein if the Indemnitee acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Indemnitee did not satisfy the foregoing standard of conduct to the extent applicable thereto.           (b) Derivative Actions. From and after the Effective Date, the Company shall indemnify the Indemnitee to the fullest extent permitted by applicable law when he was or is, or is threatened to be made, a party to or a participant in any threatened, pending or completed action, suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether civil, criminal, administrative or investigative, by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was or had agreed to become a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including, without limitation, attorneys’ fees and expenses) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action, suit or proceeding and any appeal therefrom or any claim, issue or matter therein if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been fully adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery, or the court in which such action, suit or proceeding is or was brought, shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses and then only to the extent that the Delaware Court of Chancery or such other court shall determine.           (c) Determination of Entitlement. Any indemnification under Section l(a) or l(b) hereof (unless ordered by a court) shall be made by the Company only if authorized in the specific case upon a determination, in accordance with Section 4 hereof or any applicable provision of the Company’s Restated Certificate of Incorporation, as then amended (the “Charter”), its By-laws as then amended (the “By-laws”), any other agreement, any resolution or otherwise, that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in Section l(a) or (b) above. Such determination shall be made (i) by the Company’s Board of Directors (the “Board”) by a majority vote of directors who are not parties to such action, suit or proceeding, even though less than a quorum of the Board, (ii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders of the Company (the “Stockholders”). Notwithstanding the foregoing, as contemplated by Section 3, no subsequent amendment or change to the By-laws or Charter which limits or restricts the rights of the Company to indemnify Indemnitee shall adversely affect the rights of Indemnitee hereunder. 2 --------------------------------------------------------------------------------             (d) Mandatory Indemnification. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or participant in) and is successful, on the merits or otherwise, in any action, suit or proceeding referred to in Section 1(a) or 1(b) hereof, or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all expenses (including, without limitation, attorneys’ fees and expenses) actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such action, suit or proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters therein, the Company shall indemnify Indemnitee against all expenses actually and reasonably incurred by him or on his behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law.           (e) Advancement of Expenses. Notwithstanding any provision of this Agreement to the contrary (other than Section 4), the Company shall advance, to the extent not prohibited by law, the expenses (including, without limitation, attorneys’ fees and expenses) incurred by the Indemnitee in defending any civil, criminal, administrative or investigative action, suit or proceeding, and such advancement shall be made within thirty (30) days after the receipt by Company of a statement or statements requesting such advances from time to time, whether prior to or in advance of the final disposition of such action, suit or proceeding as authorized in accordance with Section 4 hereof or any applicable provision of the Charter, the By-laws, any other agreement, any resolution or otherwise.           (f) Benefit Plan Matters. For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on the 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 or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and the beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Section 1.      2. Additional Indemnification.           (a) General. If and to the extent that (i) the DGCL is amended hereafter to require or permit indemnification, expense advancement or exculpation that is or may be more favorable to the Indemnitee than the maximum permissible indemnification, expense advancement and exculpation now permitted thereunder and provided in this Agreement, or (ii) the Company reincorporates in or merges, consolidates or combines into or with any other corporation or entity by virtue of which transaction the Company is not the surviving, resulting or acquiring corporation and the surviving, resulting or acquiring corporation is incorporated in a different jurisdiction which at such time requires or permits indemnification, expense advancement or exculpation that is or may be more favorable to the Indemnitee than the maximum permissible indemnification, expense advancement and exculpation now permitted under the DGCL and provided in this Agreement, then pursuant to this Agreement the Indemnitee shall be entitled to, and this Agreement shall be deemed to be amended to provide for 3 --------------------------------------------------------------------------------   the Indemnitee’s contractual entitlement to, indemnification, expense advancement and exculpation to the maximum extent that may be permitted or required under such applicable law at the time of any initial or subsequent request for indemnity hereunder (determined as contemplated by Section 4 hereof), whether or not the Company has adopted any Charter or By-law provisions adopting, effecting or implementing any provisions thereof which are permissive and not mandatory in nature. Nothing contained herein shall be deemed to detract from, diminish, impair, limit or adversely affect any right which the Indemnitee may have under this Agreement under any circumstances, including without limitation in the event of subsequent amendment or revision to the Charter or By-laws, and to the extent that any terms, conditions or provisions of this Agreement (including, without limitation, those in Section 1 hereof) are more favorable to the Indemnitee than the maximum indemnification, expense advancement and exculpation then permitted or required under such applicable law (determined as aforesaid), then such terms, conditions and provisions of this Agreement shall be preserved and integrated with such more favorable terms from then applicable law and shall continue to apply to the Indemnitee’s rights by virtue of this Agreement. The same expansion of the Indemnitee’s rights and deemed inclusion herein and integration herewith of any terms, conditions or provisions more favorable to the Indemnitee shall occur upon and with respect to any amendment of the provisions relating to indemnification, expense advancement and exculpation in the Company’s Charter or By-laws and any provision by the Company to any other officer or director of the Company of any other different form of indemnification contract or agreement.           (b) Examples and Limitations. Without limiting the generality of Section 2(a) hereof, the Indemnitee hereby may become entitled to indemnification of any and all amounts which he becomes legally obligated to pay (including, without limitation, damages, judgments, fines, settlements, expenses of investigation and defense of legal actions, proceedings or claims and appeals therefrom, and expenses of appeal, attachment or similar bonds) relating to or arising out of any claim made against him because of any act, failure to act or neglect or breach of duty, including any actual or alleged error, misstatement or misleading statement, which he commits, suffers, permits or acquiesces in while acting in his capacity as an officer, director, employee or agent of the Company, subject only to any limitations on the maximum permissible, expense advancement or indemnification which may exist under applicable law (determined as provided in Section 2(a) hereof). In no event, however, shall the Company be obligated under this Section 2 to make any payment in connection with any claim against the Indemnitee:           (i) for which payment actually has been made to the Indemnitee under a valid and collectible insurance policy, except in respect of any retention or excess beyond the amount of payment under such insurance;           (ii) which results in a final, nonappealable order for the Indemnitee to pay a fine or similar governmental imposition which the Company is prohibited by applicable law from paying; or           (iii) which is based upon or attributable to the Indemnitee gaining in fact a personal profit to which he was not legally entitled, including, without limitation, any profits made from the purchase and sale by the Indemnitee of equity securities of the Company which are recoverable by the Company pursuant to Section 16(b) of the 4 --------------------------------------------------------------------------------   Securities Exchange Act of 1934 and any profits arising from transactions in any publicly traded securities of the Company which were effected by the Indemnitee in violation of Section 10(b) of the Securities Exchange Act of 1934 or Rule 10b-5 promulgated thereunder.      3. Effect of Future Adverse Changes in Charter, By-laws or Applicable Law.      Nothing herein shall prevent the adoption by the Board or Stockholders of the Company of any amendment to the Charter or By-laws of the Company, the effect of which would be to detract from, diminish, impair, limit or adversely affect the Indemnitee’s rights to indemnification, expense advancement or exculpation that otherwise exist as of the Effective Date pursuant to such Charter or By-laws as applied to any act or failure to act occurring in whole or in part after the date hereof. In the event that the Company shall adopt any such amendment to its Charter or By-laws, however, or in the event that the indemnification, expense advancement or exculpation provisions of the DGCL (or any other then applicable law) hereafter shall be amended in a manner which may be deemed to detract from, diminish, impair, limit or adversely affect the Indemnitee’s rights with respect thereto, such events and changes shall not in any manner or to any extent detract from, diminish, impair, limit or adversely affect in any manner the contractual indemnification rights and procedures granted to and benefiting the Indemnitee under this Agreement, unless and then except only to the extent that any of such rights or any of the terms, conditions and provisions of this Agreement shall thereby be made illegal or otherwise violative of applicable law, in which case the provisions of Section 10(c) hereof shall apply. For purposes only of determining the Indemnitee’s rights to indemnification pursuant to the Company’s Charter or By-laws as so amended, and not for purposes of the continuing applicability of this Agreement in accordance with its terms, any such amendment to the Company’s Charter or By-laws shall apply to acts or failures to act occurring entirely after the date on which such amendment was approved and adopted by the Board or the Stockholders, as the case may be, unless the Indemnitee shall have voted in favor of such approval and adoption as a director or holder of record of the Company’s voting stock, as the case may be.      4. Certain Procedures.           (a) Indemnification Procedures. For purposes of pursuing his rights to indemnification under Section 1 (other than the second sentence of Section 1(d) hereof, which shall be governed by Section 4(b) hereof) or Section 2 hereof, as the case may be, the Indemnitee shall be required to submit to the Board a sworn statement of request for indemnification substantially in the form of Exhibit 1 hereto (the “Indemnification Statement”) averring that he is entitled to indemnification hereunder. Submission of an Indemnification Statement to the Board shall create a presumption that the Indemnitee is entitled to indemnification under Section 1 (other than the second sentence of Section 1(d) hereof, which shall be governed by Section 4(b) hereof) or Section 2 hereof, as the case may be, and, except as set forth below, the Board shall within 30 calendar days after submission of the Indemnification Statement specifically determine that the Indemnitee is so entitled, unless within such 30-calendar day period it shall determine by Board action, based upon clear and convincing evidence (sufficient to rebut the foregoing presumption) that the Indemnitee is not entitled to indemnification under Sections 1 or 2 hereof. The Company shall notify the Indemnitee promptly in writing following such determination. 5 --------------------------------------------------------------------------------   Any evidence rebutting the Indemnitee’s presumption, to which the Board gave weight in arriving at its determination, shall be disclosed to the Indemnitee with particularity in such written notice. Notwithstanding anything to the contrary contained in the three preceding sentences, if the Board determines that it cannot act on the request for indemnification submitted by the Indemnitee because a determination of entitlement can not be made in the manner required by Section 1(c) hereof, the Board will act promptly to retain independent legal counsel or convene a meeting of Stockholders to act on the request.           (b) Expense Advancement Procedures. For purposes of determining whether to authorize advancement of expenses pursuant to the second sentence of Section 1(d) hereof or Section 2(b) hereof, the Indemnitee shall be required to submit to the Board a sworn statement of request for advancement of expenses substantially in the form of Exhibit 2 hereto (the “Undertaking”), averring that (i) he has incurred or will incur actual expenses in defending a civil, criminal, administrative or investigative action, suit or proceeding and (ii) he undertakes to repay such amount if it shall be determined ultimately that he is not entitled to be indemnified by the Company under this Agreement or otherwise. Within 30 calendar days after receipt of the Undertaking, the Board shall authorize payment of the expenses described in the Undertaking, whereupon such payments shall be made promptly by the Company. No security shall be required in connection with any Undertaking, and any Undertaking shall be accepted without reference to the Indemnitee’s ability to make repayment.           (c) Selection of Counsel. In the event the Company shall be obligated under this Section 4 to pay the expenses of any action, suit or proceeding against the Indemnitee, the Company shall be entitled to assume the defense of such proceeding, with counsel acceptable to and approved by the Indemnitee, upon the delivery to the Indemnitee of written notice of the Company’s election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of separate counsel subsequently incurred by the Indemnitee with respect to the same action, suit or proceeding; provided, however, that if (i) the employment of counsel by the Indemnitee has been previously authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of any such defense, or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the Indemnitee may select and employ his own counsel to direct the defense thereof and the fees and expenses of such counsel shall be paid by the Company. Notwithstanding any assumption of the defense of any such action, suit or proceeding and employment of counsel with respect thereto by the Company in accordance with the foregoing, the Indemnitee shall have the right to employ his own separate counsel to participate in any such action, suit or proceeding at the Indemnitee’s expense.      5. Corporate Approval. The Company represents and warrants to the Indemnitee that: (i) the Company has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder; (ii) this Agreement and the performance of all of the Company’s obligations hereunder have been approved by all corporate action required on the part of the Company under the Charter, the By-laws or applicable law or contract; and (iii) this Agreement, when executed, will constitute the valid and legally binding obligation of the 6 --------------------------------------------------------------------------------   Company, enforceable against the Company in accordance with its terms, subject to any applicable bankruptcy law and equitable limitations.      6. Fees and Expenses of Enforcement. It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding designed (or having the effect of being designed) to deny, or to recover from, the Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Indemnitee in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all expenses, including without limitation attorneys’ fees and expenses, and, if requested by Indemnitee, shall advance, to the extent not prohibited by law, such expenses, actually and reasonably incurred by the Indemnitee (i) as a result of the Company’s failure to perform this Agreement or any provision hereof or (ii) as a result of the Company or any person contesting the validity or enforceability of this Agreement or any provision hereof.      7. Maintenance of Insurance and Self Insurance.           (a) The Company represents that it presently has in force and effect policies of D & O Insurance in insurance companies and amounts as follows (the “Insurance Policies”).                           Insurer   Policy No.   Amount   Deductible Chubb Group of Insurance Companies   81691712     $ 10,000,000     $ 250,000   Subject only to the provisions of Section 7(b) hereof, the Company hereby agrees that, so long as Indemnitee shall continue to serve as a director of officer of the Company (or shall continue at the request of the Company to serve as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise) and thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative by reason of the fact that Indemnitee was a director of the Company (or served in any of said other capacities), the Company will purchase and maintain in effect for the benefit of Indemnitee one or more valid, binding and enforceable policy or policies of D & O Insurance providing, in all respects, coverage at least comparable to that presently provided pursuant to the Insurance Policies. 7 --------------------------------------------------------------------------------             (b) The Company shall not be required to maintain said policy or policies of D & O Insurance in effect if said insurance is not reasonably available or if, in the reasonable business judgment of the then directors of the Company, either (i) the premium cost for such insurance is substantially disproportionate to the amount of coverage or (ii) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance.      8. Reorganizations. In the event that the Company shall be a constituent corporation (including any constituent of a constituent) in a merger, reorganization, consolidation, combination or similar transaction, the Company, if it shall not be the surviving, resulting or acquiring corporation therein, shall require as a condition thereto the surviving, resulting or acquiring corporation to expressly assume and adopt this Agreement and to agree to indemnify the Indemnitee to the full extent provided in this Agreement. Whether or not the Company is the resulting, surviving or acquiring corporation in any such transaction, the Indemnitee shall stand in the same position under this Agreement with respect to the resulting, surviving or acquiring corporation as he would have with respect to the Company if its separate existence had continued.      9. Nonexclusivity, Survival and Subrogation.           (a) Nonexclusivity. The rights to indemnification and advancement provided by this Agreement shall not be exclusive of any other rights to which the Indemnitee may be entitled under the Charter, the By-laws, the DGCL, any other statute, insurance policy, agreement, vote of shareholders or of directors or otherwise, both as to actions in his official capacity and as to actions in another capacity while holding such office.           (b) Survival. The provisions of this Agreement shall survive the death, disability, or incapacity of the Indemnitee or the termination of the Indemnitee’s service as an officer, director, employee or agent of the Company and shall inure to the benefit of, and be enforceable by, the Indemnitee’s heirs, executors, guardians, administrators or assigns.           (c) Subrogation. In the event of any payment by the Company under this Agreement, the Company shall be subrogated to the extent thereof to all rights of recovery previously vested in the Indemnitee, who shall cooperate with the Company, at the Company’s expense, in executing all such instruments and taking all such other actions as shall be reasonably necessary for the Company to enforce such right or as the Company may reasonably request.      10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.      11. Miscellaneous.           (a) This Agreement shall become effective as of the Effective Date. 8 --------------------------------------------------------------------------------             (b) This Agreement contains the entire agreement of the parties relating to the subject matter hereof.           (c) Any provision of this Agreement may be amended or waived only if such amendment or waiver is in writing and signed, in the case of an amendment, by both parties hereto or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver hereof nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right, power or privilege.           (d) If any provision of this Agreement or the application of any provision hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.           (e) Nothing contained in this Agreement is intended to create in the Indemnitee any separate or independent right to continued employment by the Company.           (f) This Agreement may be executed in counterparts, but all such counterparts taken together shall constitute on and the same Agreement.           (g) The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than limitation. The use of the word “or” in this Agreement is intended to be conjunctive rather than disjunctive. * * * * * *           IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.             MAGELLAN PETROLEUM CORPORATION       By:   /s/ Walter J. McCann       Name:   Walter McCann      Title:   Chairman of the Board              /s/ William H. Hastings       William H. Hastings          9 --------------------------------------------------------------------------------             EXHIBIT 1 Indemnification Statement       STATE OF   )      ) ss.  COUNTY OF   )            I,                                         , being first duly sworn, do depose and state as follows:           1. This Indemnification Statement is submitted pursuant to the Indemnification Agreement, dated                                         , 200___ between Magellan Petroleum Corporation, a Delaware corporation (the “Company”), and the undersigned.           2. I am requesting indemnification against expenses (including, without limitation, attorneys’ fees and expenses), costs, judgments, damages, fines and amounts paid in settlement, all of which (collectively, “Liabilities”) have been or will be actually and reasonably incurred by me in connection with an actual or threatened action, suit or proceeding to which I was or am a party or am threatened to be made a party.           3. With respect to all matters related to any such action, suit or proceeding, I am entitled to be indemnified as herein contemplated pursuant to the aforesaid Indemnification Agreement.           4. Without limiting any other rights which I have or may have, I am requesting indemnification against Liabilities which have arisen or may arise out of                         . Indemnitee                                                              Subscribed and sworn to before me, a Notary Public in and for said County and State, this ___ day of                     , 20___. [Seal] My commission expires the       day of                     , 20 ___.   --------------------------------------------------------------------------------   EXHIBIT 2 Undertaking       STATE OF   )      ) ss.  COUNTY OF   )            I,                                         , being first duly sworn, do depose and state as follows:           1. This Undertaking is submitted pursuant to the Indemnification Agreement, dated                                          , 200___, between Magellan Petroleum Corporation, a Delaware corporation (the “Company”), and the undersigned.           2. I am requesting advancement of certain expenses (including, without limitation, attorneys’ fees and expenses) which I have incurred or will incur in defending a civil, criminal, administrative or investigative action, suit or proceeding.           3. I hereby undertake to repay this advancement of expenses if it shall ultimately be determined that I am not entitled to be indemnified by the Company under the aforesaid Indemnification Agreement or otherwise.             4. The expenses for which advance is requested are, in general, all expenses related to                       . Indemnitee                                                              Subscribed and sworn to before me, a Notary Public in and for said County and State, this       day of                     , 20___. [Seal] My commission expires the       day of                     , 20___.
Exhibit 10.3   FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT   THIS FIRST AMENDMENT to the AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of this 14th day of December, 2007, is between First Federal Bancshares of Arkansas, Inc., a Texas chartered corporation (the “Corporation”), First Federal Bank, a federally chartered savings bank and a wholly owned subsidiary of the Corporation (the “Bank”), and                      (the “Executive”) (the “Amended and Restated Agreement”).   WITNESSETH   WHEREAS, the Employers desire to amend the Amended and Restated Agreement in order to make changes to comply with certain executive compensation restrictions imposed on the Corporation in connection with its participation in the Capital Purchase Program (“CPP”) of the U.S. Department of Treasury’s (the “Treasury”) Troubled Asset Relief Program and specifically Section 111 of the Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended by Section 7001 of the American Recovery and Reinvestment Act of 2009 (the “ARRA”).   NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:   1.                           Section 20 of the Amended and Restated Agreement shall become Section 21 and the following new Section 20 added                           20.                               Compliance with the Troubled Asset Relief Program (“TARP”)                           (i)                                  Notwithstanding any provision to the contrary herein, during the period that any obligation arising from financial assistance provided to the Corporation under the TARP remains outstanding pursuant to the TARP Capital Purchase Program (“CPP”) (excluding any period in which the Federal Government only holds warrants to purchase common stock of the Corporation), Executive will not receive and will not be entitled to receive any payment or compensation pursuant to this Agreement if the receipt of such payment or compensation alone or when added to any other payment or compensation received or to be received by Executive from the Corporation would cause Executive to receive a “golden parachute payment” within the meaning of Section 111 of the Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended by Section 7001 of the American Recovery and Reinvestment Act of 2009 (the “ARRA”) or any of the rules and regulations promulgated under the EESA or ARRA. The Corporation and the Bank shall retain the exclusive and final authority, without the consent of Executive, to cancel, reduce or otherwise eliminate any compensation or other payments pursuant to this Agreement, including without limitation any payments pursuant to Sections 3 and 5 hereof, so as to comply with the EESA, as amended by ARRA and the rules and regulations promulgated thereby, as then in effect. Any compensation or other payments canceled, reduced or eliminated pursuant to the preceding sentence, will be   --------------------------------------------------------------------------------   forever forfeited by Executive and [he] shall not be entitled to or have any claim against the Corporation and/or the Bank to receive such payments at anytime.                           (ii)                              Notwithstanding any provision to the contrary herein, Executive shall make prompt and immediate repayment to the Corporation or the Bank, as the case may be, of the full amount of any payment made or credited to Executive under this Agreement during the period that any obligation arising from financial assistance provided to the Corporation under the TARP remains outstanding pursuant to the CPP (excluding any period in which the Federal Government only holds warrants to purchase common stock of the Corporation) or any  other TARP program involving the Corporation and/or the Bank where such entity received financial assistance provided under TARP, if such compensation or other payment(s) are determined at any time by the Corporation and/or the Bank or their federal bank regulator to have been: (i) calculated or based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria or (ii) compensation or payments that are incentive, retention or bonus compensation that is not permitted by EESA, as amended by ARRA or the rules and regulations promulgated thereunder. The Corporation shall retain the exclusive and final authority as to all such determinations under this subparagraph (ii), so as to ensure compliance with applicable requirements of EESA, as amended by ARRA and the rules and regulations as are promulgated thereby, as then in effect. Any compensation or other payments returned to the Corporation or the Bank pursuant to the preceding sentence shall be forever forfeited by Executive and [he] shall not be entitled to or have any claim against the Corporation and/or the Bank for repayment or return of any such amounts repaid by Executive at anytime.   2.                                       Entire Agreement and Waiver.  The Amended and Restated Agreement, as amended by this First Amendment constitute the entire agreement among the Parties and supersedes any prior understandings, agreements or representations by or among the Parties, written or oral, with respect to the subject matter of the Amended and Restated Agreement.   3.                                       Conflict of Terms.  In the event of a conflict or inconsistency between the terms, conditions and provisions of the Amended and Restated Agreement and those of this First Amendment, the terms, conditions and provisions of this First Amendment shall control and govern the rights and obligations of the Parties.   4.                                       Ratification.  Except to the extent amended hereby or inconsistent herewith, all of the terms, conditions and provisions of the Amended and Restated Agreement shall remain in full force and effect, and the Parties hereby acknowledge and confirm that the same are in full force and effect.     IN WITNESS WHEREOF, this First Amendment has been executed as of the date first above written.   --------------------------------------------------------------------------------   Attest: FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.         Attest: FIRST FEDERAL BANK           EXECUTIVE   --------------------------------------------------------------------------------
Exhibit 10.43   EXECUTION VERSION     [g30592km01i001.jpg]   AMENDED AND RESTATED CREDIT AGREEMENT     dated as of March 30, 2012   among   TITAN MACHINERY INC. a Delaware corporation, as Borrower,   THE SUBSIDIARIES OF BORROWER PARTY HERETO, as Subsidiary Guarantors,   THE FINANCIAL INSTITUTIONS PARTY HERETO, as Lenders,   BANK OF AMERICA, N.A. as Syndication Agent,   COBANK,  ACB as Documentation Agent   and   WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Swing Line Lender and L/C Issuer     WELLS FARGO SECURITIES, LLC Sole Lead Arranger and Sole Book Runner     --------------------------------------------------------------------------------   TABLE OF CONTENTS   ARTICLE I CERTAIN DEFINED TERMS; CERTAIN RULES OF CONSTRUCTION 1       SECTION 1.01 CERTAIN DEFINED TERMS 1 SECTION 1.02 CERTAIN RULES OF CONSTRUCTION 38       ARTICLE II CREDIT EXTENSIONS 41       SECTION 2.01 WORKING CAPITAL LOANS; FLOORPLAN LOANS 41 SECTION 2.02 PROCEDURES FOR BORROWING 41 SECTION 2.03 LETTERS OF CREDIT 43 SECTION 2.04 SWING LINE LOANS 54 SECTION 2.05 PAYMENTS AND PREPAYMENTS 57 SECTION 2.06 TERMINATION OR REDUCTION OF AGGREGATE COMMITMENTS 60 SECTION 2.07 FINAL REPAYMENT OF LOANS 61 SECTION 2.08 INTEREST; APPLICABLE RATES 61 SECTION 2.09 FEES 62 SECTION 2.10 COMPUTATIONS OF INTEREST AND FEES 63 SECTION 2.11 EVIDENCE OF DEBT 63 SECTION 2.12 PAYMENTS GENERALLY; RIGHT OF ADMINISTRATIVE AGENT TO MAKE DEDUCTIONS AUTOMATICALLY 64 SECTION 2.13 SHARING OF PAYMENTS 66 SECTION 2.14 INCREASE IN AGGREGATE COMMITMENTS 66 SECTION 2.15 SECURITY FOR THE OBLIGATIONS 69 SECTION 2.16 EXTENSION OF MATURITY DATE 69       ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 70       SECTION 3.01 TAXES 70 SECTION 3.02 ILLEGALITY 73 SECTION 3.03 INABILITY TO DETERMINE RATES 73 SECTION 3.04 INCREASED COSTS 74 SECTION 3.05 COMPENSATION FOR LOSSES 75 SECTION 3.06 MITIGATION OBLIGATIONS; ADDITIONAL L/C ISSUER 76 SECTION 3.07 REMOVAL OR REPLACEMENT OF LENDERS 77 SECTION 3.08 DEFAULTING LENDERS 78 SECTION 3.09 SURVIVAL 80       ARTICLE IV CONDITIONS PRECEDENT 80       SECTION 4.01 CONDITIONS TO EFFECTIVENESS AND INITIAL CREDIT EXTENSION 80 SECTION 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS 83       ARTICLE V REPRESENTATIONS AND WARRANTIES 84       SECTION 5.01 CORPORATE EXISTENCE AND POWER 84 SECTION 5.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION 85 SECTION 5.03 GOVERNMENTAL AUTHORIZATION; COMPLIANCE WITH LAWS 85   i --------------------------------------------------------------------------------   SECTION 5.04 BINDING EFFECT 85 SECTION 5.05 LITIGATION 86 SECTION 5.06 NO DEFAULTS 86 SECTION 5.07 EMPLOYEE BENEFIT PLANS 86 SECTION 5.08 USE OF PROCEEDS 87 SECTION 5.09 TITLE TO PROPERTIES 87 SECTION 5.10 TAXES 87 SECTION 5.11 FINANCIAL CONDITION 87 SECTION 5.12 ENVIRONMENTAL MATTERS 88 SECTION 5.13 MARGIN REGULATIONS; REGULATED ENTITIES 88 SECTION 5.14 SWAP OBLIGATIONS 88 SECTION 5.15 INTELLECTUAL PROPERTY 88 SECTION 5.16 EQUITY INTERESTS HELD BY BORROWER; EQUITY INTERESTS IN BORROWER 89 SECTION 5.17 INSURANCE 89 SECTION 5.18 COLLATERAL AND COLLATERAL DOCUMENTS 89 SECTION 5.19 LABOR RELATIONS 90 SECTION 5.20 SOLVENCY 90 SECTION 5.21 FULL DISCLOSURE 90       ARTICLE VI AFFIRMATIVE COVENANTS 90       SECTION 6.01 FINANCIAL STATEMENTS 90 SECTION 6.02 CERTIFICATES; OTHER INFORMATION 91 SECTION 6.03 NOTICES 93 SECTION 6.04 PAYMENT OF CERTAIN OBLIGATIONS 94 SECTION 6.05 PRESERVATION OF EXISTENCE, ETC. 94 SECTION 6.06 MAINTENANCE OF PROPERTIES 94 SECTION 6.07 MAINTENANCE OF INSURANCE 94 SECTION 6.08 COMPLIANCE WITH LAWS 95 SECTION 6.09 BOOKS AND RECORDS 95 SECTION 6.10 INSPECTION RIGHTS 95 SECTION 6.11 USE OF PROCEEDS 95 SECTION 6.12 FINANCIAL COVENANTS 96 SECTION 6.13 COLLATERAL VALUATIONS; COLLATERAL AUDITS 96 SECTION 6.14 FURTHER ASSURANCES 96 SECTION 6.15 LANDLORDS’ AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS 97 SECTION 6.16 CONTROL AGREEMENTS 97       ARTICLE VII NEGATIVE COVENANTS 98       SECTION 7.01 LIENS 98 SECTION 7.02 INVESTMENTS 100 SECTION 7.03 DEBT 101 SECTION 7.04 FUNDAMENTAL CHANGES 103 SECTION 7.05 DISPOSITIONS 104 SECTION 7.06 RESTRICTED PAYMENTS 105 SECTION 7.07 INTENTIONALLY OMITTED 105 SECTION 7.08 TRANSACTIONS WITH AFFILIATES 105   ii --------------------------------------------------------------------------------   SECTION 7.09 BURDENSOME AGREEMENTS 105 SECTION 7.10 USE OF PROCEEDS 105 SECTION 7.11 CERTAIN GOVERNMENTAL REGULATIONS 106 SECTION 7.12 AMENDMENT OF MATERIAL DOCUMENTS 106 SECTION 7.13 DISQUALIFIED EQUITY INTERESTS 106 SECTION 7.14 TRANSPORTATION SOLUTIONS 106       ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 106       SECTION 8.01 EVENTS OF DEFAULT 106 SECTION 8.02 REMEDIES UPON EVENT OF DEFAULT 109 SECTION 8.03 APPLICATION OF FUNDS 109       ARTICLE IX ADMINISTRATIVE AGENT 110       SECTION 9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT 110 SECTION 9.02 RIGHTS AS A LENDER 110 SECTION 9.03 EXCULPATORY PROVISIONS 110 SECTION 9.04 RELIANCE BY ADMINISTRATIVE AGENT 111 SECTION 9.05 DELEGATION OF DUTIES 112 SECTION 9.06 RESIGNATION OF ADMINISTRATIVE AGENT 112 SECTION 9.07 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS 113 SECTION 9.08 NO OTHER DUTIES, ETC. 113 SECTION 9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM 114 SECTION 9.10 GUARANTY MATTERS 114 SECTION 9.11 COLLATERAL MATTERS 114       ARTICLE X GENERAL PROVISIONS 116       SECTION 10.01 AMENDMENTS, ETC. 116 SECTION 10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS 119 SECTION 10.03 NO WAIVER; CUMULATIVE REMEDIES 121 SECTION 10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER 121 SECTION 10.05 PAYMENTS SET ASIDE 123 SECTION 10.06 SUCCESSORS AND ASSIGNS 123 SECTION 10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY 126 SECTION 10.08 RIGHT OF SETOFF 127 SECTION 10.09 INTEREST RATE LIMITATION 127 SECTION 10.10 COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION 127 SECTION 10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES 128 SECTION 10.12 SEVERABILITY 128 SECTION 10.13 USA PATRIOT ACT NOTICE 128 SECTION 10.14 GUARANTY BY SUBSIDIARIES 129 SECTION 10.15 TIME OF THE ESSENCE 135 SECTION 10.16 PRIOR AGREEMENT 135 SECTION 10.17 GOVERNING LAW; JURISDICTION; ETC. 135 SECTION 10.17 WAIVER OF RIGHT TO JURY TRIAL 136 SECTION 10.18 JUDGMENT CURRENCY 136   iii --------------------------------------------------------------------------------   SCHEDULES           1.01-A   Applicable Rates 1.01-B   Existing Letters of Credit 2.01   Lenders; Commitments; Percentage Shares 5.05   Litigation 5.12   Environmental Matters 5.16   Equity Interests Held by Borrower; Equity Interests in Borrower 5.17   Insurance 5.18   Applicable Filing Offices 5.19   Labor Issues 7.01   Existing Liens 7.03   Existing Debt 7.13   Assets of Transportation Solutions 10.02   Administrative Agent’s Office; Certain Addresses for Notices       EXHIBITS           A   Form of Assignment and Assumption B   Form of Compliance Certificate C   Form of Joinder Agreement D   Form of Loan Notice E   Form of Notes F   Form of Swing Line Notice G   Form of Security Agreement H   Borrowing Base Certificate I-1 – I-4   Forms of Tax Compliance Certificates   iv --------------------------------------------------------------------------------   AMENDED AND RESTATED CREDIT AGREEMENT   This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 30, 2012, is among TITAN MACHINERY INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party hereto, the several financial institutions party to this Agreement as Lenders, BANK OF AMERICA, N.A. as Syndication Agent, COBANK,  ACB, as Documentation Agent and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer.   RECITALS   WHEREAS Borrower, Wells Fargo and certain other banks previously entered into that certain Credit Agreement dated October 31, 2010 (as amended from time to time, the “Prior Credit Agreement”); and   WHEREAS the parties hereto now desire to amend and restate the Prior Credit Agreement by entering into this Agreement; and   WHEREAS Borrower and Guarantors have requested that Lenders, Swing Line Lender and L/C Issuer make available to Borrower the extensions of credit referenced herein on the terms and conditions contained herein; and   WHEREAS Lenders, Swing Line Lender and L/C Issuer have agreed severally to make available to Borrower the extensions of credit referenced herein on the terms and conditions contained herein; and   NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:   AGREEMENT   ARTICLE I CERTAIN DEFINED TERMS; CERTAIN RULES OF CONSTRUCTION   SECTION 1.01                            CERTAIN DEFINED TERMS.   As used herein:   “Acquiree” has the meaning ascribed thereto in the definition of “Permitted Acquisition” contained herein.   “Acquisition” means any transaction or series of related transactions resulting, directly or indirectly, in:  (a) the acquisition by any Person of:  (i) all or substantially all of the assets of another Person; or (ii) any business unit or division of another Person; (b) the acquisition by any Person of in   1 --------------------------------------------------------------------------------   excess of 50.00% of the Equity Interests of any other Person, or otherwise causing any other Person to become a Subsidiary of such Person; or (c) a merger or consolidation, or any other combination, of any Person with another Person (other than a Person that is a wholly-owned Subsidiary) in which Borrower or a Subsidiary of Borrower is the surviving Person.   “Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).   “Additional Commitment Documentation” has the meaning ascribed thereto in Section 2.14(c).   “Additional Commitments Effective Date” has the meaning ascribed thereto in Section 2.14(b).   “Additional Floorplan Commitment” means the commitment of an Additional Floorplan Lender to make Additional Floorplan Loans pursuant to Section 2.14.   “Additional Floorplan Lender” means, at any time, any lender providing an Additional Floorplan Commitment.   “Additional Floorplan Loans” means any loans made in respect of Additional Floorplan Commitments.   “Additional Working Capital Commitment” means the commitment of an Additional Working Capital Lender to make Additional Working Capital Loans pursuant to Section 2.14.   “Additional Working Capital Lender” means, at any time, any lender providing an Additional Working Capital Commitment.   “Additional Working Capital Loans” means any loans made in respect of Additional Working Capital Commitments.   “Administrative Agent” means, at any time, the administrative agent for the Lending Parties under each of the Loan Documents (which, initially, shall be Wells Fargo).   “Administrative Agent’s Office” means Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as Administrative Agent may from time to time notify Borrower, Guarantors and each Lending Party.   “Administrative Detail Form” means an administrative detail form in a form supplied by, or otherwise acceptable to, Administrative Agent.   “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.   “Aggregate Commitments” means, at any time, the sum of: (a) the Aggregate Working Capital Commitments; plus (b) the Aggregate Floorplan Commitments.   2 --------------------------------------------------------------------------------   “Aggregate Floorplan Commitments” means, at any time, the combined Floorplan Commitments of all Floorplan Lenders.   “Aggregate Working Capital Commitments” means, at any time, the combined Working Capital Commitments of all Working Capital Lenders.   “Agreement” means this Credit Agreement.   “Applicable Base Rate Margin” means, at any time, the applicable percentage per annum (expressed in basis points) set forth on Schedule 1.01-A for Base Rate Loans.   “Applicable LIBOR Margin” means, at any time, the applicable percentage per annum (expressed in basis points) set forth on Schedule 1.01-A for Eurodollar Rate Loans.   “Applicable Fee” means, as of any date of determination, (a) 0.40% per annum if during the immediately preceding Fiscal Period, average Total Outstandings divided by average Aggregate Commitments is less than or equal to 33.3%, and (b) 0.30% per annum if during the immediately preceding Fiscal Period, average Total Outstandings divided by average Aggregate Commitments is greater than 33.3%.   “Applicable Rate” means, at any time, the applicable percentage per annum (expressed in basis points) set forth on Schedule 1.01-A, each such percentage being based, subject to Section 2.08(d), upon the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by Administrative Agent pursuant to Section 4.01(a)(xii) or Section 6.02(b), as applicable.  If the Borrower fails to provide the Compliance Certificate as required by Section 6.02(b), the Consolidated Leverage Ratio shall be deemed to be 2.50:1.00 from the date on which such Compliance Certificate was due, as applicable, until such time as such Compliance Certificate is delivered to the Administrative Agent, as applicable.  Notwithstanding the foregoing, in the event that a Compliance Certificate delivered pursuant to Section 6.02(b) is inaccurate (regardless of whether (i) this Agreement is in effect, or (ii) the Working Capital Commitments are in effect, (iii) the Floorplan Commitments are in effect or (iv) any Credit Extension is outstanding when such inaccuracy is discovered or such Compliance Certificate was delivered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Rate for any period (an “Applicable Period”) than the Applicable Rate applied for such Applicable Period, then (x) the Borrower shall immediately deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Period, (y) the Applicable Rate for such Applicable Period shall be determined as if the Consolidated Leverage Ratio in the corrected Compliance Certificate were applicable for such Applicable Period, and (z) the Borrower shall immediately pay to the Administrative Agent the accrued additional interest and fees owing as a result of such increased Applicable Rate for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 2.12.  Nothing in this paragraph shall limit the rights of the Administrative Agent and Lenders with respect to Section 2.08(b) and Section 8.01, provided that payment of any amounts due under the previous sentence shall cure any Default and Event of Default resulting from any such inaccurate Compliance Certificate (but not any underlying financial covenant or other default).   “Arranger” means Wells Fargo Securities, LLC as sole lead arranger and sole book runner for the transactions contemplated by the Loan Documents.   3 --------------------------------------------------------------------------------   “Asset Sale” means any direct or indirect Disposition (whether in one transaction or a series of related transactions) by Borrower or any Subsidiary thereof to any Person other than Borrower or any wholly-owned Subsidiary thereof of:  (a) any Equity Interests of any Subsidiary of Borrower; or (b) any other property of Borrower or any Subsidiary thereof; provided that “Asset Sale” shall not include:  (i) any Disposition by Borrower or any Subsidiary thereof of Investments of the type described in Section 7.02 other than Section 7.02(h); (ii) any Disposition that is governed by and complies with Section 7.05 other than Section 7.05(e); or (iii) any issuance by Borrower of perpetual common Equity Interests.   “Assignment and Assumption” means an assignment and assumption entered into by a Lending Party and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by Administrative Agent, in substantially the form of Exhibit A or any other form approved by Administrative Agent.   “Attributable Debt” means, on any date of determination:  (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP; and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.   “Audited Financial Statements” means the audited consolidated balance sheet for Borrower for the fiscal year ended January 31, 2011, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Borrower, including the notes thereto, together with the opinion issued thereon by the independent accountants that audited such financial statements.   “Automatic Extension Letter of Credit” means a Letter of Credit that has automatic extension provisions.   “Bankruptcy Code” means the federal Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101 et seq.).   “Base Rate” means, for any day, a fluctuating rate per annum equal to the higher of:  (a) the Federal Funds Rate plus 100.00 basis points per annum; (b) the Daily LIBOR Rate; or (c) the per annum rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its “Prime Rate,” such rate being the rate of interest most recently announced within Wells Fargo at its principal office as its “Prime Rate,” with the understanding that Wells Fargo’s “Prime Rate” is one of Wells Fargo’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate.  Any change in Wells Fargo’s “Prime Rate” as announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change.  The Prime Rate is not intended to be lowest rate of interest charged by Wells Fargo in connection with extensions of credit to borrowers.   “Base Rate Loan” means a Loan that bears interest as set forth in Section 2.08(a)(ii).   “Borrower Extension Notice” has the meaning ascribed thereto in Section 2.16.   4 --------------------------------------------------------------------------------   “Borrowing” means a Working Capital Borrowing, a Floorplan Borrowing or a Swing Line Borrowing, as the context may require.   “Borrowing Base Certificate” shall mean a certificate, in substantially the form of Exhibit H attached hereto and made a part hereof, setting forth the Working Capital Borrowing Base and the Floorplan Borrowing Base and the component calculations thereof.   “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, New York, New York or the city and state where Administrative Agent’s Office is located; provided, however, that (a) when used in connection with a rate determination, borrowing or payment in respect of a Eurodollar Rate Loan, the term “Business Day” shall also exclude any day on which banks in London, England are not open for dealings in deposits of Dollars or Foreign Currencies, as applicable, in the London interbank market, and (b) with respect to any Letter of Credit or other obligation under the Loan Documents denominated in Euros, the term “Business Day” shall exclude any day that is not a Target Settlement Day.   “Capital Expenditures” means all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of capital leases that is capitalized on the balance sheet of such Person including in connection with a sale-leaseback transaction) by such Person for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that are required to be capitalized under GAAP on a balance sheet of such Person, but specifically excluding any Equipment purchased by a Loan Party for lease or rental to others.  For purposes of this definition:  (a) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment owned by such Person thereof or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price minus the credit granted by the seller of such equipment for such equipment being traded in at such time, or the amount of such proceeds, as the case may be; and (b) neither an acquisition to the extent made with the proceeds of a Disposition in accordance with Section 2.05(c)(i) nor an Acquisition complying with Section 7.02(e) shall constitute a “Capital Expenditure.”   “Cash Collateral” means all Collateral that has, in accordance with the provisions hereof, been pledged to Cash Collateralize:  (a) L/C Obligations; (b) at Borrower’s option in accordance with Section 2.05(c)(vi), Working Capital Loans that are Eurodollar Rate Loans; or (c) at Borrower’s option in accordance with Section 2.05(c)(vii), Floorplan Loans that are Eurodollar Rate Loans.   “Cash Collateralize” means to pledge and deposit with or deliver to Administrative Agent, for the benefit of (a) L/C Issuer and Working Capital Lenders, as collateral for the Working Capital L/C Obligations, (b) L/C Issuer and Floorplan Lenders, as collateral for the Floorplan L/C Obligations, (c) at Borrower’s option in accordance with Section 2.05(c)(vi), Working Capital Lenders, as collateral for Working Capital Loans that are Eurodollar Rate Loans, cash or deposit account balances pursuant to documents in form and substance satisfactory to Administrative Agent and L/C Issuer (which documents are hereby consented to by L/C Issuer and Working Capital Lenders) or (d) at Borrower’s option in accordance with Section 2.05(c)(vii), Floorplan Lenders, as collateral for Floorplan Loans that are Eurodollar Rate Loans, cash or deposit account balances pursuant to documents in form and substance satisfactory to Administrative Agent (which documents are hereby consented to by Floorplan Lenders).   5 --------------------------------------------------------------------------------   “Cash Equivalents” means, as to any Person:  (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (but only so long as the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; (b) securities issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than ninety days from the date of acquisition and having one of the two highest ratings from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc.; (c) domestic and Eurodollar certificates of deposit, time or demand deposits or bankers’ acceptances maturing within six months after the date of acquisition issued or guaranteed by or placed with, and money market deposit accounts issued or offered by:  (i) any Lender; and (ii) any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia having combined capital and surplus of not less than $250,000,000; (d) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clause (a) and (b) of this definition entered into with any bank meeting the qualifications specified in clause (c) of this definition; (e) commercial paper issued by the parent corporation of any Lender or any commercial bank (provided that the parent corporation and the bank are both incorporated in the United States) having capital and surplus in excess of $250,000,000 and commercial paper issued by any Person incorporated in the United States, which commercial paper is rated at least A-1 or the equivalent thereof by Standard & Poor’s Corporation or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc., and in each case maturing not more than ninety days after the date of acquisition by such Person; and (f) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (a) through (e) of this definition.   “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.   “Change of Control” means (a) an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35.00% or more of the Equity Interests of Borrower entitled to vote for members of the board of directors or equivalent governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), (b) the failure of a majority of the seats (other than vacant seats) on the board of directors of Borrower to   6 --------------------------------------------------------------------------------   be occupied by persons who were nominated by the board of directors of Borrower or appointed by directors so nominated, (c) after taking any to account any modification or waiver thereunder, the occurrence of any change in control (or similar event, however denominated) with respect to Borrower or any of its Subsidiaries shall occur under and as defined in any indenture or agreement to which Borrower or any of its Subsidiaries is a party, or (d) the failure of Borrower to own directly or indirectly, beneficially and of record, 100% of the aggregate ordinary voting power and economic interests represented by the issued and outstanding Equity Interests of each Subsidiary (or such lesser percentage as may be owned, directly or indirectly, as of the Closing Date or the later acquisition thereof) except where such failure is as a result of a transaction permitted by the Loan Documents.   “Closing Date” means the first date on which all of the conditions precedent in Section 4.01 are satisfied (or waived in accordance with Section 10.01).   “CNH Intercreditor Agreement” means an Intercreditor Agreement among CNH America LLC, CNH Capital America LLC, and Wells Fargo Bank, National Association.   “CNH Parts Reserve” means an amount established by the Administrative Agent to reflect the amount of proceeds of Case New Holland parts which, in accordance with the terms of the CNH Intercreditor Agreement, CNH Capital America LLC is entitled to receive.   “Code” means the Internal Revenue Code of 1986.   “Collateral” means all property and interests in property and proceeds thereof now owned or hereafter acquired by Borrower or any Subsidiary thereof in or upon which a Lien now or hereafter exists in favor of Administrative Agent, for the benefit of itself and each Lending Party (or any of the foregoing), whether under this Agreement or under any other Loan Document.   “Collateral Documents” means, collectively, the Guaranties, the Security Documents and all other security agreements, mortgages, deeds of trust, patent, trademark and copyright assignments, lease assignments and other similar documents between Borrower or any Subsidiary thereof and Administrative Agent, for the benefit of itself and each Lending Party (or any of the foregoing), now or hereafter delivered to Administrative Agent pursuant to or in connection with the transactions contemplated hereby, and all financing statements (or comparable documents now or hereafter filed in accordance with the Uniform Commercial Code or other comparable Law) against Borrower or any Subsidiary thereof as debtor in favor of Administrative Agent, for the benefit of itself and each Lending Party (or any of the foregoing), as secured party.   “Commitment” means, as to any Lender, such Lender’s Working Capital Commitment, Floorplan Commitment or Swing Line Commitment, as applicable.   “Compliance Certificate” means a certificate substantially in the form of Exhibit B.   “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.   7 --------------------------------------------------------------------------------   “Consolidated EBITDAR” means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the sum of (without duplication):  (a) Consolidated Net Income for such period; plus (b) Consolidated Interest Expense (net of interest income) for such period to the extent included in the determination of such Consolidated Net Income; plus (c) and all amounts treated as expenses for such period for depreciation and amortization, but in each case only to the extent included in the determination of such Consolidated Net Income; plus (d) Consolidated Rent Expense plus (e) income tax expense related to income made by the Borrower and its Subsidiaries; provided that Consolidated Net Income shall be computed for all of the foregoing purposes without giving effect to extraordinary gains or extraordinary losses.   “Consolidated Fixed Charge Coverage Ratio” means, as of the last day of a fiscal quarter, for the period consisting of the four consecutive Fiscal Periods ending on such date, subject to Section 1.02(h), the ratio of:  (a) the sum for such period of (without duplication):  (i) Consolidated EBITDAR; minus (ii) all payments in cash for taxes related to income made by Borrower and its Subsidiaries; minus (iii) Capital Expenditures actually made in cash by Borrower and its Subsidiaries (net of any insurance proceeds, condemnation awards or proceeds relating to any financing with respect to such expenditures); minus (iv) Restricted Payments paid in cash by Borrower; to (b) of:  (i) Consolidated Interest Expense; plus (ii) Consolidated Rent Expense; plus (iii) without duplication, all current maturities of long-term Debt (including with respect to Debt that is a capital lease).   “Consolidated Interest Expense” means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the sum of (without duplication):  (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets during such period; plus (b) all payments made under interest rate Swap Contracts during such period to the extent not included in clause (a) of this definition; minus (c) all payments received under interest rate Swap Contracts during such period; plus (d) the portion of rent expense with respect to such period under capital leases that is treated as interest in accordance with GAAP.   “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of:  (a)  Consolidated Total Liabilities; to (b) Consolidated Tangible Net Worth.   “Consolidated Net Income” means for any period, the sum of net income (or loss) for such period of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding any income of any Person if such Person is not a Subsidiary, except that the Borrower’s direct or indirect equity in the net income of any such person for such period shall be included in such Consolidated Net Income in accordance with GAAP.   “Consolidated Net Leverage Ratio” means, as of any date of determination, the ratio of:  (a) the sum of (i) Consolidated Total Liabilities, minus (ii) the amount by which Cash Equivalents held by Borrower and its Subsidiaries as of such date of determination exceed $30,000,000; to (b) Consolidated Tangible Net Worth.   “Consolidated Rent Expense” means for such period, total rental expenses attributable to operating leases of the Borrower and its Subsidiaries for real property on a consolidated basis.   8 --------------------------------------------------------------------------------   “Consolidated Tangible Net Worth” means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the sum of (without duplication):  (a) stockholders’ equity; minus (b) treasury stock; minus (c) all intangible assets, including goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles.   “Consolidated Total Assets” means as of any date, the value of the assets reflected on the consolidated balance sheet of the Borrower and its Subsidiaries as of such date prepared in accordance with GAAP.   “Consolidated Total Liabilities” means as of any date, total liabilities reflected on the consolidated balance sheet of the Borrower and its Subsidiaries as of such date prepared in accordance with GAAP.   “Contractual Obligation” means, as to any Person, any document or other agreement or undertaking to which such Person is a party or by which it or any of its property is bound.   “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  The terms “Controlling” and “Controlled” have meanings correlative thereto.  Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, the power to vote 12.50% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.  It is agreed that Dealer Sites, LLC shall not be deemed to be under common control with Borrower or other Loan Parties.   “Credit Extension” means each of the following: (a) a Borrowing; and (b) an L/C Credit Extension.   “Daily LIBOR” means, for any day, the rate of interest equal to LIBOR then in effect for delivery for a one (1) month period.  When interest is determined in relation to Daily LIBOR, each change in the interest rate shall become effective each Business Day that Administrative Agent determines that Daily LIBOR has changed.   “Daily LIBOR Rate” means, for any day, a fluctuating rate per annum equal to Daily LIBOR for such day (determined on a daily basis) plus 100.00 basis points per annum, provided if for any reason Daily LIBOR is unavailable and/or the Administrative Agent is unable to determine Daily LIBOR for any period, the Administrative Agent may, at its discretion, either: (a) select a replacement index based on the arithmetic mean of the quotations, if any, of the interbank offered rate by first class banks in London or New York for deposits with comparable maturities or (b) accrue interest at a rate per annum equal to Wells Fargo’s “Prime Rate” during any period which Daily LIBOR is unavailable or cannot be determined, such “Prime Rate,” being the rate of interest most recently announced within Wells Fargo at its principal office as its “Prime Rate,” with the understanding that Wells Fargo’s “Prime Rate” is one of Wells Fargo’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate.  Any change in Wells Fargo’s   9 --------------------------------------------------------------------------------   “Prime Rate” as announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change.  The Prime Rate is not intended to be lowest rate of interest charged by Wells Fargo in connection with extensions of credit to borrowers.   “Debt” means, as to any Person as of any date of determination, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:  (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial letters of credit), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (c) the Swap Termination Value under all Swap Contracts to which such Person is a party; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business not past due for more than sixty days); (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) the amount of Attributable Debt in respect of all capital lease obligations and Synthetic Lease Obligations of such Person; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make a payment in respect of Disqualified Equity Interests valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (h) all Guarantees of such Person in respect of any of the foregoing.  For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Debt is expressly made non-recourse to such Person.   “Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.   “Default” means any Event of Default or any event or condition that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.   “Default Rate” means:  (a) when used with respect to Obligations other than L/C Fees, a per annum interest rate equal to the sum of:  (i) the Base Rate; plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans; plus (iii) 200.00 basis points per annum; provided that, with respect to a Eurodollar Rate Loan, the Default Rate shall be a per annum interest rate equal to the sum of:  (A) the interest rate (including any Applicable Rate) otherwise applicable to such Loan; plus (B) 200.00 basis points per annum; and (b) when used with respect to L/C Fees, a per annum interest rate equal to the sum of (i) the Applicable Rate plus (ii) 200.00 basis points per annum.   “Defaulting Lender” means, subject to Section 3.08(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified   10 --------------------------------------------------------------------------------   in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, L/C Issuer, Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or L/C Issuer or Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 3.08(b)) upon delivery of written notice of such determination to the Borrower, L/C Issuer, Swingline Lender and each Lender.   “Disqualified Equity Interest” means any Equity Interest of any Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, or requires or mandates payments or distributions in cash, on or prior to the date that is one year after the last to occur of the Working Capital Maturity Date and Floorplan Maturity Date.  The term “Disqualified Equity Interest” shall also include any options, warrants or other rights that are convertible into Disqualified Equity Interest or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is one year after the last to occur of the Working Capital Maturity Date and Floorplan Maturity Date.   “Disposition” means the sale, assignment transfer, conveyance, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer, conveyance or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.  The term “Dispose” has a meaning correlative thereto.   11 --------------------------------------------------------------------------------   “Dollar” and “$” mean lawful money of the United States.   “Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (as determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Foreign Currency.   “Domestic Subsidiary” means a Subsidiary incorporated or organized under the laws of the United States, any State thereof or the District of Columbia.   “Electronic Platform” means an electronic system for the delivery of information (including documents), such as SyndTrak Online, that may or may not be provided or administered by Administrative Agent or an Affiliate thereof.   “Eligible Accounts” means all unpaid Accounts of the Loan Parties, net of any credits, but excluding any such Accounts having any of the following characteristics:   (a)           That portion of Accounts unpaid 90 days or more after the invoice date;   (b)           That portion of Accounts related to goods or services with respect to which a Loan Party has received written notice of a claim or dispute, which are subject to a claim of offset or a contra account, or which reflect a reasonable reserve for warranty claims or returns;   (c)           That portion of Accounts not yet earned by the final delivery of goods or that portion of Accounts not yet earned by the final rendition of services by a Loan Party to the account debtor, including with respect to both goods and services, progress billings, and that portion of Accounts for which an invoice has not been sent to the applicable account debtor;   (d)           Accounts constituting (i) proceeds of copyrightable material unless such copyrightable material shall have been registered with the United States Copyright Office, or (ii) proceeds of patentable inventions unless such patentable inventions have been registered with the United States Patent and Trademark Office;   (e)           Accounts owed by any unit of the United States federal government or any foreign government;   (f)            Accounts denominated in any currency other than United States dollars;   (g)           Accounts owed by an account debtor located outside the United States or Canada (excluding the provinces of Newfoundland and Quebec, the Northwest Territories and the Territory of Nunavut) which are not (i) backed by a bank letter of credit naming the Administrative Agent as beneficiary or assigned to the Administrative Agent, in the Administrative Agent’s possession or control, and with respect to which a control agreement concerning the letter-of-credit rights is in effect, and acceptable to the Administrative Agent in all   12 --------------------------------------------------------------------------------   respects, in its sole discretion, or (ii) covered by a foreign receivables insurance policy acceptable to the Administrative Agent in its sole discretion;   (h)           Accounts owed by an account debtor for which a Loan Party has received notice that such account debtor is insolvent, the subject of bankruptcy proceedings or has gone out of business;   (i)            Accounts owed by a Subsidiary, Affiliate, officer or employee of the Borrower or any Subsidiary of Borrower;   (j)            Accounts not subject to a duly perfected security interest in the Administrative Agent’s favor;   (k)           Accounts which are subject to any Lien in favor of any Person other than the Administrative Agent, unless such Account is subject to a duly perfected first priority security interest in the Administrative Agent’s favor pursuant to an intercreditor agreement acceptable to Administrative Agent with each other Person holding a Lien in such Account;   (l)            That portion of Accounts that has been restructured, extended, amended or modified, other than Accounts extended as a result of marketing campaigns entered into in the ordinary course of business;   (m)          Accounts owed by an account debtor, regardless of whether otherwise eligible, to the extent that the aggregate balance of such Accounts exceeds twenty percent (20%) of the aggregate amount of all Eligible Accounts; and   (n)           Accounts owed by an account debtor, regardless of whether otherwise eligible, if twenty percent (20%) or more of the total amount of Accounts due from such debtor is ineligible hereunder.   “Eligible Assignee” means any of the following:  (a) a Lender; (b) an Affiliate of a Lender; (c) any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business to the extent such Person is administered or managed by:  (i) a Lender; (ii) an Affiliate of a Lender; or (iii) a Person or an Affiliate of a Person that administers or manages a Lender; and (d) any other Person (other than a natural person) approved by Administrative Agent, Swing Line Lender and L/C Issuer and Borrower as provided in this Agreement; provided that, notwithstanding the foregoing, “Eligible Assignee” shall not include any Affiliates of Borrower or any competitor of Borrower or any of its Subsidiaries or any of such Person’s Affiliates.   “Eligible Inventory” means Inventory owned by any Loan Party; but excluding any Inventory having any of the following characteristics:   (a)           Inventory that is: not subject to a duly perfected first priority security interest in the Administrative Agent’s favor; covered by any negotiable or non-negotiable warehouse receipt, bill of lading or other document of title; on consignment from any Person; on   13 --------------------------------------------------------------------------------   consignment to any Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Administrative Agent;   (b)           Packaging, raw materials, parts, sample Inventory, or customer supplied parts or Inventory and other items not held for sale;   (c)           Work-in-process Inventory;   (d)           Inventory that is materially damaged, defective, obsolete, slow moving or not currently saleable in the normal course of the Loan Parties’ operations, or the amount of such Inventory that has been reduced by shrinkage;   (e)           Inventory that a Loan Party has returned;   (f)            Inventory manufactured by a Loan Party pursuant to a license unless the applicable licensor has agreed in writing to permit the Administrative Agent to exercise its rights and remedies against such Inventory;   (g)           Inventory that is not covered by casualty insurance reasonably acceptable to Administrative Agent;   (h)           Inventory that is subject to a Lien in favor of any Person other than the Administrative Agent unless such Inventory is subject to a duly perfected first priority security interest in the Administrative Agent’s favor pursuant to an intercreditor agreement acceptable to Administrative Agent with each other Person holding a Lien in such Inventory;   (i)            Inventory that is in-transit, unless the in-transit Inventory is Eligible Rental Equipment or other Inventory in-transit between the Loan Party’s locations; and   (j)            Inventory that is located outside the U.S.   “Eligible New Equipment Inventory” means all Inventory owned by a Loan Party which is (a) Eligible Inventory in all respects and (b) Inventory which consists of new Equipment held by a Loan Party for sale to others.   “Eligible Parts and Attachments Inventory” means Inventory owned by a Loan Party which is parts held by a Loan Party for sale to others, valued at the lower of cost or market in accordance with GAAP; but excluding any Inventory which is parts having any of the following characteristics:   (a)           Inventory that is: not subject to a duly perfected first priority security interest in the Administrative Agent’s favor, except for Case New Holland parts if Administrative Agent’s security interest is adequately addressed in a CNH Intercreditor Agreement acceptable to Administrative Agent;   (b)           Inventory that is: covered by any negotiable or non-negotiable warehouse receipt, bill of lading or other document of title; on consignment from any Person; on consignment to any   14 --------------------------------------------------------------------------------   Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Administrative Agent;   (c)           Packaging, raw materials, sample Inventory, or customer supplied parts or Inventory and other items not held for sale;   (d)           Work-in-process Inventory;   (e)           Inventory that is materially damaged, defective, obsolete or not currently saleable in the normal course of the Loan Parties’ operations, or the amount of such Inventory that has been reduced by shrinkage;   (f)            Inventory that a Loan Party has returned;   (g)           Inventory manufactured by a Loan Party pursuant to a license unless the applicable licensor has agreed in writing to permit the Administrative Agent to exercise its rights and remedies against such Inventory;   (h)           Inventory that is not covered by casualty insurance reasonably acceptable to Administrative Agent;   (i)            Inventory that is subject to a Lien in favor of any Person other than the Administrative Agent unless such Inventory is subject to a duly perfected first priority security interest in the Administrative Agent’s favor pursuant to an intercreditor agreement acceptable to Administrative Agent with each other Person holding a Lien in such Inventory;   (j)            Inventory that is in-transit, unless the in-transit Inventory is in-transit between the Loan Party’s locations;   (k)           Inventory not subject to a buy-back and held by Borrower for more than three (3) years which exceeds an aggregate value of $1,000,000; and   (l)            Inventory that is located outside the U.S.   “Eligible Rental Equipment” means all Equipment owned by a Loan Party which is (a) Eligible Inventory in all respects and (b) consists of Equipment held by a Loan Party for lease or rental to others.   “Eligible Used Equipment Inventory” means all Inventory owned by a Loan Party which is (a) Eligible Inventory in all respects, (b) Inventory which consists of used Equipment held by a Loan Party for sale to others and (c) not held by Borrower for more than three (3) years.   “Eligible Work In Process Inventory” means all Inventory owned by a Loan Party which is Eligible Inventory or Eligible Parts and Attachments Inventory in all respects except for the fact that such Inventory is work in process inventory (for clarity, Eligible Work in Process Inventory includes, without limitation, parts and services).   15 --------------------------------------------------------------------------------   “Enforcement Action” means any action to enforce any Obligations or Loan Documents or to realize upon any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, or otherwise).   “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution, the protection of the environment or the release of any materials into the environment, including those related to Hazardous Materials or wastes, air emissions and discharges to waste or public systems.   “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon:  (a) violation of any Environmental Law; (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials; (c) exposure to any Hazardous Materials; (d) the release or threatened release of any Hazardous Materials into the environment; or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.   “Environmental Permit” means any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law.   “Equipment” means whole goods (and not attachments) held for resale, lease or rental.   “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination; provided that Permitted Convertible Debt and Permitted Warrants shall not constitute Equity Interests of Borrower.   “ERISA” means the Employee Retirement Income Security Act of 1974.   “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Borrower or any Subsidiary thereof within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).   “ERISA Event” means any of the following:  (a) a Reportable Event with respect to a Pension Plan; (b) the incurrence by Borrower or an ERISA Affiliate of any liability with respect to a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of   16 --------------------------------------------------------------------------------   operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the incurrence by Borrower or any ERISA Affiliate of any liability with respect to a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or the receipt by Borrower or an ERISA Affiliate of notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.   “Euro” means the official currency of the euro area.   “Euro Unit” means the currency unit of the Euro.   “Eurodollar Rate” means for any Interest Period, with respect to a Eurodollar Rate Loan, a rate per annum (rounded upwards, as necessary, to the nearest one one-hundredth of 1.00%) obtained by dividing:  (a) the rate per annum determined by Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period by reference to the British Bankers’ Association “Interest Settlement Rates” for deposits in Dollars (as set forth by any service (including Bloomberg, Reuters and Thomson Financial) selected by Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) in an amount approximately equal to the principal amount to which such Interest Period applies (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided that, if an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, then “Eurodollar Rate” shall be the interest rate per annum determined by Administrative Agent to be the average of the rates per annum at which deposits in Dollars in an amount approximately equal to the principal amount to which such Interest Period applies (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period are offered for such Interest Period by Wells Fargo to major banks in the London interbank offered market in London, England at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period; by (b) the sum of: (i) one; minus (ii) the stated maximum rate (rounded upwards, as necessary, to the nearest one one-hundredth of 1.00%), as in effect on the date of the determination of any “Eurodollar Rate” in accordance with clause (a) of this definition, of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves) applicable on such date to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities” as defined in Regulation D (or any successor category of liabilities under Regulation D) of the FRB as in effect on such day, whether or not applicable to any Lending Party.  Each determination by Administrative Agent pursuant to this definition shall be conclusive absent manifest error.   “Eurodollar Rate Loan” means a Loan that bears interest based upon the Eurodollar Rate.   “Event of Default” has the meaning ascribed thereto in Section 8.01.   “Event of Loss” means, with respect to any property, any of the following:  (a) any loss, destruction or damage of such property; or (b) any actual condemnation, seizure or taking, by exercise of   17 --------------------------------------------------------------------------------   the power of eminent domain or otherwise, of such property, or confiscation of such property or the requisition of the use of such property.   “Exchange Act” means the Securities Exchange Act of 1934.   “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.06) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.01, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.   “Existing Guaranteed Obligations” has the meaning ascribed thereto in Section 10.14(j).   “Existing Letters of Credit” means the letters of credit identified on Schedule 1.01-B.   “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.   “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that:  (a) if such day is not a Business Day, then the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day; and (b) if no such rate is so published on such next succeeding Business Day, then the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of one one-hundredth of 1.00%) charged to Wells Fargo on such day on such transactions as determined by Administrative Agent.   “Fee Letter” means the letter agreement, dated February 17, 2012, among Borrower, the Arranger and the Administrative Agent regarding certain fees to be paid by the Borrower to the Arranger, Administrative Agent and L/C Issuer.   “Fiscal Period” means, as of any date of determination with respect to Borrower or any Subsidiary thereof, each fiscal quarter occurring during each of Borrower’s fiscal years.   18 --------------------------------------------------------------------------------   “Floorplan Availability” means, at any time, the lesser of (a) the Aggregate Floorplan Commitments at such time or (b) the Floorplan Borrowing Base at such time.   “Floorplan Availability Period” means the period from the Closing Date to the Floorplan Maturity Date.   “Floorplan Borrowing” means a borrowing consisting of simultaneous Floorplan Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each Floorplan Lender pursuant to Section 2.01(b).   “Floorplan Borrowing Base” means as of any date of calculation, an amount, as set forth on the most current Borrowing Base Certificate delivered to the Administrative Agent, equal to the sum of:   (a)                                 90% of the net book value of Eligible New Equipment Inventory; plus   (b)                                 85% of the net book value of Eligible Used Equipment Inventory; minus   (c)                                  the Floorplan Borrowing Base Reserve.   The Borrower, Administrative Agent and the Lenders acknowledge and agree that (i) the advance rates set forth in this definition are solely to establish the parameters for Availability, and (ii) this definition does not constitute nor shall it be deemed to constitute an express or implied representation or determination by Lenders that the recovery in a forced liquidation scenario would be equal to the advance rates established herein.   “Floorplan Borrowing Base Reserve” means, as of any date of determination, such amounts (expressed as either a specified amount or as a percentage of a specified category or item) as the Administrative Agent may from time to time establish and adjust in reducing Floorplan Availability acting in its Permitted Discretion (a) to the extent to reasonably reflect events, conditions, contingencies or risks that materially adversely affect (i) the value of the Collateral consisting of that which is taken into account in determining the Floorplan Borrowing Base, or (ii) the security interests and other rights of the Administrative Agent or Lenders in such Collateral (including the enforceability, perfection and priority thereof), or (b) to the extent to reasonably reflect any collateral report or financial information furnished by or on behalf of the Borrower to the Lenders that is or was incomplete, inaccurate or misleading in any material respect that affects such Collateral’s value that has not been cured after 10 days prior written notice thereof to the Borrower, or (c) in respect of any Default or an Event of Default during the continuation thereof; provided that (x) any such required reserves shall continue only for so long as the events, conditions, contingencies or risks giving rise thereto continue, (y) the Administrative Agent shall give Borrower the lesser of 45 days notice (or if 45 days notice would cause such reserve not to be reflected on the second Borrowing Base Certificate required to be delivered after the date thereof, the number of days which would cause such reserve to be so reflected) of any increase in any such reserves under clause (a)(i), and (z) in the case of reserves required under clause (a)(i), upon delivery of notice to Borrower, as provided above, the Administrative Agent shall be available to discuss the proposed reserve, and Borrower may take such action as may be required so that the event, condition or matter that is the basis for such reserve no longer exists in a manner and to the extent reasonably satisfactory to the Administrative Agent in the exercise of its Permitted Discretion.   19 --------------------------------------------------------------------------------   “Floorplan Commitment” means, as to each Floorplan Lender at any time any determination thereof is to be made, its obligation to do the following pursuant to the terms hereof (a) make Floorplan Loans to Borrower; and (b) purchase participations in Swing Line Loans and Floorplan L/C Obligations; all in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.   “Floorplan Exposure” means, as to any Floorplan Lender at any time, the aggregate principal amount at such time of its outstanding Floorplan Loans and such Floorplan Lender’s participation in Floorplan L/C Obligations and Swingline Loans at such time.   “Floorplan L/C Obligations” means, at any time, an amount equal to the Dollar Equivalent of the sum of:  (a) the aggregate amount available to be drawn under all outstanding Floorplan Letters of Credit; plus (b) the aggregate of all Unreimbursed Amounts, including all L/C Borrowings, with respect to Floorplan Letters of Credit.  For purposes of computing the amount available to be drawn under any Floorplan Letter of Credit, the amount of such Floorplan Letter of Credit shall be determined in accordance with Section 1.02(i).  For all purposes of this Agreement, if at any time of determination a Floorplan Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Floorplan Letter of Credit shall be deemed to be “outstanding” in an amount equal to the amount remaining available to be drawn.   “Floorplan L/C Sublimit” means an amount equal to $20,000,000.  The Floorplan L/C Sublimit is part of, and not in addition to, the Aggregate Floorplan Commitments.   “Floorplan Lender” means, collectively, (a) initially, each Lender designated on Schedule 2.01 as a “Floorplan Lender” and (b) each Lender that assumes a Floorplan Commitment pursuant to an Assignment and Assumption or pursuant to the applicable Additional Commitment Documentation or which otherwise holds a Floorplan Commitment, a Floorplan Loan or a risk participation in a Swing Line Loan, a Floorplan Letter of Credit or an L/C Borrowing in respect of a Floorplan Letter of Credit.   “Floorplan Letter of Credit” means a Letter of Credit issued under Section 2.03(a)(iv).   “Floorplan Loan” has the meaning ascribed thereto in Section  2.01(b).   “Floorplan Maturity Date” means the earliest of:  (a) March 30, 2016, or if applicable, any extension thereof pursuant to Section 2.16; (b) the date of the termination of the Aggregate Floorplan Commitments pursuant to Section 2.06; and (c) the date of the termination of the Aggregate Floorplan Commitments.   “Floorplan Percentage Share” means as to any Floorplan Lender at any time, the percentage (expressed as a decimal carried out to the ninth decimal place) of the Aggregate Floorplan Commitments represented by such Lender’s Floorplan Commitment at such time; provided that, if the commitment of each Floorplan Lender to make Floorplan Loans and the obligation of L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Floorplan Commitments have expired, then the Floorplan Percentage Share of each Floorplan Lender shall be determined based   20 --------------------------------------------------------------------------------   upon such Lender’s Floorplan Percentage Share most recently in effect, giving effect to any subsequent assignments.  The initial Floorplan Percentage Share of each Floorplan Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or the Additional Commitment Documentation pursuant to which such Lender became a party hereto, as applicable.   “Foreign Currency” means Euros.   “Foreign Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Foreign Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Foreign Currency with Dollars.   “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.   “Foreign Pledge Agreement” means, a pledge agreement, in form and substance satisfactory to the Administrative Agent, pursuant to which a Loan Party grants a security interest to the Administrative Agent, for the ratable benefit of the Secured Parties, in 100% of the non-voting and 65% of the voting Equity Interests in a first tier Foreign Subsidiary, which pledge agreement is governed by the laws of the jurisdiction of organization of such Material First Tier Foreign Subsidiary.   “Foreign Subsidiary” means any Subsidiary of the Borrower that is not a Domestic Subsidiary.   “FRB” means the Board of Governors of the Federal Reserve System of the United States.   “Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to L/C Issuer, such Defaulting Lender’s Percentage Share of the outstanding L/C Obligations with respect to Letters of Credit issued by L/C Issuer other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to Swingline Lender, such Defaulting Lender’s Floorplan Percentage Share of outstanding Swingline Loans made by Swingline Lender other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.   “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.   “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing,   21 --------------------------------------------------------------------------------   regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).   “Guarantee” means, as to any Person, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect:  (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation; (b) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation; (c) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation; or (d) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.   “Guaranteed Obligations” has the meaning ascribed thereto in Section 10.14(a).   “Guarantors” means, collectively:  (a) each Subsidiary Guarantor (including each Subsidiary of Borrower who executes a Joinder Agreement following the date hereof); and (b) each other Person who, following the date hereof, is required pursuant to the terms hereof to be a guarantor of the Obligations; provided, however, that no Foreign Subsidiary shall be required to be a guarantor of the Obligations.   “Guaranty” means any guaranty, in form and substance acceptable to Administrative Agent, made by a Guarantor for the benefit of Administrative Agent and Lending Parties and includes the guaranty set forth in Section 10.14.   “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.   “Hedging Obligations” means, with respect to Borrower, all liabilities of Borrower under Swap Contracts entered into with any Lender or an Affiliate of any Lender which are permitted under Section 7.03(d); provided that such liabilities under any Swap Contract with an Affiliate of a Lender shall not constitute “Hedging Obligations” hereunder unless and until such liabilities are certified as such in writing to Administrative Agent by Borrower and such Affiliate of a Lender.   “Honor Date” means, with respect to any Letter of Credit, the date of any payment by L/C Issuer thereunder.   22 --------------------------------------------------------------------------------   “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.   “Indemnitees” means, collectively, Administrative Agent (and any sub-agent thereof), each Lending Party and each Related Party of any of the foregoing Persons.   “Intercreditor Agreement” means an intercreditor agreement executed by a creditor in favor of and acceptable to the Administrative Agent and Lenders and acknowledged by the Borrower.   “Interest Payment Date” means:  (a) with respect to:  (i) a Eurodollar Rate Loan, the last day of each Interest Period applicable thereto and, in the case of a Eurodollar Rate Loan 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, (ii) a Base Rate Loan (other than a Swing Line Loan), the last Business Day of each calendar month; and (iii) a Swing Line Loan, the last Business Day of each calendar month; and (b) (i) in the case of Working Capital Loans, the Working Capital Maturity Date and (ii) in the case of Floorplan Loans and Swing Line Loans, the Floorplan Maturity Date.   “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by Borrower in its related Loan Notice; provided that: (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (c) no Interest Period for:  (i) any Working Capital Loan shall extend beyond the Working Capital Maturity Date; and (ii) any Floorplan Loan shall extend beyond the Floorplan Maturity Date.   “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person in another Person, whether by means of:  (a) the purchase or other acquisition of Equity Interests or other securities of another Person; (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or limited liability company interest in such other Person and any arrangement pursuant to which the investor Guarantees Debt of such other Person; or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.   “IRS” means the United States Internal Revenue Service.   23 --------------------------------------------------------------------------------   “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or, if the L/C Issuer shall agree at the time of issuance, such later version thereof as may be in effect at the time of issuance).   “Issuer Documents” means, with respect to any Letter of Credit, the L/C Application relating thereto and any other document entered into by L/C Issuer and Borrower or in favor of L/C Issuer and relating to any such Letter of Credit.   “Joinder Agreement” means an agreement entered into by a Subsidiary of Borrower following the date hereof to join in the Guaranty set forth in Section 10.14, in substantially the form of Exhibit C or any other form approved by Administrative Agent.   “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.   “L/C Advance” means (a) with respect to Floorplan Letters of Credit, a Floorplan Lender’s funding of its participation in an L/C Borrowing in accordance with its Floorplan Percentage Share, and (b) with respect to Working Capital Letters of Credit, a Working Capital Lender’s funding of its participation in an L/C Borrowing in accordance with its Working Capital Percentage Share (in each case, subject to adjustment pursuant to Section 3.08(a)).   “L/C Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by L/C Issuer.   “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit that has not been reimbursed on the date when made or refinanced as a Floorplan Borrowing or Working Capital Borrowing, as applicable.   “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof, the extension of the expiry date thereof or the increase of the amount thereof.   “L/C Expiration Date” means the day that is ten days prior to the earlier of the Floorplan Maturity Date or Working Capital Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).   “L/C Fee” has the meaning ascribed thereto in Section 2.03(i).   “L/C Issuer” means, at any time, the issuer of Letters of Credit hereunder (which, initially, shall be Wells Fargo).   “L/C Obligations” means Floorplan L/C Obligations and Working Capital L/C Obligations.   24 --------------------------------------------------------------------------------   “L/C Sublimit” means, as applicable, the Floorplan L/C Sublimit or the Working Capital L/C Sublimit.   “Lender” means, as applicable, a Working Capital Lender or a Floorplan Lender.   “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Detail Form, or such other office or offices as a Lender may from time to time notify Borrower, Administrative Agent and Lending Parties.   “Lending Parties” means, collectively, Lenders, Swing Line Lender and L/C Issuer.   “Letter of Credit” means any standby letter of credit issued hereunder and shall include the Existing Letters of Credit.   “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any easement, right of way or other encumbrance on title to real property).   “Loan” means any Working Capital Loan, Floorplan Loan or Swing Line Loan.   “Loan Documents” means, collectively, this Agreement, each Note, each Issuer Document, each Collateral Document, the Treasury Management Service Documents and the Fee Letter.   “Loan Notice” means a notice, pursuant to Section 2.02(a), of:  (a) a borrowing of Loans; (b) a conversion of Loans from one Type to the other; or (c) a continuation of Eurodollar Rate Loans; which, if in writing, shall be substantially in the form of Exhibit D.   “Loan Parties” means, collectively, Borrower and all Guarantors.   “Material Adverse Effect” means any of the following:  (a) a material adverse change in, or material adverse effect upon, the business, condition (financial or otherwise), operations, performance, properties or prospects of either:  (i) Borrower; or (ii) the Loan Parties taken as a whole; (b) a material impairment of the ability of either Borrower or the Loan Parties, taken as a whole, to perform their respective obligations under the Loan Documents; or (c) a material adverse effect upon:  (i) the legality, validity, binding effect or enforceability of any Loan Document to which any Loan Party is a party against either:  (A) Borrower; or (B) the Loan Parties taken as a whole; or (ii) the rights and remedies of Administrative Agent or any Lending Party under or in respect of any Loan Document.   “Maximum Rate” means, at any time, the maximum rate of non-usurious interest permitted by applicable Law.   “Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 102% of the Fronting Exposure of L/C Issuer   25 --------------------------------------------------------------------------------   with respect to Letters of Credit issued and outstanding at such time and (b) otherwise, an amount determined by the Administrative Agent and L/C Issuer in their sole discretion.   “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.   “Net Proceeds” means, in respect of any Disposition or Event of Loss, the proceeds in cash or Cash Equivalents received by Borrower or any Subsidiary thereof with respect to or on account of such Disposition or Event of Loss, net of:  (a) in the case of a Disposition, the direct costs of such Disposition then payable by the recipient of such proceeds, or, in the case of an Event of Loss, the direct costs of collecting insurance or other proceeds, in each case excluding amounts payable to Borrower or any Affiliate of Borrower; (b) sales, use and other taxes paid or payable by such recipient as a result thereof; and (c) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Debt secured by a Permitted Lien on the properties subject to such Disposition.   “Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 10.01 and (ii) has been approved by the Required Lenders.   “Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.   “Note” means any promissory note executed by Borrower in favor of a Lender pursuant to Section 2.11 in substantially the form of Exhibit E.   “Obligations” means (a) all advances, debts, liabilities, obligations, covenants and duties, including treasury management obligations, of any Loan Party to Administrative Agent or any Lending Party under or in respect of any Loan Document or otherwise, whether 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 Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, and (b) all Hedging Obligations.   “Organizational Documents” means:  (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction) of such Person; (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement of such Person; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization of such Person and any agreement, instrument, filing or notice with respect thereto filed in connection with such Person’s formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such Person.   26 --------------------------------------------------------------------------------   “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).   “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).   “Outstanding Amount” means:  (a) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of such Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.   “Participant” means any Person other than (i) a natural person, (ii) Borrower or any of Borrower’s Affiliates or (iii) any competitor of Borrower or any of its Subsidiaries or any of such Person’s Affiliates.   “Participation Interest” means a Credit Extension by way a purchase of a participation interest in Letters of Credit or L/C Obligations as provided in Section 2.03.   “PBGC” means the Pension Benefit Guaranty Corporation.   “Pension Plan” means any “employee pension benefit plan” (as that term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.   “Percentage Share” means, as to any Lender, its Working Capital Percentage Share or Floorplan Percentage Share, as applicable.   “Perfection Certificate” shall mean the Perfection Certificate substantially in the form of Exhibit A to the Security Agreement.   “Permitted Acquisition” means any Acquisition so long as:  (a) such Acquisition is undertaken in accordance with all applicable Laws; (b) no Default exists immediately prior to, or would exist immediately after, giving effect to such Acquisition; (c) in connection with such Acquisition, Borrower   27 --------------------------------------------------------------------------------   has obtained, effective written consent of the board of directors or equivalent governing body of the Person or business so acquired (the “Acquiree”) if required under applicable corporate/company law or the Borrower’s Organizational Documents; (d) the Acquiree (or the business unit or division of the Acquiree to be acquired) shall be engaged principally in the same business as Borrower or the Subsidiary of Borrower proposing to effect such Acquisition or a Related Business; (e) the aggregate cash and non-cash consideration to be paid by Borrower and any Subsidiary thereof (whether in one or a series of transactions) for such Acquisition does not exceed (i) 10% of Consolidated Total Assets for any one Acquisition if such Acquisition is of a Domestic Subsidiary or assets located within the U.S., (ii) 5% of Consolidated Total Assets for any one Acquisition if such Acquisition is of a Foreign Subsidiary or assets located outside the U.S., (iii) 10% of Consolidated Total Assets for all Acquisitions of Foreign Subsidiaries or assets located outside the U.S. in each fiscal year, or (iv) 20% of Consolidated Total Assets for all Acquisitions in each fiscal year; (f) upon the closing of such Acquisition in the case of a Permitted Material Acquisition, a Responsible Officer of Borrower delivers to Administrative Agent and Lenders:  (i) a certificate to the effect that each of clauses (a) through (e), inclusive, of this definition has been satisfied; (ii) a copy of the resolutions or consent required to be obtained by (c); (iii) a certificate detailing pro forma compliance with all financial covenants set forth in Section 6.12 for each of the Fiscal Periods which remain in such fiscal year following the consummation of such Acquisition; (iv) the consolidated earnings before interest, taxes, depreciation and amortization of the Loan Parties, including the Acquiree (or the business unit or division of the Acquiree to be acquired), must be positive on a pro forma basis for each of the Fiscal Periods which remain in such fiscal year following the consummation of such Acquisition; and (v) a three year financial forecast for the Acquiree; and (g) within 30 days after the closing of such Acquisition in the case of any other Acquisition that is not a Permitted Material Acquisition, a Responsible Officer of Borrower delivers to Administrative Agent and Lenders: (i) a certificate to the effect that each of clauses (a) through (e), inclusive, of this definition has been satisfied; and (ii) a copy of the resolutions or consent required to be obtained by (c).  For purposes this definition, any purchases of minority Equity Interests of a Subsidiary following the initial Acquisition of such Subsidiary will be deemed to be a series of transactions constituting a single Acquisition.   “Permitted Call Options” means any convertible bond hedge transactions, call options or capped call options relating to Borrower’s Equity Interests (regardless of whether settled in cash or in Equity Interests) that are purchased by Borrower substantially contemporaneously with the issuance of any Permitted Convertible Debt.   “Permitted Convertible Debt” means any Debt permitted by Section 7.03 that is convertible into Equity Interests of Borrower and/or cash in lieu thereof.   “Permitted Debt” mean any Debt permitted by Section 7.03.   “Permitted Discretion” shall mean the Administrative Agent’s commercially reasonable judgment, exercised in good faith in accordance with customary business practices for asset-based lending transactions; provided that any standard of eligibility or reserve established or modified by the Administrative Agent shall have a reasonable relationship to circumstances, conditions, events or contingencies which are the basis for such standard of eligibility or reserve, as reasonably determined, without duplication and for so long as they continue, by the Administrative Agent in good faith.   “Permitted Floorplan Debt” means the floorplan Debt permitted pursuant to Section 7.03(i).   28 --------------------------------------------------------------------------------   “Permitted Liens” has the meaning ascribed thereto in Section 7.01.   “Permitted Material Acquisition” means an Acquisition that is otherwise a Permitted Acquisition under clauses (a) through (f) of the definition thereof and which the aggregate cash and non-cash consideration to be paid by Borrower and any Subsidiary thereof (whether in one or a series of transactions) for such Acquisition exceeds 5% of the Borrower’s Consolidated Total Assets.   “Permitted Shortline Debt” means floorplan facilities with short line manufacturers, or facilities arranged by short line manufacturers for their products and services with third party financing sources,  in the ordinary course of business.   “Permitted Subordinated Debt” means any Debt that has been subordinated to the Obligations on terms and conditions, and pursuant to documents, satisfactory to Administrative Agent and Required Lenders.   “Permitted Warrants” means any call options relating to Borrower’s Equity Interests (regardless of whether settled in cash or in Equity Interests) that are sold by Borrower substantially contemporaneously with the issuance of any Permitted Convertible Debt.   “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.   “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.   “Recipient” means (a) the Administrative Agent, (b) any Lender and (c) L/C Issuer, as applicable.   “Register” means a register for the recordation of the names and addresses of Lenders and, as applicable, the Commitments of, and Outstanding Amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time.   “Related Business” shall mean any business that is the same, similar or otherwise reasonably related, ancillary or complementary to the businesses of the Borrower and its Subsidiaries on the Closing Date.   “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, members, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates, and specifically includes, in the case of Wells Fargo, Wells Fargo in its capacity as Administrative Agent, Arranger, Swing Line Lender and L/C Issuer.   “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.   29 --------------------------------------------------------------------------------   “Request for Credit Extension” means:  (a) with respect to a Borrowing, conversion or continuation of Working Capital Loans or Floorplan Loans, a Loan Notice; (b) with respect to an L/C Credit Extension, an L/C Application; and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.   “Required Floorplan Lenders” means, at any time:  (a) three or more Floorplan Lenders holding in excess of 50.00% of the then Total Floorplan Outstandings; or (b) if there are no Total Floorplan Outstandings, three or more Floorplan Lenders holding in excess of 50.00% of the Aggregate Floorplan Commitments; provided that the Floorplan Commitment of, and the portion of the Total Floorplan Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Floorplan Lenders. provided further, at any time there is only one Floorplan Lender, “Required Floorplan Lenders” shall mean the sole Floorplan Lender.   “Required Lenders” means:  (a) at any time that Loans are outstanding and the Aggregate Working Capital Commitments and Aggregate Floorplan Commitments are in effect, three or more Lenders holding in excess of 50.00% of the sum of:  (i) the Aggregate Working Capital Commitments; plus (ii) the Aggregate Floorplan Commitments; (b) at any time that Loans are outstanding but the Aggregate Working Capital Commitments have been terminated, three or more Lenders holding in excess of 50.00% of the aggregate Outstanding Amount of the Loans; (c) at any time that Loans are outstanding but the Aggregate Floorplan Commitments have been terminated, three or more Lenders holding in excess of 50.00% of the aggregate Outstanding Amount of the Loans; (d) at any time on or prior to the Closing Date that no Loans are outstanding, three or more Lenders holding in excess of 50.00% of the Aggregate Commitments; and (e) at any time following the Closing Date that no Loans are outstanding, three or more Lenders holding in excess of 50.00% of the Aggregate Commitments; provided that the Working Capital Commitment and/or Floorplan Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.   “Required Working Capital Lenders” means, at any time:  (a) three or more Working Capital Lenders holding in excess of 50.00% of the then Total Working Capital Outstandings; or (b) if there are no Total Working Capital Outstandings, three or more Working Capital Lenders holding in excess of 50.00% of the Aggregate Working Capital Commitments; provided that the Working Capital Commitment of, and the portion of the Total Working Capital Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Working Capital Lenders.   “Responsible Officer” means:  (a) with respect to the Borrower in connection with any Request for Credit Extension, any Compliance Certificate or any other certificate or notice pertaining to any financial information required to be delivery by Borrower hereunder, the chief financial officer, treasurer or controller of Borrower; and (b) otherwise, with respect to Borrower or any other Loan Party, the chief executive officer, president, chief financial officer, vice president of finance, treasurer or controller of such Person.   “Restricted Payment” means, as to any Person, (a) any dividend or other distribution by such Person (whether in cash, securities or other property) with respect to any Equity Interests of such Person, (b) any payment (whether in cash, securities or other property), including any sinking fund or similar   30 --------------------------------------------------------------------------------   deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, (c) any payment of principal or interest or any purchase, redemption, retirement, acquisition or defeasance with respect to any Debt of such Person, which is subordinated to the payment of the Obligation pursuant to a Subordination Agreement acceptable to the Administrative Agent, in violation of any subordination provisions applicable thereto (it being acknowledged that payments that are not restricted by the subordination provisions applicable thereto are not Restricted Payments), (d) the acquisition for value by such Person of any Equity Interests issued by such Person or any other Person that Controls such Person and (e) with respect to clauses (a) through (d), any transaction that has a substantially similar effect; provided that payments in respect of the purchase of Permitted Call Options shall not constitute Restricted Payments.   “Revaluation Date” means each of the following:  (a) each date a Loan is made; (b) each date a Eurodollar Rate Loan is continued, or a Base Rate Loan is converted to a Eurodollar Rate Loan, pursuant to Section 2.02; (c) each date a Floorplan Loan is made to reimburse drawing under a Letter of Credit or a Participation Interest is required to be purchased in outstanding L/C Obligations pursuant to the terms of Section 2.03; (d) the last Business Day of each calendar month; and (e) such additional dates as the Administrative Agent or the Required Lenders shall specify.   “Same Day Funds” means (a) with respect to disbursements and payments in Dollars, same day funds, and (b) with respect to disbursements and payments in a Foreign Currency, same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Foreign Currency.   “Secured Parties” shall have the meaning assigned to such term in any applicable Collateral Document.   “Security Documents” means, collectively:  (a) the Security Agreement, dated as of the Closing Date, executed by Borrower and Guarantors in favor of Administrative Agent, substantially in the form of Exhibit G; (b) each deposit account control agreement or securities account control agreement, each in form and substance satisfactory to the Administrative Agent; (c) with respect to each Foreign Subsidiary of a Loan Party, a Foreign Pledge Agreement, (d) each intellectual property assignment or security agreement, each in form and substance satisfactory to the Administrative Agent; and (e) any similar document executed thereafter pursuant to the terms hereof or otherwise in connection herewith after the Closing Date.   “Solvent” means, as to any Person at any time, that:  (a) the fair value of the property of such Person on a going concern basis is greater than the amount of such Person’s liabilities (including contingent liabilities), as such value is established and such liabilities are evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or any similar state statute applicable to Borrower or any Subsidiary thereof; (b) the present fair salable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including contingent liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature;   31 --------------------------------------------------------------------------------   and (e) 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 unreasonably small capital.   “Specified Lender” means, at any time, any Lender:  (a) that has requested compensation under Section 3.04 and has not rescinded such request within five Business Days of the making thereof; (b) to whom Borrower must pay an additional amount (or on whose behalf Borrower must pay an additional amount to a Governmental Authority) pursuant to Section 3.01; (c) that gives a notice pursuant to Section 3.02; (d) that is a Defaulting Lender; or (e) that is a Lender that may, but does not, provide its consent to any matter as to which Required Lenders, Required Working Capital Lenders or Required Floorplan Lenders, as applicable, may give and have given their consent pursuant to Section 10.01; or (f) that is the sole Lender that may but does not provide its consent to any matter as to which all other Lenders may give and have given their consent pursuant to Section 10.01.   “Specified Materials” means, collectively, all materials or information provided by or on behalf of Borrower or any Subsidiary thereof, as well as documents and other written materials relating to Borrower, the Loan Parties or any of their respective Subsidiaries or Affiliates or any other materials or matters relating to the Loan Documents (including any amendments or waivers of the terms thereof or supplements thereto).   “Spot Rate” means, for any currency, the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in a Foreign Currency.   “Subordinated Creditor” means each Person now or in the future who agrees to subordinate indebtedness of the Borrower held by that Person to the payment of the Obligations.   “Subordination Agreement” means a subordination agreement executed by a Subordinated Creditor in favor of and acceptable to the Administrative Agent and Lenders and acknowledged by the Borrower.   “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person, provided that Subsidiaries of Borrower shall be limited to such entities whose financial statements are consolidated with the Borrower’s financial statements in accordance with GAAP or with respect to which more than 50.00% of the Equity Interests therein are   32 --------------------------------------------------------------------------------   owned directly or indirectly by Borrower.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Borrower.   “Subsidiary Guarantor” has the meaning ascribed thereto in Section 10.14(a).   “Subsidiary Guarantor Subordinated Debt” has the meaning ascribed thereto in Section 10.14(i).   “Subsidiary Guarantor Subordinated Debt Payments” has the meaning ascribed thereto in Section 10.14(i).   “Supermajority Floorplan Lenders” means, at any time:  (a) three or more Floorplan Lenders holding in excess of 66.67% of the then Total Floorplan Outstandings; or (b) if there are no Total Floorplan Outstandings, three or more Floorplan Lenders holding in excess of 66.67% of the Aggregate Floorplan Commitments; provided that the Floorplan Commitment of, and the portion of the Total Floorplan Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Floorplan Lenders. provided further, at any time there is only one Floorplan Lender, “Required Floorplan Lenders” shall mean the sole Floorplan Lender.   “Supermajority Working Capital Lenders” means, at any time:  (a) three or more Working Capital Lenders holding in excess of 66.67% of the then Total Working Capital Outstandings; or (b) if there are no Total Working Capital Outstandings, three or more Working Capital Lenders holding in excess of 66.67% of the Aggregate Working Capital Commitments; provided that the Working Capital Commitment of, and the portion of the Total Working Capital Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Working Capital Lenders.   “Swap Contract” means:  (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement; and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement including any such obligations or liabilities under any such master agreement (in each case, together with any related schedules).   “Swap Obligations” means all liabilities and obligations of any Loan Party to Administrative Agent or any Lending Party under a swap contract applicable to Borrowings advanced under the Credit Agreement.   33 --------------------------------------------------------------------------------   “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts:  (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s); and (b) for any date prior to the date referenced in clause (a) of this definition, the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).   “Swing Line” means the revolving credit facility made available by Swing Line Lender pursuant to Section 2.04.   “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.   “Swing Line Lender” means, at any time, the provider of the Swing Line hereunder (which, initially, shall be Wells Fargo).   “Swing Line Loan” has the meaning ascribed thereto in Section 2.04(a).   “Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit F.   “Swing Line Sublimit” means an amount equal to the lesser of:  (a) $15,000,000; and (b) the Aggregate Floorplan Commitments.  The Swing Line Sublimit is a part of, but is not in addition to, the Aggregate Floorplan Commitments.   “Synthetic Lease Obligation” means the monetary obligation of a Person under either:  (a) a so-called synthetic, off-balance sheet or tax retention lease; or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).   “Target Settlement Day” means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.   “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.   “Threshold Amount” means $10,000,000.00.   “Total Floorplan Outstandings” means, at any time, the sum of:  (a) Outstanding Amount of all Floorplan Loans; plus (b) the Outstanding Amount of all Swing Line Loans; plus (c) the Outstanding Amount of all Floorplan L/C Obligations.   34 --------------------------------------------------------------------------------   “Total Outstandings” means, at any time, the sum of:  (a) Total Working Capital Outstandings; plus (b) the Total Floorplan Outstandings.   “Total Working Capital Outstandings” means, at any time, the sum of:  (a) the aggregate Outstanding Amount of all Working Capital Loans; plus (b) the Outstanding Amount of all Working Capital L/C Obligations.   “Transactions” means on the Closing Date (i) the execution, delivery and performance by each Loan Party of each Loan Document to which it is a party, (ii) the borrowing of the Loans and the issuance of the Letters of Credit, and (iii) the use of the proceeds of the Loans and the Letters of Credit.   “Transportation Solutions” means Transportation Solutions LLC, a North Dakota limited liability company.   “Treasury Management Service Documents” means, at any time, the Master Agreement for Treasury Management Services between Borrower and Wells Fargo, the related Acceptance of Services, Service Descriptions, and any other documents or agreements now in effect or hereafter entered into with respect to treasury management services provided to Borrower by Wells Fargo.   “Type” means, with respect to any Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.   “Uniform Commercial Code” means the Uniform Commercial Code as in effect in any applicable jurisdiction.   “United States” and “U.S.” mean the United States of America.   “U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.   “U.S. Tax Compliance Certificate” has the meaning assigned to such term in paragraph (f) of Section 3.01.   “Unreimbursed Amount” means, with respect to any Letter of Credit, any amount drawn thereunder that Borrower has failed to reimburse to L/C Issuer by 11:00 a.m. on the related Honor Date.   “Wells Fargo” means WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association.   “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.   “Withholding Agent” means the Borrower and the Administrative Agent.   35 --------------------------------------------------------------------------------   “Working Capital Availability” means, at any time, the lesser of (a) the Aggregate Working Capital Commitments at such time or (b) the Working Capital Borrowing Base at such time.   “Working Capital Availability Period” means the period from the Closing Date to the Working Capital Maturity Date.   “Working Capital Borrowing” means a borrowing consisting of simultaneous Working Capital Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each Working Capital Lender pursuant to Section 2.01(a).   “Working Capital Borrowing Base” means as of any date of calculation, an amount, as set forth on the most current Borrowing Base Certificate delivered to the Administrative Agent, equal to the sum of:   (a)                                  80% of Eligible Accounts; plus   (b)                                 85% of the net book value of Eligible Rental Equipment; plus   (c)                                  75% of (i) Eligible Parts and Attachments Inventory minus (ii) the CNH Parts Reserve; plus   (d)                                 50% of Eligible Work in Process Inventory; minus   (e)                                  the Working Capital Borrowing Base Reserve.   The Borrower, Administrative Agent and the Lenders acknowledge and agree that (i) the advance rates set forth in this definition are solely to establish the parameters for Availability, and (ii) this definition does not constitute nor shall it be deemed to constitute an express or implied representation or determination by Lenders that the recovery in a forced liquidation scenario would be equal to the advance rates established herein.   “Working Capital Borrowing Base Reserve” means, as of any date of determination, such amounts (expressed as either a specified amount or as a percentage of a specified category or item) as the Administrative Agent may from time to time establish and adjust in reducing Working Capital Availability acting in its Permitted Discretion (a) to the extent to reasonably reflect events, conditions, contingencies or risks that materially adversely affect (i) the value of the Collateral consisting of that which is taken into account in determining the Working Capital Borrowing Base, or (ii) the security interests and other rights of the Administrative Agent or Lenders in such Collateral (including the enforceability, perfection and priority thereof), or (b) to the extent to reasonably reflect any collateral report or financial information furnished by or on behalf of the Borrower to the Lenders that is or was incomplete, inaccurate or misleading in any material respect that affects such Collateral’s value that has not been cured after 10 days prior written notice thereof to the Borrower, or (c) in respect of any Default or an Event of Default during the continuation thereof; provided that (x) any such required reserves shall continue only for so long as the events, conditions, contingencies or risks giving rise thereto continue, (y) the Administrative Agent shall give Borrower the lesser of 45 days notice (or if 45 days notice would cause such reserve not to be reflected on the second Borrowing Base Certificate required to be delivered   36 --------------------------------------------------------------------------------   after the date thereof, the number of days which would cause such reserve to be so reflected) of any increase in any such reserves under clause (a)(i), and (z) in the case of reserves required under clause (a)(i), upon delivery of notice to Borrower, as provided above, the Administrative Agent shall be available to discuss the proposed reserve, and Borrower may take such action as may be required so that the event, condition or matter that is the basis for such reserve no longer exists in a manner and to the extent reasonably satisfactory to the Administrative Agent in the exercise of its Permitted Discretion.   “Working Capital Commitment” means, as to each Working Capital Lender at any time any determination thereof is to be made, its obligation to do the following pursuant to the terms hereof:  (a) make Working Capital Loans to Borrower; and (b) purchase participations in Working Capital L/C Obligations; all in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender became a party hereto or pursuant to the applicable Additional Commitment Documentation, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.   “Working Capital Exposure” means, as to any Working Capital Lender at any time, the aggregate principal amount at such time of its outstanding Working Capital Loans and such Working Capital Lender’s participation in Working Capital L/C Obligations at such time.   “Working Capital L/C Obligations” means, at any time, the sum of:  (a) the aggregate amount available to be drawn under all outstanding Working Capital Letters of Credit; plus (b) the aggregate of all Unreimbursed Amounts, including all L/C Borrowings, with respect to Working Capital Letters of Credit.  For purposes of computing the amount available to be drawn under any Working Capital Letter of Credit, the amount of such Working Capital Letter of Credit shall be determined in accordance with Section 1.02(i).  For all purposes of this Agreement, if at any time of determination a Working Capital Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Working Capital Letter of Credit shall be deemed to be “outstanding” in an amount equal to the amount remaining available to be drawn.   “Working Capital L/C Sublimit” means an amount equal to $5,000,000.  The Working Capital L/C Sublimit is part of, and not in addition to, the Aggregate Working Capital Commitments.   “Working Capital Lender” means, collectively, (a) initially, each Lender designated on Schedule 2.01 as a “Working Capital Lender” and (b) each Lender that assumes a Working Capital Commitment pursuant to an Assignment and Assumption or pursuant to the applicable Additional Commitment Documentation or which otherwise holds a Working Capital Commitment, a Working Capital Loan or a participation in a Working Capital Letter of Credit or an L/C Borrowing in respect of a Working Capital Letter of Credit.   “Working Capital Letter of Credit” means a Letter of Credit issued under Section 2.03(a)(i).   “Working Capital Loan” has the meaning ascribed thereto in Section  2.01(a).   “Working Capital Maturity Date” means the earliest of:  (a) March 30, 2016 or if applicable, any extension thereof pursuant to Section 2.16; (b) the date of the termination of the Aggregate Working   37 --------------------------------------------------------------------------------   Capital Commitments pursuant to Section 2.06; and (c) the date of the termination of the Aggregate Working Capital Commitments and of the obligation of L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.   “Working Capital Percentage Share” means as to any Working Capital Lender at any time, the percentage (expressed as a decimal carried out to the ninth decimal place) of the Aggregate Working Capital Commitments represented by such Lender’s Working Capital Commitment at such time; provided that, if the commitment of each Working Capital Lender to make Working Capital Loans and the obligation of L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Working Capital Commitments have expired, then the Working Capital Percentage Share of each Working Capital Lender shall be determined based upon such Lender’s Working Capital Percentage Share most recently in effect, giving effect to any subsequent assignments.  The initial Working Capital Percentage Share of each Working Capital Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or the Additional Commitment Documentation pursuant to which such Lender became a party hereto, as applicable.   When used in this Agreement, each of the following terms shall have the respective meaning ascribed thereto by the Uniform Commercial Code:  “Account”, “Account Debtor”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Document”, “Equipment”, “General Intangibles”, “Goods”, “Instrument”, “Inventory”, “Investment Property”, “Letter of Credit Right”, “Proceeds”, “Record”, “Secured Party”, “Security”, “Security Certificate”, and “Supporting Obligation”.   SECTION 1.02                               CERTAIN RULES OF CONSTRUCTION.   (a)                                  General Rules.   (i)                                     Unless the context otherwise clearly requires, the meaning of a defined term is applicable equally to the singular and plural forms thereof.   (ii)                                  The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.   (iii)                               The word “documents” includes instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.   (iv)                              The words “include” and “including” are not limiting and the word “or” is not exclusive.   (v)                                 In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”   (vi)                              Unless the context otherwise clearly requires, the words “property,” “properties,” “asset” and “assets” refer to both personal property (whether tangible or intangible) and real property.   38 --------------------------------------------------------------------------------   (vii)                           Unless the context otherwise clearly requires:  (A) Article, Section, subsection, clause, Schedule and Exhibit references are to this Agreement; (B) references to documents (including this Agreement) shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document; (C) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation; and (D) references to any Person shall be deemed to include such Person’s successors and assigns.   (b)                                  Time and Fiscal Year References.  Unless the context otherwise clearly requires:  (i) all references herein to times of day shall be references to Pacific time (daylight or standard, as applicable); and (ii) all references herein to “fiscal year” refer to the fiscal year of Borrower.   (c)                                  Captions.  The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.   (d)                                  Cumulative Nature of Certain Provisions.  This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall be performed in accordance with their respective terms.   (e)                                  No Construction Against Any Party.  This Agreement and the other Loan Documents are the result of negotiations among, and have been reviewed by counsel to, the Loan Parties, Administrative Agent and Lending Parties and are the products of all parties.  Accordingly, they shall not be construed against Administrative Agent or any Lending Party merely because of the involvement of any or all of the preceding Persons in their preparation.   (f)                                    GAAP.  Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or Required Lenders shall so request, Administrative Agent, Lending Parties and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Required Lenders); provided that, until so amended:  (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein; and (ii) Borrower shall provide to Administrative Agent and Lending Parties financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.   (g)                                 Rounding.  Any financial ratios required to be maintained by the Loan Parties or any of them pursuant to the Loan Documents shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number using the common — or symmetric arithmetic — method of rounding (in other words, rounding-up if there is no nearest number).   39 --------------------------------------------------------------------------------   (h)                                 Computations of Certain Financial Covenants.  For purposes of computing the Consolidated Fixed Charge Coverage Ratio as of any date, following an Acquisition, Borrower shall compute components of such ratios, financial results (without duplication of amounts) attributable to any business or assets the subject of any such Acquisition by Borrower or any Subsidiary thereof effected during such period in the same manner that Borrower accounts for such Acquisition for purposes of complying with applicable securities laws and regulations (including, if applicable, pursuant to SX Rule 3-05).   (i)                                    Calculations with Respect to Letters of Credit.  Unless otherwise specified herein the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided that, with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.   (j)                                    Documents Executed by Responsible Officers.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate or other organizational action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.   SECTION 1.03              EXCHANGE RATES; CURRENCY EQUIVALENTS.   (a)                                  The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating the Dollar Equivalents of Credit Extensions and amounts outstanding hereunder denominated in Foreign Currencies.  Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur.  Except for purposes of financial statements delivered by the Borrower hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency for purposes of the Loan Documents shall be such Dollar Equivalent as so determined by the Administrative Agent.   (b)                                 Wherever in this Agreement, in connection with any Credit Extension, any conversion, continuation or prepayment of a Loan or any renewal of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Credit Extension or Loan is denominated in a Foreign Currency, such amount shall be the relevant Foreign Currency Equivalent of such Dollar amount (rounded to the nearest 1,000 units of such Foreign Currency), as determined by the Administrative Agent.   (c)                                  Wherever in this Agreement an amount, such as a minimum or maximum limitation on Debt permitted to be incurred or Investments permitted to be made hereunder, is expressed in Dollars, it shall be deemed to refer to the Dollar Equivalent thereof.   (d)                                 Determinations by the Administrative Agent pursuant to this Section shall be conclusive absent manifest error.   40 --------------------------------------------------------------------------------   ARTICLE II CREDIT EXTENSIONS   SECTION 2.01                               WORKING CAPITAL LOANS; FLOORPLAN LOANS.   Subject to the terms and conditions set forth herein:   (a)                                  Working Capital Loans.  Each Working Capital Lender severally agrees to make loans (each such loan, a “Working Capital Loan”) to Borrower, from time to time on any Business Day during the Working Capital Availability Period, in an aggregate outstanding amount not to exceed at any time such Lender’s Working Capital Commitment, provided that, after giving effect to any Working Capital Borrowing:  (i) the Total Working Capital Outstandings shall not exceed Working Capital Availability; and (ii) the sum of (x) aggregate Outstanding Amount of the Working Capital Loans of any Working Capital Lender, plus (y) such Lender’s Working Capital Percentage Share, multiplied by the Outstanding Amount of all Working Capital L/C Obligations shall not exceed such Lender’s Working Capital Commitment.  Within the limits of each Working Capital Lender’s Working Capital Commitment, and subject to the other terms and conditions hereof, Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01.  Working Capital Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.   (b)                                  Floorplan Loans.  Each Floorplan Lender severally agrees to make loans (each such loan, a “Floorplan Loan”) to Borrower, from time to time on any Business Day during the Floorplan Availability Period, in an aggregate outstanding amount not to exceed at any time such Lender’s Floorplan Commitment, provided that, after giving effect to any Floorplan Borrowing:  (i) the Total Floorplan Outstandings shall not exceed Floorplan Availability; and (ii) the sum of (x) aggregate Outstanding Amount of the Floorplan Loans of any Floorplan Lender plus (y) such Lender’s Floorplan Percentage Share, multiplied by the Outstanding Amount of all Swing Line Loans and Floorplan L/C Obligations shall not exceed such Lender’s Floorplan Commitment.  Within the limits of each Floorplan Lender’s Floorplan Commitment, and subject to the other terms and conditions hereof, Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01.  Floorplan Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.   (c)                                  Loans Generally.  Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Working Capital Commitments or Floorplan Commitments, provided, however, that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).   SECTION 2.02                               PROCEDURES FOR BORROWING.   (a)                                  Notices of Borrowing, Conversion and Continuation.  Each Borrowing (other than a Swing Line Borrowing), each conversion of Loans from one Type to the other and each continuation of Eurodollar Rate Loans shall be made upon Borrower’s irrevocable notice to Administrative Agent, which may, subject to the provisions of Section 10.02(b) and Section 10.02(d), be given by telephone or by approved electronic communication.  Each such notice must be received by Administrative Agent not   41 --------------------------------------------------------------------------------   later than 11:00 a.m.:  (i) three Business Days prior to the requested date of any Borrowing (other than a Swing Line Borrowing) of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans; and (ii) one Business Day prior to the requested date of any Borrowing (other than a Swing Line Borrowing) of Base Rate Loans.  Notwithstanding anything to the contrary contained herein, but subject to the provisions of Section 10.02(b) and Section 10.02(d), any telephonic notice or other electronic communication by Borrower pursuant to this Section 2.02(a) may be given by an individual who has been authorized in writing to do so by an appropriate Responsible Officer of Borrower.  Each such telephonic notice or other electronic communication must be confirmed promptly by delivery to Administrative Agent of a written Loan Notice, appropriately completed and signed by an appropriate Responsible Officer of Borrower.   (b)                                  Amount of Borrowing, Conversion or Continuation.  Each Borrowing (other than a Swing Line Borrowing) of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000.00 or a whole multiple of $500,000.00 in excess thereof.  Except as provided in Sections 2.03(c) and Section 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000.00 or a whole multiple of $100,000.00 in excess thereof.   (c)                                  Loan Notices Generally.  Each Loan Notice (whether telephonic or written) shall specify:  (i) whether Borrower is requesting:  (A) a Working Capital Borrowing or a Floorplan Borrowing; (B) a conversion of outstanding Loans from one Type to the other; or (C) a continuation of Eurodollar Rate Loans; (ii) the requested date (which shall be a Business Day) of such Borrowing, conversion or continuation, as the case may be; (iii) the principal amount of the Loans to be borrowed, converted or continued; (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted; and (v) if applicable, the duration of the Interest Period with respect thereto.  If Borrower fails to specify a Type of Loan in a Loan Notice or if Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loan(s) shall be made as, or converted to, Base Rate Loans using the Daily LIBOR Rate.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.  If Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.   (d)                                  Procedures Concerning the Making of Loans.  Following receipt of a Loan Notice, Administrative Agent shall promptly notify each applicable Lender of the amount of its Applicable Percentage Share of the requested Borrowings.  If Borrower does not timely provide notice of a conversion or continuation, then Administrative Agent shall notify each applicable Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  Each Lender shall make the amount of its applicable Loan available to Administrative Agent in immediately available funds at Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), Administrative Agent shall make all funds so received available to Borrower in like funds as received by Administrative Agent either by:  (i) crediting the account of Borrower on the books of Wells Fargo with the amount of such funds; or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) Administrative Agent by Borrower; provided that, if, on the date the Loan Notice with respect to such Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the proceeds   42 --------------------------------------------------------------------------------   of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings and, second, to Borrower as provided in this subsection.   (e)                                  Special Provisions Applicable to Continuation or Conversions of Eurodollar Rate Loans.  Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of an Event of Default:  (i) no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of Required Lenders; and (ii) Required Working Capital Lenders may demand that any or all of the then outstanding Working Capital Loans that are Eurodollar Rate Loans be converted immediately to Base Rate Loans, whereupon Borrower shall pay any amounts due under Section 3.05 in accordance with the terms thereof due to any such conversion.   (f)                                    Notification of Interest Rate.  Administrative Agent shall promptly notify Borrower and the applicable Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.   (g)                                 Limitation on Interest Periods.  After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than five (5) Interest Periods in effect with respect to Working Capital Loans and Floorplan Loans.   SECTION 2.03                               LETTERS OF CREDIT.   (a)                                  Letter of Credit Subfacilities.  Subject to the terms and conditions set forth herein:   (i)                                     L/C Issuer agrees, in reliance upon the agreements of the Working Capital Lenders set forth in this Section 2.03:  (A) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Working Capital Letters of Credit for the account of Borrower, and to amend or extend Working Capital Letters of Credit previously issued by it, in accordance with subsection (b) of this Section 2.03; and (B) to honor drawings under the Working Capital Letters of Credit.   (ii)                                  Each Working Capital Lender severally agrees to participate in Working Capital Letters of Credit issued by L/C Issuer and any drawings thereunder; provided that, after giving effect to any L/C Credit Extension with respect to any Working Capital Letter of Credit:  (A) the Total Working Capital Outstandings shall not exceed Working Capital Availability; (B) the sum of (x) aggregate Outstanding Amount of the Working Capital Loans of any Working Capital Lender, plus (y) an amount equal to such Lender’s Working Capital Percentage Share, multiplied by the Outstanding Amount of all Working Capital L/C Obligations shall not exceed such Lender’s Working Capital Commitment; or (C) the Outstanding Amount of the Working Capital L/C Obligations shall not exceed the Working Capital L/C Sublimit.  Each request by Borrower for the issuance or amendment of a Working Capital Letter of Credit shall be deemed to be a representation by Borrower that the requested L/C Credit Extension complies with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to the terms and conditions hereof, Borrower’s ability to obtain Working Capital Letters of Credit shall be fully revolving, and, accordingly, Borrower may, during the foregoing period, obtain Working   43 --------------------------------------------------------------------------------   Capital Letters of Credit to replace Working Capital Letters of Credit that have expired or that have been drawn upon and reimbursed.   (iii)                               Subject to Section 2.03(b)(iv), L/C Issuer shall not issue any Working Capital Letter of Credit, if:  (A) the expiry date of such requested Working Capital Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless Required Working Capital Lenders shall have approved such expiry date; or (B) the expiry date of such requested Working Capital Letter of Credit would occur after the L/C Expiration Date, unless all Working Capital Lenders shall have approved such expiry date.   (iv)                            L/C Issuer agrees, in reliance upon the agreements of the Floorplan Lenders set forth in this Section 2.03:  (A) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Floorplan Letters of Credit for the account of Borrower, and to amend or extend Floorplan Letters of Credit previously issued by it, in accordance with subsection (b) of this Section 2.03; and (B) to honor drawings under the Floorplan Letters of Credit.  All Existing Letters of Credit shall be deemed to have been issued pursuant to this Section 2.03(a)(iv) and, from and after the Closing Date, shall be subject to and governed by the terms and conditions hereof.   (v)                                 Each Floorplan Lender severally agrees to participate in Floorplan Letters of Credit issued by L/C Issuer and any drawings thereunder; provided that, after giving effect to any L/C Credit Extension with respect to any Floorplan Letter of Credit:  (A) the Total Floorplan Outstandings shall not exceed Floorplan Availability; (B) the sum of (x) aggregate Outstanding Amount of the Floorplan Loans of any Floorplan Lender, plus (y) an amount equal to such Lender’s Floorplan Percentage Share, multiplied by the Outstanding Amount of all Floorplan L/C Obligations shall not exceed such Lender’s Floorplan Commitment; or (C) the Outstanding Amount of the Floorplan L/C Obligations shall not exceed the Floorplan L/C Sublimit.  Each request by Borrower for the issuance or amendment of a Floorplan Letter of Credit shall be deemed to be a representation by Borrower that the requested L/C Credit Extension complies with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to the terms and conditions hereof, Borrower’s ability to obtain Floorplan Letters of Credit shall be fully revolving, and, accordingly, Borrower may, during the foregoing period, obtain Floorplan Letters of Credit to replace Floorplan Letters of Credit that have expired or that have been drawn upon and reimbursed.   (vi)                              Subject to Section 2.03(b)(iv), L/C Issuer shall not issue any Floorplan Letter of Credit, if:  (A) the expiry date of such requested Floorplan Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless Required Floorplan Lenders shall have approved such expiry date; or (B) the expiry date of such requested Floorplan Letter of Credit would occur after the L/C Expiration Date, unless all Floorplan Lenders shall have approved such expiry date.   (vii)                           L/C Issuer shall not have any obligation to issue a Letter of Credit if:   (A)                              any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain L/C Issuer from issuing such   44 --------------------------------------------------------------------------------   Letter of Credit, or any Law applicable to L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over L/C Issuer shall prohibit, or request that L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon L/C Issuer any unreimbursed loss, cost or expense that was not applicable on the Closing Date and which L/C Issuer in good faith deems material to it;   (B)                                the issuance of such Letter of Credit would violate one or more policies of L/C Issuer;   (C)                                such Letter of Credit:  (1) if a Floorplan Letter of Credit, is to be denominated in a currency other than Dollars or Euros; (2) if a Working Capital Letter of Credit, is to be denominated in a currency other than Dollars; or (3) is a commercial letter of credit;   (D)                               with respect to Working Capital Letters of Credit, any Working Capital Lender is in default of its obligation to fund under Section 2.03(d) or any Working Capital Lender is at such time a Defaulting Lender hereunder, unless the Fronting Exposure with respect to such Defaulting Lender has been reallocated pursuant to Section 3.08(a) or L/C Issuer has entered into satisfactory arrangements with Borrower or such Working Capital Lender to eliminate L/C Issuer’s risk with respect to such Lender;   (E)                                 with respect to Floorplan Letters of Credit, any Floorplan Lender is in default of its obligation to fund under Section 2.03(c) or any Floorplan Lender is at such time a Defaulting Lender hereunder, unless the Fronting Exposure with respect to such Defaulting Lender has been reallocated pursuant to Section 3.08(a) or L/C Issuer has entered into satisfactory arrangements with Borrower or such Floorplan Lender to eliminate L/C Issuer’s risk with respect to such Lender; or   (F)                                 unless specifically provided for in this Agreement, such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.   (v)                                 L/C Issuer shall not amend any Letter of Credit if L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.   (vi)                              L/C Issuer shall not have any obligation to amend any Letter of Credit if:   (A) L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof; or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.   45 --------------------------------------------------------------------------------   (vii)                           L/C Issuer shall act on behalf of all Working Capital Lenders with respect to any Working Capital Letter of Credit issued by it and the documents associated therewith, all Floorplan Lenders with respect to any Floorplan Letters of Credit issued by it and the documents associated therewith, and L/C Issuer shall have all of the benefits and immunities:  (A) provided to Administrative Agent in Article IX with respect to any acts taken or omissions suffered by L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included L/C Issuer with respect to such acts or omissions; and (B) as additionally provided herein with respect to L/C Issuer.   (b)                                 Procedures for Issuance and Amendment of Letters of Credit; Automatic Extensions of Letters of Credit.   (i)                                     Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to L/C Issuer (with a copy to Administrative Agent) in the form of an L/C Application, appropriately completed and signed by a Responsible Officer of Borrower.  Such L/C Application must be received by L/C Issuer and Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as may be agreed to by each of Administrative Agent and L/C Issuer, each in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to L/C Issuer:  (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) whether such Letter of Credit is to be a Working Capital Letter of Credit or a Floorplan Letter of Credit; and (H) such other matters as L/C Issuer may require.  In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to L/C Issuer:  (1) the Letter of Credit to be amended; (2) the proposed date of the amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as L/C Issuer may require.  Additionally, Borrower shall furnish to L/C Issuer and Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as L/C Issuer or Administrative Agent may require.   (ii)                                  Promptly after receipt of any L/C Application at the address provided for pursuant to Section 10.02 for receiving L/C Applications and related correspondence, L/C Issuer will confirm with Administrative Agent (by telephone or in writing) that Administrative Agent has received a copy of such L/C Application from Borrower and, if not, L/C Issuer will provide Administrative Agent with a copy thereof.  Unless L/C Issuer has received written notice from any Floorplan Lender or Working Capital Lender, as applicable, Administrative Agent or any Loan Party at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit that one or more applicable conditions in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, L/C Issuer shall, on the requested date, issue the Letter of Credit requested by Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with L/C Issuer’s usual and customary business   46 --------------------------------------------------------------------------------   practices.  Immediately upon the issuance of each Floorplan Letter of Credit, each Floorplan Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from L/C Issuer a risk participation in such Floorplan Letter of Credit equal to such Lender’s Floorplan Percentage Share multiplied by the face amount of such Floorplan Letter of Credit.  Immediately upon the issuance of each Working Capital Letter of Credit, each Working Capital Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from L/C Issuer a risk participation in such Working Capital Letter of Credit equal to such Lender’s Working Capital Percentage Share multiplied by the face amount of such Working Capital Letter of Credit.   (iii)                               Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, L/C Issuer will also deliver to Borrower and Administrative Agent a true and complete copy of such Letter of Credit or amendment.   (iv)                              If Borrower specifically requests in any applicable L/C Application, L/C Issuer may issue an Automatic Extension Letter of Credit.  Unless otherwise directed by L/C Issuer, Borrower shall not be required to make a specific request to L/C Issuer for any such extension.  Once an Automatic Extension Letter of Credit has been issued, Floorplan Lenders or Working Capital Lenders, as applicable, shall be deemed to have authorized (but may not require) L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Expiration Date; provided that L/C Issuer shall not permit any such extension if:  (A) L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of Section 2.03(a) or otherwise); or (B) L/C Issuer has received notice (which may be by telephone or in writing) on or before the day that is thirty days before any date provided for in such Automatic Extension Letter of Credit as the last day by which notice of the non-extension thereof must be given: (1) from Administrative Agent that Required Floorplan Lenders or Required Working Capital Lenders, as applicable, have elected not to permit such extension; or (2) from Administrative Agent, any Floorplan Lender or Working Capital Lender, as applicable, or Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing L/C Issuer not to permit such extension.   (v)                                 Within fifteen (15) Business Days after the end of each calendar quarter, the L/C Issuer (or the Administrative Agent if the Administrative Agent agrees to undertake such action) shall report to each Lender all Letters of Credit issued by it during the previous calendar quarter and the average daily undrawn and unexpired amounts for all Letters of Credit for each day in such calendar quarter.  The L/C Issuer (or the Administrative Agent if the Administrative Agent agrees to undertake such action) shall calculate the Dollar Equivalent of each outstanding Floorplan Letter of Credit denominated in any Foreign Currency as of each Revaluation Date and shall notify the Administrative Agent and the Borrower of such calculation, and such calculation shall be the basis of any determination of the amount of outstanding Floorplan L/C Obligations for purposes hereof until the next such calculation.   47 --------------------------------------------------------------------------------   (c)                                  Drawings and Reimbursements; Funding of Participations — Floorplan Letters of Credit.   (i)                                     Upon receipt from the beneficiary of any Floorplan Letter of Credit of any drawing under such Floorplan Letter of Credit (or any notice thereof), L/C Issuer shall notify Borrower and Administrative Agent of the date and, if applicable, the Dollar Equivalent of the amount thereof.  If L/C Issuer shall make any payment in respect of a Floorplan Letter of Credit, Borrower shall reimburse L/C Issuer the amount of such payment not later than 1:00 p.m. on the related Honor Date if Borrower shall have received notice of such payment prior to 11:00 a.m. on the Honor Date, or, if such notice has not been received by Borrower prior to such time on such Honor Date, then not later than 10:00 a.m. on the Business Day immediately following the day that Borrower receives such notice.  Each such payment shall be made to the L/C Issuer at its address for notices specified herein in the currency in which such Floorplan Letter of Credit is denominated (except that, in the case of any Floorplan Letter of Credit denominated in any Foreign Currency, in the event that such payment is not made to the L/C Issuer on the date of receipt by the Borrower of such notice, such payment shall be made in Dollars, in an amount equal to the Dollar Equivalent of the amount of such payment) and in Same Day Funds.  If Borrower fails to so reimburse L/C Issuer, then Administrative Agent shall promptly notify each Floorplan Lender of the related Honor Date, the Unreimbursed Amount and the amount of such Lender’s Floorplan Percentage Share of such Unreimbursed Amount.  In such event, Borrower shall be deemed to have requested a Floorplan Borrowing consisting of Base Rate Loans to be disbursed on such Honor Date in an amount equal to the Dollar Equivalent of such Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Floorplan Commitments (after giving effect to the reduction or termination of the related Letter of Credit).  Any notice given by L/C Issuer or Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.  Any conversion by the L/C Issuer of any payment to be made by the Borrower in respect of any Floorplan Letter of Credit denominated in any Foreign Currency into Dollars in accordance with this Section (using the conversion mechanism set forth in the definition of Dollar Equivalent) shall be conclusive and binding upon the Borrower and the Lenders in the absence of manifest error; provided that upon the request of any Lender, the L/C Issuer shall provide to such Lender a certificate including reasonably detailed information as to the calculation of such conversion.   (ii)                                  Each Floorplan Lender shall, upon any notice pursuant to Section 2.03(c)(i), make funds available to Administrative Agent for the account of L/C Issuer at the Administrative Agent’s Office in an amount equal to such Lender’s Floorplan Percentage Share multiplied by the Dollar Equivalent of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Floorplan Lender that so makes funds available shall be deemed to have made a Floorplan Loan that is a Base Rate Loan to Borrower in such amount on the Honor Date.  Administrative Agent shall remit the funds so received to L/C Issuer.   (iii)                               With respect to any Unreimbursed Amount that is not fully refinanced by a Floorplan Borrowing consisting of Base Rate Loans because of the existence of an Event of Default under Section 8.01(f), Borrower shall be deemed to have incurred from L/C Issuer an L/C Borrowing on the Honor Date in the amount of the Dollar Equivalent of the Unreimbursed   48 --------------------------------------------------------------------------------   Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Floorplan Lender’s payment to Administrative Agent for the account of L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.   (iv)                              Until each Floorplan Lender funds its Floorplan Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of the amount of such Lender’s Floorplan Percentage Share of such amount shall be solely for the account of L/C Issuer.   (v)                                 Each Floorplan Lender’s obligation to make Floorplan Loans or L/C Advances to reimburse L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including:  (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing.  No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse L/C Issuer for the amount of any payment made by L/C Issuer under any Letter of Credit, together with interest as provided herein.   (vi)                              If any Floorplan Lender fails to make available to Administrative Agent for the account of L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), L/C Issuer shall be entitled to recover from such Lender (acting through Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by L/C Issuer in connection with the foregoing.  A certificate of L/C Issuer submitted to any Floorplan Lender (through Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.   (d)                                 Drawings and Reimbursements; Funding of Participations — Working Capital Letters of Credit.   (i)                                     Upon receipt from the beneficiary of any Working Capital Letter of Credit of any drawing under such Working Capital Letter of Credit (or any notice thereof), L/C Issuer shall notify Borrower and Administrative Agent thereof.  If L/C Issuer shall make any payment in respect of a Working Capital Letter of Credit, Borrower shall reimburse L/C Issuer the amount of such payment not later than 1:00 p.m. on the related Honor Date if Borrower shall have received notice of such payment prior to 11:00 a.m. on the Honor Date, or, if such notice has not been received by Borrower prior to such time on such Honor Date, then not later than 10:00 a.m. on the Business Day immediately following the day that Borrower receives such notice.  If Borrower   49 --------------------------------------------------------------------------------   fails to so reimburse L/C Issuer, then Administrative Agent shall promptly notify each Working Capital Lender of the related Honor Date, the Unreimbursed Amount and the amount of such Lender’s Working Capital Percentage Share of such Unreimbursed Amount.  In such event, Borrower shall be deemed to have requested a Working Capital Borrowing consisting of Base Rate Loans to be disbursed on such Honor Date in an amount equal to such Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Working Capital Commitments (after giving effect to the reduction or termination of the related Letter of Credit).  Any notice given by L/C Issuer or Administrative Agent pursuant to this Section 2.03(d)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.   (ii)                                  Each Working Capital Lender shall, upon any notice pursuant to Section 2.03(d)(i), make funds available to Administrative Agent for the account of L/C Issuer at the Administrative Agent’s Office in an amount equal to such Lender’s Working Capital Percentage Share multiplied by the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Administrative Agent, whereupon, subject to the provisions of Section 2.03(d)(iii), each Working Capital Lender that so makes funds available shall be deemed to have made a Working Capital Loan that is a Base Rate Loan to Borrower in such amount on the Honor Date.  Administrative Agent shall remit the funds so received to L/C Issuer.   (iii)                               With respect to any Unreimbursed Amount that is not fully refinanced by a Working Capital Borrowing consisting of Base Rate Loans because of the existence of an Event of Default under Section 8.01(f), Borrower shall be deemed to have incurred from L/C Issuer an L/C Borrowing on the Honor Date in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Working Capital Lender’s payment to Administrative Agent for the account of L/C Issuer pursuant to Section 2.03(d)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.   (iv)                              Until each Working Capital Lender funds its Working Capital Loan or L/C Advance pursuant to this Section 2.03(d) to reimburse L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of the amount of such Lender’s Working Capital Percentage Share of such amount shall be solely for the account of L/C Issuer.   (v)                                 Each Working Capital Lender’s obligation to make Working Capital Loans or L/C Advances to reimburse L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(d), shall be absolute and unconditional and shall not be affected by any circumstance, including:  (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing.  No such making of an   50 --------------------------------------------------------------------------------   L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse L/C Issuer for the amount of any payment made by L/C Issuer under any Working Capital Letter of Credit, together with interest as provided herein.   (vi)                              If any Working Capital Lender fails to make available to Administrative Agent for the account of L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(d) by the time specified in Section 2.03(d)(ii), L/C Issuer shall be entitled to recover from such Lender (acting through Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by L/C Issuer in connection with the foregoing.  A certificate of L/C Issuer submitted to any Working Capital Lender (through Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.   (e)                                  Repayment of Participations.   (i)                                     If, at any time after L/C Issuer has made a payment under any Letter of Credit and has received from any Floorplan Lender or Working Capital Lender, as applicable, such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c) or Section 2.03(d), Administrative Agent receives for the account of L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Administrative Agent), Administrative Agent will distribute to such Lender an amount that equals its Floorplan Percentage Share or Working Capital Percentage Share, as applicable, thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by Administrative Agent.   (ii)                                  If any payment received by Administrative Agent for the account of L/C Issuer pursuant to Section 2.03(c)(i) or Section 2.03(d)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by L/C Issuer in its discretion), each Floorplan Lender or Working Capital Lender, as applicable, shall pay to Administrative Agent for the account of L/C Issuer an amount equal to its Floorplan Percentage Share or Working Capital Percentage Share, as applicable, thereof on the demand of Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of Floorplan Lenders and Working Capital Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.   (f)                                   Obligations Absolute.  The obligation of Borrower to reimburse L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing are absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:   51 --------------------------------------------------------------------------------   (i)                                     any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;   (ii)                                  the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any other Loan Party may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;   (iii)                               any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;   (iv)                              any payment by L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or   (v)                                 any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any other Loan Party.   Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will immediately notify L/C Issuer in writing.  Borrower shall be conclusively deemed to have waived any such claim against L/C Issuer and its correspondents unless such notice is given as aforesaid.   (g)                                 Role of L/C Issuer.  Each Floorplan Lender, Working Capital Lender, and Borrower agree that, in paying any drawing under a Letter of Credit, L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  None of L/C Issuer, Administrative Agent, any of their respective Related Parties and any correspondent, participant or assignee of L/C Issuer shall be liable to any Lender for:  (i) any action taken or not taken, at the request or with the approval of Lenders or Required Lenders, as applicable, in connection with a Letter of Credit or any Issuer Document; (ii) in the absence of gross negligence or willful misconduct, any action taken or not taken in connection with a Letter of Credit or any Issuer Document; or (iii) the due execution, effectiveness, validity or enforceability of any document related to any Letter of Credit or Issuer Document.  As between Borrower and L/C Issuer, Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude Borrower from pursuing such rights and remedies as it may have   52 --------------------------------------------------------------------------------   against the beneficiary or transferee at law or under any other agreement.  None of L/C Issuer, Administrative Agent, any of their respective Related Parties and any correspondent, participant or assignee of L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(f); provided that, notwithstanding anything to the contrary contained in such clauses, Borrower may have a claim against L/C Issuer, and L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower that Borrower proves were caused by L/C Issuer’s willful misconduct or gross negligence or L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit.  In furtherance and not in limitation of the foregoing, L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and L/C Issuer shall not be responsible for the validity or sufficiency of any document transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason.   (h)                                 Cash Collateral.  Upon the request of Administrative Agent, if L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing that remains outstanding after payment thereof is due from Borrower, or if, on or after the L/C Expiration Date, any L/C Obligation remains outstanding for any reason without the consent of all Lenders, then Borrower shall, in each such case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations with an amount equal to 102.00% of such Outstanding Amount.  Section 2.05 and Section 8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder.  Borrower hereby grants to Administrative Agent, for the benefit of L/C Issuer, Floorplan Lenders, and Working Capital Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.   (i)                                    Applicability of ISP.  Unless otherwise expressly agreed by L/C Issuer and Borrower when a standby Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the ISP shall apply to such Letter of Credit.   (j)                                    L/C Fees.  Borrower shall pay to Administrative Agent (i) for the account of each Floorplan Lender in accordance with its Floorplan Percentage Share a fee equal to the Applicable Rate multiplied by the actual daily amount available to be drawn under all Floorplan Letters of Credit and (ii) for the account of each Working Capital Lender in accordance with its Working Capital Percentage Share a fee equal to the Applicable Rate multiplied by the actual daily amount available to be drawn under all Working Capital Letters of Credit (collectively, the “L/C Fee”).  For purposes of computing the actual daily amount available to be drawn under all Letters of Credit, the amount of each Letter of Credit shall be determined in accordance with Section 1.02(i).  L/C Fees shall be:  (A) computed on a quarterly basis in arrears and (B) due and payable on the last Business Day of each March, June, September and December (in each case for the calendar quarter then ending), commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate during any quarter, then the actual daily amount available to be drawn under all Letters of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary contained herein, while any Event of Default exists, upon written notice to Borrower from   53 --------------------------------------------------------------------------------   Required Floorplan Lenders or Required Working Capital Lenders, as applicable, all L/C Fees shall accrue at the Default Rate.   (k)                                 Fees of L/C Issuer.  Borrower shall pay directly to L/C Issuer for its own account such fees with respect to each Letter of Credit as are set forth in the Fee Letter and any other customary fees.   (l)                                    Conflict with Issuer Documents.  If a conflict exists between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.   SECTION 2.04                            SWING LINE LOANS.   (a)                                 The Swing Line.  Subject to the terms and conditions set forth herein, Swing Line Lender agrees, in reliance upon the agreements of the Floorplan Lenders set forth in this Section 2.04, to make loans (each such loan, a “Swing Line Loan”) to Borrower from time to time on any Business Day from the Closing Date through the tenth (10th) Business Day immediately preceding the last day of the Floorplan Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Floorplan Percentage Share of the Outstanding Amount of Floorplan Loans acting as Swing Line Lender, may exceed the amount of such Lender’s Floorplan Commitment; provided that, after giving effect to any Swing Line Loan:  (i) the Total Floorplan Outstandings shall not exceed Floorplan Availability; and (ii) the aggregate Outstanding Amount of the Floorplan Loans of any Floorplan Lender (other than the Swing Line Lender in such capacity), plus such other Lender’s Floorplan Percentage Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Floorplan Commitment.  Each Swing Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing Line Loan, each Floorplan Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the such Lender’s Floorplan Percentage Share multiplied by the amount of such Swing Line Loan.  Notwithstanding the foregoing, (i) the Swing Line Lender shall not be obligated to make a Swing Line Loan to refinance an outstanding Swing Line Loan, and (ii) the Swing Line Lender shall not be required to make a Swing Line Loan if (A) prior thereto or simultaneously therewith the Borrower shall not have borrowed Floorplan Loans or (B) any Floorplan Lender shall be a Defaulting Lender and the Fronting Exposure with respect to such Defaulting Lender cannot be fully reallocated pursuant to Section 3.08(a).   (b)                                 Swing Line Borrowing Procedures.  Unless the Swing Line has been terminated or suspended by Swing Line Lender as provided in subsection (a) of this Section 2.04, each Swing Line Borrowing shall be made upon Borrower’s irrevocable notice to Swing Line Lender and Administrative Agent, which may be given by telephone.  Each such notice must be received by Swing Line Lender and Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and must specify:  (i) the amount to be borrowed, which shall be a minimum of $100,000.00 or a whole multiple of $50,000.00 in excess thereof; (ii) the requested borrowing date, which must be a Business Day.  Each such telephonic notice must be confirmed promptly by delivery to Swing Line Lender and Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of Borrower.  Promptly after receipt by Swing Line Lender of any telephonic Swing Line Loan Notice, Swing Line Lender will confirm with Administrative Agent (by telephone or in writing) that Administrative Agent has also received such Swing Line Loan Notice and, if not, Swing Line Lender will notify Administrative Agent (by telephone or in writing) of the contents thereof.  Unless (A) the Swing   54 --------------------------------------------------------------------------------   Line has been terminated or suspended by Swing Line Lender, or (B) Swing Line Lender has received notice (by telephone or in writing) from Administrative Agent (including at the request of any Floorplan Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (1) directing Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.04(a), or (2) that at least one of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in the related Swing Line Loan Notice, make the amount of its Swing Line Loan available to Borrower at its office by crediting the account of Borrower on the books of Swing Line Lender in immediately available funds.  Floorplan Lenders agree that Swing Line Lender may agree to modify the borrowing procedures used in connection with the Swing Line in its discretion and without affecting any of the obligations of Floorplan Lenders hereunder other than notifying Administrative Agent of a Swing Line Loan Notice.   (c)                                  Refinancing of Swing Line Loans.   (i)                                     Swing Line Lender at any time in its sole and absolute discretion may request, on the 15th day of each month (or, if such day is not a Business Day, the immediately preceding Business Day) and on the last Business Day of each month during the term hereof shall request, on behalf of Borrower (which hereby irrevocably authorizes Swing Line Lender to so request on its behalf), that each Floorplan Lender make a Floorplan Loan that is a Base Rate Loan in an amount equal to such Lender’s Floorplan Percentage Share multiplied by the aggregate Outstanding Amount of Swing Line Loans as of the close of business on the immediately preceding Friday (or, if such day is not a Business Day, the immediately preceding Business Day).  Such request shall be made in writing (which written request shall be deemed to be a Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Floorplan Commitments (after giving effect to the termination of such Swing Line Loan).  Swing Line Lender shall furnish Borrower with a copy of the applicable Loan Notice promptly after delivering such notice to Administrative Agent.  Each Floorplan Lender shall make an amount equal to its Floorplan Percentage Share multiplied by the aggregate amount of the requested Floorplan Loans specified in such Loan Notice available to Administrative Agent in immediately available funds for the account of Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Floorplan Lender that so makes funds available shall be deemed to have made a Floorplan Loan that is a Base Rate Loan to Borrower in such amount.  Administrative Agent shall promptly remit the funds so received to Swing Line Lender.   (ii)                                  If for any reason the outstanding amount of all Swing Line Loans cannot be refinanced by such a Floorplan Borrowing because of the existence of an Event of Default under Section 8.01(f), then the request for Floorplan Loans that are Base Rate Loans submitted by Swing Line Lender as set forth herein shall be deemed to be a request by Swing Line Lender that each Floorplan Lender fund its risk participation in the relevant Swing Line Loan and each Floorplan Lender’s payment to Administrative Agent for the account of Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.   55 --------------------------------------------------------------------------------   (iii)                               If any Floorplan Lender fails to make available to Administrative Agent for the account of Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), Swing Line Lender shall be entitled to recover from such Lender (acting through Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Swing Line Lender in connection with the foregoing.  A certificate of Swing Line Lender submitted to any Floorplan Lender (through Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.   (iv)                              Each Floorplan Lender’s obligation to make Floorplan Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including:  (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against Swing Line Lender, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided that each Floorplan Lender’s obligation to make Floorplan Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall relieve or otherwise impair the obligation of Borrower to repay Swing Line Loans together with interest as provided herein.   (d)                                 Repayment of Participations.   (i)                                     If, at any time after any Floorplan Lender has purchased and funded a risk participation in a Swing Line Loan, Swing Line Lender receives any payment on account of such Swing Line Loan, then Swing Line Lender will distribute to such Lender an amount equal to its Floorplan Percentage Share multiplied by such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by Swing Line Lender.   (ii)                                  If any payment received by Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by Swing Line Lender in its discretion), each Floorplan Lender shall pay to Swing Line Lender an amount equal to its Floorplan Percentage Share multiplied by the amount to be returned on demand of Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate.  Administrative Agent will make such demand upon the request of Swing Line Lender.  The obligations of Floorplan Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.   (e)                                  Interest for Account of Swing Line Lender.  Swing Line Lender shall be responsible for invoicing Borrower for interest on Swing Line Loans.  Until each Floorplan Lender funds its   56 --------------------------------------------------------------------------------   Floorplan Loan that is a Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Floorplan Percentage Share of any Swing Line Loan, interest in respect of such proportionate share shall be solely for the account of Swing Line Lender.   (f)                                   Payments Directly to Swing Line Lender.  Borrower shall make all payments of principal and interest in respect of Swing Line Loans directly to Swing Line Lender.   (g)                                 Treasury Management Borrowings and Payments.  Unless the Swing Line has been terminated or suspended by Swing Line Lender as provided in subsection (a) of this Section 2.04 and so long as the Treasury Management Service Documents are effective between Swing Line Lender and Borrower, Swing Line Borrowings may be made and repaid by Borrower pursuant to the Treasury Management Service Documents.  Swing Line Lender shall have no obligation to make a Swing Line Loan pursuant to the Treasury Management Service Documents if (A) the Swing Line has been terminated or suspended by Swing Line Lender as provided in this Agreement, or (B) Swing Line Loans are not available (1) as a result of the limitations set forth in the proviso to the first sentence of Section 2.04(a), or (2) because at least one of the applicable conditions specified in Article IV is not then satisfied.  Floorplan Lenders agree that Swing Line Lender may agree to modify the Treasury Management Service Documents and the borrowing procedures set forth therein used in connection with the Swing Line in its discretion and without affecting any of the obligations of Floorplan Lenders hereunder.   SECTION 2.05                            PAYMENTS AND PREPAYMENTS.   (a)                                 Swing Line Repayments.  The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date five (5) Business Days after such Swing Line Loan is made or (ii) the Floorplan Maturity Date.   (b)                                 Voluntary Prepayments.   (i)                                     Borrower may, upon notice to Administrative Agent, at any time or from time to time voluntarily prepay Working Capital Loans in whole or in part without premium or penalty; provided that:  (A) such notice must be received by Administrative Agent not later than 11:00 a.m.:  (1) three Business Days prior to any date of prepayment of Working Capital Loans that are Eurodollar Rate Loans; and (2) one Business Day prior to the date of prepayment of Working Capital Loans that are Base Rate Loans; and (B) any prepayment of any Working Capital Loans of a given Type shall be in a principal amount of $1,000,000.00 or a whole multiple of $500,000.00 in excess thereof for Eurodollar Rate Loans and $500,000.00 or a whole multiple of $100,000.00 in excess thereof for Base Rate Loans, or, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Working Capital Loans to be prepaid.  Administrative Agent will promptly notify each Working Capital Lender of its receipt of each such notice and of the amount of such Lender’s Working Capital Percentage Share thereof.  If Borrower gives such notice, then Borrower’s prepayment obligation shall be irrevocable, and Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Working Capital Loan that is a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional   57 --------------------------------------------------------------------------------   amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the Working Capital Loans of the Working Capital Lenders in accordance with their respective Working Capital Percentage Shares.   (ii)                                  Borrower may, upon notice to Swing Line Lender (with a copy to Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that:  (A) such notice must be received by Swing Line Lender and Administrative Agent not later than 1:00 p.m. on the date of the prepayment; and (B) any such prepayment shall be in a minimum principal amount of $100,000.00 or a whole multiple of $50,000.00 in excess thereof or, if the aggregate Outstanding Amount of Swing Line Loans is less, the entire Outstanding Amount thereof.  Each such notice shall specify the date and amount of such prepayment.  If Borrower gives such a notice, then Borrower’s prepayment obligation shall be irrevocable, and Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.   (iii)                               Borrower may, upon notice to Administrative Agent, at any time or from time to time voluntarily prepay Floorplan Loans in whole or in part without premium or penalty; provided that:  (A) such notice must be received by Administrative Agent not later than 11:00 a.m. one Business Day prior to the date of prepayment of Floorplan Loans; and (B) any prepayment of any Floorplan Loans shall be in a principal amount of $500,000.00 or a whole multiple of $100,000.00 in excess thereof, or, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment.  Administrative Agent will promptly notify each Floorplan Lender of its receipt of each such notice and of the amount of such Lender’s Floorplan Percentage Share thereof.  If Borrower gives such notice, then Borrower’s prepayment obligation shall be irrevocable, and Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Each such prepayment shall be applied to the Floorplan Loans of the Floorplan Lenders in accordance with their respective Floorplan Percentage Shares.   (c)                                  Mandatory Prepayments.   (i)                                     Upon any (A) Event of Loss, or (B) Disposition or series of Dispositions by Borrower or any Subsidiary thereof undertaken within any fiscal year other than Dispositions permitted under Section 7.05, Borrower shall prepay the Loans in an amount equal to 100.00% of the Net Proceeds of each such Event of Loss or each such Disposition; in each case, to the extent that the Net Proceeds generated by such Event of Loss or Disposition(s) exceed $10,000,000 in the aggregate for all such Events of Loss or Dispositions, as the case may be, in any fiscal year; provided that no such prepayment shall be required if the Administrative Agent provides written consent for the Borrower or any Subsidiary thereof to purchase replacement property or restore the property affected by such Event of Loss.   (ii)                                  Upon receipt by Borrower or any Subsidiary thereof, Borrower shall prepay the Loans in an amount equal to 100.00% of the proceeds (net of underwriting discounts and commissions or placement fees, investment banking fees, legal fees, accounting fees, and other customary fees, commissions, expenses and costs associated therewith) of any incurrence of Debt, other than Permitted Debt by Borrower or any Subsidiary thereof.  Any prepayment   58 --------------------------------------------------------------------------------   pursuant to this Section 2.05(c)(ii) shall not be subject to the minimum amount provisions of Section 2.05(b).   (iii)                               Intentionally Omitted.   (iv)                              If, on any date and for any reason, (A) the Outstanding Amount of Floorplan L/C Obligations exceeds the Floorplan L/C Sublimit, then Borrower shall Cash Collateralize on such date Floorplan L/C Obligations in an amount equal to such excess, or (B) the Outstanding Amount of Working Capital L/C Obligations exceeds the Working Capital L/C Sublimit, then Borrower shall Cash Collateralize on such date Working Capital L/C Obligations in an amount equal to such excess.   (v)                                 Intentionally Omitted.   (vi)                              Subject to Article IV, if on any date the Total Working Capital Outstandings minus the amount of any L/C Obligations Cash Collateralized on such date pursuant to the preceding clause (iv), exceeds Working Capital Availability, then Borrower shall immediately, and without notice or demand, prepay the outstanding principal amount of the Working Capital Loans, Swing Line Loans and L/C Borrowings by an amount equal to the applicable excess.  Any such prepayment shall be applied, first, to any L/C Borrowings and/or Cash Collateralize Working Capital L/C Obligations, second, to any Working Capital Loans constituting Base Rate Loans or matured Eurodollar Rate Loans, as selected by Borrower, and, third, at Borrower’s option, to Cash Collateralize Eurodollar Rate Loans (which Cash Collateral shall be applied on the maturity date of their respective Interest Periods in the order of the maturities of their respective Interest Periods) or to prepay Eurodollar Rate Loans (in the order of the maturity of their respective Interest Periods).   (vii)                           Subject to Article IV, if on any date the Total Floorplan Outstandings exceeds Floorplan Availability, then Borrower shall immediately, and without notice or demand, prepay the outstanding principal amount of the Floorplan Loans and Swing Line Loans by an amount equal to the applicable excess.  Any such prepayment shall be applied, first, to any L/C Borrowings and/or Cash Collateralize Floorplan L/C Obligations, second, to prepay Swing Line Loans, third, to any Floorplan Loans constituting Base Rate Loans or matured Eurodollar Rate Loans, as selected by Borrower, and, fourth, at Borrower’s option, to Cash Collateralize Eurodollar Rate Loans (which Cash Collateral shall be applied on the maturity date of their respective Interest Periods in the order of the maturities of their respective Interest Periods) or to prepay Eurodollar Rate Loans (in the order of the maturity of their respective Interest Periods).   (viii)                        If, following any reduction of the Aggregate Commitments pursuant to Section 2.06, the aggregate Outstanding Amount of Swing Line Loans would exceed the Swing Line Sublimit (including as reduced by such reduction), Borrower shall prepay on the reduction date the Outstanding Amount of Swing Line Loans by an amount equal to the amount by which such Outstanding Amount exceeds the Swing Line Sublimit.   (ix)                              If, following any reduction of the Aggregate Commitments pursuant to Section 2.06, the Floorplan L/C Obligations would exceed the Floorplan L/C Sublimit (including   59 --------------------------------------------------------------------------------   as reduced by such reduction) or the Working Capital L/C Obligations would exceed the Working Capital L/C Sublimit (including as reduced by such reduction), Borrower shall Cash Collateralize such L/C Obligations.   (d)                                 Intentionally Omitted.   SECTION 2.06                            TERMINATION OR REDUCTION OF AGGREGATE COMMITMENTS.   (a)                                 Voluntary Reductions; Termination.   (i)                                         Borrower may, upon notice to Administrative Agent, terminate the Aggregate Working Capital Commitments, or from time to time permanently reduce the Aggregate Working Capital Commitments; provided that:  (A) any such notice shall be irrevocable and received by Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction; (B) any such partial reduction shall be in an aggregate amount of $1,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof; (C) Borrower shall not terminate or reduce the Aggregate Working Capital Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Working Capital Outstandings would exceed the Aggregate Working Capital Commitments; and (D) if, after giving effect to any reduction of the Aggregate Working Capital Commitments, the sum of the Working Capital L/C Sublimit exceeds the amount of the Aggregate Working Capital Commitments, such sublimit(s) shall be automatically reduced by the amount of such excess.  Administrative Agent will promptly notify Lenders of any such notice of termination or reduction of the Aggregate Working Capital Commitments.  Any reduction of the Aggregate Working Capital Commitments shall be applied to the commitment of each Working Capital Lender according to its Working Capital Percentage Share thereof.  All fees payable under Sections 2.03(i) and (j) and 2.09 accrued until the effective date of any termination of the Aggregate Working Capital Commitments shall be paid on the effective date of such termination.   (ii)                                      Borrower may, upon notice to Administrative Agent, terminate the Aggregate Floorplan Commitments, or from time to time permanently reduce the Aggregate Floorplan Commitments; provided that:  (A) any such notice shall be irrevocable and received by Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction; (B) any such partial reduction shall be in an aggregate amount of $1,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof; and (C) Borrower shall not terminate or reduce the Aggregate Floorplan Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Floorplan Outstandings would exceed the Aggregate Floorplan Commitments; and (D) if, after giving effect to any reduction of the Aggregate Floorplan Commitments, the sum of the Swing Line Sublimit and the Floorplan L/C Sublimit exceeds the amount of the Aggregate Floorplan Commitments, such sublimit(s) shall be automatically reduced by the amount of such excess.  Administrative Agent will promptly notify Lenders of any such notice of termination or reduction of the Aggregate Floorplan Commitments.  Any reduction of the Aggregate Floorplan Commitments shall be applied to the commitment of each Floorplan Lender according to its Floorplan Percentage Share thereof.  All fees payable under Sections 2.03(i) and (j) and 2.09 accrued until the effective date of any termination of the Aggregate Floorplan Commitments shall be paid on the effective date of such termination.   60 --------------------------------------------------------------------------------   (b)                                 Reserved.   SECTION 2.07                            FINAL REPAYMENT OF LOANS.   (a)                                 Payments Due on Working Capital Maturity Date.  On the Working Capital Maturity Date, Borrower shall repay to Working Capital Lenders in full the aggregate Outstanding Amount of all Working Capital Loans.   (b)                                 Payments Due on Floorplan Maturity Date.  On the Floorplan Maturity Date, Borrower shall repay:  (i) to Floorplan Lenders in full the aggregate Outstanding Amount of all Floorplan Loans; and (ii) to Swing Line Lender in full the aggregate Outstanding Amount of all Swing Line Loans.   (c)                                  Intentionally Omitted.   (d)                                 Intentionally Omitted.   SECTION 2.08                            INTEREST; APPLICABLE RATES.   (a)                                 Interest Generally.  Subject to the provisions of subsection Section 2.08(b):  (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan (including a Swing Line Loan) shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to (A) the Base Rate or the Daily LIBOR Rate, as designated by Borrower plus (B) the Applicable Rate for Base Rate Loans.   (b)                                 Default Rate.   (i)                                     If an Event of Default occurs because any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest while such Event of Default exists at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.   (ii)                                  If an Event of Default occurs because any amount (other than principal of any Loan) payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon written notice to Borrower from Required Lenders, such amount shall thereafter bear interest until the related Event of Default no longer exists at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.   (iii)                               If any Event of Default exists pursuant to Section 8.01(f) or 8.01(g) or, except as set forth in clauses (i) and (ii) above, upon written notice to Borrower from Required Lenders, while any Event of Default exists, Borrower shall pay interest on the principal amount of all   61 --------------------------------------------------------------------------------   outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws until such Event of Default no longer exists.   (iv)                              Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.   (c)                                  Payment Dates; Accrual of Interest.  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof both before and after judgment, and both before and after the commencement of any proceeding under any Debtor Relief Law.   (d)                                 Increases and Decreases of Applicable Rates.  Any increase or decrease in any Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the date that is the earlier of:  (i) the last date by which Borrower is otherwise required to deliver a Compliance Certificate in accordance with Section 6.02(b) with reference to Section 6.01 for a given period (each such date, a “calculation date”); and (ii) the date that is two Business Days after the date on which Borrower actually delivers a Compliance Certificate in accordance with Section 6.02(b) with reference to Section 6.01 for such period; provided that the Applicable Rates in effect from the Closing Date to the date that is two Business Days following receipt by Administrative Agent of a timely delivered Compliance Certificate with respect to the Fiscal Period ended April 30, 2012 shall be set at Tier III (as indicated on Schedule 1.01-A); provided further that, if any Compliance Certificate required to be delivered in accordance with Section 6.02(b) with reference to Section 6.01 for any given period is not delivered to Administrative Agent on or before the related calculation date, then Tier 1 (as indicated on Schedule 1.01-A) shall apply, effective on the related calculation date until two Business Days after such Compliance Certificate is actually received by Administrative Agent.   Notwithstanding the foregoing and for the avoidance of doubt, if, for any period and for any reason, the actual Consolidated Leverage Ratio is higher than that reported in the related Compliance Certificate delivered for such period, then Borrower shall immediately, without the requirement of notice or demand from any Person, pay to Lending Parties an amount equal to the excess of:  (A) the amount of interest or fees that would have accrued had the Applicable Rates for such period been based upon the actual Consolidated Leverage Ratio for such period rather than the Consolidated Leverage Ratio reported in the Compliance Certificate delivered for such period; over (B) the amount of interest or fees that was actually paid by Borrower based upon the Consolidated Leverage Ratio reported in the Compliance Certificate delivered for such period.   SECTION 2.09                            FEES.   In addition to certain fees described in subsections (i) and (j) of Section 2.03:   (a)                                 Working Capital Commitment Fee.  Borrower shall pay to Administrative Agent for the account of each Working Capital Lender in accordance with its Working Capital Percentage Share, a commitment fee (the “Working Capital Commitment Fee”) equal to the Applicable Fee multiplied by the actual daily amount by which the Aggregate Working Capital Commitments exceed the sum of the Total   62 --------------------------------------------------------------------------------   Working Capital Outstandings.  The Working Capital Commitment Fee shall accrue at all times during the Working Capital Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each January, April, July, and October, commencing with the first such date to occur after the Closing Date, and on the Working Capital Maturity Date.  The Working Capital Commitment Fee shall be calculated quarterly in arrears together with the determination of changes to the Applicable Rate pursuant to Section 2.08(d).   (b)                                 Administrative Agent’s Fees.  Borrower shall pay to Administrative Agent for Administrative Agent’s own account, such fees as are specified as owing to such Person in the Fee Letter.   (c)                                  Floorplan Commitment Fee.  Borrower shall pay to Administrative Agent for the account of each Floorplan Lender in accordance with its Floorplan Percentage Share, a commitment fee (the “Floorplan Commitment Fee”) equal to the Applicable Fee multiplied by the actual daily amount by which the Aggregate Floorplan Commitments exceed the sum of the Total Floorplan Outstandings (less the Outstanding Amount of Swing Line Loans).  The Floorplan Commitment Fee shall accrue at all times during the Floorplan Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each January, April, July, and October, commencing with the first such date to occur after the Closing Date, and on the Floorplan Maturity Date.  The Floorplan Commitment Fee shall be calculated quarterly in arrears together with the determination of changes to the Applicable Rate pursuant to Section 2.08(d).   (d)                                 Collateral Exam Fees.  The Borrower shall pay the Administrative Agent fees in connection with any collateral exams, audits or inspections conducted by or on behalf of the Administrative Agent of any Collateral or of the Borrower’s operations or business at the rates established from time to time by the Administrative Agent, together with any related out-of-pocket costs and expenses incurred by the Administrative Agent.   SECTION 2.10                            COMPUTATIONS OF INTEREST AND FEES.   All computations of interest for Base Rate Loans shall be made on the basis of a year of 360 days and actual days elapsed.  All other computations of interest and fees hereunder shall be made on the basis of a year of 360 days and actual days elapsed.  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day.  Each determination by Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.   SECTION 2.11                            EVIDENCE OF DEBT.   (a)                                 Evidence of Payments.  The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative Agent in the ordinary course of business.  The accounts or records maintained by Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by Lenders to Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall   63 --------------------------------------------------------------------------------   not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations.  If any conflict exists between the accounts and records maintained by any Lender and the accounts and records of Administrative Agent in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through Administrative Agent, Borrower shall execute and deliver to such Lender (through Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.   (b)                                 Evidence of Certain Participations.  In addition to the accounts and records referred to in Section 2.11(a), each Lender and Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans.  If any conflict exists between the accounts and records maintained by Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.   SECTION 2.12                            PAYMENTS GENERALLY; RIGHT OF ADMINISTRATIVE AGENT TO MAKE DEDUCTIONS AUTOMATICALLY.   (a)                                 Payments Generally.   (i)                                     All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 12:00 noon on the date specified herein.  Administrative Agent will promptly distribute to each Lender its applicable Percentage Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by Administrative Agent after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.   (ii)                                  Borrower hereby authorizes Administrative Agent:  (A) to deduct automatically all principal, interest or fees when due hereunder or under any Note from any account of Borrower maintained with Administrative Agent; and (B) if and to the extent any payment of principal, interest or fees under this Agreement or any Note is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Administrative Agent.  Administrative Agent agrees to provide written notice to Borrower of any automatic deduction made pursuant to this Section 2.12(a)(ii) showing in reasonable detail the amounts of such deduction.  Each Lender agrees to reimburse Borrower based on its applicable Percentage Share for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.   64 --------------------------------------------------------------------------------   (b)                                 Fundings by Lenders, Payments by Borrower and Presumptions by Administrative Agent.   (i)                                     Unless Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to Administrative Agent such Lender’s share of such Borrowing, Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 and may, in reliance upon such assumption, make available to Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to Administrative Agent, then the applicable Lender, on the one hand, and Borrower, on the other hand, each severally agrees to pay to Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from the date such amount is made available to Borrower to the date of payment to Administrative Agent, at:  (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Administrative Agent in connection with the foregoing; and (B) in the case of a payment to be made by Borrower, the interest rate applicable to Working Capital Loans that are Base Rate Loans.  If Borrower and such Lender shall pay such interest to Administrative Agent for the same or an overlapping period, Administrative Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period.  If such Lender pays its share of the applicable Borrowing to Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing.  Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed to make such payment to Administrative Agent.   (ii)                                  Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due hereunder to Administrative Agent for the account of Lenders or L/C Issuer that Borrower will not make such payment, Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to Lenders or L/C Issuer, as the case may be, the amount due.  In such event, if Borrower has not in fact made such payment, then Lenders and L/C Issuer, as the case may be, each severally agrees to repay to Administrative Agent forthwith on demand the amount so distributed to such Lenders or L/C Issuer, as the case may be, in immediately available funds with interest thereon, for each day from the date such amount is distributed to it to the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation.  A notice of Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.   (c)                                  Failure to Satisfy Conditions Precedent.  If any Lender makes available to Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to Borrower by Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or   65 --------------------------------------------------------------------------------   waived in accordance with the terms hereof, Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.   (d)                                 Obligations of Lenders Several.  The obligations of Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments under Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, purchase its participation or to make its payment under Section 10.04(c).   (e)                                  Funding Sources.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.   SECTION 2.13                            SHARING OF PAYMENTS.   If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it, resulting in such Lender receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its Percentage Share (or other applicable share as provided herein) thereof as provided herein, then the Lender receiving such greater proportion shall:  (a) notify Administrative Agent of such fact; and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:  (i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section 2.13 shall not be construed to apply to:  (A) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement; or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than to Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.13 shall apply).   Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.   SECTION 2.14                            INCREASE IN AGGREGATE COMMITMENTS.   (a)                                 Increase in Aggregate Commitments Generally.  So long as no Default has occurred and is continuing or would result therefrom and the Aggregate Commitments have not been voluntarily reduced, upon notice to Administrative Agent, at any time after the Closing Date but prior to the Working   66 --------------------------------------------------------------------------------   Capital Maturity Date, Borrower may request one or more Additional Working Capital Commitments or one or more Additional Floorplan Commitments; provided that:  (i) after giving effect to any such addition, the maximum aggregate amount of Additional Working Capital Commitments and Additional Floorplan Commitments that have been added pursuant to this Section 2.14 shall not exceed $75,000,000; (ii) any such addition shall be in an aggregate amount of $15,000,000.00 or any whole multiple of $1,000,000.00 in excess thereof (provided that such amount may be less than $15,000,000.00 if such amount represents all remaining availability under the aggregate limit in respect of Additional Working Capital Commitments and Additional Floorplan Commitments set forth in clause (i) of this proviso); (iii) Borrower may request a maximum total of three (3) increases under this section and (iv) no Lender shall be required to participate in the Additional Working Capital Commitments or Additional Floorplan Commitments.   (b)                                 Certain Provisions Regarding Increase of Aggregate Commitments.  If any Additional Working Capital Commitments or Additional Floorplan Commitments are added in accordance with this Section 2.14, Administrative Agent and Borrower shall determine the effective date (the “Additional Commitments Effective Date”) of such addition and the amount of, and the Persons who will provide, such Additional Working Capital Commitments or Additional Floorplan Commitments, as applicable; provided that no existing Lender shall have any obligation to provide all or any portion of such Additional Working Capital Commitments or Additional Floorplan Commitments.  Administrative Agent shall promptly notify Borrower and Lending Parties (which may, in the case of Additional Working Capital Commitments, include Persons reasonably acceptable to Administrative Agent and Borrower that were not Lenders prior to the Additional Commitments Effective Date) of the final amount of such addition and the Additional Commitments Effective Date, as well as in the case of each notice to any Working Capital Lender, the respective interests in such Working Capital Lender’s Working Capital Loans, in each case subject to the assignments contemplated by this Section 2.14.  As conditions precedent to such addition:  (i) the representations and warranties contained in Article V and the other Loan Documents (including all documents required pursuant to Section 2.14(c)) shall be true and correct on and as of the Additional Commitments Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall have been true and correct as of such earlier date, and except that, for purposes of this Section 2.14(b), the representations and warranties contained in Section 5.11(a) and Section 5.11(b) shall be deemed to refer to the most recent financial statements furnished pursuant to Section 6.01(a) and Section 6.01(b), respectively; (ii) no Default shall exist immediately before or immediately after giving effect to such addition; without limiting the generality of the foregoing, Borrower shall be in compliance with the financial covenants set forth in Section 6.12 after giving pro forma effect to the making of Additional Working Capital Loans or Additional Floorplan Loans, as applicable, in connection with such addition; (iii) Borrower, Administrative Agent and Lending Parties (including any new Lending Parties being added in connection with such addition) shall have entered into all documents required pursuant to Section 2.14(c), and Borrower shall have complied with all of the conditions precedent to the effectiveness of such addition as provided in such documents (including any requirement to pay fees and expenses to any or all of Administrative Agent, Arranger and Lending Parties, including any new Lending Parties); and (iv) Borrower shall have delivered to Administrative Agent a certificate dated as of the Additional Commitments Effective Date signed by a Responsible Officer of Borrower, certifying as to the truth, accuracy and correctness of the matters set forth in the immediately preceding clauses (i) and (ii).  On each Additional Commitments Effective Date, each applicable Lender, Eligible Assignee or other Person who is providing an Additional Working Capital Commitment or an Additional Floorplan Commitment:   67 --------------------------------------------------------------------------------   (A) in the case of any Additional Working Capital Commitment, shall become a “Working Capital Lender” for all purposes of this Agreement and the other Loan Documents; and (B) in the case of any Additional Floorplan Commitment, shall become a “Floorplan Lender” for all purposes of this Agreement and the other Loan Documents.  Any Additional Working Capital Loan shall be a “Working Capital Loan” and the other Loan Documents and any Additional Floorplan Loan shall be a “Floorplan Loan” for all purposes of this Agreement and the other Loan Documents.  In furtherance of the foregoing, on any Additional Commitments Effective Date on which Additional Working Capital Commitments are made, subject to the satisfaction of the other terms and conditions contained in this Section 2.14:  (1) each of the existing Working Capital Lenders shall assign to each Person providing an Additional Working Capital Commitment, and each such Person shall purchase from each of the existing Working Capital Lenders, in an amount equal to the Outstanding Amount thereof (together with accrued but unpaid interest thereon), such interests in the Working Capital Loans outstanding on such date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Working Capital Loans will be held by existing Working Capital Lenders and the Person making the Additional Working Capital Commitments ratably in accordance with their Working Capital Percentage Shares after giving effect to the addition of such Additional Working Capital Commitments to the existing Working Capital Commitments; and (2) each Person making an Additional Working Capital Commitment shall be deemed for all purposes to have a Working Capital Commitment and each Additional Working Capital Loan shall be deemed, for all purposes, a Working Capital Loan.  In furtherance of the foregoing, on any Additional Commitments Effective Date on which Additional Floorplan Commitments are made, subject to the satisfaction of the other terms and conditions contained in this Section 2.14:  (1) each of the existing Floorplan Lenders shall assign to each Person providing an Additional Floorplan Commitment, and each such Person shall purchase from each of the existing Floorplan Lenders, in an amount equal to the Outstanding Amount thereof (together with accrued but unpaid interest thereon), such interests in the Floorplan Loans outstanding on such date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Floorplan Loans will be held by existing Floorplan Lenders and the Person making the Additional Floorplan Commitments ratably in accordance with their Floorplan Percentage Shares after giving effect to the addition of such Additional Floorplan Commitments to the existing Floorplan Commitments; and (2) each Person making an Additional Floorplan Commitment shall be deemed for all purposes to have a Floorplan Commitment and each Additional Floorplan Loan shall be deemed, for all purposes, a Floorplan Loan.   (c)                                  Terms and Documentation.  Any other terms of and documentation entered into in respect of any Additional Working Capital Commitments made or any Additional Floorplan Commitments provided in each case pursuant to this Section 2.14 (collectively, the “Additional Commitment Documentation”) shall be consistent with the Working Capital Commitments and Floorplan Commitments (including with respect to voluntary and mandatory prepayments).  Any Additional Working Capital Commitments or Additional Floorplan Loans, as applicable, made or provided pursuant to this Section 2.14 shall be evidenced by one or more entries in the Register maintained by Administrative Agent in accordance with the provisions set forth in Section 10.06(c).   (d)                                 Conflicts with Other Provisions.  This Section 2.14 shall supersede any provisions in Section 10.01 to the contrary.  Notwithstanding any other provision of any Loan Document, the Loan Documents may be amended by Administrative Agent and the Loan Parties, if necessary, to provide for terms applicable to each Additional Working Capital Commitment or Additional Floorplan Commitments, as the case may be.   68 --------------------------------------------------------------------------------   SECTION 2.15                            SECURITY FOR THE OBLIGATIONS.   Except as otherwise specifically provided in any Loan Document, all Obligations shall be secured pursuant to the terms of the Collateral Documents.  All Cash Collateral required to secure the Obligations (or any portion thereof) shall be maintained in blocked, interest bearing deposit accounts at Wells Fargo or invested in such other Cash Equivalents as directed by Borrower and for which Borrower shall have provided evidence reasonably satisfactory to Administrative Agent that Administrative Agent possesses a perfected, first priority security interest in such Cash Collateral.   SECTION 2.16                            EXTENSION OF MATURITY DATE .   (a)                                 The Borrower may request that the Floorplan Maturity Date and the Working Capital Maturity Date be extended for additional terms of twelve (12) months each.  Each of the following conditions must be satisfied in a manner acceptable to Administrative Agent as a condition precedent to extension of the Floorplan Maturity Date and the Working Capital Maturity Date, as applicable:   (i)                                      the Borrower delivers written notice to Administrative Agent not less than ninety (90) days prior to the Floorplan Maturity Date and the Working Capital Maturity Date, advising that the Borrower requests the extension (the “Borrower Extension Notice”);   (ii) the Administrative Agent and each Lender has consented in writing to such extension, which consent may be granted or withheld in the Administrative Agent’s and/or each Lender’s sole and absolute discretion; and   (iii)                                the Borrower, Administrative Agent and each Lenders shall have entered into an amendment to this Agreement which amendment shall confirm the extension of the Floorplan Maturity Date and the Working Capital Maturity Date and otherwise be in a form reasonably acceptable to Borrower and Lender;   (iv)                               no Default or Event of Default exists (i) as of the date of the Borrower Extension Notice and (ii) if such extension is approved by Administrative Agent and each Lender commencement date as of the effective date of such extension term; and   (v)                                  the Borrower has reimbursed the Administrative Agent for all costs reasonably incurred by the Administrative Agent in processing the extension request, including, without limitation, reasonable legal fees and expenses.   (b)                                 Within 30 days of a Borrower Extension Notice being posted to the Electronic Platform, the Administrative Agent and each Lender by its signature hereto, agrees to respond to Borrower in writing stating its consent and approval or its rejection of the then proposed extension of the Floorplan Maturity Date and the Working Capital Maturity Date (“Lender Party Response”).  As to any such extension to which a Lender consents and approves in a Lender Party Response, such Lender agrees to execute any amendment to this Agreement evidencing such extension promptly upon the request of Borrower and Administrative Agent.   69 --------------------------------------------------------------------------------   ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY   SECTION 3.01                            TAXES.   (a)                                 L/C Issuer.  For purposes of this Section 3.01, the term “Lender” includes any L/C Issuer.   (b)                                 Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.   (c)                                  Payment of Other Taxes by Borrower.  The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.   (d)                                 Indemnification by Borrower.  The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.   (e)                                  Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise   70 --------------------------------------------------------------------------------   payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).   (f)                                   Evidence of Payments.  As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 3.01, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.   (g)                                  Status of Lenders.  (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.   (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Borrower,   (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;   (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:   (i)  in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;   71 --------------------------------------------------------------------------------   (ii)  executed originals of IRS Form W-8ECI;   (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or   (iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner;   (C)  any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and   (D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.   Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.   (h)                                 Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.01 (including by the payment of additional amounts pursuant to this Section 3.01), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity   72 --------------------------------------------------------------------------------   payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.   (i)                                     Survival.  Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.   SECTION 3.02                            ILLEGALITY.   If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank offered market, then, on notice thereof by such Lender to Borrower through Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Loans that are Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies Administrative Agent and Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due under Section 3.05 in accordance with the terms thereof due to such prepayment or conversion.   SECTION 3.03                            INABILITY TO DETERMINE RATES.   If (a) Administrative Agent determines in connection with any request for a Borrowing or continuation of, or a conversion to, Eurodollar Rate Loan that (i) Dollar deposits are not being offered to banks in the London interbank offered market for the applicable amount and Interest Period of such Eurodollar Rate Loan or (ii) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (b) Required Lenders determine in connection with any request for a Borrowing or continuation of, or a   73 --------------------------------------------------------------------------------   conversion to, a Eurodollar Rate Loan that the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, then Administrative Agent will promptly so notify Borrower and each Lender in writing.  Thereafter, the obligation of Lenders to make or maintain Eurodollar Rate Loans shall be suspended until Administrative Agent (upon the instruction of Required Lenders) revokes such notice.  Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Working Capital Borrowing consisting of Base Rate Loans in the amount specified therein.   SECTION 3.04                            INCREASED COSTS.   (a)                                 Increased Costs Generally.  If any Change in Law shall:   (i)                                          impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lending Party (except any reserve requirement reflected in the Eurodollar Rate);   (ii)                                       subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or   (iii)                                    impose on any Lender or L/C Issuer or the London interbank offered market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;   and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such L/C Issuer or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, L/C Issuer or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, L/C Issuer or other Recipient, the Borrower will pay to such Lender, L/C Issuer or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, L/C Issuer or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.   (b)                                 Capital Requirements.  If any Lender or L/C Issuer determines that any Change in Law affecting such Lender or L/C Issuer or any lending office of such Lender or such Lender’s or L/C Issuer’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or L/C Issuer’s capital or on the capital of such Lender’s or L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by any L/C Issuer, to a level below that which such Lender or L/C   74 --------------------------------------------------------------------------------   Issuer or such Lender’s or L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or L/C Issuer’s policies and the policies of such Lender’s or L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company for any such reduction suffered.   (c)                                  Certificates for Reimbursement.  A certificate of a Lender or L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section 3.04, as well as the basis for determining such amount or amounts, and delivered to Borrower shall be conclusive absent manifest error.  Borrower shall pay such Lender or L/C Issuer, as the case may be, the amount shown as due on any such certificate within ten days after receipt thereof.   (d)                                 Delay in Requests.  Failure or delay on the part of any Lender or L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or L/C Issuer’s right to demand such compensation, provided that Borrower shall not be required to compensate a Lender or L/C Issuer pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or L/C Issuer, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to in this subsection (d) shall be extended to include the period of retroactive effect thereof).   SECTION 3.05                            COMPENSATION FOR LOSSES.   Upon demand of any Lender (with a copy to Administrative Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:  (a) any continuation, conversion, payment or prepayment of any Eurodollar Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); (b) any failure by Borrower (for a reason other than the failure of such Lender to make a Loan), to prepay (including any failure to prepay pursuant to Section 2.05(b)(v)), borrow, continue or convert any Loan other than to continue a Loan as, or to convert a Loan to, a Base Rate Loan, on the date or in the amount notified by Borrower; or (c) any assignment of a Eurodollar Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.14 or Section 3.06; including, in each of the foregoing cases, any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.  For purposes of calculating amounts payable by Borrower to Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank offered market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.   75 --------------------------------------------------------------------------------   SECTION 3.06                            MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS; ADDITIONAL L/C ISSUER .   Notwithstanding anything to the contrary contained in Section 10.01:   (a)           Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section  3.01, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender as reasonably determined by such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.   (b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.04 or Section 3.01) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:   (i)            the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.06;   (ii)           such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);   (iii)          in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;   (iv)          such assignment does not conflict with applicable law; and   76 --------------------------------------------------------------------------------   (v)           in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.   A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.   (c)           Additional L/C Issuer.  If L/C Issuer may not issue Letters of Credit as a result of the limitations set forth in Section 2.03(a)(iv)(A), then Borrower may, if no Default exists and with the prior written consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed):  (i) request one of the other Lenders (with such other Lender’s consent) to issue Letters of Credit; or (ii) designate a supplemental bank or financial institution, which is an Eligible Assignee and otherwise satisfactory to Administrative Agent, to issue Letters of Credit and become an additional “L/C Issuer” hereunder.   SECTION 3.07                            CASH COLLATERAL .   At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent, the L/C Issuer, or the Swingline Lender (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Fronting Exposure of the L/C Issuer and/or Swingline Lender, as applicable, with respect to such Defaulting Lender (determined after giving effect to Section 3.08(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.   (a)           (a)           Grant of Security Interest.  The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Swingline Lender, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of L/C Obligations and Swingline Loans, to be applied pursuant to clause (b) below.  If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent, the L/C Issuer, and the Swingline Lender as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).   (b)           (b)           Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 3.07 or Section 3.08  in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of L/C Obligations and Swingline Loans (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.   (c)           (c)           Termination of Requirement.  Cash Collateral (or the appropriate portion thereof) provided to reduce the Fronting Exposure of the L/C Issuer and/or Swingline Lender shall no longer be required to be held as Cash Collateral pursuant to this Section 3.07 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent, L/C Issuer, and Swingline   77 --------------------------------------------------------------------------------   Lender that there exists excess Cash Collateral; provided that, subject to Section 3.08 the Person providing Cash Collateral, the L/C Issuer, and Swingline Lender may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.   SECTION 3.08                            DEFAULTING LENDERS.   (a)           Defaulting Lender Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:   (i)            Waivers and Amendments.  Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders.   (ii)           Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any L/C Issuer or Swingline Lender hereunder; third, to Cash Collateralize the Fronting Exposure of L/C Issuer and/or Swingline Lender with respect to such Defaulting Lender in accordance with Section 3.07; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the future Fronting Exposure of L/C Issuer and/or Swingline Lender with respect to such Defaulting Lender with respect to future Letters of Credit and Swingline Loans issued under this Agreement, in accordance with Section 3.07; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Advances in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit or Swingline Loans were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the   78 --------------------------------------------------------------------------------   Loans of, and L/C Advances or Swingline Loans owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Advances or Swingline Loans owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments under the applicable credit facility without giving effect to Section 3.08(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 3.08(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.   (iii)          Certain Fees. (A) No Defaulting Lender shall be entitled to receive any fee on the Commitment of such Defaulting Lender pursuant to Section 2.09 for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).   (B)           Each Defaulting Lender shall be entitled to receive L/C Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its applicable Percentage Share of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 3.07.   (C)          With respect to any fee under Section 2.09 or L/C Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each L/C Issuer and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s or Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.   (iv)          Reallocation of Participations to Reduce Fronting Exposure.  All or any part of such Defaulting Lender’s participation in L/C Obligations and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective applicable Percentage Shares (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Floorplan Exposure or Working Capital Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Floorplan Commitment or Working Capital Commitment, as applicable.  No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.   79 --------------------------------------------------------------------------------   (v)           Cash Collateral, Repayment of Swingline Loans.  If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 3.07.   (b)           Defaulting Lender Cure.  If the Borrower, the Administrative Agent and Swingline Lender and L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with the Commitments under the applicable Facility (without giving effect to Section 3.08(a)(iv), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.   (c)           New Swingline Loans/Letters of Credit.  So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) L/C Issuer shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.   SECTION 3.09                            SURVIVAL.   All obligations of Borrower under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations.   ARTICLE IV CONDITIONS PRECEDENT   SECTION 4.01                            CONDITIONS TO EFFECTIVENESS AND TO INITIAL CREDIT EXTENSION.   This Agreement shall become binding on the parties hereto upon, and the obligation of each Lending Party to make its initial Credit Extension hereunder is subject to, the satisfaction of the following conditions precedent (all Loan Documents and other documents to be delivered to Administrative Agent or any Lending Party pursuant to this Section 4.01 shall be subject to prior approval as to form and substance (including as to results) by Lending Parties and Administrative Agent, with delivery by a Lending Party or Administrative Agent of its signature page to this Agreement evidencing such Person’s   80 --------------------------------------------------------------------------------   acknowledgement that the conditions set forth in this Section 4.01 have been satisfied, unless otherwise waived in writing):   (a)           Receipt of Certain Documents.  Administrative Agent shall have received the following, each of which shall be in form and substance satisfactory to the Administrative Agent and each of which shall be, unless otherwise specified herein or otherwise required by Administrative Agent, originals (or telefacsimiles or portable document format versions thereof (in either such case, promptly followed by originals thereof), each, to the extent to be executed by a Loan Party, properly executed by a Responsible Officer of such Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date), all in sufficient number as Administrative Agent shall separately identify (including, if specified by Administrative Agent, for purposes of the distribution thereof to Administrative Agent, Lending Parties and Borrower):   (i)            counterparts of this Agreement, executed by each of the parties hereto;   (ii)           if requested by Swing Line Lender or any Lender, a Note or Notes (as the case may be) executed by Borrower in favor of such Lending Party evidencing, as applicable, the Working Capital Loans, Floorplan Loans or Swing Line Loans to be made by such Lending Party to Borrower;   (iii)          counterparts of the other Loan Documents (including all applicable Collateral Documents), executed by each of the parties thereto, together with:   (A)          any certificated securities representing shares of Equity Interests owned by or on behalf of any Loan Party constituting Collateral as of the Closing Date after giving effect to the Transactions together with undated stock powers with respect thereto executed in blank;   (B)          any promissory notes and other instruments evidencing all loans, advances and other debt owed or owing to any Loan Party constituting Collateral as of the Closing Date after giving effect to the Transactions together with undated instruments of transfer with respect thereto executed in blank;   (C)          all instruments and other documents, including UCC financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement; and   (D)          a Perfection Certificate with respect to the Loan Parties, dated the Closing Date and duly executed by a Responsible Officer of Borrower together with results of a search of the UCC (or equivalent) filings made and tax and judgment lien searches with respect to the Loan Parties in the jurisdictions contemplated by the Security Agreement and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 7.01 or have been released.   81 --------------------------------------------------------------------------------   (iv)          such certificates of resolutions or other action, incumbency certificates or other certificates of Responsible Officers of each Loan Party as Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with the Loan Documents to which such Loan Party is a party;   (v)           such documents and certifications as Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in:  (A) the State of North Dakota; and (B) each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;   (vi)          Intercreditor Agreements as Administrative Agent may require for the Permitted Floorplan Debt;   (vii)         favorable opinions of counsel to the Loan Parties reasonably acceptable to Administrative Agent addressed to Administrative Agent and each Lending Party, as to such matters as are reasonably required by Administrative Agent or any Lending Party with respect to the Loan Parties and the Loan Documents;   (viii)        a certificate of a Responsible Officer of each Loan Party either:  (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect; or (B) stating that no such consents, licenses or approvals are so required;   (ix)          a certificate signed by a Responsible Officer of each Loan Party certifying that:  (A) the conditions specified in Section 4.02(a) and Section 4.02(b) have been satisfied; and (B) there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;   (x)           evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;   (xi)          a duly completed Compliance Certificate as of the last day of the Fiscal Period of Borrower ended October 31, 2011, signed by an appropriate Responsible Officer of Borrower;   (xii)         a copy, certified by an appropriate Responsible Officer of Borrower, of the financial statements of Borrower referred to in Section 5.11;   (xiii)        evidence that: (A) all commitments under any secured facilities not otherwise permitted under Section 7.02 have been terminated not later than the Closing Date, and all outstanding amounts thereunder paid in full; and (B) all Liens securing obligations under any   82 --------------------------------------------------------------------------------   secured facilities not otherwise permitted under Section 7.02 have been released and terminated not later than the Closing Date; and   (xiv)        waivers, in the form and substance required by Section 6.15, for either 75% of Borrower’s and its Subsidiaries’ domestic locations or for domestic locations where not less that 75% of the Collateral which is Equipment and Inventory is located, or such lesser percentage as is agreed to by Administrative Agent, but not less than 50%.   (xv)         such other assurances, certificates, documents, consents, reports or opinions as Administrative Agent or any Lending Party may reasonably require.   (b)           [Reserved].   (c)           Payment of Fees.  Borrower shall have paid:  (i) all fees required to be paid to Administrative Agent and any Lending Party on or before the Closing Date; and (ii) unless Administrative Agent shall have agreed in writing to any delay in such payment, all fees, charges and disbursements of counsel to Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final billing by the Administrative Agent to Borrower).   Notwithstanding anything to the contrary contained herein, this Agreement shall not become effective or be binding on any party hereto unless all of the conditions precedent to the effectiveness of this Agreement as specified in this Section 4.01(a) are satisfied at or before 1:00 p.m. on April 30, 2012.  Administrative Agent shall promptly notify each Loan Party and each Lending Party of the occurrence of the Closing Date, and such notice shall be conclusive and binding on all parties hereto.  For purposes of determining compliance with the conditions specified in this Section 4.01 (but without limiting the generality of the provisions of Section 9.04), each Lending Party that has signed this Agreement shall be deemed to have consented to, approved or accepted or become satisfied with, each document or other matter required hereunder to be consented to or approved by or to be acceptable or satisfactory to a Lending Party unless Administrative Agent shall have received notice from such Lending Party prior to the proposed Closing Date specifying its objection thereto.   SECTION 4.02                            CONDITIONS TO ALL CREDIT EXTENSIONS.   The obligation of each Lending Party to make any Credit Extension (including its initial Credit Extension) hereunder or to honor any Request for Credit Extension is subject to the following conditions precedent:   (a)           Truth and Correctness of Representations and Warranties.  The representations and warranties of Borrower and each other Loan Party contained in Article V or any other Loan Document, or that are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and   83 --------------------------------------------------------------------------------   warranties contained in subsections (a) and (b) of Section 5.11 shall be deemed to refer to each of the Audited Financial Statements and the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01.   (b)           No Default.  No Default shall then exist, or shall result from, such proposed Credit Extension or from the application of the proceeds thereof or from the honoring of any Request for Credit Extension.   (c)           Requests for Credit Extensions.  Administrative Agent and, if applicable, Swing Line Lender or L/C Issuer shall have received the applicable Request for Credit Extension; provided that no L/C Applications shall be required in connection with the Existing Letters of Credit becoming Letters of Credit issued hereunder pursuant to the last sentence of Section 2.03(a)(i).   (d)           Other Matters.  Administrative Agent shall have received, in form and substance satisfactory to it, such other assurances, documents or consents related to the foregoing as Administrative Agent or Required Lenders may reasonably require.   Each Request for Credit Extension submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in Section 4.02(a) and Section 4.02(b) have been satisfied on and as of the date of the making of the applicable Credit Extension or the honoring of the applicable Request for Credit Extension.   ARTICLE V REPRESENTATIONS AND WARRANTIES   Borrower represents and warrants to Administrative Agent and each Lending Party that:   SECTION 5.01                            CORPORATE EXISTENCE AND POWER.   Each of the Loan Parties and their respective Subsidiaries:  (a) is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation (subject to such changes after the date hereof as are permitted under the Loan Documents); (b) has the power and authority and all governmental licenses, authorizations, consents and approvals:  (i) to own its assets and carry on its business, except to the extent that any failure to have any of the foregoing could not reasonably be expected to have a Material Adverse Effect; and (ii) to execute, deliver, and perform its obligations under the Loan Documents to which each is a party; and (c) is duly qualified as a foreign corporation, partnership or limited liability company, as applicable, and is licensed and in good standing under the laws of each jurisdiction where its ownership, leasing or operation of property or the conduct of its business requires such qualification or license, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.   84 --------------------------------------------------------------------------------   SECTION 5.02                            CORPORATE AUTHORIZATION; NO CONTRAVENTION.   The execution and delivery by each of the Loan Parties and their respective Subsidiaries, and the performance by each of the Loan Parties and their respective Subsidiaries of its obligations under, each Loan Document to which such Person is party have been duly authorized by all necessary corporate or other organizational action, and do not and will not:  (a) contravene the terms of any of such Person’s Organizational Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under:  (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any Subsidiary thereof which could reasonable be expected to have a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.  Each of the Loan Parties and their respective Subsidiaries are in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that any failure to be in compliance could not reasonably be expected to have a Material Adverse Effect.  No Loan Party or any Subsidiary thereof is a party to or is bound by any Contractual Obligation, or is subject to any restriction in any Organizational Document, or any requirement of Law, which could reasonably be expected to have a Material Adverse Effect.   SECTION 5.03                            GOVERNMENTAL AUTHORIZATION; COMPLIANCE WITH LAWS.   (a)           Governmental Authorizations.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution and delivery by any Loan Party (or any Subsidiary thereof) of, or the performance by any Loan Party (or any Subsidiary thereof) of its obligations under, any Loan Document to which it is a party other than (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents or (iii) filings with the SEC.   (b)           Compliance with Laws.  Each Loan Party and each Subsidiary thereof are in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which:  (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors rights generally to limitations on the availability of equitable remedies.   SECTION 5.04                            BINDING EFFECT.   This Agreement has been, and each other Loan Document (when delivered hereunder) will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement and each other Loan Document to which any Loan Party is a party constitute the legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with their respective terms.   85 --------------------------------------------------------------------------------   SECTION 5.05                            LITIGATION.   Except as specifically disclosed on Schedule 5.05, there are no actions, suits, proceedings, claims or disputes pending, or to the best knowledge of Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against any Loan Party or any Subsidiary of any Loan Party that:  (a) purport to affect or pertain to any Loan Document, or any of the transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect.  No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this any Loan Document, or directing that the transactions provided for therein not be consummated as therein provided.  Since the Closing Date, there has been no change in the status of the any matters disclosed on Schedule 5.05 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.   SECTION 5.06                            NO DEFAULTS.   No Default exists or would result from the incurring of any Obligations by Borrower or from the grant and perfection of the Liens upon the Collateral in favor of Administrative Agent.  As of the Closing Date, none of Borrower, any other Loan Party or any Subsidiary of any Loan Party is in default under or with respect to any Contractual Obligation in any respect that, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Closing Date, create an Event of Default under Section 8.01(e).   SECTION 5.07                            EMPLOYEE BENEFIT PLANS.   (a)           Compliance with ERISA Generally.  As of the Closing Date, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state law except to the extent to which the failure to so comply could not reasonably be expected to have a Material Adverse Effect.  Each Plan which is intended to qualify under subsection 401(a) of the Code has received a favorable determination letter from the IRS and, to the best knowledge of Borrower, nothing has occurred that would cause the loss of such qualification.  As of the Closing Date, Borrower and each ERISA Affiliate have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.   (b)           No Actions.  As of the Closing Date:  (i) there are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect; and (ii) there has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.   (c)           Certain Events.  As of the Closing Date:  (i) no ERISA Event has occurred or is reasonably expected to occur; and (ii) no event or circumstance has occurred or exists that, if such event or circumstance had occurred or arisen after the Closing Date, would create an Event of Default under Section 8.01(i).   86 --------------------------------------------------------------------------------   SECTION 5.08                            USE OF PROCEEDS.   Borrower will use the Letters of Credit and the proceeds of the Loans solely for the purposes set forth in and as permitted by Section 6.11 and Section 7.10.   SECTION 5.09                            TITLE TO PROPERTIES.   Each Loan Party and each Subsidiary thereof have good record and marketable title in fee simple to, or valid leasehold interests in, or valid rights to use (including easements) all real property necessary to the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  As of the Closing Date, the properties of each Loan Party and each Subsidiary thereof are subject to no Liens other than Permitted Liens.   SECTION 5.10                            TAXES.   Each Loan Party and each Subsidiary thereof have filed all Federal and other material tax returns and reports required to be filed, and have paid prior to delinquency all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those that are being contested in good faith by appropriate proceedings timely instituted and diligently conducted and for which such Person has set aside adequate reserves, if any, on its financial statements in accordance with GAAP.  There is no proposed tax assessment against any Loan Party or any Subsidiary thereof that would, if made, have a Material Adverse Effect.   SECTION 5.11                            FINANCIAL CONDITION.   (a)           Financial Statements.   (i)            The Audited Financial Statements:  (A) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (B) fairly present the consolidated financial condition of Borrower as of the date thereof and its consolidated results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (C) show, on a consolidated basis, all material indebtedness and other material liabilities, direct or contingent, of Borrower as of the date thereof, including liabilities for taxes, material commitments and Debt required under GAAP.   (ii)           The unaudited consolidated balance sheet of Borrower October 31, 2011, and the related consolidated statements of income or operations and cash flows for the Fiscal Period ended on such date:  (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) fairly present the consolidated financial condition of Borrower as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end adjustments.   87 --------------------------------------------------------------------------------   (b)           No Material Adverse Effect.  Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.   SECTION 5.12                            ENVIRONMENTAL MATTERS.   Each Loan Party conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result thereof each Loan Party has reasonably concluded that, except as specifically disclosed on Schedule 5.12, such Environmental Laws and Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Since the date hereof, there has been no change in the status of the matters disclosed on Schedule 5.12 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.   SECTION 5.13                            MARGIN REGULATIONS; REGULATED ENTITIES.   Neither Borrower nor any Subsidiary thereof is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  None of Borrower, any Subsidiary thereof or any Person controlling Borrower is an “investment company” within the meaning of the Investment Company Act of 1940.  Borrower is not subject to regulation under the Federal Power Act, any state public utilities code or any other Federal or state statute or regulation limiting its ability to incur Debt.   SECTION 5.14                            SWAP OBLIGATIONS.   Neither Borrower nor any Subsidiary thereof has incurred any outstanding obligations under any Swap Contracts, other than obligations under Swap Contracts expressly permitted hereby.  Borrower has voluntarily entered into each Swap Contract to which it is a party based upon its own independent assessment of its consolidated assets, liabilities and commitments, in each case as an appropriate means of mitigating and managing risks associated with such matters, and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract.   SECTION 5.15                            INTELLECTUAL PROPERTY.   Borrower and each Subsidiary thereof own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, except for those the failure of which to own or license could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The use of such intellectual property by Borrower and its Subsidiaries and the operation of their respective businesses do not infringe any valid and enforceable intellectual property rights of any other Person, except to the extent any such infringement could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower or any Subsidiary thereof infringes upon any rights held by   88 --------------------------------------------------------------------------------   any other Person, except to the extent any such infringement could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Except as specifically disclosed on Schedule 5.05, no claim or litigation regarding any of the foregoing is pending or, to Borrower’s knowledge, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to Borrower’s knowledge, proposed, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   SECTION 5.16                            EQUITY INTERESTS HELD BY BORROWER; EQUITY INTERESTS IN BORROWER; .   As of the Closing Date:  (a) the only Subsidiaries of Borrower are those listed on Schedule 5.16; and (b) Borrower holds no Equity Interests in any other Person other than those specifically disclosed on Schedule 5.16.  All of the outstanding Equity Interests in Borrower and in each Subsidiary thereof have been validly issued and are fully paid and nonassessable.   SECTION 5.17                            INSURANCE.   The properties of each Loan Party and each Subsidiary thereof are insured with financially sound and reputable insurance companies that are not Affiliates of any of the Loan Parties, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Loan Party or its Subsidiary operates.   SECTION 5.18                            COLLATERAL AND COLLATERAL DOCUMENTS.   (a)           Enforceable and Perfected Security Interest.   (i)            The Security Agreement creates in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and the proceeds thereof (the “Security Interest”) and (i) when the Pledged Collateral (as defined in the Security Agreement) are delivered to the Administrative Agent together with the proper endorsements, the Security Interest therein shall be perfected, (ii) when each financing statement in the form attached to the Perfection Certificate (each a “Financing Statement”) is filed in the applicable office set forth in Schedule 5.18, the Security Interest (other than with respect to Intellectual Property, as defined in the Security Agreement) shall be perfected to the extent the Security Interest may be perfected by the filing of a UCC financing statement.   (ii)           Upon the recordation of the Security Agreement (or a short-form security agreement in form and substance reasonably satisfactory to Borrower and the Administrative Agent) with the United States Patent and Trademark Office and the United States Copyright Office, and the filing of each Financing Statement in the office indicated therein, the Security Interest in the Intellectual Property shall be perfected.   (iii)          Each deposit account control agreement and securities account deposit account control agreement perfects the Security Interest in each deposit account and securities account, respectively, subject thereto.   89 --------------------------------------------------------------------------------   (b)           Truth and Correctness of Representations and Warranties.  To the best knowledge after due inquiry of any Responsible Officer of Borrower, all representations and warranties of each Loan Party in each Collateral Document are true and correct in all material respects except to the extent they relate to a prior date.   SECTION 5.19                            LABOR RELATIONS.   There are no strikes, lockouts or other material labor disputes against Borrower or any Subsidiary thereof, or to Borrower’s knowledge, threatened against or affecting Borrower or any Subsidiary thereof, and no significant unfair labor practice complaint is pending against Borrower or any Subsidiary thereof or, to the knowledge of Borrower, threatened against any of them before any Governmental Authority.  Except as set forth on Schedule 5.19:  (a) Borrower is not a party to any collective bargaining agreements or contracts; and (b) no union representation exists and, to the knowledge of Borrower, no union organizing activities are taking place.   SECTION 5.20                            SOLVENCY.   Borrower, as well as each Subsidiary thereof, is Solvent.   SECTION 5.21                            FULL DISCLOSURE.   To the best knowledge after due inquiry of any Responsible Officer of Borrower, none of the representations or warranties made by any Loan Party in the Loan Documents as of the date such representations and warranties are made or deemed made, and no statements contained in any exhibit, report, statement or certificate furnished by or on behalf of any Loan Party in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of any Loan Party to Administrative Agent and Lending Parties (or any of the foregoing Persons) prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered; provided that with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.   ARTICLE VI AFFIRMATIVE COVENANTS   So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other than unasserted contingent indemnification obligations and other hedging obligations not related to this Credit Facility) shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding:   SECTION 6.01                            FINANCIAL STATEMENTS.   To the extent not available publicly on EDGAR, Borrower shall deliver to Administrative Agent a sufficient number of copies for delivery by Administrative Agent to each Lender, in form and detail satisfactory to Administrative Agent and Required Lenders:   90 --------------------------------------------------------------------------------   (a)           Annual Financial Statements.  As soon as available, but in any event within ninety (90) days after the end of each fiscal year of Borrower, a consolidated balance sheet for Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth, in each case in comparative form, the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit;   (b)           Fiscal Period Financial Statements.  As soon as available, but in any event within forty-five (45) days after the end of each of the first three Fiscal Periods in each fiscal year, the financial statements filed with the SEC for such Fiscal Period;   (c)           Reserved;   (d)           Forecasts.  As soon as available, but in any event no later than the later of forty-five (45) days after the end of each fiscal year of Borrower or five days following review and approval thereof by the Board of Directors (or similar entity) of Borrower, forecasts prepared by the management of Borrower, in form satisfactory to Administrative Agent and Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows for Borrower and its Subsidiaries for the immediately following fiscal year (including for the fiscal year immediately following the fiscal year in which the Working Capital Maturity Date and/or Floorplan Maturity Date occurs);   (e)           Borrowing Base Certificates.  As soon as available, but in any event no later than thirty (30) days after the end of each month (or more frequently during the continuance of an Event of Default, upon request of Administrative Agent), a Borrowing Base Certificate prepared as of the last day of such month; and   (f)            Monthly Reports.  No later than thirty (30) days after the last day of each month or more frequently during the continuance of an Event of Default if the Lender so requires with respect to each Borrower; (i) a monthly trial balance showing Accounts outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more, (ii) accounts payable, aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or more (iii) a detailed inventory report which includes a summary of Inventory by type with a supporting perpetual inventory report, a designation as to whether each such item of Inventory is subject to a lien other than that of the Administrative Agent, an inventory certification report, as at the end of such month, in each case accompanied by such supporting detail and documentation as shall be requested by Administrative Agent in its reasonable discretion.   SECTION 6.02                            CERTIFICATES; OTHER INFORMATION.   To the extent not available publically on EDGAR, Borrower shall deliver to Administrative Agent a sufficient number of copies for Administrative Agent to deliver to each Lender (and, to the extent   91 --------------------------------------------------------------------------------   not also a Lender, Swing Line Lender and L/C Issuer), in form and detail satisfactory to Administrative Agent and Required Lenders:   (a)           Accountants’ Certificate.  Concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that, in connection with their audit, nothing came to their attention that caused them to believe that Borrower failed to comply with the terms, covenants, provisions or conditions of Section 6.12, insofar as such terms, covenants, provisions or conditions relate to financial and accounting matters, but also noting that their audit was not directed primarily toward obtaining knowledge of or noncompliance with Section 6.12;   (b)           Compliance Certificate.  Concurrently with the delivery of the financial statements referred to in subsections (a) and (b) of Section 6.01, a duly completed Compliance Certificate signed by an appropriate Responsible Officer of Borrower;   (c)           Additional Accountant Reports.  Promptly after any request by Administrative Agent or any Lending Party, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary thereof, or any audit of any of them;   (d)           Equity Interest Holder Reports and Certain Public Filings.  Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the holders of Equity Interests of Borrower and copies of all annual, regular, periodic and special reports and registration statements that Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or Section 15(d) of the Exchange Act, and, in each case, not otherwise required to be delivered to Administrative Agent pursuant hereto;   (e)           Debt Holder Reports.  Upon request from time to time of Administrative Agent, promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement that are not otherwise required to be furnished to Administrative Agent and Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;   (f)            Materials from Governmental Authorities.  Promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each material notice or other correspondence received from any Governmental Authority concerning any investigation or possible investigation or other inquiry by such agency regarding any material financial or other material operational results of any Loan Party or any Subsidiary thereof; and   (g)           Additional Information.  Promptly, such additional information regarding the business, financial or corporate affairs of any Loan Party or any Subsidiary thereof or compliance with the terms of the Loan Documents, as Administrative Agent or any Lending Party may from time to time reasonably request.   92 --------------------------------------------------------------------------------   SECTION 6.03                            NOTICES.   Borrower shall promptly notify Administrative Agent and each Lender (and, to the extent not also a Lender, Swing Line Lender and L/C Issuer) of:   (a)           Defaults.  The occurrence of any Default;   (b)           Matters Involving a Material Adverse Effect.  Any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including any such matter arising from:  (i) any breach or non-performance of, or any default under, a Contractual Obligation of any Loan Party or any Subsidiary thereof; (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Subsidiary thereof and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Subsidiary thereof, including pursuant to any applicable Environmental Laws;   (c)           ERISA Events.  The occurrence of any ERISA Event;   (d)           Certain Acquisitions.  Any Acquisition, or the incurrence of any Contractual Obligations with respect to any Acquisition, by Borrower or any Subsidiary thereof, which notice shall identify the related Acquiree(s), the anticipated or actual closing date of such Acquisition and the aggregate cash and non-cash consideration (including assumption of Debt) to be paid or paid in connection with such Acquisition;   (e)           Certain Asset Sales.  Any Asset Sale, or the incurrence of any Contractual Obligations with respect to any Asset Sale, by Borrower or any Subsidiary thereof if the aggregate cash and non-cash consideration (including assumption of Debt) in connection with such Asset Sale is (or could reasonably be expected to become) $10,000,000 or more, which notice shall identify the related purchaser(s), the anticipated closing date of such Asset Sale and the aggregate cash and non-cash consideration (including assumption of Debt) to be paid in connection with such Asset Sale;   (f)            Swap Contracts.  Upon reasonable request from time to time of Administrative Agent, the Swap Termination Values, together with a description of the method by which such values were determined, relating to any then-outstanding Swap Contracts to which any Loan Party is a party;   (g)           Labor Controversies.  Any material labor controversy resulting in or to Borrower’s knowledge threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving any Loan Party or any Subsidiary thereof; and   (h)           Financial Matters.  Any material change in accounting policies or financial reporting practices by Borrower or any Subsidiary thereof.   Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action, if any, Borrower (or the other applicable Person) has taken or proposes to take with respect thereto (if applicable).  Each notice given pursuant to Section 6.03(a) shall describe with particularity any and all   93 --------------------------------------------------------------------------------   provisions of this Agreement and any other Loan Document that have been (or could reasonably be expected to be) breached or violated.   SECTION 6.04                            PAYMENT OF CERTAIN OBLIGATIONS.   Borrower shall and shall cause each of its Subsidiaries to pay and discharge prior to delinquency all material tax liabilities, assessments and governmental charges or levies upon their respective properties, unless the same are being contested in good faith by appropriate proceedings timely instituted and diligently conducted by the applicable Person and such Person has set aside adequate reserves, if any, on its financial statements in accordance with GAAP.   SECTION 6.05                            PRESERVATION OF EXISTENCE, ETC.   Borrower shall and shall cause each of its Subsidiaries to:  (a) preserve, renew and maintain in full force and effect their respective legal existence and good standing under the Laws of the jurisdiction of their organization except in a transaction permitted by Section 7.04 or Section 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of their respective businesses, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of their respective registered patents, trademarks, trade names and service marks and other intellectual property, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.   SECTION 6.06                            MAINTENANCE OF PROPERTIES.   Borrower shall and shall cause each of its Subsidiaries to:  (a) maintain, preserve and protect all of their respective material properties and equipment necessary to the operation of their respective businesses in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof; in each of the foregoing clauses (a) and (b), except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   SECTION 6.07                            MAINTENANCE OF INSURANCE.   (a)           Borrower shall at all times maintain insurance with insurers acceptable to Administrative Agent, in such amounts and on such terms (including deductibles) and against such risks as Administrative Agent in its sole discretion may require from time to time and including, as applicable and without limitation, business interruption insurance (including force majeure coverage), hazard coverage on an “all risks” basis for all tangible Collateral, theft and physical damage coverage for Collateral consisting of motor vehicles, commercial general liability and such other risks and in such amounts as the Administrative Agent may reasonably request.  All insurance policies must contain an appropriate lender’s interest endorsement or clause, and name Administrative Agent, on behalf of itself and Lenders as an additional insured.   (b)           Borrower shall provide to Administrative Agent, in a form and substance reasonably acceptable to Administrative Agent, endorsements to (i) all hazard and business interruption insurance   94 --------------------------------------------------------------------------------   naming Administrative Agent, on behalf of itself and Lenders as loss payee and (ii) all general liability and other liability policies naming Administrative Agent, on behalf of itself and Lenders as additional insured.   SECTION 6.08                            COMPLIANCE WITH LAWS.   Borrower shall and shall cause each of its Subsidiaries to comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to them or to their respective properties or businesses, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings timely instituted and diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.   SECTION 6.09                            BOOKS AND RECORDS.   Borrower shall and shall cause each of its Subsidiaries to:  (a) maintain proper books of record and account, in which full, true and correct (in all material respects) entries in conformity with GAAP consistently applied are made of all financial transactions and matters involving their respective properties and businesses; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over them, as the case may be.   SECTION 6.10                            INSPECTION RIGHTS.   (a)           Borrower shall and shall cause each of its Subsidiaries to permit representatives and independent contractors of Administrative Agent and each Lender to visit and inspect any of their respective properties, to examine their corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, members, managers and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; provided that, when an Event of Default exists, Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice and as many times as Administrative Agent or any Lender may require.   (b)           Borrower shall and shall cause each of its Subsidiaries to permit representatives and independent contractors of Administrative Agent and each Lender to visit and inspect any of their respective properties, to examine and inspect any Collateral, Inventory or any other property of the Borrower at any time during ordinary business hours.   SECTION 6.11                            USE OF PROCEEDS.   Borrower shall use the proceeds of the Working Capital Borrowings solely:  (a) to pay the costs associated with preparing and closing this Credit Agreement; and (b) otherwise, for working capital and general corporate purposes not in contravention of any Law or of any Loan Document.  Borrower shall   95 --------------------------------------------------------------------------------   use the proceeds of the Floorplan Borrowings only: (a) to provide working capital to finance Inventory and Equipment held by a Loan Party for sale or lease to others; and (b) to provide Letters of Credit supporting purchases of Inventory and Equipment.   SECTION 6.12                            FINANCIAL COVENANTS.   (a)           Consolidated Net Leverage Ratio.  Borrower shall maintain, (a) as at the end of each Fiscal Period beginning with the Fiscal Period ending January 31, 2012 through the Fiscal Period ending January 31, 2014, a Consolidated Net Leverage Ratio not greater than 3.00 : 1.00, and (b) as at the end of each Fiscal Period from and after the Fiscal Period ending April 30, 2014, a Consolidated Net Leverage Ratio not greater than 2.50 : 1.00.   (b)           Consolidated Fixed Charge Coverage Ratio.  Borrower shall maintain, as at the end of each Fiscal Period ending after the Closing Date, a Consolidated Fixed Charge Coverage Ratio not less than 1.25 : 1.00 for the then trailing twelve month period.   SECTION 6.13    COLLATERAL VALUATIONS; COLLATERAL AUDITS.   (a)           Borrower shall and shall cause each of its Subsidiaries to permit Administrative Agent to obtain appraisals or other valuations of Collateral from time to time, in form and substance acceptable to Administrative Agent and at Borrower’s expense; provided as of the Closing Date, Administrative Agent or a third party designated by Administrative Agent shall conduct at least an annual collateral exam once each calendar year and inventory inspections no less than each quarter.   (b)           Borrower shall and shall cause each of its Subsidiaries to permit representatives and independent contractors of Administrative Agent to audit and examine their books, records, journals, orders, receipts and any correspondence and other data relating to the Collateral or the business of Borrower and its Subsidiaries.   SECTION 6.14                            FURTHER ASSURANCES.   Promptly upon the written request by Administrative Agent or Required Lenders, Borrower shall and shall cause each of its Subsidiaries to take such further acts (including the acknowledgement, execution, delivery, recordation, filing and registering of documents) as may reasonably be required from time to time to:  (a) carry out more effectively the purposes of this Agreement or any other Loan Document; (b) subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests covered by any of the Collateral Documents or any other properties, rights or interests (including real property) acquired by Borrower or any Subsidiary thereof following the Closing Date; (c) perfect and maintain the validity, effectiveness and priority of the Liens created or intended to be created by any of the Loan Documents; and (d) better assure, convey, grant, assign, transfer, preserve, protect and confirm to Administrative Agent and Lending Parties the rights, remedies and privileges existing or granted or now or hereafter intended to be granted to such Persons under any Loan Document or other document executed in connection therewith.  Without limiting the generality of the foregoing, Borrower hereby agrees that: (A) within ten (10) Business Days after any Person becomes a Domestic Subsidiary of Borrower following the Closing Date, Borrower shall cause such Domestic Subsidiary to (1) enter into a Joinder Agreement or otherwise deliver a Guaranty; and (2) enter into such Collateral   96 --------------------------------------------------------------------------------   Documents as shall be required by Administrative Agent so as to create, perfect and protect a Lien in favor of Administrative Agent in all of the properties of such Person which constitute Collateral; (B) within ninety (90) days of the date of this Agreement, Borrower shall pledge 100% of the non-voting and 65% of the voting Equity Interests in Titan European Holdings SARL pursuant to a Foreign Pledge Agreement, in form and substance satisfactory to the Administrative Agent; (C) upon request of Administrative Agent, Borrower shall cause Titan European Holdings SARL to pledge its Equity Interests in each other Foreign Subsidiary existing on the date of this Agreement (but only to the extent such pledge would not cause a negative tax consequence for Borrower) pursuant to a Foreign Pledge Agreement, in form and substance satisfactory to the Administrative Agent;  (D) within thirty (30) days after any Person becomes a Foreign Subsidiary following the date of this Agreement, Borrower shall cause each Loan Party or Subsidiary owning Equity Interests therein to (1) pledge 100% of the non-voting and 65% of the voting Equity Interests in each first-tier Foreign Subsidiary pursuant to a Foreign Pledge Agreement, in form and substance satisfactory to the Administrative Agent and (2) pledge the Equity Interests in each other Foreign Subsidiary (but only to the extent such pledge would not cause a negative tax consequence for Borrower) pursuant to a Foreign Pledge Agreement, in form and substance satisfactory to the Administrative Agent; and (E) in connection with the matters described in clauses (A), (B), (C), and (D) above, Borrower shall deliver or cause to be delivered to the Administrative Agent, such opinions, certificates and other documents as the Administrative Agent shall require.   SECTION 6.15    LANDLORDS’ AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS; REAL ESTATE PURCHASES.   Within 30 days of the Closing Date, Borrower shall obtain a landlord’s agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property, mortgagee of owned property or bailee with respect to 90% of Borrower’s and its Subsidiaries’ domestic locations or for domestic locations where not less that 90% of the Collateral which is Equipment and Inventory is stored or located, which agreement or letter shall contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance acceptable to Administrative Agent.  As to any location for which a waiver is not delivered pursuant to the preceding sentence, Borrower shall use its commercially reasonable best efforts to obtain such waivers, in the form and substance set forth in the preceding sentence, for each other domestic location where Collateral is stored or located.  With respect to such domestic locations or warehouse space leased or owned by Borrower or its Subsidiaries as of the Closing Date and thereafter, if Administrative Agent has not received a landlord or mortgagee agreement or bailee letter as of 30 days after the Closing Date (or, if later, as of the date such location is acquired or leased), Collateral at that location shall, in Administrative Agent and Required Lender’s discretion, be excluded from the Floorplan Borrowing Base or Working Capital Borrowing Base, as applicable, or be subject to such reserves as may be established by Administrative Agent and Required Lender in their reasonable credit judgment (which exclusion shall be the sole remedy for failure to meet Borrower’s obligations under this Section 6.15).   SECTION 6.16    CONTROL AGREEMENTS.   Within 60 days of the Closing Date, Borrower shall obtain a control agreement in favor of Administrative Agent and in form and substance acceptable to Administrative Agent with respect to 80% of the bank accounts maintained by Borrower.  As to any bank account for which a control agreement is   97 --------------------------------------------------------------------------------   not delivered pursuant to the preceding sentence or for bank accounts opened by Borrower after the Closing Date, Borrower shall use its commercially reasonable best efforts to obtain such control agreements, in form and substance to Administrative Agent.   ARTICLE VII NEGATIVE COVENANTS   So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation (other than unasserted contingent indemnification obligations and other hedging obligations not related to this Credit Facility) hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding, Borrower shall not and shall not permit any Subsidiary of Borrower directly or indirectly to:   SECTION 7.01                            LIENS.   Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than any of the following (collectively, “Permitted Liens”):   (a)           any Lien created under any Loan Document;   (b)           any Lien existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that:  (i) the property covered thereby is not changed; (ii) the amount secured or benefited thereby is not increased; (iii) the direct or any contingent obligor with respect thereto is not changed; and (iv) and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b);   (c)           any Lien for tax liabilities, assessments and governmental charges or levies not yet due or to the extent that non-payment thereof is permitted by Section 6.04; provided that no notice of lien has been filed or recorded under the Code;   (d)           any landlord’s, grower’s, supplier’s, producer’s, carrier’s, warehouseman’s, mechanic’s, materialman’s, repairman’s or other like Lien arising in the ordinary course of business that is not overdue for a period of more than thirty days or that is being contested in good faith and by appropriate proceedings timely instituted and diligently conducted, if adequate reserves with respect thereto, if any, in accordance with GAAP are set aside on the financial statements of the applicable Person;   (e)           any pledge or deposit in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;   (f)            any deposit to secure the performance of bids, trade contracts or leases (other than Debt), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature, in each case incurred in the ordinary course of business;   98 --------------------------------------------------------------------------------   (g)           any lease, sublease, easement, right-of-way, encroachment, restriction or other similar encumbrance affecting real property that, when aggregated with all other such Liens, is not substantial in amount, and that does not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;   (h)           any Lien securing a judgment for the payment of money not constituting an Event of Default under Section 8.01(h) or securing an appeal or other surety bond related to any such judgment;   (i)            any Lien existing on any property prior to the acquisition thereof by Borrower or any Subsidiary thereof or existing on any property of any Person that becomes a Subsidiary of Borrower after the date hereof prior to the time such Person becomes a Subsidiary of Borrower; provided that:  (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary of Borrower, as the case may be; (ii) such Lien shall not apply to any other property or assets of Borrower or any Subsidiary thereof; and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary of Borrower, as the case may be;   (j)            any Lien securing obligations in respect of a capital lease on the assets subject to such lease; provided that such capital lease is otherwise permitted hereunder;   (k)           any Lien 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 as to deposit accounts or other funds maintained with a creditor depository institution; provided that:  (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by Borrower or any Subsidiary thereof in excess of those set forth by regulations promulgated by the FRB; and (ii) such deposit account is not intended by Borrower or any Subsidiary thereof to provide collateral to the depository institution;   (l)            any Lien securing Debt permitted under:  (i) Section 7.03(c) (but only to the extent a Lien is otherwise permitted hereunder for the underlying Debt); or (ii) Section 7.03(d);   (m)          the right of a licensee under a license agreement entered into by Borrower or any Subsidiary thereof, as licensor, in the ordinary course of business for the use of intellectual property or other intangible assets of Borrower or any such Subsidiary; provided that, in the case of any such license granted by Borrower or any such Subsidiary on an exclusive basis:  (i) such Person shall have determined in its reasonable business judgment that such intellectual property or other intangible assets are no longer useful in the ordinary course of business; (ii) such license is for the use of intellectual property or other intangible assets in geographic regions in which Borrower or any Subsidiary thereof does not have material operations or in connection with the exploitation of any product not then produced or planned to be produced by Borrower or any Subsidiary thereof; (iii) such license is granted in connection with a transaction otherwise permitted by this Agreement in which a third party acquires the right to manufacture or sell any product covered by such intellectual property or other intangible assets from Borrower or such Subsidiary; provided further that, in the case of clauses (ii) and (iii) of this subsection (m), Borrower or such Subsidiary has determined that it is in its best economic interest to grant such license, or (iv) such license is for use in connection with financing provided for the benefit of Borrower’s or its Subsidiaries’ customers;   99 --------------------------------------------------------------------------------   (n)           any Lien securing Debt permitted under Section 7.03(f)(iii); provided that:  (i) any such Lien does not at any time encumber any property other than the property financed by the related Debt and the related products and proceeds thereof; and (ii) the Debt secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of the acquisition thereof;   (o)           any Lien securing Permitted Shortline Debt;   (p)           any Lien securing Permitted Subordinated Debt;   (q)           any Lien securing Permitted Floorplan Debt;   (r)           any Lien securing Debt permitted under Section 7.03(n); provided that any such Lien does not at any time encumber any property other than the property financed by the related Debt and the related products and proceeds thereof; and   (s)            any Lien on assets of Foreign Subsidiaries; provided that such Lien does not extend to, or encumber, (i) assets of the Borrower or any Domestic Subsidiary or (ii) the Equity Interests of Borrower or any of the Subsidiaries, which are owned by a Borrower or any of its Subsidiaries.   SECTION 7.02                            INVESTMENTS.   Make any Investments, except:   (a)           Investments in cash and Cash Equivalents; provided that the aggregate amount thereof outstanding at any time shall not exceed $10,000,000.00, unless the excess thereof is deposited with Administrative Agent or invested in cash or other Cash Equivalents for which Borrower or such Subsidiary shall have provided evidence satisfactory to Administrative Agent that Administrative Agent shall have a perfected, first priority security interest in such Collateral;   (b)           Investments arising from transactions by Borrower or any Subsidiary thereof with customers or suppliers in the ordinary course of business, including Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers and suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;   (c)           advances to officers, directors, employees, shareholders, partners or members of Borrower or any Subsidiary thereof for travel, entertainment, relocation and analogous ordinary business purposes in a maximum aggregate amount at any time outstanding not to exceed $1,000,000.00;   (d)           (i) Investments of Borrower in any Subsidiary Guarantor; (ii) Investments of any Subsidiary Guarantor in any other Subsidiary Guarantor; (iii) Investments of any Subsidiary in Borrower; (iv) Investments of Borrower or any wholly-owned Subsidiary thereof consisting of Equity Interests disclosed on Schedule 5.16; (v) Investments permitted under Section 7.03(k); (vi) Investments of Borrower in Foreign Subsidiaries to fund the purchase price of Permitted Acquisitions; (vii) Investments of Borrower in Foreign Subsidiaries (in addition to those Investments described in clause (vi) of this   100 --------------------------------------------------------------------------------   Section 7.02(d)) in an aggregate amount outstanding at any time not to exceed five percent (5%) of Consolidated Total Assets; and (viii) Investments of any Foreign Subsidiary in any other Foreign Subsidiary;   (e)           any Permitted Acquisition;   (f)            Investments made for the benefit of employees of Borrower or any Subsidiary thereof for the purposes of deferred compensation;   (g)           Guarantees permitted by (i) Section 7.03(c), (ii) Section 7.03(l), or (iii) Section 7.03(m);   (h)           Investments consisting of Swap Contracts permitted by Section 7.03(d);   (i)            Investments consisting of Capital Expenditures;   (j)            Investments existing on the date hereof listed on Schedule 7.02;   (k)           Investments consisting of Permitted Call Options; and   (l)            Other investments in an aggregate amount outstanding at any time not to exceed two percent (2%) of Consolidated Total Assets.   SECTION 7.03                            DEBT.   Create, incur, assume or suffer to exist any Debt, except:   (a)           Debt under the Loan Documents;   (b)           Debt outstanding on the date hereof and listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof; provided that:  (i) the amount of such Debt is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder; and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Debt, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or Lenders than the terms of any agreement or instrument governing the Debt being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Debt does not exceed the then applicable market interest rate;   (c)           Guarantees by Borrower or any Subsidiary thereof of Debt (other than Debt under the Loan Documents) otherwise permitted hereunder of Borrower or any Subsidiary thereof;   (d)           Swap Contracts solely to the extent such Swap Contracts:  (i) are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated   101 --------------------------------------------------------------------------------   with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view”; and (ii) do not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;   (e)           (i) without duplication, existing unsecured Debt, or secured to the extent permitted under Section 7.01(i), of an Acquiree outstanding at the time of the Acquisition of such Acquiree otherwise permitted under Section 7.02(e); provided that such Debt is not created in contemplation of or in connection with such Acquisition or such Person becoming a Subsidiary, as the case may be; and (ii) without duplication, unsecured Debt incurred by Borrower or any Subsidiary thereof in connection with any Acquisition otherwise permitted under Section 7.02(e), consisting of Debt owed to the seller(s) in a Permitted Acquisition representing the deferred purchase price for such Acquisition;   (f)            Debt in respect of:  (i) capital leases; (ii) Synthetic Lease Obligations; and (iii) purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(n);   (g)           Permitted Shortline Debt;   (h)           Permitted Subordinated Debt;   (i)            Debt subject to an Intercreditor Agreement acceptable to Administrative Agent and which is (i) a floorplan facility from CNH Capital America, LLC and (ii) floorplan facility from Agricredit Acceptance, LLC not to exceed $225 million (or a replacement thereof);   (j)            Debt in respect of:  (i) workers’ compensation claims or obligations in respect of health, disability or other employee benefits; (ii) property, casualty or liability insurance or self-insurance; (iii) completion, bid, performance, appeal or surety bonds issued for the account of Borrower or any Subsidiary thereof; or (iv) bankers’ acceptances and other similar obligations not constituting Debt for borrowed money; in each of the foregoing cases, to the extent incurred in the ordinary course of business;   (k)           Intercompany Debt of the Borrower or any Subsidiary owing to and held by the Borrower or any Subsidiary; provided that (i) if the Borrower or any Subsidiary Guarantor is the obligor on such Debt and any Subsidiary (other than a Subsidiary Guarantor) is the obligee thereof, such Debt must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations (including, with respect to any Subsidiary Guarantor, its obligations under Section 10.14, and (ii) Debt owed to the Borrower or any Subsidiary Guarantor must be evidenced by an unsubordinated promissory note pledged to the Administrative Agent under the applicable Collateral Document;   (l)            Guarantees in connection with private label credit cards of the Borrower’s customers and lease residuals in an aggregate amount not to exceed $10,000,000.00;   (m)          Debt of any Foreign Subsidiary and unsecured guarantees by Borrower of such Debt;   (n)           Debt to finance Equipment held by a Loan Party for lease or rental to others;   (o)           Debt consisting of Permitted Warrants or Permitted Call Options; and   102 --------------------------------------------------------------------------------   (p)           Unsecured Debt not otherwise permitted under this Section 7.03 in an aggregate outstanding principal amount not in excess of $225,000,000; provided that (i) the incurrence or maintenance of such Debt would not otherwise result in an Event of Default, (ii) such Debt is not scheduled to mature prior to the Floorplan Maturity Date or Working Capital Maturity Date, (iii) the interest rates and payment requirements of such Debt are consistent with market terms, and (iv) the financial covenants applicable to such Debt are no more restrictive than the financial covenants set forth in Section 6.12 of this Agreement.   SECTION 7.04                            FUNDAMENTAL CHANGES.   (a)                                 Engage in any material line of business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto regardless of geographic location; or   (b)                                 Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:   (i)            any Subsidiary of Borrower may merge with:  (A) Borrower, provided that Borrower shall be the continuing or surviving Person; or (B) any one or more other Subsidiaries of Borrower, provided that, when any wholly-owned Subsidiary of Borrower is merging with another Subsidiary of Borrower, the wholly-owned Subsidiary of Borrower shall be the continuing or surviving Person;   (ii)           any Subsidiary of Borrower may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Borrower or to another Subsidiary of Borrower; provided that if the transferor in such a transaction is a wholly-owned Subsidiary of Borrower, then the transferee must either be Borrower or a wholly-owned Subsidiary of Borrower; and   (iii)          Borrower or any Subsidiary thereof may consummate any Acquisition permitted under Section 7.02(e); or   (c)                                  With respect to any Debt where the total amount of such Debt exceeds $10,000,000.00 (as to such Debt and not in the aggregate), other than Debt arising under the Loan Documents or in connection with buyback obligations of equipment in the ordinary course of business and other than with respect to Permitted Shortline Debt and Permitted Floorplan Debt (unless otherwise provided in any Subordination Agreement or Intercreditor Agreement applicable thereto) and other than with respect to Debt permitted under Section 7.03(m) or 7.03(n), (i) make any voluntary, optional payment or prepayment on account of, or optional redemption or acquisition for value of any portion of, any such Debt, provided that (x) in the case of Debt permitted under Section 7.03(e), any such payments or prepayments may be made on such Debt within 90 days after the closing of the related Acquisition and (y) prepayments of the entire amount of any such Debt made in connection with a refinancing of such Debt are not prohibited by this Section 7.04(c); or (ii) otherwise agree to amend, modify or otherwise alter: (A) the payment terms (including any provisions regarding interest rates, principal or interest payment or prepayment amounts, total principal amounts or similar or related terms and provisions) of or subordination provisions respecting any such Debt (including Permitted Subordinated Debt); or (B) any   103 --------------------------------------------------------------------------------   other provision of such Debt (including Permitted Subordinated Debt) except to the extent that:  (1) no Default exists at the time or results by virtue of any such amendment, modification or other alteration; or (2) such amendment, modification or other alternation could not reasonably be expected to have a Material Adverse Effect.   SECTION 7.05                            DISPOSITIONS.   Make any Disposition or enter into any agreement to make any Disposition, except:   (a)           Dispositions of used, obsolete, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and the abandonment or other Disposition of intellectual property that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the conduct of the business of Borrower and its Subsidiaries, taken as a whole;   (b)           Dispositions of inventory in the ordinary course of business;   (c)           Dispositions of equipment or real property to the extent that:  (i) such property is exchanged for credit against the purchase price of similar replacement property; or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;   (d)           (i) Dispositions of property by Borrower or any Subsidiary thereof to Borrower or to a wholly-owned Subsidiary of Borrower; provided that, if the transferor of such property is a Guarantor, the transferee thereof must be Borrower or a Guarantor, and (ii) Dispositions of property by any Foreign Subsidiary to any other Foreign Subsidiary;   (e)           Dispositions permitted by Section 7.04(b)(i) or Section 7.04(b)(ii), or Dispositions of Investments permitted under Section 7.02(j) or under Section 7.02(k);   (f)            Dispositions consisting of sale and leaseback transactions which (i) are completed on arms-length terms, (ii) for fair market value and (iii) do not exceed $20,000,0000 for a transaction or series of related transactions, or $40,000,000 in the aggregate in a calendar year;   (g)           (i) the unwinding of any Swap Contract; (ii) to the extent permitted hereunder, Restricted Payments; and (iii) to the extent permitted hereunder and otherwise constituting Dispositions, Investments;   (h)           Dispositions of cash and Cash Equivalents; and   (i)            Dispositions of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of business;   provided that any Disposition pursuant to any of the foregoing subsections of this Section 7.05 shall be for not less than fair market value.   104 --------------------------------------------------------------------------------   SECTION 7.06                            RESTRICTED PAYMENTS.   Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:  (a) each Subsidiary may make Restricted Payments to Borrower and to wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a non-wholly-owned Subsidiary, to Borrower and any Subsidiary and to each other owner of Equity Interests of such Subsidiary on a pro rata basis based on their relative ownership interests); (b) Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in common Equity Interests of such Person; (c) Borrower and each Subsidiary may purchase, redeem or otherwise acquire shares of its common Equity Interests or warrants or options to acquire any such common Equity Interests with the proceeds received from the substantially concurrent issue of new shares of its common Equity Interests; (d) so long as no Default or Event of Default exists prior to or immediately following such action or otherwise results from such action, Borrower may declare or pay cash dividends to its holders of Equity Interests in an amount not to exceed 50% of Consolidated Net Income for the then trailing four (4) quarters; and (e) in lieu of issuing stock to participants in the Borrower’s restricted stock plan, pay the associated tax liability with other stock issued.   SECTION 7.07                            INTENTIONALLY OMITTED.   SECTION 7.08                            TRANSACTIONS WITH AFFILIATES.   Enter into any transaction of any kind with any Affiliate of Borrower, irrespective of whether in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or a Subsidiary of Borrower as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to:  (a) transactions between or among Borrower and any Guarantor or between or among Guarantors; (b) Restricted Payments permitted hereunder; and (c) Guarantees permitted by Section 7.03(c) or 7.03(m).   SECTION 7.09                            BURDENSOME AGREEMENTS.   Enter into any Contractual Obligation (other than this Agreement or any other Loan Document) that:  (a) limits the ability:  (i) of any Subsidiary of Borrower to make Restricted Payments to Borrower or to otherwise transfer property to Borrower; (ii) of any Subsidiary of Borrower to Guarantee the Debt of Borrower; or (iii) of Borrower or any Subsidiary thereof to create, incur, assume or suffer to exist Liens on property of such Person; provided that this subclause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Debt permitted under Section 7.03(b), Section 7.03(e), Section 7.03(g), Section 7.03(h) and Section 7.03(f) solely to the extent that any such negative pledge relates to the property financed by or the subject of such Debt; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.   SECTION 7.10                            USE OF PROCEEDS.   Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of   105 --------------------------------------------------------------------------------   Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.   SECTION 7.11                            CERTAIN GOVERNMENTAL REGULATIONS.   Borrower will not, and will not permit any Subsidiary to, (a) be or become subject at any time to any law, regulation, or list of any government agency (including the United States Office of Foreign Asset Control list) that prohibits or limits any Lender from making any loans or extension of credit (including the Loans and the Letters of Credit) to any Loan Party or from otherwise conducting business with any Loan Party, or (b) fail to provide documentary and other evidence of any Loan Party’s identity as may be requested by any Lender or the L/C Issuer at any time to enable such Lender or the L/C Issuer to verify any Loan Party’s identity or to comply with any applicable law or regulation, including Section 326 of the Act.   SECTION 7.12                            AMENDMENT OF MATERIAL DOCUMENTS.   Borrower will not, and will not permit any of the Subsidiaries to, amend, modify or waive any of its rights under (a) any material agreements, contracts or licenses or (b) its Organizational documents, other than in each case amendments, modifications or waivers that could not reasonably be expected to materially adversely affect the Administrative Agent or the Lender Parties; provided to the extent requested by the Administrative Agent for time to time, the Borrower shall deliver or cause to be delivered to the Administrative Agent and each Lender a copy of each such amendment, modification or waiver promptly after the execution and delivery thereof.   SECTION 7.13                            DISQUALIFIED EQUITY INTERESTS.   Borrower will not, and will not permit any Subsidiary to, (a) issue any Disqualified Equity Interests, or (b) be or become liable in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect of any Equity Interests of Borrower or any Subsidiary, except as permitted under Section 7.06.   SECTION 7.14                            TRANSPORTATION SOLUTIONS.   Transportation Solutions shall not own any assets other than assets used for or incidental to providing transportation services to the Loan Parties, including, without limitation, the assets set forth on Schedule 7.13 hereto.   ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES   SECTION 8.01                            EVENTS OF DEFAULT.   Each of the following shall constitute an event of default hereunder (each, an “Event of Default”):   106 --------------------------------------------------------------------------------   (a)           Non-Payment.  Borrower or any other Loan Party fails to pay:  (i) within five Business Days when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation; (ii) within five Business Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder; or (iii) within five Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or   (b)           Specific Covenants.  Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, Section 6.02, Section 6.03, Section 6.05, Section 6.10, Section 6.11, Section 6.12 or Article VII, or any Guarantor fails to perform or observe any term, covenant or agreement contained in its Guaranty; or   (c)           Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or   (d)           Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a), Section 8.01(b) or Section 8.01(c)) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty days; or   (e)           Cross-Default.  (i) Borrower or any Subsidiary thereof:  (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise but after giving affect to any cure period or waivers with respect thereto) in respect of any Debt (other than Debt hereunder and Debt under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount; or (B) fails to observe or perform (within the cure period applicable thereto and any waivers with respect thereto) any other agreement or condition relating to any such other Debt or contained in any document evidencing, securing or relating to any of the foregoing, or any other default or event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Debt to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Debt to be made, prior to its stated maturity; provided that the occurrence of an event that allows holders of Permitted Convertible Debt to convert such Debt prior to its stated maturity shall not constitute an Event of Default under this clause (i) or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from:  (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract); or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Borrower or any such Subsidiary as a result thereof is greater than the Threshold Amount; provided that an Early Termination Date under any Permitted Warrants shall not constitute an Event of Default under this clause (ii); or   (f)            Insolvency Proceedings, Etc.  Any Loan Party or any Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian,   107 --------------------------------------------------------------------------------   conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty calendar days, or an order for relief is entered in any such proceeding; or   (g)           Inability to Pay Debts; Attachment.  (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due; or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty days after its issue or levy; or   (h)           Judgments.  There is entered against any Loan Party or any Subsidiary thereof:  (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage); or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case:  (A) enforcement proceedings are commenced by any creditor upon such judgment or order; or (B) there is a period of thirty consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or   (i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount; or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its Withdrawal Liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or   (j)            Invalidity of Loan Documents.  Any Loan Document or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any Loan Document or any provision thereof; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document or any provision thereof; or   (k)           Liens. Any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Collateral Document, except (a) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or (b) as a result of the Administrative Agent’s failure to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Agreement; or   (l)            Change of Control.  There occurs a Change of Control.   108 --------------------------------------------------------------------------------   SECTION 8.02                            REMEDIES UPON EVENT OF DEFAULT.   If any Event of Default occurs and is continuing, Administrative Agent shall, at the request of, or may, with the consent of, Required Lenders, take any or all of the following actions:   (a)           Termination of Commitments, Etc.  Declare, by written notice to Borrower, the commitment of each Lender to make Loans and any obligation of L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;   (b)           Acceleration of Obligations.  Declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;   (c)           Cash Collateralization of L/C Obligations.  Require that Borrower Cash Collateralize the L/C Obligations in an amount equal to 102.00% of the then Outstanding Amount thereof; and   (d)           Exercise of Rights and Remedies.  Exercise on behalf of itself and Lenders all rights and remedies available to it and Lenders under the Loan Documents;   provided that, upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under any Debtor Relief Law, the obligation of each Lender to make Loans and any obligation of L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations in an amount equal to 102.00% of the then Outstanding Amount thereof shall automatically become effective, in each case, without further act of Administrative Agent or any Lender.   SECTION 8.03                            APPLICATION OF FUNDS.   Following the occurrence of an Event of Default or any exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by Administrative Agent in the following order (on a pro rata basis within each level of priority):   (a)           First, to pay all costs and expenses incident to the enforcement of the Loan Documents or otherwise owing to Administrative Agent hereunder, including all attorneys’ fees and costs and all compensation to any agents, sub-agents and contractors of Administrative Agent and Lending Parties;   (b)           Second, to pay all accrued but unpaid interest on the Loans and L/C Obligations and all accrued but unpaid letter of credit and commitment fees hereunder;   (c)           Third:  (i) to pay the Total Outstandings, the Outstanding Amount of all Swing Line Loans; (ii) to Cash Collateralize all L/C Obligations up to the Outstanding Amount thereof; (iii) to pay all   109 --------------------------------------------------------------------------------   treasury management obligations owing to Administrative Agent and (iv) to pay the total amount of Swap Obligations;   (d)           Fourth, to pay all other Obligations; and   (e)           Fifth, to pay the remainder, if any, to Borrower or to whomever may be lawfully entitled to receive such remainder.   Notwithstanding anything to the contrary contained in this Section 8.03:  (i) Cash Collateral for Eurodollar Rate Loans shall be applied on the maturity date of their respective Interest Periods to repay such Eurodollar Rate Loans; and (ii) subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Third of this Section 8.03 shall be applied to satisfy drawings under such Letters of Credit as they occur; if any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth in this Section 8.03.   ARTICLE IX ADMINISTRATIVE AGENT   SECTION 9.01                            APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.   Each Lending Party hereby irrevocably appoints Wells Fargo to act on its behalf as Administrative Agent hereunder and under the other Loan Documents and authorizes Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article IX are solely for the benefit of Administrative Agent and Lending Parties, and neither Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.   SECTION 9.02                            RIGHTS AS A LENDER.   If the Person serving as Administrative Agent hereunder is also “Swing Line Lender,” “L/C Issuer” or a “Lender,” such Person shall have the same rights and powers in such capacity(ies) as any other Person in such capacity(ies) and may exercise the same as though it were not Administrative Agent.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower or any Subsidiary or Affiliate of Borrower as if such Person were not Administrative Agent hereunder and without any duty to account therefor to any other Lending Party.   SECTION 9.03                            EXCULPATORY PROVISIONS.   Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, Administrative Agent:   110 --------------------------------------------------------------------------------   (a)           No Fiduciary Duties.  Shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;   (b)           No Obligations Regarding Certain Actions.  Shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Administrative Agent is required to exercise as directed in writing by Required Lenders (or such other number or percentage of Lenders as shall be expressly provided for herein or in any other Loan Documents, Swing Line Lender or L/C Issuer, as applicable; provided that Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and   (c)           Disclosure Obligations.  Shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity.   (d)           Limitation on Liability.  Shall not be liable for any action taken or not taken by it:  (i) with the consent or at the request of Required Lenders (or such other number or percentage of Lenders as shall be necessary, or as Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 8.02 and Section 10.01); or (ii) in the absence of its own gross negligence or willful misconduct.  Administrative Agent shall be deemed not to have knowledge of any Default, unless and until Borrower, a Loan Party, or a Lending Party provides written notice to Administrative Agent describing such Default.   (e)           No Further Inquiry. Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into:  (A) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document; (B) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith; (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default; (D) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document; or (E) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Administrative Agent.   SECTION 9.04                            RELIANCE BY ADMINISTRATIVE AGENT.   Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a specified Lending Party, Administrative Agent may presume that such condition is satisfactory to such Lending Party, unless Administrative Agent shall   111 --------------------------------------------------------------------------------   have received notice to the contrary from such Lending Party prior to the making of such Loan or the issuance of such Letter of Credit.  Administrative Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts it selects and shall not be liable for any action it takes or does not take in accordance with the advice of any such counsel, accountants or experts.   SECTION 9.05                            DELEGATION OF DUTIES.   Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents it appoints.  Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article IX shall apply to any such sub-agent and to the Related Parties of 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.  The Administrative Agent shall not be liable for the actions or inactions of any sub-agent   SECTION 9.06                            RESIGNATION OF ADMINISTRATIVE AGENT.   (a)           The Administrative Agent may at any time give notice of its resignation to the Lenders, L/C Issuer, and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.   (b)           If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.   (c)           With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents solely in its capacity as Administrative Agent (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and L/C Issuer directly,   112 --------------------------------------------------------------------------------   until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent, and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents solely in its capacity as Administrative Agent (if not already discharged therefrom as provided in this Section 9.06).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.   (d)           Any resignation by Wells Fargo as Administrative Agent pursuant to this Section 9.06 shall also constitute its resignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder:  (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender; (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents; (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit and (iv) the successor Swing Line Lender shall purchase the outstanding Swing Lines Loans of the resigning Swing Line Lender at par.   SECTION 9.07                            NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.   Each Lending Party acknowledges that it has, independently and without reliance upon Administrative Agent, any other Lending Party or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lending Party also acknowledges that it will, independently and without reliance upon Administrative Agent, any other Lending Party or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.   SECTION 9.08                            NO OTHER DUTIES, ETC.   Notwithstanding anything to the contrary contained herein, no Person identified herein or on the facing page or signature pages hereof as a “Co-Documentation Agent,” “Co-Agent,” “Book Manager,” “Book Runner,” “Arranger,” “Lead Arranger,” “Co-Lead Arranger” or “Co-Arranger,” if any, shall have or be deemed to have any right, power, obligation, liability, responsibility or duty under this Agreement or the other Loan Documents, other than in such Person’s capacity as:  (a) Administrative Agent, a Lender, Swing Line Lender or L/C Issuer hereunder; and (b) an Indemnitee hereunder.   113 --------------------------------------------------------------------------------   SECTION 9.09                            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 any Loan Party, Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:  (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lending Parties and Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lending Parties and Administrative Agent and their respective agents and counsel and all other amounts due Lending Parties and Administrative Agent under Sections 2.03(i), Section 2.09 and Section 10.04) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lending Party to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making of such payments directly to Lending Parties, to pay to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due Administrative Agent under Section 2.09 and Section 10.04.  Nothing contained herein shall be deemed to authorize Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lending Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lending Party or to authorize Administrative Agent to vote in respect of the claim of any Lending Party in any such proceeding.   SECTION 9.10                            GUARANTY MATTERS   Each Lending Party hereby:  (a) irrevocably authorizes Administrative Agent, at its option and in its discretion, to release any Guarantor from its obligations under a Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and (b) agrees that, upon request by Administrative Agent at any time, it will confirm in writing Administrative Agent’s authority to release any such Guarantor pursuant to this Section 9.10.   SECTION 9.11                            COLLATERAL MATTERS   (a)           Directions by Lending Parties.  Each Lending Party hereby, irrevocably authorizes and directs Administrative Agent:  (i) to enter into the Collateral Documents for the benefit of such Person; (ii) without the necessity of any notice to or further consent from any such Person from time to time prior to an Event of Default, to take any action with respect to any Collateral or Collateral Documents that may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents; (iii) to release any Lien on any property granted to or held by Administrative Agent under any Loan Document:  (A) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than unasserted contingent indemnification obligations); (B) that is sold or to be sold as part of or in connection with any Asset Sale or other Disposition permitted hereunder or under any other Loan Document; (C) subject to Section 10.01, if approved, authorized or ratified in writing by   114 --------------------------------------------------------------------------------   Required Lenders; or (D) in connection with any foreclosure sale or other disposition of Collateral after the occurrence of an Event of Default; and (iv) to subordinate any Lien on any property granted to or held by Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by this Agreement or any other Loan Document.  Upon request by Administrative Agent at any time, each Lending Party will confirm in writing Administrative Agent’s authority to release or subordinate its interest in particular types or items of Collateral pursuant to this Section 9.11.   (b)           Certain Actions by Administrative Agent.  Subject to Section 9.11(a)(iii) and Section 9.11(a)(iv), Administrative Agent shall (and is hereby irrevocably authorized by each Lending Party to) execute such documents as may be necessary to evidence the release or subordination of Liens granted to Administrative Agent herein or pursuant hereto upon the applicable Collateral; provided that:  (i) Administrative Agent shall not be required to execute any such document on terms that, in Administrative Agent’s opinion, would expose Administrative Agent to or create any liability or entail any consequence other than the release or subordination of such Liens without recourse or warranty; and (ii) such release or subordination shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any other Loan Party in respect of) all interests retained by Borrower or any other Loan Party, including the proceeds of the sale, all of which shall continue to constitute part of the Collateral.  In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the Collateral, Administrative Agent shall be authorized to deduct all expenses reasonably incurred by Administrative Agent from the proceeds of any such sale, transfer or foreclosure.   (c)           No Obligations Regarding Certain Actions.  Administrative Agent shall have no obligation whatsoever to any Lending Party or any other Person to assure that the Collateral exists or is owned by Borrower or any other Loan Party or is cared for, protected or insured or that the Liens granted to Administrative Agent herein or in any of the Collateral Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Administrative Agent in this Section 9.11 or in any of the Collateral Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, given Administrative Agent’s own interest in the Collateral as one of the Lenders, as Swing Line Lender and as L/C Issuer.   (d)           Appointment of Lending Parties as Agents.  Each Lending Party hereby appoints each other such Person as agent for the purpose of perfecting Administrative Agent’s or such Person’s security interest in assets that, in accordance with Article 9 or Division 9 (as applicable) of the Uniform Commercial Code, can be perfected only by possession.  Should any such Person (other than Administrative Agent) obtain possession of any such Collateral, such Person shall notify Administrative Agent thereof, and, promptly upon Administrative Agent’s request therefor, shall deliver such Collateral to Administrative Agent or in accordance with Administrative Agent’s instructions.   (e)           Credit Bidding.  The Lenders irrevocably authorize the Administrative Agent, at any time upon the direction of the Required Lenders, to credit bid all or any portion of the Obligations in any foreclosure sale relating to the Collateral.  Each Lending Party agrees that, except as otherwise provided in any Loan Documents or with the written consent of Administrative Agent and Required Lenders, it will not take any Enforcement Action, accelerate Obligations under any Loan Documents, or exercise any   115 --------------------------------------------------------------------------------   right that it might otherwise have under applicable Laws to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.   ARTICLE X GENERAL PROVISIONS   SECTION 10.01                     AMENDMENTS, ETC.   No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by Required Lenders (or Administrative Agent at the written request of Required Lenders) and Borrower or the applicable Loan Party, as the case may be, with receipt acknowledged by Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall:   (a)                                 Matters Involving Each Working Capital Lender.  Unless in writing and signed by Borrower, with receipt acknowledged by Administrative Agent, do any of the following:   (i)                                     increase, or extend the expiry of, the Working Capital Commitment of any Working Capital Lender without the written consent of such Working Capital Lender, or increase or extend the Swing Line Sublimit (or reinstate any such Commitment or the Swing Line Sublimit to the extent terminated pursuant to Section 8.02) without the written consent of all Working Capital Lenders; or   (ii)                                  postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to any Working Capital Lender hereunder or under any other Loan Document, including any prepayments specified under Section 2.05, or reduce the amount due to any Working Capital Lender on any such date, in each case without the written consent of such Working Capital Lender; or   (iii)                               reduce the principal of, or the rate of interest or commitment fee specified herein on, any Working Capital Loan or any Working Capital Commitment or other amounts payable to any Working Capital Lender hereunder or under any other Loan Document, in each case without the written consent of such Working Capital Lender; or   (iv)                              amend any provision herein providing for consent or other action by all Working Capital Lenders, without the written consent of all Working Capital Lenders; or   (v)                                 amend the definition of or “Working Capital Maturity Date” contained in Section 1.01 without the written consent of Working Capital Lenders holding in excess of 50% of the Aggregate Working Capital Commitments, provided that the amended definition of “Working Capital Maturity Date” shall not extend the Working Capital Commitment of any Working Capital Lender not consenting to the amended definition; or   116 --------------------------------------------------------------------------------   (vi)                              amend the definition of “Required Working Capital Lenders” contained in Section 1.01 without the written consent of all Working Capital Lenders; and   (b)                                 Matters Involving Each Floorplan Lender.  Unless in writing and signed by Borrower, with receipt acknowledged by Administrative Agent, do any of the following:   (i)                                     increase, or extend the expiry of, the Floorplan Commitment of any Floorplan Lender (or reinstate any such Commitment to the extent terminated pursuant to Section 8.02) without the written consent of such Floorplan Lender; or   (ii)                                  postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to any Floorplan Lender hereunder or under any other Loan Document, including any prepayments and scheduled reductions specified under Sections 2.05, 2.06(b) and 2.06(c), or reduce the amount due to any Floorplan Lender on any such date, in each case without the written consent of such Floorplan Lender; or   (iii)                               reduce the principal of, or the rate of interest or commitment fee specified herein on, any Floorplan Loan or any Floorplan Commitment or other amounts payable to any Floorplan Lender hereunder or under any other Loan Document, in each case without the written consent of such Floorplan Lender; or   (iv)                              amend any provision herein providing for consent or other action by all Floorplan Lenders, without the written consent of all Floorplan Lenders;   (v)                                 amend the definition of “Floorplan Maturity Date” contained in Section 1.01 without the written consent of Floorplan Lenders holding in excess of 50% of the Aggregate Floorplan Commitments, provided that the amended definition of “Floorplan Maturity Date” shall not extend the Floorplan Commitment of any Floorplan Lender not consenting to the amended definition; or   (v)                                 amend the definition of “Required Floorplan Lenders” contained in Section 1.01 without the written consent of all Floorplan Lenders; and   (c)                                  Matters Involving Required Working Capital Lenders.  No such waiver, amendment or consent to any representation, warranty, covenant, Event of Default or other provision of any Loan Document shall be effective for purposes of Section 4.02 with respect to the making of Working Capital Loans, Swing Line Loans or L/C Credit Extensions with respect to Working Capital Letters of Credit after the Closing Date unless in writing and signed by Required Working Capital Lenders and Borrower, with receipt acknowledged by Administrative Agent;   (d)                                 Matters Involving Required Floorplan Lenders.  No such waiver, amendment or consent to any representation, warranty, covenant, Event of Default or other provision of any Loan Document shall be effective for purposes of Section 4.02 with respect to the making of Floorplan Loans, Swing Line Loans or L/C Credit Extensions with respect to Floorplan Letters of Credit after the Closing   117 --------------------------------------------------------------------------------   Date unless in writing and signed by Required Floorplan Lenders and Borrower, with receipt acknowledged by Administrative Agent;   (e)                                  Matters Involving Specific Lenders.  Unless in writing and signed by Required Working Capital Lenders, Required Floorplan Lenders and Borrower, with receipt acknowledged by Administrative Agent, amend or waive any of the terms and provisions contained in Section 2.05, it being understood that any waiver, amendment or consent to Section 2.05 shall also be subject to subsections (a) and (b) of this Section 10.01, if applicable;   (f)                                   Matters Involving All Lenders.  Unless in writing and signed by all Lenders and Borrower, with receipt acknowledged by Administrative Agent, do any of the following:   (i)                                     amend this Section 10.01, or Section 2.13, or any provision herein providing for consent or other action by all Lenders;   (ii)                                  release all or a substantial portion of the Collateral, except as otherwise expressly provided herein or in any of the Collateral Documents, or amend the definition of the obligations secured by any of the Collateral Documents;   (iii)                               except as contemplated by Section 2.14, increase the Aggregate Commitments;   (iv)                              release or terminate any of the Guaranties except as otherwise expressly provided herein or in any of the Loan Documents;   (v)                                 amend the definition of “Required Lenders” contained in Section 1.01;   (vi)                              amend the definition of “Supermajority Floorplan Lenders” contained in Section 1.01; or   (vii)                           amend the definition of “Supermajority Working Capital Lenders” contained in Section 1.01;   (g)                                 Matters Involving Supermajority Floorplan Lenders.  Unless in writing and signed by Supermajority Floorplan Lenders and Borrower, with receipt acknowledged by Administrative Agent, (i) increase any advance rate set forth in the Floorplan Borrowing Base or (ii) amend or waive any of the terms and provisions contained in Section 8.03;   (h)                                 Matters Involving Supermajority Working Capital Lenders.  Unless in writing and signed by Supermajority Working Capital Lenders and Borrower, with receipt acknowledged by Administrative Agent, (i) increase any advance rate set forth in the Working Capital Borrowing Base or (ii) amend or waive any of the terms and provisions contained in Section 8.03;   provided further that:  (i) no amendment, waiver or consent shall, unless in writing and signed by L/C Issuer in addition to such Lenders as are otherwise required by this Section 10.01, affect the rights or duties of L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Swing   118 --------------------------------------------------------------------------------   Line Lender in addition to such Lenders as are otherwise required by this Section 10.01, affect the rights or duties of Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by Administrative Agent in addition to such Lenders as are otherwise required by this Section 10.01, affect the rights or duties of Administrative Agent under this Agreement or any other Loan Document; (iv) the Fee Letter and the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto; and Notwithstanding anything to the contrary herein, no Lender who is at the time a Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.   SECTION 10.02                     NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS.   (a)                                 Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 10.02(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, sent by telefacsimile transmission or sent by approved electronic communication in accordance with Section 10.02(b), and all notices and other communications expressly permitted to be given by telephone shall be made to the applicable telephone number, as follows:   (i)                                     if to Borrower, any Guarantor, Administrative Agent, L/C Issuer or Swing Line Lender, to the address, telefacsimile number, e-mail address or telephone number specified for such Person on Schedule 10.02; and   (ii)                                  if to any Lender, to the address, telefacsimile number, e-mail address or telephone number specified in its Administrative Detail Form.   Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received, and notices sent by telefacsimile transmission or by means of approved electronic communication shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient); provided that notices delivered through electronic communications to the extent provided by Section 10.02(b) shall be effective as provided in such subsection (b).   (b)                                 Electronic Communications. Each Lending Party agrees that notices and other communications to it hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Administrative Agent; provided that the foregoing shall not apply to notices to any Lending Party pursuant to Article II if such Lending Party has notified Administrative Agent that it is incapable of receiving notices under Article II by electronic communication; provided further that, as of the date hereof, each Lending Party who is a party hereto confirms that it is capable of receiving notices under Article II by electronic communication.  In furtherance of the foregoing, each Lending Party hereby agrees to notify Administrative Agent in writing, on or before the date such Lending Party becomes a party to this Agreement, of such Lending Party’s e-mail address to which a notice may be sent (and from time to time thereafter to ensure that Administrative Agent has on record an effective e-mail address for such Lending Party).  Each of   119 --------------------------------------------------------------------------------   Administrative Agent and Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by means of electronic communication pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.   Unless Administrative Agent otherwise prescribes:  (A) 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 such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient; and (B) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (A) of notification that such notice or communication is available and identifying the website address therefor.   (c)                                  Change of Address, Etc.  Borrower, Administrative Agent, Swing Line Lender and L/C Issuer may change their respective address(es), telefacsimile number(s), telephone number(s) or e-mail address(es) for notices and other communications hereunder by notice to the other parties hereto.  Each Lender may change its address(es), telefacsimile number(s), telephone number(s) or e-mail address(es) for notices and other communications hereunder by notice to Borrower, Administrative Agent, Swing Line Lender and L/C Issuer.   (d)                                 Reliance by Administrative Agent and Lending Parties.  Administrative Agent and Lending Parties shall be entitled to rely and act upon any notices (including telephonic or electronically delivered Requests for Credit Extension) purportedly given by or on behalf of Borrower even if:  (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein; or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  Borrower shall indemnify Administrative Agent and each Lending Party and their respective Related Parties from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower.  All telephonic notices to and other telephonic communications with Administrative Agent may be recorded by Administrative Agent, and each of the parties hereto hereby consents to such recording.   (e)                                  Platform.  Borrower hereby acknowledges that:  (i) Administrative Agent may make available to Lending Parties Specified Materials by posting some or all of the Specified Materials on an Electronic Platform; (ii) the distribution of materials and information through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with any such distribution, the Electronic Platform is provided and used on an “AS IS,” “AS AVAILABLE” basis; and (iii) neither Administrative Agent nor any of its Affiliates warrants the accuracy, completeness, timeliness, sufficiency or sequencing of the Specified Materials posted on the Electronic Platform.  ADMINISTRATIVE AGENT, ON BEHALF OF ITSELF AND ITS AFFILIATES, EXPRESSLY AND SPECIFICALLY DISCLAIMS, WITH RESPECT TO THE ELECTRONIC PLATFORM, DELAYS IN POSTING OR DELIVERY, OR PROBLEMS ACCESSING THE SPECIFIED MATERIALS POSTED ON THE ELECTRONIC PLATFORM, AND ANY LIABILITY FOR ANY LOSSES, COSTS, EXPENSES OR LIABILITIES THAT MAY BE SUFFERED OR INCURRED IN CONNECTION WITH THE ELECTRONIC PLATFORM.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSES, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS   120 --------------------------------------------------------------------------------   MADE BY ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES IN CONNECTION WITH THE ELECTRONIC PLATFORM.   Each Lending Party hereby agrees that notice to it in accordance with Section 10.02(b)(i) specifying that any Specified Materials have been posted to the Electronic Platform shall, for purposes of this Agreement, constitute effective delivery to such Lending Party of such Specified Materials.   EACH LENDING PARTY:  (1) ACKNOWLEDGES THAT THE SPECIFIED MATERIALS, INCLUDING INFORMATION FURNISHED TO IT BY ANY LOAN PARTY OR ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THE LOAN DOCUMENTS, MAY INCLUDE MATERIAL, NON-PUBLIC INFORMATION CONCERNING THE LOAN PARTIES AND THEIR RESPECTIVE SUBSIDIARIES OR AFFILIATES OR THEIR RESPECTIVE SECURITIES; AND (2) CONFIRMS THAT:  (I) IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL, NON-PUBLIC INFORMATION; (II) IT WILL HANDLE SUCH MATERIAL, NON-PUBLIC INFORMATION IN ACCORDANCE WITH SUCH PROCEDURES AND APPLICABLE LAWS, INCLUDE FEDERAL AND STATE SECURITIES LAWS; AND (III) IT HAS IDENTIFIED IN ITS ADMINISTRATIVE DETAIL FORM A CONTACT PERSON WHO MAY RECEIVE SPECIFIED MATERIALS THAT MAY CONTAIN MATERIAL, NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAWS.   SECTION 10.03                     NO WAIVER; CUMULATIVE REMEDIES.   No failure by Administrative Agent or any Lending Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; no single or partial exercise of any right, remedy, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.   SECTION 10.04                     EXPENSES; INDEMNITY; DAMAGE WAIVER.   (a)                                 Costs and Expenses.  Borrower shall pay:  (i) all reasonable out-of-pocket expenses incurred by Administrative Agent, Arranger and their respective Affiliates (including the reasonable fees, charges and disbursements of counsel for 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 or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated); (ii) all reasonable out-of-pocket expenses incurred by L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (iii) all out-of-pocket expenses incurred by Administrative Agent or any Lending Party (including the fees, charges and disbursements of any counsel for Administrative Agent or any Lending Party), and shall pay all fees and time charges for attorneys, who may be employees of Administrative Agent or any Lending Party, in connection with the enforcement or protection of its rights:  (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 10.04; or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout or restructuring (or negotiations in connection with the foregoing) in respect of such Loans or Letters of Credit.   121 --------------------------------------------------------------------------------   (b)                                 Indemnification by Borrower.  Borrower shall indemnify each Indemnitee against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys, who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of:  (i) the execution or delivery of this Agreement, any other Loan Document or any document contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby; (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit); (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Borrower, any Subsidiary thereof or any other Loan Party, or any Environmental Claim or Environmental Liability related in any way to Borrower, any Subsidiary thereof or any other Loan Party; or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower, any Subsidiary thereof or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses result from the gross negligence or willful misconduct of such Indemnitee.   (c)                                  Reimbursement by Lenders.  If Borrower for any reason fails to pay when due any amount that it is required to pay under Section 10.04(a) or Section 10.04(b) to Administrative Agent (or any sub-agent thereof), Swing Line Lender, L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to Administrative Agent (or any such sub-agent), Swing Line Lender, L/C Issuer or such Related Party, as the case may be, such Lender’s pro rata share (based on its Percentage Shares (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Administrative Agent (or any such sub-agent), Swing Line Lender, L/C Issuer or any Related Party of any of the foregoing acting for Administrative Agent (or any such sub-agent), Swing Line Lender or L/C Issuer in connection with such capacity.  The obligations of Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).   (d)                                 Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, each Loan Party shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any document contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in Section 10.04(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.   122 --------------------------------------------------------------------------------   (e)                                  Payments.  All amounts due under this Section 10.04 shall be payable not later than three Business Days after demand therefor.   (f)                                   Survival.  The agreements in this Section 10.04 shall survive the resignation of Administrative Agent, Swing Line Lender and L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.   SECTION 10.05                     MARSHALLING; PAYMENTS SET ASIDE.   Neither Administrative Agent nor any other Lending Party shall be under any obligation to marshal any asset in favor of Borrower or any other Person or against or in payment of any or all of the Obligations.  To the extent that any payment by or on behalf of Borrower is made to Administrative Agent or any Lending Party, or Administrative Agent or any Lending Party exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Administrative Agent or any Lending Party in such Person’s discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then:  (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred; and (b) each Lending Party severally agrees to pay to Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Administrative Agent plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate.  The obligations of each Lending Party under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.   SECTION 10.06                     SUCCESSORS AND ASSIGNS.   (a)                                 Successors and Assigns Generally.  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 neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Administrative Agent and each Lending Party, and neither Swing Line Lender nor any Lender may assign or otherwise transfer any of its rights or obligations hereunder except:  (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section 10.06; (ii) by way of participation in accordance with the provisions of subsection (d) of this Section 10.06; or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section 10.06 (and any other attempted assignment or transfer by any party hereto 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, Participants to the extent provided in subsection (d) of this Section 10.06 and, to the extent expressly contemplated hereby, the Related Parties of each of Administrative Agent and each Lending Party) any legal or equitable right, remedy or claim under or by reason of this Agreement.   (b)                                 Assignments by Swing Line Lender or any Lender.  Swing Line Lender or any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for   123 --------------------------------------------------------------------------------   purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans, as applicable) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment(s) and Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment(s) (which for this purpose includes Loans outstanding thereunder) or, if any Commitment is not then in effect, the Outstanding Amount of the Loans of the assigning Swing Line Lender or Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Administrative Agent or, if a “trade date” is specified in the Assignment and Assumption, as of such trade date, shall not be less than $5,000,000.00 unless each of Administrative Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to rights in respect of Swing Line Loans; (iii) any assignment of a Commitment must be approved by Administrative Agent, L/C Issuer and Swing Line Lender, unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); (iv) the Eligible Assignee, if it is not then a Lender, shall deliver to Administrative Agent an Administrative Detail Form; and (v) the parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500.00; and (vi) so long as an Event of Default does not then exist, any assignment shall require the prior written consent of Borrower (which shall not be unreasonably withheld or delayed) unless the Person that is the proposed assignee is an Eligible Assignee.  Subject to acceptance and recording thereof by Administrative Agent pursuant to subsection (c) of this Section 10.06, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of Swing Line Lender or a Lender, as applicable, under this Agreement, and the assigning Swing Line Lender or Lender, as applicable, thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lending Party’ rights and obligations under this Agreement, such Lending Party shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 3.01, Section 3.04, Section 3.05 and Section 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, Borrower (at its expense) shall execute and deliver Notes to the assignee Lending Party.  Any assignment or transfer by Swing Line Lender or a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lending Party of a participation in such rights and obligations in accordance with subsection (d) of this Section 10.06.   (c)                                  Register.  Administrative Agent, acting solely for this purpose as an agent of Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a Register.  The entries in the Register shall be conclusive, and Borrower, Administrative Agent and Lending Parties may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by each of Borrower, Swing Line Lender and L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice.  In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Lender   124 --------------------------------------------------------------------------------   wishing to consult with other Lenders in connection therewith may request and receive from Administrative Agent a copy of the Register.   (d)                                 Participations.  Swing Line Lender or any Lender may at any time, without the consent of, or notice to, Borrower or Administrative Agent, sell participations to any Participant in all or a portion of such Person’s rights and/or obligations under this Agreement (including all or a portion of its Commitment(s) and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that:  (i) such Person’s obligations under this Agreement shall remain unchanged; (ii) such Person shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) Borrower, Administrative Agent and Lending Parties shall continue to deal solely and directly with such Person in connection with such Person’s rights and obligations under this Agreement.  Any document pursuant to which Swing Line Lender or a Lender sells such a participation shall provide that such Person shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided that such document may provide that such Person will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section 10.06, Borrower agrees that each Participant shall be entitled to the benefits of Section 3.01, Section 3.04 and Section 3.05 to the same extent as if it were a Lending Party hereunder and had acquired its interest by assignment pursuant to subsection (b) of this Section 10.06.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lending Party, as long as such Participant agrees to be subject to Section 2.13 as though it were a Lending Party.   (e)                                  Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 3.01 or Section 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.   (f)                                   Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.   (g)                                 Resignation as L/C Issuer or Swing Line Lender.  Notwithstanding anything to the contrary contained herein, if at any time Wells Fargo assigns all of its Commitments and Loans pursuant to subsection (b) of this Section 10.06, Wells Fargo may do either or both of the following:  (i) upon thirty days’ notice to Borrower and all Lenders, resign as L/C Issuer; or (ii) upon thirty days’ notice to Borrower, resign as Swing Line Lender.  In the event of any such resignation as L/C Issuer or Swing Line Lender, Borrower shall be entitled to appoint from among Lenders a successor L/C Issuer or Swing Line Lender; provided that no failure by Borrower to appoint any such successor shall affect the resignation of Wells Fargo as L/C Issuer or Swing Line Lender, as the case may be.  If Wells Fargo resigns as   125 --------------------------------------------------------------------------------   L/C Issuer, it shall retain all the rights and obligations of L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require Lenders to make Working Capital Loans or Floorplan Loans that are Base Rate Revolving Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) and Section 2.03(d)).  If Wells Fargo resigns as Swing Line Lender, it shall retain all the rights of Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require Lenders to make Working Capital Loans that are Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).   SECTION 10.07                     TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.   Administrative Agent and each Lending Party each agrees to maintain the confidentiality of the Information, except that Information may be disclosed:  (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and agree to keep such Information confidential on the same terms as provided herein); (b) to the extent requested by any regulatory authority, purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications, (g) unless an Event of Default has occurred and is continuing, subject to an agreement containing provisions substantially the same as those of this Section 10.07 to:  (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement; or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party; (h) with the consent of Borrower; or (i) to the extent such Information:  (i) becomes publicly available other than as a result of a breach of this Section 10.07; or (ii) becomes available to Administrative Agent, any Lending Party or any of their respective Affiliates on a non-confidential basis from a source other than Borrower or any Subsidiary thereof and not in contravention of this Section 10.07.  For purposes of this Section 10.07, “Information” means all information (including financial information) received from Borrower or any Subsidiaries thereof relating to Borrower or any Subsidiary thereof or any of their respective businesses, other than any such information that is available to Administrative Agent or any Lending Party on a nonconfidential basis, and not in contravention of this Section 10.07, prior to disclosure by Borrower or any Subsidiary thereof.  Any Person required to maintain the confidentiality of Information as provided in this Section 10.07:  (A) 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; and (B) shall not disclose any financial information concerning Borrower, any Subsidiary thereof or their respective businesses (including any information based on any such financial information) or use any such financial information for commercial purposes without the prior written consent of Borrower.   126 --------------------------------------------------------------------------------   SECTION 10.08                     RIGHT OF SETOFF.   If an Event of Default shall have occurred and be continuing, each of Lending Parties and their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lending Party to or for the credit or the account of Borrower or any other Loan Party against any and all of the Obligations to such Lending Party or such Affiliate, irrespective of whether or not such Lending Party shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lending Party different from the branch or office holding such deposit or obligated on such obligations.  The rights of each Lending Party and its Affiliates under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) that such Lending Party or its Affiliates may have.  Each Lending Party agrees to notify Borrower and Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.  NOTWITHSTANDING THE FOREGOING, NO LENDING PARTY SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF BORROWER OR ANY SUBSIDIARY THEREOF HELD OR MAINTAINED BY SUCH LENDING PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF ADMINISTRATIVE AGENT.   SECTION 10.09                     INTEREST RATE LIMITATION.   Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the Maximum Rate.  If Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to Borrower.  In determining whether the interest contracted for, charged, or received by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law:  (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.   SECTION 10.10                     COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION.   (a)                                 Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic   127 --------------------------------------------------------------------------------   (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.   (b)                                 Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.   SECTION 10.11                     SURVIVAL OF REPRESENTATIONS AND WARRANTIES.   All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by Administrative Agent and each Lender, regardless of any investigation made by Administrative Agent or any Lender or on their behalf and notwithstanding that Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation (other than unasserted contingent indemnification obligations) hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.   SECTION 10.12                     SEVERABILITY.   If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.   SECTION 10.13                     USA PATRIOT ACT NOTICE.   Each Lending Party that is subject to the Act and Administrative Agent (for itself and not on behalf of any Lending Party) hereby notify Borrower that, pursuant to the requirements of the Act, they are each required to obtain, verify and record information that identifies Borrower and each other Loan Party, which information includes the name and address of Borrower and each other Loan Party and other information that will allow such Lending Party or Administrative Agent, as applicable, to identify Borrower and each other Loan Party in accordance with the Act.   128 --------------------------------------------------------------------------------   SECTION 10.14                     GUARANTY BY SUBSIDIARIES.   (a)                                 Guaranty.  Each Subsidiary of Borrower party hereto (each, a “Subsidiary Guarantor”) unconditionally and irrevocably guarantees to Administrative Agent and Lending Parties the full and prompt payment when due (whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise) and performance of the Obligations (the “Guaranteed Obligations”).  The Guaranteed Obligations include interest that, but for a proceeding under any Debtor Relief Law, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in any such proceeding.   (b)                                 Separate Obligation.  Each Subsidiary Guarantor acknowledges and agrees that:  (i) the Guaranteed Obligations are separate and distinct from any Debt arising under or in connection with any other document, including under any provision of this Agreement other than this Section 10.14, executed at any time by such Subsidiary Guarantor in favor of Administrative Agent or any Lending Party; and (ii) such Subsidiary Guarantor shall pay and perform all of the Guaranteed Obligations as required under this Section 10.14, and Administrative Agent and Lending Parties may enforce any and all of their respective rights and remedies hereunder, without regard to any other document, including any provision of this Agreement other than this Section 10.14, at any time executed by such Subsidiary Guarantor in favor of Administrative Agent or any Lending Party, irrespective of whether any such other document, or any provision thereof or hereof, shall for any reason become unenforceable or any of the Debt thereunder shall have been discharged, whether by performance, avoidance or otherwise.  Each Subsidiary Guarantor acknowledges that, in providing benefits to Borrower, Administrative Agent and Lending Parties are relying upon the enforceability of this Section 10.14 and the Guaranteed Obligations as separate and distinct Debt of such Subsidiary Guarantor, and each Subsidiary Guarantor agrees that Administrative Agent and Lending Parties would be denied the full benefit of their bargain if at any time this Section 10.14 or the Guaranteed Obligations were treated any differently.  The fact that the guaranty is set forth in this Agreement rather than in a separate guaranty document is for the convenience of Borrower and Subsidiary Guarantors and shall in no way impair or adversely affect the rights or benefits of Administrative Agent and Lending Parties under this Section 10.14.  Each Subsidiary Guarantor agrees to execute and deliver a separate document, immediately upon request at any time of Administrative Agent or any Lending Party, evidencing such Subsidiary Guarantor’s obligations under this Section 10.14.  Upon the occurrence of any Event of Default, a separate action or actions may be brought against such Subsidiary Guarantor, whether or not Borrower, any other Subsidiary Guarantor or any other Person is joined therein or a separate action or actions are brought against Borrower, any such other Subsidiary Guarantor or any such other Person.   (c)                                  Limitation of Guaranty.  To the extent that any court of competent jurisdiction shall impose by final judgment under applicable law (including the Uniform Fraudulent Transfer Act and Sections 544 and 548 of the Bankruptcy Code) any limitations on the amount of any Subsidiary Guarantor’s liability with respect to the Guaranteed Obligations that Administrative Agent or any Lending Party can enforce under this Section 10.14, Administrative Agent and Lending Parties by their acceptance hereof accept such limitation on the amount of such Subsidiary Guarantor’s liability hereunder to the extent needed to make this Section 10.14 fully enforceable and nonavoidable.   (d)                                 Liability of Subsidiary Guarantors.  The liability of any Subsidiary Guarantor under this Section 10.14 shall be irrevocable, absolute, independent and unconditional, and shall not be affected   129 --------------------------------------------------------------------------------   by any circumstance that might constitute a discharge of a surety or guarantor other than the indefeasible payment and performance in full of all Guaranteed Obligations.  In furtherance of the foregoing and without limiting the generality thereof, each Subsidiary Guarantor agrees as follows:   (i)                                     such Subsidiary Guarantor’s liability hereunder shall be the immediate, direct, and primary obligation of such Subsidiary Guarantor and shall not be contingent upon Administrative Agent’s or any Lending Party’s exercise or enforcement of any remedy it may have against Borrower or any other Person, or against any collateral or other security for any Guaranteed Obligations;   (ii)                                  this Guaranty is a guaranty of payment when due and not merely of collectibility;   (iii)                               Administrative Agent and Lending Parties may enforce this Section 10.14 upon the occurrence of an Event of Default notwithstanding the existence of any dispute among Administrative Agent and Lending Parties, on the one hand, and Borrower or any other Person, on the other hand, with respect to the existence of such Event of Default;   (iv)                              such Subsidiary Guarantor’s payment of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge such Subsidiary Guarantor’s liability for any portion of the Guaranteed Obligations remaining unsatisfied; and   (v)                                 such Subsidiary Guarantor’s liability with respect to the Guaranteed Obligations shall remain in full force and effect without regard to, and shall not be impaired or affected by, nor shall such Subsidiary Guarantor be exonerated or discharged by, any of the following events:   (A)                               any proceeding under any Debtor Relief Law;   (B)                               any limitation, discharge, or cessation of the liability of Borrower or any other Person for any Guaranteed Obligations due to any statute, regulation or rule of law, or any invalidity or unenforceability in whole or in part of any of the Guaranteed Obligations or the Loan Documents;   (C)                               any merger, acquisition, consolidation or change in structure of any Company or any other guarantor or Person, or any sale, lease, transfer or other disposition of any or all of the assets or shares of Borrower or any other Person;   (D)                               any assignment or other transfer, in whole or in part, of Administrative Agent’s or any Lending Party’s interests in and rights under this Agreement (including this Section 10.14) or the other Loan Documents;   (E)                                any claim, defense, counterclaim or setoff, other than that of prior performance, that Borrower, such Subsidiary Guarantor, any other Guarantor or any other Person may have or assert, including any defense of incapacity or lack of corporate or other authority to execute any of the Loan Documents;   130 --------------------------------------------------------------------------------   (F)                                 Administrative Agent’s or any Lending Party’s amendment, modification, renewal, extension, cancellation or surrender of any Loan Document or any Guaranteed Obligations;   (G)                               Administrative Agent’s or any Lending Party’s exercise or non-exercise of any power, right or remedy with respect to any Guaranteed Obligations or any collateral;   (H)                              Administrative Agent’s or any Lending Party’s vote, claim, distribution, election, acceptance, action or inaction in any proceeding under any Debtor Relief Law; or   (I)                                   any other guaranty, whether by such Subsidiary Guarantor or any other Person, of all or any part of the Guaranteed Obligations or any other indebtedness, obligations or liabilities of Borrower to Administrative Agent or any Lending Party.   (e)                                  Consents of Subsidiary Guarantors.  Each Subsidiary Guarantor hereby unconditionally consents and agrees that, without notice to or further assent from such Subsidiary Guarantor:   (i)                                     the principal amount of the Guaranteed Obligations may be increased or decreased and additional indebtedness or obligations of Borrower under the Loan Documents may be incurred and the time, manner, place or terms of any payment under any Loan Document may be extended or changed, by one or more amendments, modifications, renewals or extensions of any Loan Document or otherwise;   (ii)                                  the time for Borrower’s (or any other Person’s) performance of or compliance with any term, covenant or agreement on its part to be performed or observed under any Loan Document may be extended, or such performance or compliance waived, or failure in or departure from such performance or compliance consented to, all in such manner and upon such terms as Administrative Agent and Lending Parties (as applicable under the relevant Loan Documents) may deem proper;   (iii)                               Administrative Agent and Lending Parties may request and accept other guaranties and may take and hold security as collateral for the Guaranteed Obligations, and may, from time to time, in whole or in part, exchange, sell, surrender, release, subordinate, modify, waive, rescind, compromise or extend such other guaranties or security and may permit or consent to any such action or the result of any such action, and may apply such security and direct the order or manner of sale thereof; and   (iv)                              Administrative Agent or Lending Parties may exercise, or waive or otherwise refrain from exercising, any other right, remedy, power or privilege even if the exercise thereof affects or eliminates any right of subrogation or any other right of such Subsidiary Guarantor against Borrower.   131 --------------------------------------------------------------------------------   (f)                                   Subsidiary Guarantor’s Waivers.  Each Subsidiary Guarantor waives and agrees not to assert:   (i)                                     any right to require Administrative Agent or any Lending Party to proceed against Borrower, any other Guarantor or any other Person, or to pursue any other right, remedy, power or privilege of Administrative Agent or any Lending Party whatsoever;   (ii)                                  the defense of the statute of limitations in any action hereunder or for the collection or performance of the Guaranteed Obligations;   (iii)                               any defense arising by reason of any lack of corporate or other authority or any other defense of Borrower, such Guarantor or any other Person;   (iv)                              any defense based upon Administrative Agent’s or any Lending Party’s errors or omissions in the administration of the Guaranteed Obligations;   (v)                                 any rights to set-offs and counterclaims;   (vi)                              without limiting the generality of the foregoing, to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties, or that may conflict with the terms of this Section 10.14; and   (vii)                           any and all notice of the acceptance of this guaranty, and any and all notice of the creation, renewal, modification, extension or accrual of the Guaranteed Obligations, or the reliance by Administrative Agent and Lending Parties upon this Guaranty, or the exercise of any right, power or privilege hereunder.  The Guaranteed Obligations shall conclusively be deemed to have been created, contracted, incurred and permitted to exist in reliance upon this Guaranty.  Each Subsidiary Guarantor waives promptness, diligence, presentment, protest, demand for payment, notice of default, dishonor or nonpayment and all other notices to or upon Borrower, each Guarantor or any other Person with respect to the Guaranteed Obligations.   (g)                                 Financial Condition of Borrower.  No Subsidiary Guarantor shall have any right to require Administrative Agent or any Lending Party to obtain or disclose any information with respect to:  the financial condition or character of Borrower or the ability of Borrower to pay and perform the Guaranteed Obligations; the Guaranteed Obligations; any collateral or other security for any or all of the Guaranteed Obligations; the existence or nonexistence of any other guarantees of all or any part of the Guaranteed Obligations; any action or inaction on the part of Administrative Agent or any Lending Party or any other Person; or any other matter, fact or occurrence whatsoever.  Each Subsidiary Guarantor hereby acknowledges that it has undertaken its own independent investigation of the financial condition of Borrower and all other matters pertaining to this Guaranty and further acknowledges that it is not relying in any manner upon any representation or statement of Administrative Agent or any Lending Party with respect thereto.   (h)                                 Subrogation.  Until the Guaranteed Obligations shall be satisfied in full and the Aggregate Commitments shall be terminated, each Subsidiary Guarantor shall not have, and shall not   132 --------------------------------------------------------------------------------   directly or indirectly exercise:  (i) any rights that it may acquire by way of subrogation under this Section 10.14, by any payment hereunder or otherwise; (ii) any rights of contribution, indemnification, reimbursement or similar suretyship claims arising out of this Section 10.14; or (iii) any other right that it might otherwise have or acquire (in any way whatsoever) that could entitle it at any time to share or participate in any right, remedy or security of Administrative Agent or any Lending Party as against any Borrower or other Guarantors or any other Person, whether in connection with this Section 10.14, any of the other Loan Documents or otherwise.  If any amount shall be paid to any Subsidiary Guarantor on account of the foregoing rights at any time when all the Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the benefit of Administrative Agent and Lending Parties and shall forthwith be paid to Administrative Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents.   (i)                                    Subordination.  All payments on account of all indebtedness, liabilities and other obligations of Borrower to any Subsidiary Guarantor or to any other Subordinated Guarantor, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined (the “Subsidiary Guarantor Subordinated Debt”) shall be subject, subordinate and junior in right of payment and exercise of remedies, to the extent and in the manner set forth herein, to the prior payment in full in cash or cash equivalents of the Guaranteed Obligations.  As long as any of the Guaranteed Obligations (other than unasserted contingent indemnification obligations) shall remain outstanding and unpaid, each Subsidiary Guarantor shall not accept or receive any payment or distribution by or on behalf of Borrower or any other Subsidiary Guarantor, directly or indirectly, or assets of Borrower or any other Subsidiary Guarantor, of any kind or character, whether in cash, property or securities, including on account of the purchase, redemption or other acquisition of Subsidiary Guarantor Subordinated Debt, as a result of any collection, sale or other disposition of collateral, or by setoff, exchange or in any other manner, for or on account of the Subsidiary Guarantor Subordinated Debt (“Subsidiary Guarantor Subordinated Debt Payments”), except that, so long as an Event of Default does not then exist, any Subsidiary Guarantor shall be entitled to accept and receive payments on its Subsidiary Guarantor Subordinated Debt, in accordance with past business practices of such Subsidiary Guarantor and Borrower (or any other applicable Subsidiary Guarantor) and not in contravention of any Law or the terms of the Loan Documents it being understood that any payments pursuant to the section are not “Restricted Payments” hereunder.   If any Subsidiary Guarantor Subordinated Debt Payments shall be received in contravention of this Section 10.14, such Subsidiary Guarantor Subordinated Debt Payments shall be held in trust for the benefit of Administrative Agent and Lending Parties and shall be paid over or delivered to Administrative Agent for application to the payment in full in cash or cash equivalents of all Guaranteed Obligations remaining unpaid to the extent necessary to give effect to this Section 10.14 after giving effect to any concurrent payments or distributions to Administrative Agent and Lending Parties in respect of the Guaranteed Obligations.   (j)                                    Continuing Guaranty.  This Guaranty is a continuing guaranty and agreement of subordination and shall continue in effect and be binding upon each Subsidiary Guarantor until termination of the Aggregate Commitments and payment and performance in full of the Guaranteed Obligations, including Guaranteed Obligations which may exist continuously or which may arise from time to time under successive transactions, and each Subsidiary Guarantor expressly acknowledges that this guaranty shall remain in full force and effect notwithstanding that there may be periods in which no   133 --------------------------------------------------------------------------------   Guaranteed Obligations exist.  This Guaranty shall continue in effect and be binding upon each Subsidiary Guarantor until actual receipt by Administrative Agent of written notice from such Subsidiary Guarantor of its intention to discontinue this Guaranty as to future transactions (which notice shall not be effective until noon on the day that is five Business Days following such receipt); provided that no revocation or termination of this guaranty shall affect in any way any rights of Administrative Agent, or any Lending Party hereunder with respect to any Guaranteed Obligations arising or outstanding on the date of receipt of such notice, including any subsequent continuation, extension, or renewal thereof, or change in the terms or conditions thereof, or any Guaranteed Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of any Lending Party in existence as of the date of such revocation (collectively, “Existing Guaranteed Obligations”), and the sole effect of such notice shall be to exclude from this Guaranty Guaranteed Obligations thereafter arising which are unconnected to any Existing Guaranteed Obligations.   (k)                                 Reinstatement.  This Guaranty shall continue to be effective or shall be reinstated and revived, as the case may be, if, for any reason, any payment of the Guaranteed Obligations by or on behalf of Borrower (or receipt of any proceeds of collateral) shall be rescinded, invalidated, declared to be fraudulent or preferential, set aside, voided or otherwise required to be repaid to Borrower, its estate, trustee, receiver or any other Person (including under any Debtor Relief Law), or must otherwise be restored by Administrative Agent or any Lending Party, whether as a result of proceedings under any Debtor Relief Law or otherwise.  All losses, damages, costs and expenses that Administrative Agent, or any Lending Party may suffer or incur as a result of any voided or otherwise set aside payments shall be specifically covered by the indemnity in favor of Administrative Agent and Lending Parties contained in Section 10.04.   (l)                                    Substantial Benefits.  The Credit Extensions provided to or for the benefit of Borrower hereunder by Lending Parties have been and are to be contemporaneously used for the benefit of Borrower and each Subsidiary Guarantor.  It is the position, intent and expectation of the parties that Borrower and each Subsidiary Guarantor have derived and will derive significant and substantial benefits from the Credit Extensions to be made available by Lending Parties under the Loan Documents.  Each Subsidiary Guarantor has received at least “reasonably equivalent value” (as such phrase is used in Section 548 of the Bankruptcy Code, in the Uniform Fraudulent Transfer Act and in comparable provisions of other applicable law) and more than sufficient consideration to support its obligations hereunder in respect of the Guaranteed Obligations.  Immediately prior to and after and giving effect to the incurrence of each Subsidiary Guarantor’s obligations under this Guaranty, such Subsidiary Guarantor will be solvent.   (m)                             KNOWING AND EXPLICIT WAIVERS.  EACH SUBSIDIARY GUARANTOR ACKNOWLEDGES THAT IT EITHER HAS OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS SECTION 10.14.  EACH SUBSIDIARY GUARANTOR ACKNOWLEDGES AND AGREES THAT EACH OF THE WAIVERS AND CONSENTS SET FORTH HEREIN IS MADE WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES, THAT ALL SUCH WAIVERS AND CONSENTS HEREIN ARE EXPLICIT AND KNOWING AND THAT EACH SUBSIDIARY GUARANTOR EXPECTS SUCH WAIVERS AND CONSENTS TO BE FULLY ENFORCEABLE.   If, while any Subsidiary Guarantor Subordinated Debt is outstanding, any proceeding under any Debtor Relief Law is commenced by or against Borrower or its property, Administrative Agent, when so   134 --------------------------------------------------------------------------------   instructed by L/C Issuer, Swing Line Lender and Required Lenders, is hereby irrevocably authorized and empowered (in the name of Lending Parties or in the name of any Subsidiary Guarantor or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution in respect of all Subsidiary Guarantor Subordinated Debt and give acquittances therefor and to file claims and proofs of claim and take such other action (including voting the Subsidiary Guarantor Subordinated Debt) as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of Administrative Agent and Lending Parties; and each Subsidiary Guarantor shall promptly take such action as Administrative Agent (on instruction from L/C Issuer, Swing Line Lender and Required Lenders) may reasonably request:  (A) to collect the Subsidiary Guarantor Subordinated Debt for the account of the Lending Parties and to file appropriate claims or proofs of claim in respect of the Subsidiary Guarantor Subordinated Debt; (B) to execute and deliver to Administrative Agent such powers of attorney, assignments and other instruments as it may request to enable it to enforce any and all claims with respect to the Subsidiary Guarantor Subordinated Debt; and (C) to collect and receive any and all Subsidiary Guarantor Subordinated Debt Payments.   SECTION 10.15                     TIME OF THE ESSENCE.   Time is of the essence of the Loan Documents.   SECTION 10.16                     PRIOR AGREEMENT   This Agreement constitutes an amendment and restatement of, and replacement and substitution for, the Prior Credit Agreement.  The indebtedness evidenced by the Prior Credit Agreement is continuing indebtedness evidenced hereby as amended, and nothing herein shall be deemed to constitute a payment, settlement or novation of the Prior Credit Agreement, or to release or otherwise adversely affect any lien, mortgage, or security interest securing such indebtedness or any rights of the Administrative Agent and Lending Parties against any guarantor, surety, or other Person liable for such indebtedness.   SECTION 10.17                     GOVERNING LAW; JURISDICTION; ETC.   (a)                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW 5-1401 AND 5-1402).   (b)                                 SUBMISSION TO JURISDICTION.  BORROWER AND EACH OTHER LOAN PARTY PARTY HERETO EACH IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH EACH IS A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURTS OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURTS.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR   135 --------------------------------------------------------------------------------   PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT OR ANY LENDING PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.   (c)           WAIVER OF VENUE.  BORROWER AND EACH OTHER LOAN PARTY PARTY HERETO EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SUBSECTION (B) OF THIS SECTION 10.16.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.   (d)           SERVICE OF PROCESS.  BORROWER AND EACH OTHER LOAN PARTY PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.   SECTION 10.17                     WAIVER OF RIGHT TO JURY TRIAL.   TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM.  EACH OF THE PARTIES HERETO REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH MATTERS.   SECTION 10.18 JUDGMENT CURRENCY.   If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of any Loan Party in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender in the Agreement Currency, each Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the   136 --------------------------------------------------------------------------------   sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).   [SIGNATURE PAGES FOLLOW.]   137 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.     BORROWER:       TITAN MACHINERY INC.,   a Delaware corporation       By: /s/ Ted O. Christianson   Name: Ted O. Christianson   Title: VP Finance     [Signature Page to Amended and Restated Credit Agreement]   --------------------------------------------------------------------------------   ADMINISTRATIVE AGENT, L/C ISSUER AND SWING   LINE LENDER:       WELLS FARGO BANK, NATIONAL ASSOCIATION,   a national banking association, as Administrative   Agent, L/C Issuer and Swing Line Lender           By: /s/ Mark T. Lundquist   Name: Mark T. Lundquist   Title: Vice President           WELLS FARGO BANK, NATIONAL ASSOCIATION,   a national banking association, as a Lender           By: /s/ Mark T. Lundquist   Name: Mark T. Lundquist   Title: Vice President       WORKING CAPITAL COMMITMENT:   $ 25,500,000.00   FLOORPLAN COMMITMENT:   $ 102,000,000.00     --------------------------------------------------------------------------------   LENDER:       COBANK, ACB           By: /s/ Jason Lueders   Name: Jason Lueders   Title: Vice President       WORKING CAPITAL COMMITMENT:   $ 11,000,000.00   FLOORPLAN COMMITMENT:   $ 44,000,000.00     --------------------------------------------------------------------------------   LENDER:       BANK OF AMERICA, N.A.           By: /s/ Don Stafford   Name: Don Stafford   Title: Senior Vice President       WORKING CAPITAL COMMITMENT:   $ 15,000,000.00   FLOORPLAN COMMITMENT:   $ 60,000,000.00     --------------------------------------------------------------------------------   LENDER:       U.S. BANK NATIONAL ASSOCIATION           By: /s/ Magnus McDowell   Name: Magnus McDowell   Title: Vice President       WORKING CAPITAL COMMITMENT:   $ 9,000,000.00   FLOORPLAN COMMITMENT:   $ 36,000,000.00     --------------------------------------------------------------------------------   LENDER:       BANK OF THE WEST   a California banking corporation           By: /s/ Ryan Mauser   Name: Ryan Mauser   Title: VP       WORKING CAPITAL COMMITMENT:   $ 6,000,000.00   FLOORPLAN COMMITMENT:   $ 24,000,000.00     --------------------------------------------------------------------------------   LENDER:       BREMER BANK, N.A.           By: /s/ Wesley Well   Name: Wesley Well   Title: President       WORKING CAPITAL COMMITMENT:   $ 3,500,000.00   FLOORPLAN COMMITMENT:   $ 14,000,000.00     --------------------------------------------------------------------------------   LENDER:       COMERICA BANK           By: /s/ Dan Walker   Name: Dan Walker   Title: Vice President       WORKING CAPITAL COMMITMENT:   $ 5,000,000.00   FLOORPLAN COMMITMENT:   $ 20,000,000.00     --------------------------------------------------------------------------------     SCHEDULE 1.01-A   APPLICABLE RATES   Tier   Consolidated Leverage Ratio   Applicable LIBOR Margin (bps)   Applicable Base Rate Margin (bps)   Applicable L/C Margin (bps) I   Less than 1.50 to 1.00   150.0   50.0   150.0 II   Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00   175.0   75.0   175.0 III   Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00   200.0   100.0   200.0 IV   Greater than or equal to 2.50 to 1.00   225.0   125.0   225.0   --------------------------------------------------------------------------------   EXHIBIT A   ASSIGNMENT AGREEMENT   THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of Attachment 1 hereto, by and among:   (1)                                 The financial institution designated under item A of Attachment 1 hereto as the Assignor Lender (“Assignor Lender”); and   (2)                                 The financial institution designated under item B of Attachment 1 hereto as the Assignee Lender (“Assignee Lender”).   RECITALS   A.                                    Assignor Lender is one of the Lenders which is a party to the Amended and Restated Credit Agreement, dated as of March 30, 2012 (as amended, supplemented or otherwise modified in accordance with its terms from time to time, the “Credit Agreement”), by and among Titan Machinery Inc., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer.   B.                                    Assignor Lender wishes to sell, and Assignee Lender wishes to purchase, all or a portion of Assignor Lender’s rights under the Credit Agreement pursuant to Section 10.06(b) of the Credit Agreement.   AGREEMENT   Now, therefore, the parties hereto hereby agree as follows:   1.                                      Definitions.  Except as otherwise defined in this Assignment Agreement, all capitalized terms used herein and defined in the Credit Agreement have the respective meanings given to those terms in the Credit Agreement.   2.                                      Sale and Assignment.  On the terms and subject to the conditions of this Assignment Agreement, Assignor Lender hereby (i) agrees to sell, assign and delegate without recourse to Assignee Lender and Assignee Lender hereby agrees to purchase, accept and assume the rights, obligations and duties of a Lender under the Credit Agreement and the other Loan Documents having a Commitment and corresponding Percentage Share as set forth under Column 1 opposite Assignee Lender’s name on Attachment 1 hereto.  Such sale, assignment and delegation shall become effective on the date designated in Attachment 1 hereto (the “Assignment Effective Date”), which date shall be, unless the Administrative Agent shall otherwise consent, at least five (5) Business Days after the date following the date counterparts of this Assignment Agreement are delivered to the Administrative Agent in accordance with Section 3 hereof.   3.                                      Assignment Effective Notice.  Upon (a) receipt by the Administrative Agent of counterparts of this Assignment Agreement (to each of which is attached a fully completed Attachment 1), each of which has been executed by Assignor Lender and Assignee Lender (and, to the extent required   2 --------------------------------------------------------------------------------   by Section 10.06(b) of the Credit Agreement, by the Borrower and the Administrative Agent) and (b) payment to the Administrative Agent of the recordation and processing fee specified in Section 10.06(b) of the Credit Agreement by Assignor Lender, the Administrative Agent will transmit to the Borrower, Assignor Lender and Assignee Lender an Assignment Effective Notice substantially in the form of Attachment 2 hereto, fully completed (an “Assignment Effective Notice”).   4.                                      Assignment Effective Date.  At or before 12:00 noon (local time of Assignor Lender) on the Assignment Effective Date, Assignee Lender shall pay to Assignor Lender, in immediately available or same day funds, an amount equal to the purchase price, as agreed between Assignor Lender and Assignee Lender (the “Purchase Price”), for the Commitment (and related Loans and participations in L/C Obligations) and corresponding Percentage Shares purchased by Assignee Lender hereunder.  Effective upon receipt by Assignor Lender of the Purchase Price payable by Assignee Lender, the sale, assignment and delegation to Assignee Lender of such Commitment (and related Loans and participations in L/C Obligations) and corresponding Percentage Shares as described in Section 2 hereof shall become effective.   5.                                      Payments After the Assignment Effective Date.  Assignor Lender and Assignee Lender hereby agree that the Administrative Agent shall, and hereby authorize and direct the Administrative Agent to, allocate amounts payable under the Credit Agreement and the other Loan Documents as follows:   (a)                                 All principal payments made after the Assignment Effective Date with respect to each Commitment and corresponding Percentage Shares assigned to Assignee Lender pursuant to this Assignment Agreement shall be payable to Assignee Lender.   (b)                                 All interest, fees and other amounts accrued after the Assignment Effective Date with respect to the Commitment and corresponding Percentage Shares assigned to Assignee Lender pursuant to this Assignment Agreement shall be payable to Assignee Lender.   Assignor Lender and Assignee Lender shall make any separate arrangements between themselves which they deem appropriate with respect to payments between them of amounts paid under the Loan Documents on account of the Commitment and corresponding Percentage Shares assigned to Assignee Lender, and neither the Administrative Agent nor the Borrower shall have any responsibility to effect or carry out such separate arrangements.   6.                                      Delivery of Notes.  On or prior to the Assignment Effective Date, Assignor Lender will deliver to the Administrative Agent the Notes (if any) payable to Assignor Lender.  On or prior to the Assignment Effective Date, if requested, the Borrower will deliver to the Administrative Agent new Notes for Assignee Lender and Assignor Lender, in each case in principal amounts reflecting, in accordance with the Credit Agreement, their respective Commitments (as adjusted pursuant to this Assignment Agreement).  As provided in Section 10.06(b) of the Credit Agreement, each such new Note shall be dated the Closing Date.  Promptly after the Assignment Effective Date, if new Notes are requested the Administrative Agent will send to each of Assignor Lender and Assignee Lender, as applicable, its new Notes and, if applicable, will send to the Borrower the superseded Notes payable to Assignor Lender, marked “Replaced.”   7.                                      Delivery of Copies of Credit Documents.  Concurrently with the execution and delivery hereof, Assignor Lender will provide to Assignee Lender (if it is not already a Lender party to the Credit Agreement) conformed copies of all documents delivered to Assignor Lender on or prior to the Closing Date in satisfaction of the conditions precedent set forth in the Credit Agreement.   3 --------------------------------------------------------------------------------   8.                                      Further Assurances.  Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement.   9.                                      Further Representations, Warranties and Covenants.  Assignor Lender and Assignee Lender further represent and warrant to and covenant with each other, the Administrative Agent and the Lenders as follows:   (a)                                 Other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, Assignor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or the other Loan Documents furnished.   (b)                                 Assignor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any of its obligations under the Credit Agreement or any other Loan Documents.   (c)                                  Assignee Lender confirms that it has received a copy of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement.   (d)                                 Assignee Lender will, independently and without reliance upon the Administrative Agent, Assignor Lender or any other Lender and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and the other Loan Documents.   (e)                                  Assignee Lender appoints and authorizes the Administrative Agent to take such action as the Administrative Agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as the Administrative Agent is authorized to exercise by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with the Credit Agreement.   (f)                                   Assignee Lender agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement and the other Loan Documents are required to be performed by it as a Lender.   (g)                                  Attachment 1 hereto sets forth administrative information with respect to Assignee Lender.   10.                               Effect of this Assignment Agreement.  On and after the Assignment Effective Date, (a) Assignee Lender shall be a Lender with a Commitment and corresponding Percentage Shares equal to that set forth under Column 2 opposite Assignee Lender’s name on Attachment 1 hereto and shall have the rights, duties and obligations of such a Lender under the Credit Agreement and the other Loan Documents and (b) Assignor Lender shall be a Lender with a Commitment and corresponding Percentage Shares equal to that set forth under Column 2 opposite Assignor Lender’s name on Attachment 1 hereto, and shall have the rights, duties and obligations of such a Lender under the Credit Agreement and the other Loan Documents or, if the Commitment of Assignor Lender has been reduced to $0, Assignor Lender shall cease to be a Lender and shall have no further obligation to make any Loans.   4 --------------------------------------------------------------------------------   11.                               Miscellaneous.  This Assignment Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.  Section headings in this Assignment Agreement are for convenience of reference only and are not part of the substance hereof.   [signature page to follow]   5 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers as of the date set forth in Attachment 1 hereto.                                                        , as   Assignor Lender           By:     Name:     Title:                                                                , as an   Assignee Lender           By:     Name:     Title:     6 --------------------------------------------------------------------------------   CONSENTED TO AND ACKNOWLEDGED BY:           TITAN MACHINERY INC.,   a Delaware corporation, as Borrower           By     Name:     Title:       7 --------------------------------------------------------------------------------   CONSENTED TO, ACKNOWLEDGED BY,   AND ACCEPTED FOR RECORDATION   IN REGISTER:       WELLS FARGO BANK, NATIONAL ASSOCIATION,   as the Administrative Agent       By:     Name:     Title:       8 --------------------------------------------------------------------------------   ATTACHMENT 1   TO ASSIGNMENT AGREEMENT NAMES, ADDRESSES, COMMITMENTS AND PERCENTAGE SHARES OF ASSIGNOR LENDER AND ASSIGNEE LENDER AND ASSIGNMENT EFFECTIVE DATE                                   , 20        A.       ASSIGNOR LENDER       Column 1 Commitment, Principal and Percentage Shares Transferred(1), (2)   Column 2 Commitment, Principal and  Percentage Shares After Assignment   WELLS FARGO BANK,           NATIONAL ASSOCIATION                       Applicable Lending Office:                                                           Attention:                       Address for Notices:                                                           Attention:           Telephone No.:           Telecopier No.:                                                             -------------------------------------------------------------------------------- (1) To be expressed by a percentage rounded to the twelfth digit to the right of the decimal point.   (2) Percentage Share of Aggregate Commitment to be sold by Assignor Lender and purchased by Assignee Lender pursuant to this Assignment Agreement.   --------------------------------------------------------------------------------   Wiring Instructions:                                                             --------------------------------------------------------------------------------   B.       ASSIGNEE LENDER       Column 1 Commitment, Principal and Percentage Shares Transferred(1), (2)   Column 2 Commitment,  Principal and  Percentage Shares After Assignment                                                   Applicable Lending Office:                                                                       Address for Notices:                                                           Telephone No.:           Telecopier No.:                       Wiring Instructions:                                                               C.       ASSIGNMENT EFFECTIVE DATE:                                     , 20       -------------------------------------------------------------------------------- (1) To be expressed by a percentage rounded to the twelfth digit to the right of the decimal point.   (2) Percentage Share of Aggregate Commitment to be sold by Assignor Lender and purchased by Assignee Lender pursuant to this Assignment Agreement.   --------------------------------------------------------------------------------   ATTACHMENT 2   TO ASSIGNMENT AGREEMENT FORM OF ASSIGNMENT EFFECTIVE NOTICE   Reference is made to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012 (as amended, supplemented or otherwise modified in accordance with its terms from time to time, the “Credit Agreement”), by and among Titan Machinery Inc., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer.  The Administrative Agent hereby acknowledges receipt of five executed counterparts of a completed Assignment Agreement, a copy of which is attached hereto.  Terms defined in such Assignment Agreement are used herein as therein defined.   1.             Pursuant to such Assignment Agreement, you are advised that the Assignment Effective Date will be                               , 20     .   2.             Pursuant to such Assignment Agreement, Assignor Lender is required to deliver to the Administrative Agent on or before the Assignment Effective Date the Note, if any, payable to Assignor Lender.   3.             Pursuant to such Assignment Agreement and the Credit Agreement, the Borrower is required to deliver to the Administrative Agent on or before the Assignment Effective Date the following Notes, each dated March 30, 2012:   A.     B.     4.             Pursuant to such Assignment Agreement, Assignee Lender is required to pay its Purchase Price to Assignor Lender at or before 12:00 noon (local time of Assignor Lender) on the Assignment Effective Date in immediately available funds.     Very truly yours,       WELLS FARGO BANK, NATIONAL ,   ASSOCIATION as the Administrative Agent           By:     Name:     Title:     --------------------------------------------------------------------------------   EXHIBIT B   COMPLIANCE CERTIFICATE   To: Wells Fargo Bank, National Association, as the Administrative Agent     Date:                             , 20         Subject: Titan Machinery Inc.   Financial Statements   In accordance with our Amended and Restated Credit Agreement dated as of March 30, 2012, as amended, modified, extended, renewed, supplemented, or restated (the “Credit Agreement”), attached are the financial statements of Titan Machinery Inc. (the “Borrower”) of and for the [fiscal year] [fiscal quarter] ended                            , 20     (the “Reporting Date”) and the year-to-date period then ended (the “Current Financials”) required to be made publicly available on EDGAR or otherwise delivered pursuant to Section 6.01 of the Credit Agreement.  All terms used in this certificate have the meanings given in the Credit Agreement.   The Borrower certifies that the Current Financials have been prepared in accordance with GAAP, subject to normal year-end adjustments and absence of footnotes, and fairly present in all material respects the consolidated financial condition of the Borrower as of the date thereof and in a manner consistent with prior periods.   Defaults. (Check one):   The Borrower further certifies that:   o            Except as previously reported in writing to the Administrative Agent, the Borrower does not have knowledge of the occurrence of any Default under the Credit Agreement.   o            The Borrower has knowledge of the occurrence of a Default under the Credit Agreement not previously reported in writing to the Administrative Agent and attached hereto is a statement of the facts with respect to thereto and the action which the Borrower is taking or purposes to take with respect thereto.   Representations and Warranties:   The Borrower further certifies that each of the representations and warranties made by the Borrower, any Subsidiary, and/or any member of the Borrower party to the Credit Agreement and/or party to any other Loan Document are true and correct in all material respects on and as of the date of this Compliance Certificate as if made on and as of the date of this Compliance Certificate (and for purposes of this Compliance Certificate, the representations and warranties made by the Borrower in Section 5.11 of the Credit Agreement shall be deemed to refer to the financial statements of the Borrower made publicly available on EDGAR or otherwise delivered to the Administrative Agent and the Lenders with this Compliance Certificate).   2 --------------------------------------------------------------------------------   As of the Reporting Date, the Borrower’s Consolidated Leverage Ratio was                     to 1.00.   Financial Covenants. The Borrower further certifies as follows:   1.             Maximum Consolidated Net Leverage Ratio. Pursuant to Section 6.12(a) of the Credit Agreement, as of the Reporting Date, the Borrower’s Consolidated Net Leverage Ratio was           to 1.00 which o satisfies o does not satisfy the requirement that such ratio be no more than            to 1.00 on the Reporting Date.   2.             Minimum Consolidated Fixed Charge Coverage Ratio. Pursuant to Section 6.12(b) of the Credit Agreement, as of the Reporting Date, the Borrower’s Consolidated Fixed Charge Coverage Ratio was           to 1.00 which o satisfies o does not satisfy the requirement that such ratio be no less than 1.25 to 1.00 on the Reporting Date.   Attached hereto are all relevant facts in reasonable detail to evidence, and the computations of the financial covenants referred to above. These computations were made in accordance with GAAP or as otherwise provided in the Credit Agreement.   Existing Debt.  The Borrower further certifies the following Debt is outstanding as of the Reporting Date:   Debt   Amount   CNH Capital America, LLC — 0% Debt   $     CNH Capital America, LLC — Interest Bearing   $     Agricredit Acceptance, LLC   $     Rental Equipment Debt (7.03(n))   $     Floorplan Loans   $     Working Capital Loans   $           TITAN MACHINERY INC.,   a Delaware corporation           By     Name:     Title:     3 --------------------------------------------------------------------------------   EXHIBIT C   JOINDER AGREEMENT   THIS JOINDER AGREEMENT, dated as of the         day of                , 20      (the “Agreement”), to the Credit Agreement and the other Loan Documents referred to below is entered into by and among                  , a                   organized under the laws of                 (the “New Subsidiary”), TITAN MACHINERY INC., a Delaware corporation (the “Borrower”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”), under such Credit Agreement (as defined below).   Recitals   I.             Reference is made to the Amended and Restated Credit Agreement, dated as of March 30, 2012, by and among Borrower, the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer (as amended, supplemented or otherwise modified, the “Credit Agreement”).  All capitalized terms used and not defined herein shall have the meanings given thereto in the Credit Agreement or the applicable Loan Document referred to therein.   II.            Pursuant to Section 6.14 of the Credit Agreement, the Borrower is required to cause the New Subsidiary to execute, among other documents, a joinder agreement in order to become a Guarantor under the Credit Agreement, to guaranty payment and performance of the Obligations of the Borrower under the Credit Agreement.   NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:   1.01        Joinder of the New Subsidiary.  Pursuant to Section 10.14 of the Credit Agreement, the New Subsidiary by its signature below becomes a Guarantor under the Credit Agreement with the same force and effect as if originally named therein as a Guarantor, and the New Subsidiary hereby (i) agrees to all the terms and provisions of the Credit Agreement applicable to it as a Guarantor thereunder and (ii) represents and warrants that the representations and warranties made by it as Guarantor thereunder are true and correct on and as of the date hereof.  The New Subsidiary hereby agrees that each reference to a “Subsidiary Guarantor,” “Guarantor” or the “Guarantors” in the Credit Agreement and the other Loan Documents shall include the New Subsidiary.  The New Subsidiary acknowledges that it has received a copy of each of the Loan Documents and that it has read and understands the terms thereof and agrees for the benefit of the Administrative Agent and the Lenders to be bound thereby and to comply with the terms thereof insofar as such terms are applicable to it.   2.01        Additional Items.  The New Subsidiary shall have executed and delivered to the Administrative Agent all such documents, instruments, and agreements as the Administrative Agent may reasonably request.   3.01        General Provisions.   (a)           Representations and Warranties.  The New Subsidiary represents and warrants that this Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding   4 --------------------------------------------------------------------------------   obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.   (b)           Limited Effect.  Except as supplemented hereby, the Credit Agreement and each other Loan Document shall continue to be, and shall remain, in full force and effect.  This Agreement shall not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document except as otherwise expressly set forth herein or (ii) to prejudice any right or rights which the Administrative Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended or modified from time to time.   (c)           Costs and Expenses.  The Borrower hereby agrees that it shall pay or reimburse the Administrative Agent for all of its reasonable and customary out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Agreement including, without limitation, the reasonable fees and disbursements of counsel.   (d)           Notices.  All communications and notices hereunder shall be made in accordance with Section 10.02 of the Credit Agreement.  All communications and notices hereunder to the Administrative Agent or the Borrower shall be given to it at its address for notices set forth in Section 10.02 of the Credit Agreement, and all communications and notices hereunder to the New Subsidiary shall be given to it c/o the Borrower at such address.   (e)           Severability.  If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (a) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Administrative Agent and the Lenders in order to carry out the intentions of the parties hereto as nearly as may be possible; and (b) the invalidity or unenforceability of any provisions hereof in such jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.   (f)            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.   (g)           Counterparts.  This Agreement may be executed by one or more of the parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.   (h)           Headings.  The various headings of this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provisions hereof.   5 --------------------------------------------------------------------------------   IN WITNESS WHEREOF the undersigned hereby causes this Agreement to be executed and delivered as of the date first above written.     BORROWER:       TITAN MACHINERY INC.,   a Delaware corporation       By:     Name:     Title:         NEW SUBSIDIARY:       [NEW SUBSIDIARY]           By:     Name:     Title:       WELLS FARGO BANK, NATIONAL ASSOCIATION,   as Administrative Agent       By:     Name:       Title:         1 --------------------------------------------------------------------------------   EXHIBIT D   NOTICE OF BORROWING, CONVERSION OR CONTINUATION                              , 20         Wells Fargo Bank, National Association         Reference is made to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among TITAN MACHINERY INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party thereto, the financial institutions party thereto from time to time (the “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), as L/C Issuer and as Swing Line Lender,.  Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein.   1.              *Pursuant to Section 2.02(a), of the Credit Agreement, the Borrower hereby irrevocably requests a Working Capital Borrowing upon the following terms:   a.              The principal amount of the requested Working Capital Borrowing is to be $                          .   b.              The requested Working Capital Borrowing is to consist of (check one):   o a Base Rate Loan.   o a Eurodollar Rate Loan, the initial Interest Period for such Loans will be              month(s).   c.               The date of the requested Working Capital Borrowing is to be                                , 20     .   2.              †Pursuant to Section 2.02(a), of the Credit Agreement, the Borrower hereby irrevocably requests conversion or continuation of Working Capital Borrowings, as set forth below  (check one):   -------------------------------------------------------------------------------- * Delete this paragraph 1 if requesting conversion or continuation of Eurodollar Rate Loans.   † Delete this paragraph 2 if requesting only a new Working Capital Borrowing and/or  Floorplan Borrowings.   2 --------------------------------------------------------------------------------   o on [Date], to convert $           in principal amount of now outstanding Eurodollar Rate Loans having an Interest Period that expires on [Date] to Base Rate Loans.   o on [Date], to continue $          in principal amount of now outstanding Eurodollar Rate Loans having an Interest Period that expires on [Date] as new Eurodollar Rate Loans that have an Interest Period of     month(s).   o on [Date], to convert $            in principal amount of now outstanding Base Rate Loans to Eurodollar Loans that have an Interest Period of      month(s).   3.              ‡Pursuant to Section 2.02(a), of the Credit Agreement, the Borrower hereby irrevocably requests a Floorplan Borrowing upon the following terms:   a.              The principal amount of the requested Floorplan Borrowing is to be $                         .   b.              The requested Floorplan Borrowing is to consist of (check one):   o a Base Rate Loan.   o a Eurodollar Rate Loan, the initial Interest Period for such Loans will be            month(s).   c.               The date of the requested Floorplan Borrowing is to be                               , 20     .   4.              §Pursuant to Section 2.02(a), of the Credit Agreement, the Borrower hereby irrevocably requests conversion or continuation of Floorplan Borrowings, as set forth below  (check one):   o on [Date], to convert $          in principal amount of now outstanding Eurodollar Rate Loans having an Interest Period that expires on [Date] to Base Rate Loans.   o  on [Date], to continue $         in principal amount of now outstanding Eurodollar Rate Loans having an Interest Period that expires on [Date] as new Eurodollar Rate Loans that have an Interest Period of     month(s).   o  on [Date], to convert $           in principal amount of now outstanding Base Rate Loans to Eurodollar Loans that have an Interest Period of     month(s).   5.              The Borrower hereby certifies to the Administrative Agent and the Lenders that, on the date of this Notice of Borrowing, Conversion or Continuation and after giving effect to the requested borrowing, conversion or continuation:   -------------------------------------------------------------------------------- ‡ Delete this paragraph 1 if requesting conversion or continuation of Eurodollar Rate Loans.   § Delete this paragraph 2 if requesting only a new Floorplan Borrowing and/or Working Capital Borrowings.   3 --------------------------------------------------------------------------------   a.              The representations and warranties of the Loan Parties set forth in Article V of the Credit Agreement and in the other Loan Documents are true and correct in all material respects as if made on such date (except for representations and warranties expressly made as of a specified date, which shall be true and correct in all material respects as of such date);   b.              No Default or Event of Default has occurred and is continuing;   c.               No material adverse change in the operations, business or conditions (financial or otherwise) of Borrower or the Loan Parties (taken as a whole) has occurred since                                 ,      .   6.              (3)Please disburse the proceeds of the requested Working Capital Borrowing or Floorplan Borrowing, as applicable, to:   Wells Fargo Bank, National Association ABA No.: Account No.: Account Name:   [signature page to follow]   -------------------------------------------------------------------------------- (3) Delete this paragraph 6 if not requesting only a new  Working Capital Borrowings Floorplan Borrowing.   4 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the Borrower has executed this Notice of Borrowing, Conversion or Continuation on the date set forth above.     TITAN MACHINERY INC.,   a Delaware corporation           By:     Name:     Title:     5 --------------------------------------------------------------------------------   EXHIBIT E-1   FLOORPLAN REVOLVING NOTE   FLOORPLAN LOAN NOTE   March 30, 2012   FOR VALUE RECEIVED, Titan Machinery Inc., a Delaware corporation (“Borrower”) hereby promises to pay to the order of                           (the “Lender”), the principal amount of each Floorplan Loan made by the Lender to the Borrower pursuant to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012, among Borrower, the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), on or before the Floorplan Maturity Date specified in the Credit Agreement.  Capitalized terms used herein have the meanings assigned to those terms in the Credit Agreement, unless otherwise defined herein.   The Borrower promises to pay interest on the unpaid principal amount of each Floorplan Loan from the date of such Floorplan Loan until such principal amount is paid in full, at the interest rates and at the times provided in the Credit Agreement.  The Borrower shall make all payments hereunder, for the account of the Lender’s applicable Lending Office, to the Administrative Agent as indicated in the Credit Agreement, in lawful money of the United States and in same day or immediately available funds.   Floorplan Loans made by the Lender shall be evidenced by one or more records or accounts maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this Floorplan Loan Note and endorse thereon the date, amount and maturity of its Floorplan Loans and all payments made on the Floorplan Loans; provided that any failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower under this Floorplan Loan Note.   This Floorplan Loan Note is one of the Notes referred to in the Credit Agreement.  This Floorplan Loan Note is subject to the terms of the Credit Agreement, including the rights of prepayment and the rights of acceleration of maturity set forth therein.  The transfer, sale or assignment of any rights under or interest in this Note is subject to certain restrictions contained in the Credit Agreement, including Section 10.06 thereof.   6 --------------------------------------------------------------------------------   The Borrower hereby waives diligence, presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of any kind.  No failure on the part of the holder hereof to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof or a consent thereto; nor shall a single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  To the extent set forth in the Credit Agreement, the Borrower shall pay all fees and expenses, including attorneys’ fees, incurred by the Lender in the enforcement or attempt to enforce any of the Borrower’s obligations hereunder not performed when due.   This Note shall be governed by and construed in accordance with the laws of the State of New York.   [signature page to follow]   7 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, Borrower has duly executed this Floorplan Loan Note effective on the date first written above.     TITAN MACHINERY INC.,   a Delaware corporation           By:     Name:     Title:     1 --------------------------------------------------------------------------------   EXHIBIT E-2   WORKING CAPITAL REVOLVING NOTE   WORKING CAPITAL LOAN NOTE   March 30, 2012   FOR VALUE RECEIVED, Titan Machinery Inc., a Delaware corporation (“Borrower”) hereby promises to pay to the order of                      (the “Lender”), the principal amount of each Working Capital Loan made by the Lender to the Borrower pursuant to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012, among Borrower, the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), on or before the Working Capital Maturity Date specified in the Credit Agreement.  Capitalized terms used herein have the meanings assigned to those terms in the Credit Agreement, unless otherwise defined herein.   The Borrower promises to pay interest on the unpaid principal amount of each Working Capital Loan from the date of such Working Capital Loan until such principal amount is paid in full, at the interest rates and at the times provided in the Credit Agreement.  The Borrower shall make all payments hereunder, for the account of the Lender’s applicable Lending Office, to the Administrative Agent as indicated in the Credit Agreement, in lawful money of the United States and in same day or immediately available funds.   Working Capital Loans made by the Lender shall be evidenced by one or more records or accounts maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this Working Capital Loan Note and endorse thereon the date, amount and maturity of its Working Capital Loans and all payments made on the Working Capital Loans; provided that any failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower under this Working Capital Loan Note.   This Working Capital Loan Note is one of the Notes referred to in the Credit Agreement.  This Working Capital Loan Note is subject to the terms of the Credit Agreement, including the rights of prepayment and the rights of acceleration of maturity set forth therein.  The transfer, sale or assignment of any rights under or interest in this Note is subject to certain restrictions contained in the Credit Agreement, including Section 10.06 thereof.   2 --------------------------------------------------------------------------------   The Borrower hereby waives diligence, presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of any kind.  No failure on the part of the holder hereof to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof or a consent thereto; nor shall a single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  To the extent set forth in the Credit Agreement, the Borrower shall pay all fees and expenses, including attorneys’ fees, incurred by the Lender in the enforcement or attempt to enforce any of the Borrower’s obligations hereunder not performed when due.   This Note shall be governed by and construed in accordance with the laws of the State of New York.   [signature page to follow]   3 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, Borrower has duly executed this Working Capital Loan Note effective on the date first written above.     TITAN MACHINERY INC.,   a Delaware corporation           By:     Name:     Title:     1 --------------------------------------------------------------------------------   EXHIBIT E-3   SWINGLINE NOTE   SWINGLINE LOAN NOTE   March 30, 2012   FOR VALUE RECEIVED, TITAN MACHINERY INC., a Delaware corporation (“Borrower”) hereby promises to pay to the order of                      (the “Lender”), the principal amount of each Swingline Loan made by the Lender to the Borrower pursuant to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012, among Borrower, the Subsidiary Guarantors party thereto, the several financial institutions party thereto as Lenders, and Wells Fargo Bank, National Association, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), on or before the Floorplan Maturity Date specified in the Credit Agreement.  Capitalized terms used herein have the meanings assigned to those terms in the Credit Agreement, unless otherwise defined herein.   The Borrower promises to pay interest on the unpaid principal amount of each Swingline Loan from the date of such Swingline Loan until such principal amount is paid in full, at the interest rates and at the times provided in the Credit Agreement.  The Borrower shall make all payments hereunder, for the account of the Lender’s applicable Lending Office, to the Administrative Agent as indicated in the Credit Agreement, in lawful money of the United States and in same day or immediately available funds.   Swingline Loans made by the Lender shall be evidenced by one or more records or accounts maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this Swingline Loan Note and endorse thereon the date, amount and maturity of its Swingline Loans and all payments made on the Swingline Loans; provided that any failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower under this Swingline Loan Note.   This Swingline Loan Note is one of the Notes referred to in the Credit Agreement.  This Swingline Loan Note is subject to the terms of the Credit Agreement, including the rights of prepayment and the rights of acceleration of maturity set forth therein.  The transfer, sale or assignment of any rights under or interest in this Note is subject to certain restrictions contained in the Credit Agreement, including Section 10.06 thereof.   The Borrower hereby waives diligence, presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of any kind.  No failure on the part of the holder hereof to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof or a consent thereto; nor shall a single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  To the extent set forth in the Credit Agreement, the Borrower shall pay all fees and expenses, including attorneys’ fees, incurred by the Lender in the enforcement or attempt to enforce any of the Borrower’s obligations hereunder not performed when due.   This Note shall be governed by and construed in accordance with the laws of the State of New York.   [signature page to follow]   2 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, Borrower has duly executed this Swingline Loan Note effective on the date first written above.     TITAN MACHINERY INC.,   a Delaware corporation       By:     Name:     Title:     --------------------------------------------------------------------------------   EXHIBIT F   SWING LINE LOAN NOTICE FOR SWING LINE BORROWING                             , 20        Wells Fargo Bank, National Association         Reference is made to that certain Amended and Restated Credit Agreement, dated as of March 30, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among TITAN MACHINERY INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party thereto, the financial institutions party thereto from time to time (the “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), as L/C Issuer and as Swing Line Lender.  Unless otherwise indicated, all terms defined in the Credit Agreement have the same respective meanings when used herein.   1.              Pursuant to Section 2.04(b), of the Credit Agreement, the Borrower hereby irrevocably requests a Swing Line Borrowing upon the following terms:   a.              The principal amount of the requested Swing Line Borrowing is to be $                   ;   b.              The requested Swing Line Borrowing is to consist of a Base Rate Loan; and   c.               The date of the requested Swing Line Borrowing is to be                           , 20    .   2.              The Borrower hereby certifies to the Administrative Agent and the Lenders that, on the date of this Swing Line Loan Notice for Swing Line Borrowing and after giving effect to the requested Swing Line Borrowing:   a.              The representations and warranties of the Loan Parties set forth in Article V of the Credit Agreement and in the other Loan Documents are true and correct in all material respects as if made on such date (except for representations and warranties expressly made as of a specified date, which shall be true and correct in all material respects as of such date);   b.     No Default or Event of Default has occurred and is continuing;   c.               No material adverse change in the operations, business or conditions (financial or otherwise) of Borrower or the Loan Parties (taken as a whole) has occurred since                            ,         .   4 --------------------------------------------------------------------------------   3.              Please disburse the proceeds of the requested Swing Line Borrowing to:   Wells Fargo Bank, National Association ABA No.: Account No.: Account Name:   [signature page to follow]   5 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the Borrower has executed this Swing Line Loan Notice for Swing Line Borrowing on the date set forth above.     TITAN MACHINERY INC.,   a Delaware corporation           By:     Name:     Title:     6 --------------------------------------------------------------------------------   EXHIBIT G   BORROWING BASE CERTIFICATE   Pursuant to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 30, 2012,  among TITAN MACHINERY INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors party thereto, the several financial institutions thereto as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent, Swing Line Lender and L/C Issuer (the “Credit Agreement”), the undersigned certifies that as of the close of business on the date set forth below, the Floorplan Availability and Working Capital Availability are computed as set forth below.   The undersigned represents and warrants that this Borrowing Base Certificate is a true and correct statement of, and that the information contained herein is true and correct in all material respects regarding, the status of Eligible Accounts, Eligible New Equipment Inventory, Eligible Used Equipment Inventory, Eligible Rental Equipment, and Eligible Parts and Attachments Inventory and that the amounts reflected herein are in compliance with the provisions of the Credit Agreement and the Exhibits thereto.  The undersigned further represents and warrants that there is no continuing Event of Default and all representations and warranties continued in the Credit Agreement and other Loan Documents are true and correct in all material respects. The undersigned understands that Wells Fargo Bank, National Association, and the other Lenders will extend loans in reliance upon the information contained herein.  In the event of a conflict between the following summary of eligibility criteria and the criteria set forth in the definition of Eligible Accounts, Eligible New Equipment Inventory, Eligible Used Equipment Inventory, Eligible Rental Equipment, and Eligible Parts and Attachments Inventory indicated in the Credit Agreement, the Credit Agreement shall govern.  Capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Credit Agreement.   CALCULATION OF FLOORPLAN BORROWING BASE AS OF                                             :                   New Equipment Inventory - NBV       $   [a] Less: Ineligible New Equipment Inventory           Encumbered New Equipment Inventory   $         Total Ineligible New Equipment Inventory       $   [b] Total Eligible New Equipment Inventory ([a]-[b])       $   [c] Available at 90% of net book value ([c]*0.90)       $   [d]             Used Equipment Inventory - NBV       $   [e] Less: Ineligible Used Equipment Inventory           Encumbered Used Equipment Inventory   $         Used Equipment on Hand > 3 years   $         Total Ineligible Used Equipment Inventory       $   [f] Total Eligible Used Equipment Inventory ([e]-[f])       $   [g] Available at 85% of net book value ([g]*0.85)       $   [h]             Floor Plan Borrowing Base ([d] + [h])       $   [i]   7 --------------------------------------------------------------------------------   Total Floorplan Loans       $   [j] Total Swing Line Loans       $   [k] Total Floorplan Outstandings ([j]+[k])       $   [l] Aggregate Floorplan Commitment       $   [m]             Floorplan Availability (lesser of [i] minus [l] or; [m] minus [l])       $       CALCULATION OF WORKING CAPITAL BORROWING BASE AS OF                                     :   Gross Accounts Receivable       $   [a] Less: Ineligible Accounts Receivable           A/R Greater than 90 days Past Due   $         Cross Agings > 20%   $         Warranty Receivables   $         Supplier Receivables   $         Discount Receivables   $         Other A/R Due From Suppliers   $         Employee Receivables   $         Encumbered A/R or Contracts in Transit   $         Total Ineligible Accounts Receivable       $   [b] Total Eligible Accounts Receivable ([a]-[b])       $   [c] Available at 80% Advance Rate ([c]*0.80)       $   [d]             Rental Equipment Inventory - NBV       $   [e] Less: Ineligible Rental Equipment Inventory       $   [f] Total Eligible Used Rental Equipment Inventory ([e]-[f])       $   [g] Available at 85% of net book value ([g]*0.85)       $   [h]             Gross Parts and Attachments Inventory       $   [i] Less: Ineligible Parts and Attachments Inventory           Trade/Notes Payables due to CNH   $         CNH Reserve (50% of net CNH Parts)   $         Parts on Hand > 3 years in excess of $1MM   $         Parts Subject to First Lien of Others (Non CNH)   $         Total Ineligible Parts and Attachments       $   [j] Total Eligible Parts and Attachments Inventory ([i]-[j])       $   [k] Available at 75% Advance Rate ([k]*0.75)       $   [l]             Work in Process Inventory       $   [m] Available at 50% Advance Rate ([m]*.50)       $   [n]             Total Parts and Attachments Inventory ([l] + [n])       $   [o]             Working Capital Borrowing Base ([d] + [h] + [o])       $   [p]   8 --------------------------------------------------------------------------------   Working Capital Loans       $   [q] L/C Credit Extension       $   [r] Total Working Capital Outstandings ([q]+[r])       $   [s]             Aggregate Working Capital Commitment       $   [t]             Working Capital Availability (lesser of [p] minus [s] or; [t] minus [s])       $       IN WITNESS WHEREOF, this Borrowing Base Certificate has been duly executed as of the date first written above.     TITAN MACHINERY INC.   a Delaware corporation           By:     Name:     Title:     9 --------------------------------------------------------------------------------   EXHIBIT H   SECURITY AGREEMENT   10 --------------------------------------------------------------------------------   --------------------------------------------------------------------------------   AMENDED AND RESTATED SECURITY AGREEMENT   among   TITAN MACHINERY INC.,   EACH OF THE OTHER GRANTORS PARTY HERETO   and   WELLS FARGO BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT   --------------------------------------------------------------------------------   Dated as of March 30, 2012   11 --------------------------------------------------------------------------------   Article 1. DEFINITIONS; GRANT OF SECURITY; CONTINUING PERFECTION AND PRIORITY 1       Section 1.1 General Definitions 2       Section 1.2 Other Definitions; Interpretation 4       Section 1.3 Grant of Security 4       Article 2. SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF LIABILITY 5     Article 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS 5       Section 3.1 Generally 5       Section 3.2 Equipment and Inventory 9       Section 3.3 Accounts 9       Section 3.4 Pledged Collateral; Documents 10       Section 3.5 Intellectual Property Collateral 11       Section 3.6 Commercial Tort Claims 13       Article 4. FURTHER ASSURANCES; FILING AUTHORIZATION 13     Article 5. ADMINISTRATIVE AGENT 14     Article 6. REMEDIES UPON DEFAULT 14       Section 6.1 Remedies Generally 14       Section 6.2 Application of Proceeds of Sale 15       Section 6.3 Grant of License to Use Intellectual Property 15       Article 7. REIMBURSEMENT OF THE ADMINISTRATIVE AGENT 15     Article 8. SECURITY INTEREST ABSOLUTE 15     Article 9. TERMINATION; RELEASE 16     Article 10. ADDITIONAL GRANTORS 16     Article 11. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS 16     Article 12. SURVIVAL OF AGREEMENT; SEVERABILITY 17   i --------------------------------------------------------------------------------   Article 13. OTHER PROVISIONS 17       Section 13.1 Notices 17       Section 13.2 Waivers; Amendments 18       Section 13.3 Damage Waiver 18       Section 13.4 Counterparts; Integration; Effectiveness 18       Section 13.5 Right of Setoff 18       Section 13.6 Governing Law; Jurisdiction; Consent to Service of Process 18       Section 13.7 WAIVER OF JURY TRIAL; OTHER WAIVER 19       Section 13.8 Headings 19   ii --------------------------------------------------------------------------------   This AMENDED AND RESTATED SECURITY AGREEMENT, dated as of March 30, 2012, among Titan Machinery, Inc., a Delaware corporation (the “Borrower”), each of the Subsidiaries of the Borrower which becomes a party hereto in accordance with Article 10 (and each such Subsidiary, individually, a “Subsidiary Guarantor” and, collectively, the “Subsidiary Guarantors”; the Subsidiary Guarantors and the Borrower are referred to collectively herein as the “Grantors”), and Wells Fargo Bank, National Association, a national banking association, as administrative agent under the Credit Agreement (in such capacity, the “Administrative Agent”) referred to in the Recitals (as amended, supplemented, or otherwise modified from time to time, the “Security Agreement”).   RECITALS   A.                                    Borrower, the Subsidiary Guarantors, the Lenders party thereto, and the Administrative Agent previously entered into that certain Credit Agreement, dated as of October 31, 2010 (as amended to date, the “Original Credit Agreement”).   B.                                    Borrower, the Subsidiary Guarantors, and the Administrative Agent, as agent for the Lenders, previously entered into that certain Security Agreement dated as of October 31, 2010 (as amended to date, the “Original Security Agreement”).   C.                                    Reference is made to the Amended and Restated Credit Agreement, dated as of even date herewith, among the Borrower, the Subsidiary Guarantors, the Lenders party thereto, and the Administrative Agent (as the same may be amended, supplemented, or otherwise modified from time to time, the “Credit Agreement”), which amends and restates in its entirety the Original Credit Agreement.   D.                                    The Lenders have agreed to make Loans to the Borrower pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement.  Each of the Subsidiary Guarantors is a direct or indirect subsidiary of the Borrower.  The Grantors acknowledge that their business is a mutual and collective enterprise and that the Loans and other financial accommodations made under the Loan Documents will enhance the aggregate borrowing powers of the Borrower and credit availability to the other Loan Parties and facilitate their loan relationship with the Lending Parties, all to the mutual advantage of the Grantors.   E.                                     Each Grantor acknowledges that it will derive substantial direct and indirect benefit from the making of the Loans. Each Guarantor has, pursuant to the Guaranty, unconditionally guaranteed the Obligations.   F.                                      This Security Agreement is given by each Grantor in favor of the Administrative Agent for the benefit of the Secured Parties (as hereinafter defined) to secure the payment and performance of all of the Obligations.   G.                                    The execution and delivery by the Grantors of this Security Agreement is a condition precedent to the effectiveness of the Credit Agreement, and the Lending Parties would not have entered into the Credit Agreement if the Grantors had not executed and delivered this Security Agreement.   Accordingly, the Grantors and the Administrative Agent, on behalf of itself and each other Secured Party (and each of their respective successors or assigns), hereby agree as follows:   2.                                      DEFINITIONS; GRANT OF SECURITY; CONTINUING PERFECTION AND PRIORITY   --------------------------------------------------------------------------------   2.1                               General Definitions. As used in this Security Agreement, the following terms shall have the meanings specified below:   (a)                                 When used in this Security Agreement, each of the following terms shall have the respective meaning ascribed thereto by the UCC:  “Account”, “Account Debtor”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Document”, “Equipment”, “General Intangibles”, “Goods”, “Instrument”, “Inventory”, “Investment Property”, “Letter of Credit Right”, “Proceeds”, “Record”, “Security”, “Security Certificate”, and “Supporting Obligation”.   (b)                                 As used in this Security Agreement, the following terms shall have the meanings specified below:   “Additional Grantor” has the meaning assigned to such term in Article 10.   “Collateral” means all personal property and fixtures of such Grantor, including all of such Grantor’s right, title, and interest in, to, and under the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (i) all Accounts, (ii) all Chattel Paper, (iii) all Commercial Tort Claims listed on the applicable Perfection Certificate (as supplemented from time to time), (iv) all Documents, (v) all Equipment, (vi) all General Intangibles, (vii) all Goods, (viii) all Instruments, (ix) all insurance policies covering any or all of the Collateral (regardless of whether the Administrative Agent or any other Secured Party is the loss payee thereof) and all business interruption insurance policies, (x) all Intellectual Property, (xi) all Inventory, (xii) all Letter-of-Credit Rights, (xiii) all Deposit Accounts, bank accounts, deposits, and cash, (xiv) all Investment Property, (xv) all Pledged Collateral, (xvi) all other goods and other personal property of such Grantor, whether tangible or intangible, (xvii) to the extent not otherwise included in clauses (i) through (xvi) of this Section, all Collateral Records and Supporting Obligations in respect of any of the foregoing, (xviii) to the extent not otherwise included in clauses (i) through (xvii) of this Section, all other property in which a security interest may be granted under the UCC or which may be delivered to and held by the Administrative Agent pursuant to the terms hereof, and (xix) to the extent not otherwise included in clauses (i) through (xvii) of this Section, all Proceeds, products, substitutions, accessions, rents, and profits of or in respect of any of the foregoing.   “Collateral Records” means all books, instruments, certificates, Records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, and other documents, and all computer software, computer printouts, tapes, disks, and related data processing software and similar items, in each case that at any time represent, cover, or otherwise evidence, or contain information relating to, any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.   “Copyrights” means all of the following: (i) all copyright rights in any work subject to the copyright laws of the United States of America or any other country, whether as author, assignee, transferee, or otherwise, and (ii) all registrations and applications for registration of any such copyright in the United States of America or any other country, including registrations, recordings, supplemental registrations, and pending applications for registration in the United States Copyright Office or any similar offices in the United States of America or any other country.   “Foreign Subsidiary” shall mean any Subsidiary that is “foreign,” as defined in Section 7701(a)(5) of the Code, more than 50 percent of (i) the total combined voting power of all classes of stock of such   2 --------------------------------------------------------------------------------   corporation entitled to vote, or (ii) the total value of the stock of such corporation, is directly or indirectly owned by a Grantor.   “Intellectual Property” means all intellectual and similar property of any Grantor of every kind and nature, including inventions, designs, Patents, Copyrights, Trademarks, licenses in respect thereof, domain names, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.   “Patents” means all of the following: (i) all letters patent of the United States of America or any other country, all registrations and recordings thereof and all applications for letters patent of the United States of America or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in the United States of America or any other country, and (ii) all reissues, continuations, divisions, continuations in part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.   “Perfection Certificate” means, (i) with respect to each Grantor party to this Security Agreement on the Closing Date, the Perfection Certificate delivered on the Closing Date, and (ii) with respect to each Additional Grantor, the Perfection Certificate delivered to the Administrative Agent on the date on which such Additional Grantor becomes a Grantor hereunder.   “Pledged Collateral” means, collectively, Pledged Debt and Pledged Equity Interests.   “Pledged Debt” means all Debt owed or owing to the Borrower or any Subsidiary represented or evidenced by any Instruments or Chattel Paper, and all Instruments, Chattel Paper and documents representing or evidencing such Debt.   “Pledged Equity Interests” means all Equity Interests owned or held by or on behalf of any Grantor, and all Security Certificates, Instruments and other documents, if any, representing or evidencing such Equity Interests.   “Secured Parties” means (i) the Lending Parties and Administrative Agent, (ii) unless otherwise agreed upon in writing by the applicable Lending Party or its Affiliate, each of the Lending Parties or any of its Affiliates party to Hedging Obligations, (iii) the beneficiaries of each indemnification obligation undertaken by or on behalf of any Grantor under any Loan Document, and (iv) the successors and assigns of each of the foregoing.   “Security Interest” means, collectively, the Liens created or purported to be created hereby.   “Trademarks” means all of the following: (i) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, uniform resource locations (URL’s), domain names, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, (ii) all registrations and recordings thereof and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in the United States of America or any other country and all extensions and renewals thereof and amendments thereto, and (iii) all goodwill associated therewith or symbolized by any of the foregoing.   3 --------------------------------------------------------------------------------   “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.   2.2                               Other Definitions; Interpretation   (a)                                 Other Definitions. Capitalized terms used herein and not otherwise defined herein, and the term “subsidiary” shall have the meanings assigned to such terms in the Credit Agreement.   (b)                                 Rules of Interpretation. The rules of interpretation specified in Sections 1.02 of the Credit Agreement shall be applicable to this Security Agreement.  All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC.  To the extent the UCC is revised after the date hereof such that the definition of any of the foregoing terms included in the description or definition of the Collateral is changed, the parties hereto desire that any property which is included in such changed definitions, but which would not otherwise be included in the Security Interest on the date hereof, nevertheless be included in the Security Interest upon the effective date of such revision.   (c)                                  Resolution of Drafting Ambiguities.  Each Grantor acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of this Security Agreement, that it and its counsel reviewed and participated in the preparation and negotiation thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.   2.3                               Grant of Security.   (a)                                 Grant. As security for the payment and performance in full of the Obligations, each Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent (and its successors and assigns), for the ratable benefit of the Secured Parties, and hereby grants to the Administrative Agent (and its successors and assigns), for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under such Grantor’s Collateral.   (b)                                 Certain Limited Exclusions. Notwithstanding anything in this Section 1.3 to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a Security Interest in, (i) any right under any lease, license, permit or other contract or agreement constituting a General Intangible (other than the Pledged Collateral), but only to the extent that the granting of a security interest therein or an assignment thereof would violate any applicable law or any enforceable provision of lease, license or other contract or agreement, as applicable, provided that to the extent such Security Interest at any time hereafter shall no longer be prohibited by law,   4 --------------------------------------------------------------------------------   and/or immediately upon such provision no longer being enforceable, as the case may be, the Collateral shall automatically and without any further action include, and the Grantors shall be deemed to have granted automatically and without any further action a Security Interest in, such right as if such law had never existed or such provision had never been enforceable, as the case may be, (ii) any of the outstanding Equity Interests in a Foreign Subsidiary in excess of 65% of the voting power of all classes of Equity Interests of such Foreign Subsidiary entitled to vote in the election of directors or other similar body of such Foreign Subsidiary; (iii) any Equity Interest in Rural Tower Network, LLC; (iv) any Equity Interest in any Foreign Subsidiary that is not a first-tier Subsidiary of any Grantor; or (v) notwithstanding anything in clause (i) of this Section 1.3(b) to the contrary, any Equity Interest in another Person that is not a Subsidiary of a Grantor, but only to the extent that the Grantor owning such Equity Interest is required by any provision of any organizational document of the issuer of the Equity Interest or any other agreement related to such Equity Interests to obtain the consent of the issuer or any other Person owning any Equity Interest in the issuer prior to granting or perfecting a security interest in such Equity Interest; provided that Collateral shall include any proceeds, products, substitutions or replacements of such property (unless such proceeds, products, substitutions or replacements would otherwise constitute property described in a any clause (i) to (v) above).   3.                                      SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF LIABILITY   This Security Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code, or any similar provision of any other bankruptcy, insolvency, receivership or other similar law), of all Obligations.  Notwithstanding anything to the contrary herein, the Security Interest is granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.   4.                                      REPRESENTATIONS AND WARRANTIES AND COVENANTS   4.1                               Generally   (a)                                 Representations and Warranties. Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that:   (i)             The information in the Perfection Certificate attached hereto as Exhibit A is true and correct on, in the case of (i) each Grantor party hereto on the Closing Date, the date hereof or (ii) each Additional Grantor, the date on which it became a Grantor.   5 --------------------------------------------------------------------------------   (ii)          Such Grantor has good and valid rights in or title to, the Collateral with respect to which it has purported to grant the Security Interest, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such Collateral for its intended purposes, and except for Liens expressly permitted pursuant to the Loan Documents.   (iii)       This Security Agreement creates a valid and continuing Security Interest in the Collateral in favor of the Secured Parties.  Upon (i) the filing of the UCC financing statements naming such Grantor as “debtor” and the Administrative Agent as “secured party”, or the making of other appropriate filings, registrations or recordings, containing a description of such Collateral in the office of the Secretary of State (or other analogous office) of the jurisdiction of its incorporation or formation as set forth in such Grantor’s Perfection Certificate, (ii) the delivery to the Administrative Agent of the Pledged Collateral to the extent certificated or evidenced by a Document endorsed in blank, and (iii) the timely filing, registration or recordation of fully executed security agreements in the form hereof in the United States Patent and Trademark Office of United States Copyright Office, as applicable, and (iv) obtaining control of any cash or Deposit Accounts described in the definition of Collateral, as applicable, such Security Interest shall be a perfected first priority Security Interest except to the extent of permitted purchase money security interests and subject to the terms of any intercreditor agreement, provided, however, that solely with respect to clause (iv) hereof, such Security Interest shall be a perfected first priority Security Interest to the extent that perfection can be effected through obtaining control, and with respect to all clauses hereof, except for any Permitted Liens.   (b)                                 Covenants and Agreements. Each Grantor hereby covenants and agrees as follows:   (i)             It shall maintain, at its own cost and expense, such complete and accurate Records with respect to the Collateral as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which it is engaged, but in any event to include complete accounting Records indicating all payments and proceeds received with respect to any part of the Collateral, and, at such time or times as the Administrative Agent may reasonably request, promptly to prepare and deliver to the Administrative Agent a duly certified schedule or schedules in form and detail satisfactory to the Administrative Agent showing the identity and amount of any and all such Collateral.   (ii)          It shall, at its own cost and expense, take any and all actions necessary to defend title to the Collateral owned or rights in Collateral held by it or on its behalf against all Persons and to defend the Security Interest in the Collateral and the priority thereof against any Lien or other interest not expressly permitted by the Loan Documents, and in furtherance thereof, it shall not take, or permit to be taken, any action not otherwise expressly permitted by the Loan Documents that could reasonably be expected to impair the Security Interest or the priority thereof or any Secured Party’s rights in or to such Collateral.   (iii)       During normal business hours, the Administrative Agent and such Persons as the Administrative Agent may designate shall, as often as reasonably requested, have the right, at the cost and expense of such Grantor, to inspect all of its Records (and to make extracts and copies from such Records), to discuss its affairs with its officers and independent accountants and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Collateral owned or rights in Collateral held by or on behalf of such Grantor, including, in the case of Accounts, Pledged Debt, General Intangibles, Commercial Tort Claims or   6 --------------------------------------------------------------------------------   Collateral in the possession of any third person, by contacting Account Debtors, contract parties or other obligors thereon or any third person possessing such Collateral for the purpose of making such a verification.  The Administrative Agent shall have the absolute right to share on a confidential basis any information it gains from such inspection or verification with any Secured Party.   (iv)      At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral owned or held by or on behalf of such Grantor, and not permitted by the Loan Documents, and may pay for the maintenance and preservation of such Collateral to the extent such Grantor fails to do so as required by the Loan Documents, and such Grantor agrees, jointly with the other Grantors and severally, to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the Administrative Agent pursuant to the foregoing authorization; provided, however, that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any other Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.   (v)         It shall remain liable for the failure to observe and perform all obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral owned or held by it or on its behalf, all in accordance with the terms and conditions thereof, and it agrees, jointly with the other Grantors and severally, to indemnify and hold harmless the Administrative Agent and the other Secured Parties from and against any and all liability for such performance.   (vi)      It shall not make, or permit to be made, an assignment, pledge or hypothecation of the Collateral owned or held by it or on its behalf, or grant any other Lien in respect of such Collateral, except as expressly permitted by the Loan Documents.   (vii)                           It shall:   (1)                                 Keep the Collateral properly housed and insured for the full insurable value thereof against loss or damage by fire, theft, explosion, sprinklers, collision (in the case of motor vehicles) and such other risks as are customarily insured against by Persons engaged in businesses similar to that of Grantors, with such companies, in such amounts, with such deductibles, and under policies in such form, as shall be satisfactory to the Administrative Agent.  Original (or certified) copies of such policies of insurance have been or shall be, within ninety (90) days of the date hereof, delivered to Administrative Agent, together with evidence of payment of all premiums therefor, and shall contain an endorsement, in form and substance acceptable to Administrative Agent, showing loss under such insurance policies payable to Administrative Agent.  Such endorsement, or an independent instrument furnished to Administrative Agent, shall provide that the insurance company shall give Administrative Agent at least thirty (30) days written notice before any such policy of insurance is altered or canceled and that no act, whether willful or negligent, or default of any Grantor or any other Person shall affect the right of Administrative Agent to recover under such policy of insurance in case of loss or damage.  In addition, each Grantor shall cause to be executed and delivered to Administrative Agent an assignment of proceeds of its business interruption   7 --------------------------------------------------------------------------------   insurance policies.  Each Grantor hereby directs all insurers under all policies of insurance to pay all proceeds payable thereunder directly to Administrative Agent during the continuance of an Event of Default.  Each Grantor irrevocably makes, constitutes and appoints Administrative Agent (and all officers, employees or agents designated by Administrative Agent) as such Grantor’s true and lawful attorney (and agent-in-fact) for the purpose of making, settling and adjusting claims under such policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and making all determinations and decisions with respect to such policies of insurance during the continuance of an Event of Default.   (2)                                 Maintain, at its expense, such public liability and third party property damage insurance as is customary for Persons engaged in businesses similar to that of each Grantor with such companies and in such amounts, with such deductibles and under policies in such form as shall be satisfactory to Administrative Agent and original (or certified) copies of such policies have been or shall be, within ninety (90) days after the date hereof, delivered to Administrative Agent, together with evidence of payment of all premiums therefor; each such policy shall contain an endorsement showing Administrative Agent as additional insured thereunder and providing that the insurance company shall give Administrative Agent at least thirty (30) days written notice before any such policy shall be altered or canceled.   If it at any time or times hereafter any Grantor shall fail to obtain or maintain any of the policies of insurance required above or to pay any premium relating thereto, then Administrative Agent, without waiving or releasing any obligation or default by any Grantor hereunder, may (but shall be under no obligation to) obtain and maintain such policies of insurance and pay such premiums and take such other actions with respect thereto as Administrative Agent deems advisable upon notice to Grantors.  Such insurance, if obtained by Administrative Agent, may, but need not, protect such Grantor’s interests or pay any claim made by or against such Grantor with respect to the Collateral.  Such insurance may be more expensive than the cost of insurance such Grantor may be able to obtain on its own and may be cancelled only upon such Grantor providing evidence that it has obtained the insurance as required above.  All sums disbursed by Administrative Agent in connection with any such actions, including, without limitation, court costs, expenses, other charges relating thereto and reasonable attorneys’ fees, shall constitute a Loan under the Credit Agreement, shall be payable on demand by Grantors to Administrative Agent and, until paid, shall bear interest at the highest rate then applicable to a Loan under the Credit Agreement.   (viii)                        It shall provide the Administrative Agent with prompt written notice of (a) each Commercial Tort Claim in excess of $10,000,000 in respect of which such Grantor has any right, title or interest that is not listed in the Perfection Certificate (and will promptly take all steps as the Administrative Agent may request to grant to the Administrative Agent and the other Secured Parties a first priority Lien therein), and (b) any judgment, settlement or other disposition of any new or existing Commercial Tort Claim.   8 --------------------------------------------------------------------------------   4.2                               Equipment and Inventory.  Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that all of its Equipment and Inventory (other than mobile goods, Inventory and Equipment in transit, or rented, leased or otherwise provided to others in the ordinary course of business and other Collateral in which possession is not maintained in the ordinary course of its business) is kept only at the locations specified in the Perfection Certificate.   4.3                               Accounts   (a)                                 Representations and Warranties. Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that no Account is evidenced by an Instrument or Chattel Paper that has not been delivered to the Administrative Agent.   (b)                                 Covenants and Agreements. Each Grantor hereby covenants and agrees that:   (i)             To the extent reasonably practicable, it shall mark conspicuously, in form and manner reasonably satisfactory to the Administrative Agent, all Chattel Paper, Instruments and other evidence of any Accounts (other than any delivered to the Administrative Agent as provided herein), as well as the related Records, with an appropriate reference to the fact that the Administrative Agent has a security interest therein.   (ii)          It will not, without the Administrative Agent’s prior written consent (which consent shall not be unreasonably withheld), grant any extension of the time of payment of any Account, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Supporting Obligation, or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, releases, compromises or settlements granted or made in the ordinary course of business and consistent with its current practices or in accordance with such practices reasonably believed by such Grantor to be prudent.   (iii)       Except as otherwise provided in this Section, it shall continue to collect all amounts due or to become due to it under all Accounts and any Supporting Obligations relating thereto, and diligently exercise each material right it may have thereunder, in each case at its own cost and expense, and in connection with such collections and exercise, it shall, upon the occurrence and during the continuance of an Event of Default, take such action as it or the Administrative Agent may reasonably deem necessary. Notwithstanding the foregoing and in addition to all other rights and remedies, the Administrative Agent shall have the right at any time after the occurrence and during the continuance of an Event of Default to notify, or require such Grantor to notify, any Account Debtor with respect to any such Account or Supporting Obligation of the Administrative Agent’s security interest therein, and in addition, at any time during the continuation of an Event of Default, the Administrative Agent may: (A) direct such Account Debtor to make payment of all amounts due or to become due to such Grantor thereunder directly to the Administrative Agent and (B) enforce, at the cost and expense of such Grantor, collection thereof and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor would be able to have done.  If the Administrative Agent notifies such Grantor that it has elected to collect any such Account or Supporting Obligation in accordance with the preceding sentence, any payments thereof received by such Grantor shall not be commingled with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the   9 --------------------------------------------------------------------------------   Administrative Agent hereunder and shall be forthwith delivered to the Administrative Agent in the same form as so received (with any necessary endorsement), and such Grantor shall not grant any extension of the time of payment thereof, compromise, compound or settle the same for less than the full amount thereof, release the same, wholly or partly, or allow any credit or discount whatsoever thereon.  Each Grantor shall use its commercially reasonable efforts to keep in full force and effect any Supporting Obligation relating to any Account.   4.4                               Pledged Collateral; Documents   (a)                                 Representations and Warranties. Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that: (i) all Pledged Equity Interests have been duly authorized and validly issued and are fully paid and non-assessable, and such Grantor is the direct owner, beneficially and of record, thereof, free and clear of all Liens (other than Liens expressly permitted by the Loan Documents), (ii) all Pledged Debt has been duly authorized, issued and delivered and, where necessary, authenticated, and, to the knowledge of such Grantor, constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and (iii) all Pledged Equity Interests evidenced by a Security Certificate and Chattel Paper or Instruments and Documents, have been delivered to the Administrative Agent.   (b)                                 Registration in Nominee Name; Denominations. Each Grantor hereby agrees that without limiting Article 5, the Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) upon the occurrence and during the continuation of an Event of Default to hold, where applicable, Pledged Collateral in the Administrative Agent’s own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned, where applicable, in blank or in favor of the Administrative Agent.   (c)                                  Distributions. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent, on behalf of the Secured Parties, shall have the right to receive (for application to the Obligations) all dividends, interest or principal in respect of Pledged Collateral and to the extent that any thereof is received by or on behalf of a Grantor, it shall be held in trust for the benefit of the Secured Parties, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Administrative Agent upon demand in the same form as so received (with any necessary endorsement).  Any and all money and other property paid over to or received by the Administrative Agent pursuant to this clause shall be retained by the Administrative Agent in an account to be established in the name of the Administrative Agent, for the ratable benefit of the Secured Parties, under its sole dominion and control and shall be applied in accordance with the provisions of Section 6.2.  After all Events of Default   10 --------------------------------------------------------------------------------   have been cured or waived, the Administrative Agent shall, within five Business Days after all such Events of Default have been cured or waived, repay to the applicable Grantor all cash dividends, interest and principal (without interest) which remain in such account.   (d)                                 Voting Rights. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent, on behalf of the Secured Parties, shall be vested with all rights of each Grantor to exercise the voting and consensual rights and powers with respect to Pledged Collateral.   (e)                                  Control. If at any time any Pledged Equity Interests do not constitute Securities or if any Pledged Equity Interests constituting Securities are not evidenced by a Security Certificate, the applicable Grantor shall take such actions and execute such documents, at such Grantor’s expense, as is necessary to establish the Administrative Agent’s control thereof or otherwise perfect the Security Interest therein   (f)                                   Instruments.  If any Pledged Debt is evidence by any Instrument or Tangible Chattel Paper, the applicable Grantor shall indorse, assign, and deliver the same to the Administrative Agent accompanied by such instruments of transfer or assignment duly executed in blank as Administrative Agent may from time to time reasonably request.   4.5                               Intellectual Property Collateral. Each Grantor hereby covenants and agrees as follows:   (a)                                 It will not, nor will it permit any of its licensees (or sublicensees) to, do any act, or omit to do any act, whereby any material Patent that is related to the conduct of its business may become invalidated or dedicated to the public, and it shall continue to mark any products covered by a Patent with the relevant patent number as necessary to establish and preserve its maximum rights under applicable patent laws.   (b)                                 It will (either directly or through its licensees or its sublicensees), for each material Trademark included in the Collateral that is related to the conduct of its business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under any such Trademark, (iii) display such Trademark with notice of Federal or other analogous registration to the extent necessary to establish and preserve its rights under applicable law, and (iv) not knowingly use or knowingly permit any of its licensees or sublicensees to use such Trademark in violation of any third party’s valid and legal rights.   (c)                                  It will (either directly or through its licensees or its sublicensees), for each material work covered by a Copyright included in the Collateral that is related to the conduct of its business, continue to publish, reproduce, display, adopt and distribute the material work with appropriate copyright notice as necessary to establish and preserve its maximum rights under applicable copyright laws.   11 --------------------------------------------------------------------------------   (d)                                 It will promptly notify the Administrative Agent in writing if it knows that any Intellectual Property material to the conduct of its business and included in the Collateral may become abandoned, lost or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or the United States Copyright Office, or any similar offices or tribunals in the United States of America or any other country) regarding such Grantor’s ownership of any such Intellectual Property, its right to register the same, or to keep and maintain the same.   (e)                                  In no event shall it, either directly or through any agent, employee, licensee or designee, file an application for any Intellectual Property of material value with the United States Patent and Trademark Office, the United States Copyright Office or any similar offices in the United States of America or any other country, unless it promptly notifies the Administrative Agent in writing thereof and, upon request of the Administrative Agent, executes and delivers any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual Property, and such Grantor hereby appoints the Administrative Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable.   (f)                                   It will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar offices or tribunals in the United States of America or any other country, to maintain and pursue each material application relating to the Intellectual Property included in the Collateral owned or held by it or on its behalf (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registered Trademark and Copyright included in the Collateral that is material to the conduct of its business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent, in good faith, with reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties. In the event that it has reason to believe that any Intellectual Property included in the Collateral material to the conduct of its business has been or is about to be infringed, misappropriated or diluted by a third party, it promptly shall notify the Administrative Agent in writing and shall, if consistent, in good faith, with reasonable business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions consistent with reasonable business practices under the circumstances to protect such Intellectual Property.   (g)                                  During the continuance of an Event of Default, it shall use its commercially reasonable efforts to obtain all requisite consents or approvals by the licensor   12 --------------------------------------------------------------------------------   of each license included in the Collateral owned or held by it or on its behalf to effect the assignment (as collateral security) of all of its right, title and interest thereunder to the Administrative Agent or its designee.   (h)                                 It shall continue to collect all amounts due or to become due to such Grantor under all material Intellectual Property included in the Collateral owned or held by it or on its behalf, and diligently exercise each material right it may have thereunder, in each case at its own cost and expense, and in connection with such collections and exercise, it shall, upon the occurrence and during the continuance of an Event of Default, take such action as it or the Administrative Agent may reasonably deem necessary. Notwithstanding the foregoing, the Administrative Agent shall have the right at any time after the occurrence and during the continuance of an Event of Default to notify, or require such Grantor to notify, any relevant obligors with respect to such amounts of the Administrative Agent’s security interest therein.   4.6                               Commercial Tort Claims.  Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that the Perfection Certificate sets forth all Commercial Tort Claims as are in existence (i) on the Closing Date, in the case of the Grantors signatory hereto on the Closing Date, and (ii) on the date on which an Additional Grantor becomes a Grantor, in the case of each Additional Grantor.  Each Grantor hereby covenants and agrees that it shall provide the Administrative Agent with prompt written notice of each Commercial Tort Claim in excess of $10,000,000, and any judgment, settlement or other disposition thereof and will take such action as the Administrative Agent may request to grant and perfect a security interest therein in favor of the Administrative Agent and the other Secured Parties.   5.                                      FURTHER ASSURANCES; FILING AUTHORIZATION   Each Grantor hereby covenants and agrees, at its own cost and expense, to promptly execute and deliver all further certificates, documents, instruments, financing and continuation statements and amendments thereto, notices and other agreements, and take all further action, that the Administrative Agent may reasonably request from time to time, in order to perfect and protect the Security Interest granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to the Collateral.  Each Grantor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral.  Each Grantor hereby further authorizes the Administrative Agent to file filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country), including this Security Agreement, the Grants of Security Interest in Trademarks and Patents and Grants of Security Interest in Copyrights in the forms of Exhibits B and C respectively or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder, without the signature of such Grantor, and naming such Grantor, as debtor, and the Administrative Agent, as secured party.   13 --------------------------------------------------------------------------------   6.                                      ADMINISTRATIVE AGENT   Each Grantor hereby appoints the Administrative Agent and any officer or agent thereof, as its true and lawful agent and attorney-in-fact for the purpose of carrying out the provisions of this Security Agreement, taking any action such Grantor is obligated to take under any Loan Document, and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest, provided that the Administrative Agent agrees it will not exercise its authority as the agent and attorney-in-fact of the Borrower unless an Event of Default shall have occurred and shall be continuing.  The provisions of this Article shall in no event relieve any Grantor of any of its obligations hereunder or under the other Loan Documents with respect to any of the Collateral or impose any obligation on the Administrative Agent to proceed in any particular manner with respect to any of the Collateral, or in any way limit the exercise by the Administrative Agent or any other Secured Party of any other or further right that it may have on the Closing Date or hereafter, whether hereunder, under any other Loan Document, by law or otherwise.  The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equivalent to that which the Administrative Agent, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that neither the Administrative Agent nor any of the Secured Parties shall have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not the Administrative Agent or any other Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any person with respect to any Collateral.   7.                                      REMEDIES UPON DEFAULT   7.1                               Remedies Generally   Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may exercise any and all rights and remedies granted to a Secured Party by the UCC or otherwise allowed at law, and provided by this Agreement.  Without limiting the foregoing, during such period with respect to any Collateral consisting of Intellectual Property each Grantor agrees, on demand, to license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Administrative Agent shall determine, unless any of the Grantor’s obligations would violate any then-existing licensing arrangements to the extent that waivers cannot be obtained. The Administrative Agent may sell all or a portion of the Collateral in any manner permitted by applicable law, provided, that the Grantors agree that ten days’ written notice of any such sale shall be deemed reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions (or any successor provisions).   14 --------------------------------------------------------------------------------   7.2                               Application of Proceeds of Sale   The Administrative Agent shall apply the proceeds of any collection or sale of the Collateral, as well as any Collateral consisting of cash as set forth in Section 8.03 of the Credit Agreement.   7.3                               Grant of License to Use Intellectual Property   For the purpose of enabling the Administrative Agent to exercise rights and remedies under this Article, at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies upon the occurrence and during the continuance of an Event of Default, each Grantor hereby grants, to the extent it has the right to grant, to the Administrative Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any of the Collateral consisting of Intellectual Property now owned or held or hereafter acquired or held by or on behalf of such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, unless any of the Grantor’s obligations would violate any then-existing licensing arrangements to the extent that waivers cannot be obtained.  The use of such license by the Administrative Agent shall be exercised, at the option of the Administrative Agent, upon the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Administrative Agent in accordance herewith shall be binding upon such Grantor notwithstanding any subsequent cure of an Event of Default.  Any royalties and other payments received by the Administrative Agent shall be applied in accordance with Section 6.2.   8.                                      REIMBURSEMENT OF THE ADMINISTRATIVE AGENT   Each Grantor agrees, jointly with the other Grantors and severally, to pay to or reimburse the Administrative Agent for all of its fees, costs and reasonable expenses incurred in connection herewith.   9.                                      SECURITY INTEREST ABSOLUTE   All rights of the Administrative Agent hereunder, the Security Interest and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of the Credit Agreement, any other Loan Documents, any agreement with respect to any of the Obligations, or any other agreement or instrument relating to any of the foregoing, (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other waiver, amendment, supplement or other modification of, or any consent to any departure from, the Credit Agreement, any other Loan Documents or any other agreement or instrument relating to any of the foregoing, (iii) except as otherwise expressly permitted under the Loan Documents or effected pursuant thereto, any exchange, release or non-perfection of any Lien on any other collateral, or any release or waiver, amendment, supplement or other modification of, or consent under, or departure from, any guaranty, securing or guaranteeing all or any of the Obligations, or (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or in respect of this Security Agreement or any other Loan Document.   15 --------------------------------------------------------------------------------   10.                               TERMINATION; RELEASE   This Security Agreement and the Security Interest shall terminate when all Commitments have expired or otherwise terminated and all Obligations then due and payable (excluding any contingent indemnification obligations and hedging obligations not related to the Credit Facility) have been finally and paid in full in cash. Upon the effectiveness of any written consent to the release of the Security Interest in any Collateral pursuant to the Credit Agreement, the Security Interest in such Collateral shall be automatically released.  Upon any sale, transfer or other disposition of Collateral permitted by the Loan Documents (other than to a Loan Party), the Security Interest in such Collateral shall be automatically released (other than to the extent any such sale, transfer or other disposition of such Collateral would, immediately after giving effect thereto, result in the receipt by such Grantor of any other property (whether in the form of Proceeds or otherwise) that would, but for the release of the Security Interest therein pursuant to this clause, constitute Collateral, in which event the Lien created hereunder shall continue in such property).  In addition, if any of the Pledged Equity Interests in any Subsidiary or subsidiary, as applicable, are sold, transferred or otherwise disposed of pursuant to a transaction permitted by the Loan Documents and, immediately after giving effect thereto, such Subsidiary or subsidiary, as applicable, would no longer be a Subsidiary or a subsidiary, as applicable, then the obligations of such Subsidiary or subsidiary, as applicable, under this Security Agreement and the Security Interest in the Collateral owned or rights in Collateral held by or on behalf of such Subsidiary or such subsidiary, as applicable, shall be automatically released.  In connection with any termination or release pursuant to this Section, the Administrative Agent shall execute and deliver to the applicable Grantor, at such Grantor’s own cost and expense, all Uniform Commercial Code termination statements and similar documents that such Grantor may reasonably request to evidence such termination or release.  Any execution and delivery of documents pursuant to this Article shall be without recourse to or warranty by the Administrative Agent or any other Secured Party.   11.                               ADDITIONAL GRANTORS   Upon execution and delivery after the date hereof by the Administrative Agent and a Subsidiary of a joinder agreement or supplement hereto together with a Perfection Certificate, each in form and substance satisfactory to the Administrative Agent, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein (each an “Additional Grantor”).  The execution and delivery of any joinder agreement or supplement shall not require the consent of any other Grantor hereunder.  The rights and obligations of each Grantor hereunder and each other Loan Party and other party (other than a Lending Party) under the Loan Documents shall remain in full force and effect notwithstanding the addition of any Additional Grantor as a party to this Security Agreement.  For clarity, no Foreign Subsidiary, NW Property Solutions LLC or Transportation Solutions shall be required to become a party hereto as a Grantor.   12.                               BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS   16 --------------------------------------------------------------------------------   Whenever in this Security Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of any Grantor that are contained in this Security Agreement shall bind and inure to the benefit of each party hereto and its successors and assigns.  This Security Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Grantor and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Administrative Agent and the other Secured Parties, and their respective successors and assigns, except that no Grantor shall have the right to assign its rights or obligations hereunder or any interest herein or in any of the Collateral (and any such attempted assignment shall be void), except as expressly contemplated by this Security Agreement or the other Loan Documents.  This Security Agreement shall be construed as a separate agreement with respect to each of the Grantors and may be amended, supplemented, waived or otherwise modified or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.   13.                               SURVIVAL OF AGREEMENT; SEVERABILITY   All covenants, agreements, representations and warranties made by the Grantors herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Security Agreement or any other Loan Documents shall be considered to have been relied upon by the Administrative Agent and the other Secured Parties and shall survive the execution and delivery of any Loan Document and the making of any Loan, regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect until this Security Agreement shall terminate. In the event any one or more of the provisions contained in this Security Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of such invalid, illegal or unenforceable provisions.   14.                               OTHER PROVISIONS   14.1                        Notices. 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 any Grantor, to it c/o the Borrower as provided in the Credit Agreement, and (ii) if to the Secured Parties or the Administrative Agent, to the Administrative Agent as provided in Section 10.02 of the Credit Agreement.  All notices and other communications given to any party hereto in accordance with the provisions hereof shall be deemed to have been given on the date of receipt.   17 --------------------------------------------------------------------------------   14.2                        Waivers; Amendments. Neither this Security Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and each Grantor, subject to any consent requirement contained in Section 10.01 of the Credit Agreement.   14.3                        Damage Waiver. To the extent permitted by applicable law, no Grantor shall assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct and actual damages) arising out of, in connection with, or as a result of, any Loan Document or any agreement, instrument or other document contemplated thereby, the Transactions or any Loan or the use of the proceeds thereof.   14.4                        Counterparts; Integration; Effectiveness. This Security 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 but one contract. This Security Agreement constitutes the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of this Security Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Security Agreement.   14.5                        Right of Setoff. If an Event of Default shall have occurred and be continuing, the Secured Parties and their respective Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to setoff 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 it to or for the credit or the account of a Grantor against any of and all the obligations of such Grantor now or hereafter existing under this Security Agreement and the other Loan Documents, irrespective of whether or not it shall have made any demand therefor and although such obligations may be unmatured.  The rights of the Secured Parties and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that it may have.   14.6                        Governing Law; Jurisdiction; Consent to Service of Process.   (a)                                 This Security Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law (other than New York General Obligations Law 5-1401 and 5-1402).  Each Grantor irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the Supreme Court of the State of New York sitting in New York County in the Borough of Manhattan and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Security Agreement or any other Loan Document to which each is a party, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such state courts or, to the fullest extent permitted by applicable Law, in such Federal courts.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  Nothing in this Security Agreement or in any other Loan Document shall affect any right   18 --------------------------------------------------------------------------------   that Administrative Agent or any Lending Party may otherwise have to bring any action or proceeding relating to this Security Agreement or any other Loan Document against any Loan Party or any of its properties in the courts of any other jurisdiction.   (b)                                 Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Security Agreement or the other Loan Documents in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.   (c)                                  Each Grantor irrevocably consents to service of process in the manner provided for notices in Section 10.02 of the Credit Agreement.  Nothing in this Security Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Law.   14.7                        WAIVER OF JURY TRIAL; OTHER WAIVER.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM.  EACH OF THE PARTIES HERETO REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH MATTERS.  IN THE EVENT OF LITIGATION, A COPY OF THIS SECURITY AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.   14.8                        Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Security Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Security Agreement.   Section 13.9                             Prior Agreement.  This Agreement constitutes an amendment and restatement of, and replacement and substitution for, the Original Security Agreement.  The indebtedness evidenced by the Original Security Agreement is continuing indebtedness evidenced hereby as amended, and nothing herein shall be deemed to constitute a payment, settlement or novation of the Original Security Agreement, or to release or otherwise adversely affect any lien, mortgage, or security interest securing such indebtedness or any rights of the Administrative Agent and Lenders against any guarantor, surety, or other Person liable for such indebtedness.   19 --------------------------------------------------------------------------------   [remainder of page intentionally left blank]   20 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have duly executed this Security Agreement as of the day and year first above written.     TITAN MACHINERY, INC.           By:     Name:     Title:     --------------------------------------------------------------------------------   WELLS FARGO BANK, NATIONAL ASSOCIATION,   as Administrative Agent           By:     Name:     Title:       22 --------------------------------------------------------------------------------   EXHIBIT A   Perfection Certificate   (Attached)   23 --------------------------------------------------------------------------------   EXHIBIT B   GRANT OF SECURITY INTEREST IN TRADEMARKS AND PATENTS   WHEREAS, TITAN MACHINERY INC., a Delaware corporation (“Grantor”) owns the trademarks, trademark registrations, trademark applications, and any and all goodwill associated therewith, and the patents and patent applications, in each case set forth on Schedule A and Schedule B attached hereto; and   WHEREAS, WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent (the “Grantee”), desires to acquire a security interest in, and lien on, all of Grantor’s right, title and interest in and to Grantor’s trademarks, trademark registrations, trademark applications and any and all goodwill associated therewith and patents and patent applications; and   WHEREAS, the Grantor is willing to grant to the Grantee a security interest in and lien upon the trademarks, trademark registrations, trademark applications and any and all goodwill associated therewith and patents and patent applications described above.   NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the terms and conditions of the Amended and Restated Security Agreement, dated as of March 30, 2012, among the Grantor, certain of its affiliates, and the Grantee (as amended from time to time, the “Security Agreement”), the Grantor hereby grants to the Grantee a security interest in, and a lien upon, all of Grantor’s right, title and interest in and to (i) the trademarks, trademark registrations, trademark applications, and any and all goodwill associated therewith (the “Marks”) set forth on Schedule A attached hereto, (ii) the patents and patent applications (the “Patents”) set forth on Schedule B attached hereto, in each case together with (iii) all Proceeds (as such term is defined in the Security Agreement) of the Marks, (iv) all of the goodwill of the businesses with which the Marks are associated, and (v) all causes of action, past, present and future, for infringement, misappropriation, or dilution of any of the Marks and/or Patents or unfair competition regarding the same.   This GRANT OF SECURITY INTEREST is made to secure the satisfactory performance and payment of all the Obligations (as such term is defined in the Security Agreement) of the Grantor and shall be effective as of the date of the Security Agreement.   This Grant of Security Interest has been granted in conjunction with the security interest granted to Grantee under the Security Agreement.  The rights and remedies of the Grantee with respect to the security interest granted herein are without prejudice to, and are in addition to those set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference.  In the event that any provisions of this Grant of Security Interest are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.   [signature page to follow]   24 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the undersigned have executed this Grant of Security Interest as of the 30th day of March, 2012.   GRANTOR:       TITAN MACHINERY INC.   a Delaware Corporation       By:     Print Name:     Title:                 ADMINISTRATIVE AGENT:       WELLS FARGO BANK, NATIONAL ASSOCIATION a national banking association, as Administrative Agent               By:     Print Name:     Title:       25 --------------------------------------------------------------------------------   STATE OF                        )   ) COUNTY OF )   On this       day of March, 2012, before me personally came                     , to me known, who, being by me duly sworn did depose and say that he is the                         of Titan Machinery Inc., the company described in and which executed the foregoing instrument, and that he signed his name thereto by like order.   IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.         Notary Public   My Commission Expires:   STATE OF )   ) COUNTY OF )   On this       day of March, 2012, before me personally came                          , to me known, who, being by me duly sworn did depose and say that he is a                           of Wells Fargo Bank, National Association, the company described in and which executed the foregoing instrument and that he signed his name thereto by like order.   IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.         Notary Public   My Commission Expires:   26 --------------------------------------------------------------------------------   Schedule A - Trademarks   Country   Trademark   Registration #   Issue Date   Owner                                                         27 --------------------------------------------------------------------------------   Schedule B - Patents   Country   Patent Title   Patent #/ (Application #)   Issue Date/ (File Date)   Owner                                                         28 --------------------------------------------------------------------------------   EXHIBIT C   GRANT OF SECURITY INTEREST IN COPYRIGHTS   WHEREAS, TITAN MACHINERY INC., a Delaware corporation (“Grantor”) owns the copyrights and associated copyright registrations and pending applications for registration set forth on Schedule A attached hereto; and   WHEREAS, WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent (the “Grantee”), desires to acquire a security interest in, and lien on, all of Grantor’s right, title and interest in and to Grantor’s copyrights and copyright registrations and applications therefor; and   WHEREAS, the Grantor is willing to grant to the Grantee a security interest in and lien upon the copyrights and copyright registrations and applications therefor described above.   NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the terms and conditions of the Amended and Restated Security Agreement, dated as of March 30, 2012, among the Grantor, certain of its affiliates, and the Grantee (as amended from time to time, the “Security Agreement”), the Grantor hereby grants to the Grantee a security interest in, and a lien upon, all of Grantor’s right, title and interest in and to Grantor’s copyrights and copyright registrations and applications more particularly set forth on Schedule A attached hereto (the “Copyrights”), together with (i) all Proceeds (as such term is defined in the Security Agreement referred to below) of the Copyrights, and (ii) all causes of action, past, present and future, for infringement of any Copyright.   This GRANT OF SECURITY INTEREST is made to secure the satisfactory performance and payment of all the Obligations (as such term is defined in the Security Agreement) of the Grantor and shall be effective as of the date of the Security Agreement.   This Grant of Security Interest has been granted in conjunction with the security interest granted to Grantee under the Security Agreement.  The rights and remedies of the Grantee with respect to the security interest granted herein are without prejudice to, and are in addition to those set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference.  In the event that any provisions of this Grant of Security Interest are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.   [signature page to follow]   29 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the undersigned have executed this Grant of Security Interest as of the 30th day of March, 2012.     GRANTOR:           TITAN MACHINERY INC.   a Delaware corporation       By:     Print Name:     Title:             ADMINISTRATIVE AGENT:       WELLS FARGO BANK, NATIONAL ASSOCIATION a national banking association, as Administrative Agent           By:     Print Name:     Title:       Trademark, Patent and Copyright Security Agreement   --------------------------------------------------------------------------------   STATE OF )   ) COUNTY OF )   On this             day of March, 2012, before me personally came                                     , to me known, who, being by me duly sworn did depose and say that he is the                        of Titan Machinery Inc., the company described in and which executed the foregoing instrument, and that he signed his name thereto by like order.   IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.         Notary Public   My Commission Expires:   STATE OF )   ) COUNTY OF )   On this              day of March, 2012, before me personally came                              , to me known, who, being by me duly sworn did depose and say that he is a                             of Wells Fargo Bank, National Association, the company described in and which executed the foregoing instrument and that he signed his name thereto by like order.   IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.         Notary Public   My Commission Expires:   Trademark, Patent and Copyright Security Agreement   --------------------------------------------------------------------------------   SCHEDULE A   COPYRIGHTS   COPYRIGHT   REGISTRATION NUMBER                     2 --------------------------------------------------------------------------------   EXHIBIT I-1   U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)   Reference is hereby made to the Amended and Restated Credit Agreement dated as of March 30, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Titan Machinery Inc., as borrower, the Subsidiary Guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer, and Swing Line Lender, and each lender from time to time party thereto.   Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.   The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.   Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.     [NAME OF LENDER]       By:       Name:     Title:         Date:                , 20[  ]     3 --------------------------------------------------------------------------------   EXHIBIT I-2   U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)   Reference is hereby made to the Amended and Restated Credit Agreement dated as of March 30, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Titan Machinery Inc., as borrower, the Subsidiary Guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer, and Swing Line Lender, and each lender from time to time party thereto.   Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.   The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.   Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.     [NAME OF PARTICIPANT]       By:       Name:     Title:         Date:                , 20[  ]     4 --------------------------------------------------------------------------------   EXHIBIT I-3   U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)   Reference is hereby made to the Amended and Restated Credit Agreement dated as of March 30, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Titan Machinery Inc., as borrower, the Subsidiary Guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer, and Swing Line Lender, and each lender from time to time party thereto.   Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.   The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by IRS Form W-8ECI, IRS Form W-8BEN, and IRS Form W-9 from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.   Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.     [NAME OF PARTICIPANT]       By:       Name:     Title:         Date:                , 20[  ]     5 --------------------------------------------------------------------------------   EXHIBIT I-4   U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)   Reference is hereby made to the Amended and Restated Credit Agreement dated as of March 30, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Titan Machinery Inc., as borrower, the Subsidiary Guarantors party thereto, Wells Fargo Bank, National Association, as Administrative Agent, L/C Issuer, and Swing Line Lender, and each lender from time to time party thereto.   Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.   The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by IRS Form W-8ECI, IRS Form W-8BEN, and IRS Form W-9 from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.   Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.     [NAME OF LENDER]       By:       Name:     Title:         Date:                , 20[  ]     6 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[a2018equityincentiveplan001.jpg] Exhibit 10.03 SONOS, INC. 2018 EQUITY INCENTIVE PLAN 1. PURPOSE & DEFINITIONS. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents, Subsidiaries and Affiliates that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. As used in this Plan, and except as elsewhere defined herein, the following capitalized terms will have the following meanings: 1.1. “Affiliate” means any person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, including any general partner, managing member, officer or director of the Company, in each case as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such person or entity, whether through the ownership of voting securities or by contract or otherwise. 1.2. “Award” means any award under the Plan, including any Option, RSA, Stock Bonus Award, SAR, RSU or award of Performance Shares. 1.3. “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and international supplement thereto for grants to non-U.S. Participants, which shall be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan. 1.4. “Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee. 1.5. “Board” means the Board of Directors of the Company. 1.6. “Cause” means Participant’s (a) willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (b) commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (c) unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; (d) misappropriation of a business opportunity of the Company; (e) provision of material aid to a competitor of the Company; or (f) willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant’s Service is being terminated for Cause shall be made 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan002.jpg] in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 1.6. 1.7. “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. 1.8. “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law. 1.9. “Common Stock” means the common stock of the Company. 1.10. “Company” means Sonos, Inc., or any successor corporation. 1.11. “Consultant” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity. 1.12. “Corporate Transaction” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then- outstanding voting securities; provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the capital stock of the Company) or 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan003.jpg] (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purpose of this subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time. 1.13. “Director” means a member of the Board. 1.14. “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. 1.15. “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash, stock or other property dividends in amounts equal equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant. 1.16. “Effective Date” means the day immediately preceding the pricing of the Company’s initial public offering, provided that the Board has adopted the Plan prior to, or on such date, subject to approval of the Plan by the Company’s stockholders. 1.17. “Employee” means any person, including Officers and Directors, employed by the Company or any Parent, Subsidiary or Affiliate. For the avoidance of doubt, neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company and the definition of “Employee” herein shall not include Non- Employee Directors. 1.18. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended. 3 --------------------------------------------------------------------------------   [a2018equityincentiveplan004.jpg] 1.19. “Exchange Program” means a program pursuant to which (a) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (b) the exercise price of an outstanding Award is increased or reduced. 1.20. “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof. 1.21. “FMV” means, as of any date, the value of a share of the Company’s Common Stock determined as follows: (a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in such source as the Committee may determine; (b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in such source as the Committee deems reliable; or (c) if none of the foregoing is applicable, by the Board or the Committee in good faith. Notwithstanding the foregoing, with respect to any Award granted after the effectiveness of the Company’s registration statement relating to its initial public offering and prior to the first date upon which the Shares of the Company are listed (or approved for listing) on any securities exchange or designated (or approved for designation) as a national market security on an interdealer quotation system, the FMV shall mean the initial public offering price of a Share as set forth in the Company’s final prospectus relating to its initial public offering. 1.22. “Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. 1.23. “IRS” means the United States Internal Revenue Service. 1.24. “ISO” has the meaning given to that term in Section 5. 1.25. “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent, Subsidiary or Affiliate. 1.26. “NSO” has the meaning given to that term in Section 5. 1.27. “Option” means an award of an option to purchase Shares pursuant to Section 5. 1.28. “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company 4 --------------------------------------------------------------------------------   [a2018equityincentiveplan005.jpg] owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 1.29. “Participant” means a person who holds an Award under this Plan. 1.30. “Performance Award” means an award covering cash, Shares or other property granted pursuant to Section 10 or Section 12 of the Plan. 1.31. “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied: (a) Profit Before Tax; (b) Sales; (c) Expenses; (d) Billings; (e) Revenue; (f) Net revenue; (g) Earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings, stock-based compensation expenses, depreciation and amortization); (h) Operating income; (i) Operating margin; (j) Operating profit; (k) Controllable operating profit, or net operating profit; (l) Net Profit; (m) Gross margin; (n) Operating expenses or operating expenses as a percentage of revenue; (o) Net income; (p) Earnings per share; 5 --------------------------------------------------------------------------------   [a2018equityincentiveplan006.jpg] (q) Total stockholder return; (r) Market share; (s) Return on assets or net assets; (t) The Company’s stock price; (u) Growth in stockholder value relative to a pre-determined index; (v) Return on equity; (w) Return on invested capital; (x) Cash Flow (including free cash flow or operating cash flows) ; (y) Balance of cash, cash equivalents and marketable securities; (z) Cash conversion cycle; (aa) Economic value added; (bb) Individual confidential business objectives; (cc) Contract awards or backlog; (dd) Overhead or other expense reduction; (ee) Credit rating; (ff) Completion of an identified special project; (gg) Completion of a joint venture or other corporate transaction; (hh) Strategic plan development and implementation; (ii) Succession plan development and implementation; (jj) Improvement in workforce diversity; (kk) Employee satisfaction; (ll) Employee retention; (mm) Customer indicators and/or satisfaction; (nn) New product invention or innovation; (oo) Research and development expenses; 6 --------------------------------------------------------------------------------   [a2018equityincentiveplan007.jpg] (pp) Attainment of research and development milestones; (qq) Improvements in productivity; (rr) Bookings; (ss) Working-capital targets and changes in working capital; (tt) Attainment of objective operating goals and employee metrics; and (uu) Any other metric that is capable of measurement as determined by the Committee in its sole discretion. The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments. 1.32. “Performance Period” means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Factors will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Award. 1.33. “Performance Share” means an Award granted pursuant to Section 10 or Section 12 of the Plan, consisting of a unit valued by reference to a designated number of Shares, the value of which may be paid to the Participant by delivery of Shares or, if set forth in the instrument evidencing the Award, of such property as the Committee shall determine, including, without limitation, cash, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. 1.34. “Performance Unit” means an Award granted pursuant to Section 10 or Section 12 of the Plan, consisting of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. 1.35. “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in- law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests. 7 --------------------------------------------------------------------------------   [a2018equityincentiveplan008.jpg] 1.36. “Plan” means this Sonos, Inc., 2018 Equity Incentive Plan. 1.37. “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR. 1.38. “RSA” means an award of Shares pursuant to Section 7 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option. 1.39. “RSU” means an Award granted pursuant to Section 6 or Section 12 of the Plan. 1.40. “SAR” means an Award granted pursuant to Section 9 or Section 12 of the Plan. 1.41. “Service” shall mean service as an Employee, Consultant, Director or Non- Employee Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of any leave of absence approved by the Company. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions, including pursuant to a policy that the Committee may adopt, revoke and/or modify from time to time in the Committee’s sole discretion, respecting suspension of or modification to vesting of the Award while the Employee is on leave from the employ of the Company or a Parent, Subsidiary or Affiliate, or during such change in working hours, as the Committee may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military or other protected leave, if required by applicable laws, vesting shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from such leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act or other applicable law), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide Service to the Company throughout the leave on the same terms as he or she was providing Service immediately prior to such leave. An employee shall have terminated employment as of the date he or she ceases to provide Service (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law, provided, however, that a change in status between an employee, consultant, advisor or director shall not terminate the service provider’s Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Service and the effective date on which the Participant ceased to provide Service. 1.42. “Shares” means shares of Common Stock and the common stock of any successor entity. 1.43. “Stock Bonus Award” means an Award granted pursuant to Section 8 or Section 12 of the Plan. 1.44. “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last 8 --------------------------------------------------------------------------------   [a2018equityincentiveplan009.jpg] corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 1.45. “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto). 2. SHARES SUBJECT TO THE PLAN. 2.1. Number of Shares Available. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is 21,200,000,1 plus (a) any reserved shares not issued or subject to outstanding grants under the Company’s Amended and Restated 2003 Stock Plan (the “Prior Plan”) on the Effective Date, (b) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards, by forfeiture or otherwise, after the Effective Date, (c) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are forfeited after the Effective Date, and (d) shares issued under the Prior Plan that are repurchased by the Company at the original issue price; however, shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award will not become available for future grant or sale under the Plan. 2.2. Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash or other property rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will not become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof. 2.3. Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan. 2.4. Automatic Share Reserve Increase. The number of Shares available for grant and issuance under the Plan shall be increased on January 1, of each of 2019 through 2028, by the lesser of (a) five percent (5%) of the number of Shares and common stock equivalents (including options, RSUs, warrants and preferred stock on an as-converted basis) issued and outstanding on 1 Adjusted to reflect a 2-for-1 stock split that was effected on July 19, 2018. 9 --------------------------------------------------------------------------------   [a2018equityincentiveplan010.jpg] each December 31 immediately prior to the date of increase and (b) such number of Shares determined by the Board. 2.5. ISO Limitation. No more than 42,400,000,2 Shares shall be issued pursuant to the exercise of ISOs. 2.6. Adjustment of Shares. If the outstanding Shares are changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), spin-off, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number and class of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number and class of Shares subject to outstanding Options and SARs, (c) the number and class of Shares subject to other outstanding Awards, and (d) the maximum number and class of Shares that may be issued as ISOs set forth in Section 2.5 shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued. If, by reason of an adjustment pursuant to this Section 2.6, a Participant’s Award Agreement or other agreement related to any Award or the Shares subject to such Award covers additional or different shares of stock or securities, then such additional or different shares, and the Award Agreement or such other agreement in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award or the Shares subject to such Award prior to such adjustment. 3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. 4. ADMINISTRATION. 4.1. Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to: (a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; (b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award; (c) select persons to receive Awards; 2 Adjusted to reflect a 2-for-1 stock split that was effected on July 19, 2018. 10 --------------------------------------------------------------------------------   [a2018equityincentiveplan011.jpg] (d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine; (e) determine the number of Shares or other consideration subject to Awards; (f) determine the FMV in good faith and interpret the applicable provisions of this Plan and the definition of FMV in connection with circumstances that impact the FMV, if necessary; (g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent, Subsidiary or Affiliate; (h) grant waivers of Plan or Award conditions; (i) determine the vesting, exercisability and payment of Awards; (j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; (k) determine whether an Award has been earned or has vested; (l) determine the terms and conditions of any, and to institute any Exchange Program; (m) reduce or waive any criteria with respect to Performance Factors; (n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships; (o) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States or qualify Awards for special tax treatment under laws of jurisdictions other than the United States; (p) make all other determinations necessary or advisable for the administration of this Plan; 11 --------------------------------------------------------------------------------   [a2018equityincentiveplan012.jpg] (q) delegate any of the foregoing to one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law; and (r) to exercise negative discretion on Performance Awards, reducing or eliminating the amount to be paid to Participants. 4.2. Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant. 4.3. Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements. 4.4. Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in which the Company and its Subsidiaries and Affiliates operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries and Affiliates shall be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan, which may include individuals who provide services to the Company, Subsidiary or Affiliate under an agreement with a foreign nation or agency; (c) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 2.1 hereof; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law. 5. OPTIONS. An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NSOs”) and may grant Options to eligible Employees, Consultants and Directors and the number of Shares subject to the Option, the Exercise Price of the Option, the period during 12 --------------------------------------------------------------------------------   [a2018equityincentiveplan013.jpg] which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this section. 5.1. Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria. 5.2. Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement will be delivered to the Participant within a reasonable time after the granting of the Option. 5.3. Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Stockholder”), will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. 5.4. Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the FMV of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the FMV of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company. 5.5. Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third-party administrator), and (b) full payment for the Shares with respect to which the Option is exercised together with applicable withholding taxes. Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the 13 --------------------------------------------------------------------------------   [a2018equityincentiveplan014.jpg] name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 5.6. Termination of Service. If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s employment terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options, except as required by applicable law. (a) Death. If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options, except as required by applicable law. (b) Disability. If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s employment terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s employment terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options. 5.7. Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate FMV of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as 14 --------------------------------------------------------------------------------   [a2018equityincentiveplan015.jpg] NSOs. For purposes of this Section 5.7, ISOs will be taken into account in the order in which they were granted. The FMV of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the FMV of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. 5.8. Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted, unless for the purpose of complying with applicable laws and regulations. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 5.4 for Options granted on the date the action is taken to reduce the Exercise Price. 5.9. No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the written consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code. 6. RESTRICTED STOCK UNITS. A restricted stock unit (“RSU”) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that may be settled in cash or by issuance of those Shares (which may consist of Restricted Stock). No Purchase Price shall apply to an RSU settled in Shares. All RSUs shall be made pursuant to an Award Agreement. 6.1. Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU; provided that no RSU shall have a term longer than ten (10) years. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (i) determine the nature, length and starting date of any Performance Period for the RSU; (ii) select from among the Performance Factors to be used to measure the performance, if any; and (iii) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. 6.2. Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award 15 --------------------------------------------------------------------------------   [a2018equityincentiveplan016.jpg] Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code. 6.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 6.4. Dividend Equivalent Payments. The Committee may permit Participants holding RSUs to receive dividend equivalent payments on outstanding RSUs if and when dividends are paid to stockholders on Shares. In the discretion of the Committee, such dividend equivalent payments may be paid in cash or Shares, and they may either be paid at the same time as dividend payments are made to stockholders or be delayed until Shares are issued pursuant to the RSU grants and may be subject to the same vesting or performance requirements as the RSUs. If the Committee permits dividend equivalent payments to be made on RSUs, the terms and conditions for such dividend equivalent payments will be set forth in the RSU Agreement. 7. RESTRICTED STOCK AWARDS. A restricted stock award (“RSA”) is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the RSA, subject to the Plan. 7.1. Restricted Stock Purchase Agreement. All purchases under an RSA will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts an RSA by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such RSA will terminate, unless the Committee determines otherwise. 7.2. Purchase Price. The Purchase Price for shares sold pursuant to an RSA will be determined by the Committee on the date the RSA is granted, and if permitted by law, no cash consideration will be required in connection with the payment for the Purchase Price where consideration is services rendered. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company. 7.3. Terms of RSAs. RSAs will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of an RSA, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the RSA; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may 16 --------------------------------------------------------------------------------   [a2018equityincentiveplan017.jpg] be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to RSAs that are subject to different Performance Periods and having different performance goals and other criteria. 7.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 7.5. Dividends and Other Distributions. Participants holding RSAs will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Committee provides otherwise at the time the Award is granted. In the discretion of the Committee, such dividends and other distributions may be paid in cash or Shares, and unless otherwise specified in the applicable Award Agreement, all such dividends and distributions will be subject to the same restrictions on transferability and forfeitability as apply to the RSAs with respect to which they were paid and may either be paid at the same time as dividend payments are made to other stockholders or be delayed until the vesting or performance requirements are satisfied for the RSAs with respect to which such dividends or distributions are paid. 8. STOCK BONUS AWARDS. A stock bonus award (“Stock Bonus Award”) is an award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent, Subsidiary or Affiliate. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. 8.1. Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. 8.2. Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the FMV of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee. 8.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 9. STOCK APPRECIATION RIGHTS. A stock appreciation right (“SAR”) is an award to an eligible Employee, Consultant, or Director that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the FMV on 17 --------------------------------------------------------------------------------   [a2018equityincentiveplan018.jpg] the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement. 9.1. Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than FMV on the date of grant. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (i) determine the nature, length and starting date of any Performance Period for each SAR; and (ii) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria. 9.2. Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs. 9.3. Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the FMV of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or Dividend Equivalent Right, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code. 9.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 10. PERFORMANCE AWARDS. A Performance Award is an award to an eligible Employee, Consultant, or Director that is based upon the attainment of performance goals, as 18 --------------------------------------------------------------------------------   [a2018equityincentiveplan019.jpg] established by the Committee, and other terms and conditions specified by the Committee, and may be settled in cash, Shares (which may consist of, without limitation, Restricted Stock), other property, or any combination thereof. Grants of Performance Awards shall be made pursuant to an Award Agreement that cites Section 10 of the Plan. 10.1. Types of Performance Awards. Performance Awards shall include Performance Shares, Performance Units, and cash-based Awards as set forth in Sections 10.1(a), 10.1(b), and 10.1(c) below. (a) Performance Shares. The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award. (b) Performance Units. The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine the number of Performance Units and the terms and conditions of each such Award. (c) Cash-Settled Performance Awards. The Committee may also grant cash- settled Performance Awards to Participants under the terms of this Plan. (d) Dividend Equivalent Payments. The Committee may permit Participants holding Performance Shares and/or Performance Units (collectively, “Performance Awards”) to receive dividends, distributions and/or dividend equivalent payments on outstanding Performance Awards if and when dividends are paid to stockholders on Shares. In the discretion of the Committee, such dividends, distributions and/or dividend equivalent payments may be paid in cash or Shares, and they may either be paid at the same time as dividend payments are made to stockholders or be delayed until Shares are issued (if applicable) pursuant to the Performance Awards and may be subject to the same performance requirements as apply to the Performance Awards. If the Committee permits dividends, distributions and/or dividend equivalent payments to be made on Performance Awards, the terms and conditions for such dividends, distributions and/or dividend equivalent payments will be set forth in the applicable Award Agreement(s). The amount to be paid under any Performance Award may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion. 10.2. Terms of Performance Awards. Performance Awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant Performance Period. The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement, and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing 19 --------------------------------------------------------------------------------   [a2018equityincentiveplan020.jpg] Performance Factors and the Performance Period the Committee will: (i) determine the nature, length and starting date of any Performance Period; (ii) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Each Performance Share will have an initial value equal to the FMV of a Share on the date of grant. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. 10.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). 11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares acquired pursuant to this Plan may be made in cash or cash equivalents or, where approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement): (a) by cancellation of indebtedness of the Company owed to the Participant; (b) by surrender of shares of Company capital stock held by the Participant that are clear of all liens, claims, encumbrances or security interests that have an FMV on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled; (c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent, Subsidiary or Affiliate; (d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan; (e) by any combination of the foregoing; or (f) by any other method of payment as is permitted by applicable law. The Committee may limit the availability of any method of payment, to the extent the Committee determines, in its discretion, that such limitation is necessary or advisable to comply with applicable law or facilitate the administration of the Plan. 12. GRANTS TO NON-EMPLOYEE DIRECTORS. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate grant date fair value of Awards granted to a Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed $600,000. 20 --------------------------------------------------------------------------------   [a2018equityincentiveplan021.jpg] 12.1. Eligibility. Awards pursuant to this Section 12 shall be granted only to Non- Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12. 12.2. Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the FMV of the Shares at the time that such Option or SAR is granted. 12.3. Election to receive Awards in Lieu of Cash. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company. 13. WITHHOLDING TAXES. Prior to any relevant taxable or tax withholding events in connection with the Awards under this Plan, the Company may require the Participant to pay or make adequate arrangements satisfactory to the Company with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account and other tax-related items related to the Participant’s participation in this Plan and legally applicable to the Participant (collectively, “Tax-Related Obligations”). The Committee may, in its sole discretion and pursuant to such procedures as it may specify from time to time, require or permit a Participant to satisfy withholding obligations for such Tax-Related Obligations, in whole or in part by (without limitation) (a) paying cash, (b) having the Company withhold otherwise deliverable cash or Shares having a value equal to the Tax-Related Obligations to be withheld, (c) delivering to the Company already-owned Shares having a value equal to the Tax-Related Obligations to be withheld, or (d) withholding from proceeds of the sale of Shares issued pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company, provided that, in all instances, the satisfaction of the Tax-Related Obligations will not result in any adverse accounting consequence to the Company, as the Committee may determine in its sole discretion. The Company may withhold or account for these Tax-Related Obligations by considering applicable statutory withholding rates or other applicable withholding rates, including maximum rates for the applicable tax jurisdiction to the extent consistent with applicable laws. Unless otherwise determined by the Committee, the FMV of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares shall be valued based on the FMV of the Shares as of the previous trading day, unless otherwise determined by the Committee. 14. TRANSFERABILITY. 14.1. Transfer Generally. Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (a) during the Participant’s lifetime only by (i) the Participant, 21 --------------------------------------------------------------------------------   [a2018equityincentiveplan022.jpg] or (ii) the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee. 14.2. Award Transfer Program. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (a) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (b) amend or remove any provisions of the Award relating to the Award holder’s continued Service to the Company or its Parent, Subsidiary, or Affiliate, (c) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (d) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (e) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion. 15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES. 15.1. Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. In addition, the Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement shall be deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares underlying an Award during the period beginning on the date the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which it is forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of cash or additional whole Shares, as determined by the Committee in its sole discretion, as of the date of payment of such cash dividends on Shares. Notwithstanding the foregoing, dividends and Dividend Equivalent Rights may accrue with respect to unvested Awards, but will not be paid or issued until such Award is fully vested and the Shares are issued to Participant and such Shares are no longer subject to any vesting requirements or repurchase rights on behalf of the Company. 22 --------------------------------------------------------------------------------   [a2018equityincentiveplan023.jpg] 15.2. Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. 16. CERTIFICATES. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject. 17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all written or electronic certificates (if any) representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificate. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid. 18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval, the Committee may (a) reprice Options or SARs (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising from the repricing), and (b) with the consent of the respective Participants (unless not required pursuant to Section 5.8 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards. 19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award 23 --------------------------------------------------------------------------------   [a2018equityincentiveplan024.jpg] and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver written or electronic certificates (if any) for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares or to effect compliance with the registration, qualification or listing requirements of any foreign, national or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. 20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to terminate Participant’s employment or other relationship at any time. 21. CORPORATE TRANSACTIONS. 21.1. Assumption or Replacement of Awards by Successor. In the event that the Company is subject to a Corporate Transaction, outstanding Awards acquired under the Plan shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Awards in an identical manner. Such agreement, without the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Corporate Transaction: (a) The continuation of an outstanding Award by the Company (if the Company is the successor entity). (b) The assumption of an outstanding Award by the successor or acquiring entity (if any) of such Corporate Transaction (or by its parents, if any), which assumption, will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable. (c) The substitution by the successor or acquiring entity in such Corporate Transaction (or by its parents, if any) of equivalent awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable). (d) The full or partial acceleration of exercisability or vesting and accelerated expiration of an outstanding Award and lapse of the Company’s right to repurchase or re- 24 --------------------------------------------------------------------------------   [a2018equityincentiveplan025.jpg] acquire shares acquired under an Award or lapse of forfeiture rights with respect to shares acquired under an Award. (e) The settlement of the full value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its parent, if any) with a FMV equal to the required amount, followed by the cancellation of such Awards; provided however, that such Award may be cancelled if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates the Award would have become exercisable or vested. Such payment may be subject to vesting based on the Participant’s continued service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become vested or exercisable. For purposes of this Section 21.1(e), the FMV of any security shall be determined without regard to any vesting conditions that may apply to such security. (f) The cancellation of outstanding Awards in exchange for no consideration. The Board shall have full power and authority to assign the Company’s right to repurchase or re-acquire or forfeiture rights to such successor or acquiring corporation. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction. 21.2. Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not be deducted from the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year. 21.3. Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non- 25 --------------------------------------------------------------------------------   [a2018equityincentiveplan026.jpg] Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines. 22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board. 23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules). 24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted. No termination or amendment of the Plan shall affect any then-outstanding Award unless expressly provided by the Committee; in any event, no termination or amendment of the Plan or any outstanding Award may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with applicable law, regulation or rule. 25. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and other equity awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company, as well as with any applicable insider trading or market abuse laws to which the Participant may be subject. 27. ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards shall, subject to applicable law, be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of Participant’s employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancelation of outstanding Awards and the recoupment of any gains realized with respect to Awards. 26 --------------------------------------------------------------------------------   [a2018equityincentiveplan027.jpg] NOTICE OF STOCK OPTION GRANT (GLOBAL) SONOS, INC. 2018 EQUITY INCENTIVE PLAN GRANT NUMBER: Unless otherwise defined herein, the terms defined in the Sonos, Inc. (the “Company”), 2018 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Option Grant (the “Notice of Grant”) and the attached Stock Option Agreement, including the International Supplement attached hereto (the “Supplement”), which is generally applicable to you if you live or work outside the United States, and any special terms and conditions for your country set forth therein (collectively, the “Option Agreement”). You have been granted an Option to purchase shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice of Grant and the Option Agreement. Name: Address: Number of Shares: Exercise Price Per Share: Date of Grant: Vesting Commencement Date: Type of Option: Expiration Date: _________; this Option expires earlier if your Service terminates earlier, as described in the Option Agreement. Vesting Schedule: Vesting Acceleration: This Notice of Grant may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic delivery specified by the Company. You acknowledge that the vesting of the Shares pursuant to this Notice of Grant is earned only by continuing Service, but you understand that your employment or consulting relationship with the Company or a Parent, Subsidiary or Affiliate is for an unspecified duration, can be terminated at any time, and that nothing in this Notice of Grant, the Option Agreement or the Plan changes the nature of that relationship. By accepting this Option, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, this Notice of Grant and the Option Agreement. By accepting this 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan028.jpg] Option, you consent to the electronic delivery and acceptance as further set forth in the Option Agreement. 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan029.jpg] STOCK OPTION AGREEMENT SONOS, INC. 2018 EQUITY INCENTIVE PLAN You have been granted an Option by Sonos, Inc. (the “Company”), under the 2018 Equity Incentive Plan (the “Plan”) to purchase Shares (the “Option”), subject to the terms, restrictions and conditions of the Plan, the Notice of Stock Option Grant (the “Notice of Grant”) and this Stock Option Agreement, including the Supplement, which is generally applicable to you if you live or work outside the United States, and any special terms and conditions for your country set forth therein (collectively, the “Agreement”). 1. Grant of Option. You have been granted the Option for the number of Shares set forth in the Notice of Grant at the Exercise Price per Share set forth in the Notice of Grant. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. If you are a U.S. taxpayer and the Option is designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 limit under Code Section 422(d), it shall be treated as a Nonqualified Stock Option (“NSO”). 2. Termination. (a) General Rule. If your Service terminates for any reason except death or Disability, then this Option will expire at the close of business at Company headquarters on the date three months after your termination of Service (subject to the expiration detailed in Section 6). You acknowledge and agree that the vesting schedule set forth in the Notice of Grant may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You acknowledge that the vesting of the Shares pursuant to this Agreement is earned only by continuing Service. (b) Death; Disability. If you die before your Service terminates or you die within three months of your termination of Service, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date of death (subject to the expiration detailed in Section 6). If your Service terminates because of your Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after your termination date (subject to the expiration detailed in Section 6). (c) Termination Date. For purposes of this Option, your Service will be considered terminated as of the date you are no longer actively providing services to the Company or a Parent, Subsidiary or Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or consulting agreement, if any), and your period of Service will not include any contractual notice period or any period of “garden 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan030.jpg] leave” or similar period mandated under labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or consulting agreement, if any. The Committee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of this Option (including whether you may still be considered to be providing services while on a leave of absence). (d) No Notice. You are responsible for keeping track of these exercise periods following your termination of Service for any reason. The Company will not provide further notice of such periods. In no event shall this Option be exercised later than the Expiration Date set forth in the Notice of Grant. 3. Exercise of Option. (a) Right to Exercise. This Option is exercisable during its term in accordance with the vesting schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement. In the event of your death, Disability, or other cessation of Service, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice of Grant and this Agreement. This Option may not be exercised for a fraction of a Share. (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate Exercise Price and any applicable withholding of Tax-Related Items as detailed in Section 8 below. 4. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at your election: (a) your personal check, wire transfer, or a cashier’s check; (b) for U.S. taxpayers only: certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Exercised Shares issued to you. However, you may not surrender, or attest to the ownership of, shares of Company stock in payment of the Exercise Price of your Option if your action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes; 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan031.jpg] (c) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Exercised Shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price and any withholding of Tax-Related Items. The balance of the sale proceeds, if any, will be delivered to you. The directions must be given by signing a special notice of exercise form provided by the Company; or (d) other method authorized by the Company. 5. Non-Transferability of Option. In general, except as provided below, only you may exercise this Option prior to your death. You may not transfer or assign this Option, except as provided below. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. However, if you are a U.S. taxpayer, you may dispose of this Option in your will or in a beneficiary designation. If you are a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow you to transfer vested Shares subject to this Option (whether exercised or unexercised) as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest. The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement. This Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of you only by you, your guardian, or legal representative, as permitted in the Plan and applicable local laws. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of you. 6. Term of Option. This Option shall in any event expire on the expiration date set forth in the Notice of Grant, which date is ten years after the grant date (five years after the grant date if this Option is designated as an ISO in the Notice of Grant and Section 5.3 of the Plan applies). 7. Tax Obligations. You should consult a tax adviser for tax obligations relating to this Option in the jurisdiction in which you are subject to tax. YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) Exercising the Option. You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding of Tax-Related Items. 3 --------------------------------------------------------------------------------   [a2018equityincentiveplan032.jpg] (b) Notice of Disqualifying Disposition of ISO Shares. If you sell or otherwise dispose of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, you shall immediately notify the Company in writing of such disposition. You agree that you may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current compensation paid to you. 8. Responsibility for Taxes. Regardless of any action the Company or, if different, your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance contributions, payroll tax, fringe benefits tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of this Option to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Item withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer, and their respective agents, to withhold taxes from the proceeds of the sale of the Shares, through a mandatory sale arranged by the Company (on your behalf and pursuant to this authorization). If any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares cannot be satisfied by the means previously described, then you authorize the Company or the Employer, and their respective agents, at their discretion, to withhold all applicable Tax-Related Items legally payable by you, if permissible under local law, from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, you may request alternative withholding arrangements, which may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares through a voluntary sale arranged by the Company, (c) your payment of a cash amount or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding prior to the taxable or withholding event. The Fair Market Value of these Shares, determined as of the effective date of the Option exercise, will be applied as a credit against the Tax-Related Items. 4 --------------------------------------------------------------------------------   [a2018equityincentiveplan033.jpg] Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, as determined in the sole discretion of the Company or the Employer. In any case, you will not receive a refund from the Company of any over-withheld amount in cash and will have no entitlement to the Shares equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Shares, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. You acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section. 9. Nature of Grant. In accepting this Option, you acknowledge, understand and agree that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, suspended or terminated by the Company at any time, to the extent permitted by the Plan; (b) the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted in the past; (c) all decisions with respect to future stock options or other grants, if any, will be at the sole discretion of the Company; (d) you are voluntarily participating in the Plan; (e) this Option and any Shares acquired under the Plan, and the income and value of same, are not intended to replace any pension rights or compensation; (f) this Option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation for purpose of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or payments or welfare benefits or similar payments; (g) unless otherwise agreed with the Company, this Option and any Shares acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, any Service you may provide as a director of any Parent, Subsidiary or Affiliate; (h) the future value of the Shares underlying this Option is unknown, indeterminable, and cannot be predicted with certainty; (i) if the underlying Shares do not increase in value, this Option will have no value; 5 --------------------------------------------------------------------------------   [a2018equityincentiveplan034.jpg] (j) if you exercise this Option and acquire Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price; (k) no claim or entitlement to compensation or damages shall arise from forfeiture of this Option resulting from the termination of your Service (for any reason whatsoever, whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or service agreement, if any), and in consideration of the grant of this Option to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, the Employer or any Parent, Subsidiary or Affiliate, waive your ability, if any, to bring any such claim, and release the Company, the Employer or any Parent, Subsidiary or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and (l) if you are providing Service outside the United States, neither the Employer, the Company nor any Parent, Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of this Option or of any amounts due to you pursuant to the exercise of this Option or the subsequent sale of any Shares acquired upon exercise. 10. Acknowledgement. The Company and you agree that this Option is granted under and governed by the Notice of Grant, this Agreement and the provisions of the Plan (incorporated herein by reference). You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with the provisions in the grant documents, and (iii) hereby accept this Option subject to all of the terms and conditions set forth in this Agreement and those set forth in the Plan and the Notice of Grant. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant and this Agreement. 11. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By your acceptance of this Option, you consent to the electronic delivery of the Notice of Grant, this Agreement, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its stockholders (including, without limitation, annual reports and proxy statements) or other communications or information related to this Option. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at sonos-stockadmin@sonos.com. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the 6 --------------------------------------------------------------------------------   [a2018equityincentiveplan035.jpg] Company or a third party designated by the Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at sonos-stockadmin@sonos.com. Finally, you understand that you are not required to consent to electronic delivery. 12. Compliance with Laws and Regulations. The exercise of this Option will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer, which compliance the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Common Stock with any state, federal or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and this Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any, determined by the Company. 13. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan. 14. Governing Law; Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice of Grant and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California in Santa Barbara County, California, or the federal courts of the United States for the Southern District of California and no other courts. 15. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. 16. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent, Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or without Cause. 7 --------------------------------------------------------------------------------   [a2018equityincentiveplan036.jpg] 17. Adjustment. In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this Option and the Exercise Price per Share may be adjusted pursuant to the Plan. 18. Lock-Up Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration), except pursuant to a transfer for no consideration in accordance with Section 5 above, without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement. 19. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Option shall be subject to clawback or recoupment pursuant to any clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your Option (whether vested or unvested) and the recoupment of any gains realized with respect to your Option. 20. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice of Grant constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning this Option are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party. 21. Insider Trading Restrictions/Market Abuse Laws. You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell the Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. 8 --------------------------------------------------------------------------------   [a2018equityincentiveplan037.jpg] You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter. 22. Language. If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. 23. International Supplement. Notwithstanding any provisions in this Agreement, this Option shall be subject to the Supplement if you live or work outside the United States, including any special terms and conditions set forth therein for your country. Moreover, if you relocate to a country other than the United States, then the Supplement, including the special terms and conditions for such country, will apply to you to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Supplement constitutes part of this Agreement. 24. Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 25. Waiver. You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other Participant. BY ACCEPTING THIS OPTION, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. 9 --------------------------------------------------------------------------------   [a2018equityincentiveplan038.jpg] NOTICE OF RESTRICTED STOCK UNIT AWARD (SECTION 16 OFFICERS) SONOS, INC. 2018 EQUITY INCENTIVE PLAN GRANT NUMBER: Unless otherwise defined herein, the terms defined in the Sonos, Inc. (the “Company”), 2018 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “Notice”) and the attached Award Agreement, including the International Supplement attached hereto (the “Supplement”), which is generally applicable to you if you live or work outside the United States, and any special terms and conditions for your country set forth therein (collectively, the “RSU Agreement”). You (“you”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached RSU Agreement. Name: Address: Number of RSUs: Date of Grant: Vesting Commencement Date: Expiration Date: The earlier to occur of: (a) the settlement of all vested RSUs granted hereunder and (b) the tenth anniversary of the Date of Grant. The RSUs expire earlier if your Service terminates earlier, as described in the RSU Agreement. Vesting Dates: Vesting Schedule: Vesting Acceleration: [Notwithstanding the foregoing and anything contrary in the RSU Agreement or the Plan, if your Service is terminated by the Company or a successor corporation as a result of an Involuntary Termination (as defined below) within the period of time commencing two months prior to a Corporate Transaction (as defined below) and ending 12 months following a Corporate Transaction, you shall also fully vest in the Accelerated RSUs (as defined below). “Involuntary Termination” means, without your express written consent, any of the following: (a) your resignation following (i) a significant reduction of your duties, position or responsibilities relative to your duties, 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan039.jpg] position or responsibilities in effect immediately prior to such reduction; (ii) a material reduction by the Company of your base salary, as in effect immediately prior to such reduction; and/or (iii) your relocation by the Company to a facility or a location more than fifty (50) miles from your current location; or (b) any termination of your Service by the Company other than for Cause (as defined below); in either of the foregoing cases, provided that such resignation or termination constitutes a “separation from service” within the meaning of Section 409A of the Code and the Treasury regulations promulgated thereunder. “Cause” means any of the following: (i) any act of personal dishonesty, taken by you in connection with your responsibilities as a service provider of the Company, which is intended to result in your personal enrichment, (ii) your conviction of, or plea of nolo contendere to, a felony, (iii) any act by you that constitutes material misconduct and is injurious to the Company, or (iv) continued violations by you of your obligations to the Company. “Accelerated RSUs” means 100% of the then- unvested RSUs. Notwithstanding anything contrary in the RSU Agreement or the Plan, if you are subject to an Involuntary Termination prior to a Corporate Transaction, your then- unvested RSUs shall remain outstanding for two months but shall not continue vesting following such Involuntary Termination to the minimum extent necessary to permit the vesting acceleration described above.] This Grant Notice may be executed and delivered electronically, whether via the Company’s intranet or the Internet site of a third party or via email or any other means of electronic delivery specified by the Company. You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing Service, but you understand that your employment or consulting relationship with the Company or a Parent, Subsidiary or Affiliate is for an unspecified duration, can be terminated at any time, and that nothing in this Notice of Grant, the RSU Agreement or the Plan changes the nature of that relationship. By accepting this award, you and the Company agree that this award is granted under and governed by the terms and conditions of the Plan, this Notice and the RSU Agreement. By accepting this award of RSUs, you consent to the electronic delivery and acceptance as further set forth in the RSU Agreement. 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan040.jpg] RESTRICTED STOCK UNIT AGREEMENT SONOS, INC. 2018 EQUITY INCENTIVE PLAN You have been granted Restricted Stock Units (“RSUs”) by Sonos, Inc. (the “Company”), subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this Restricted Stock Unit Agreement, including the Supplement, which is generally applicable to you if you live or work outside the United States, and any special terms and conditions for your country set forth therein (collectively, this “RSU Agreement”). 1. Nature of Grant. In accepting this award of RSUs, you acknowledge, understand and agree that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; (b) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past; (c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company; (d) you are voluntarily participating in the Plan; (e) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation; (f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments; (g) unless otherwise agreed with the Company, the RSUs and any Shares acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, any service you may provide as a director of the Company, or a Parent or Subsidiary of the Company; (h) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty; (i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of your Service (for any reason whatsoever whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are providing Service or the terms of your employment or service agreement, if any), and in consideration of the grant of the RSUs to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, the Employer (as defined below), or any other Parent or 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan041.jpg] Subsidiary of the Company, waive your ability, if any, to bring any such claim, and release the Company, the Employer and its Parent or Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and (j) the following provisions apply only if you are providing Service outside the United States: (i) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purpose; and (ii) neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the RSUs or the subsequent sale of any Shares acquired upon settlement. 2. Settlement. Settlement of RSUs shall be made, in any case, on or before March 15 of the calendar year following the calendar year of the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. Settlement means the delivery to you of the Shares vested under the RSUs. Fractional Shares will not be issued. 3. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, you shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares. 4. Dividend Equivalents. Dividend equivalents, if any, shall not be credited to you, except as otherwise permitted by the Committee. 5. No Transfer. RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis. 6. Termination. If your Service terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights you have to such RSUs shall immediately terminate, without payment of any consideration to you. For purposes of this award of RSUs, your Service will be considered terminated as of the date you are no longer providing Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or the terms of your employment or service agreement, if any) and will not be extended by any notice period mandated under local employment laws (e.g., Service would not include a period of “garden leave” or similar period). In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred (including whether you may still be considered to be providing Services while on a leave of absence) and the effective date of such termination. 7. Tax Consequences. You acknowledge that there will be certain consequences with regard to income tax, national or social insurance contributions, payroll tax, fringe benefits tax, payment 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan042.jpg] on account or other tax-related items (“Tax-Related Items”) upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and you should consult a tax adviser regarding your tax obligations prior to such settlement or disposition in the jurisdiction where you are subject to tax. 8. Responsibility for Taxes. Regardless of any action the Company or, if different, your actual employer (the “Employer”) takes with respect to any or all Tax-Related Items withholding or required deductions, you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. You acknowledge that the Company’s obligation to issue or deliver Shares shall be subject to your satisfaction of all Company and/or Employer withholding obligations for Tax-Related Items that arise as a result of this Award and the vesting and/or settlement of the RSUs that are subject to this Award. In this regard, you authorize the Company and/or the Employer, and their respective agents, to withhold Shares that otherwise would be issued to you upon settlement of the RSUs to satisfy the Company and/or the Employer’s tax withholding obligations. You acknowledge that you will not receive a refund in cash or Shares from the Company and/or the Employer with respect to any withheld Shares, whose value exceeds the Company and/or the Employer’s withholding obligations for Tax-Related Items, and that the Company and/or the Employer will include such excess amount in the taxes that the Company will pay to the applicable tax authorities on your behalf. You must pay to the Company and/or the Employer any amount of the Tax-Related Items that the Company and/or the Employer may be required to withhold that cannot be satisfied through share withholding. For tax purposes, you are deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. You acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section 8. 9. Acknowledgement. The Company and you agree that the RSUs are granted under and governed by the Notice, this RSU Agreement and the provisions of the Plan. You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with the provisions in the grant documents, and (iii) hereby accept the RSUs subject to all of the terms and conditions set forth in this RSU Agreement and those set forth in the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this RSU Agreement. 10. Entire Agreement; Enforcement of Rights. This RSU Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject 3 --------------------------------------------------------------------------------   [a2018equityincentiveplan043.jpg] matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this RSU Agreement, nor any waiver of any rights under this RSU Agreement, shall be effective unless in writing and signed by the parties to this RSU Agreement. The failure by either party to enforce any rights under this RSU Agreement shall not be construed as a waiver of any rights of such party. 11. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer, which compliance the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Common Stock with any state, federal or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and this RSU Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this RSU Agreement shall be endorsed with appropriate legends, if any, determined by the Company. 12. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan. 13. Governing Law; Venue. This RSU Agreement, all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice and this RSU Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California in Santa Barbara County, California, or the federal courts of the United States for the Southern District of California and no other courts. 14. Severability. If one or more provisions of this RSU Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this RSU Agreement, (ii) the balance of this RSU Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this RSU Agreement shall be enforceable in accordance with its terms. 15. No Rights as Employee, Director or Consultant. Nothing in this RSU Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without Cause. 4 --------------------------------------------------------------------------------   [a2018equityincentiveplan044.jpg] 16. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By your acceptance of this award of RSUs, you consent to the electronic delivery of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its stockholders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSUs. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at sonos-stockadmin@sonos.com. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at sonos-stockadmin@sonos.com. Finally, you understand that you are not required to consent to electronic delivery. 17. Insider Trading Restrictions/Market Abuse Laws. You acknowledge that, depending on your country, you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell the Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter. 18. Language. If you have received this RSU Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. 19. International Supplement. Notwithstanding any provisions in this RSU Agreement, this award of RSUs shall be subject to the Supplement if you live or work outside the United States, including any special terms and conditions set forth therein for your country. Moreover, if you relocate to a country other than the United States, then the Supplement, including the special terms and conditions for such country will, apply to you to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Supplement constitutes part of this RSU Agreement. 20. Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative 5 --------------------------------------------------------------------------------   [a2018equityincentiveplan045.jpg] reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 21. Waiver. You acknowledge that a waiver by the Company of breach of any provision of this RSU Agreement shall not operate or be construed as a waiver of any other provision of this RSU Agreement, or of any subsequent breach by you or any other Participant. 22. Code Section 409A. For purposes of this RSU Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this RSU Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the six-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. 23. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the RSUs shall be subject to clawback or recoupment pursuant to any clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your RSUs (whether vested or unvested) and the recoupment of any gains realized with respect to your RSUs. BY ACCEPTING THIS RESTRICTED STOCK UNIT AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. 6 --------------------------------------------------------------------------------   [a2018equityincentiveplan046.jpg] RESTRICTED STOCK UNIT AGREEMENT SONOS, INC. 2018 EQUITY INCENTIVE PLAN You have been granted Restricted Stock Units (“RSUs”) by Sonos, Inc. (the “Company”), subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this Restricted Stock Unit Agreement, including the Supplement, which is generally applicable to you if you live or work outside the United States, and any special terms and conditions for your country set forth therein (collectively, this “RSU Agreement”). 1. Nature of Grant. In accepting this award of RSUs, you acknowledge, understand and agree that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; (b) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past; (c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company; (d) you are voluntarily participating in the Plan; (e) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation; (f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments; (g) unless otherwise agreed with the Company, the RSUs and any Shares acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, any service you may provide as a director of the Company, or a Parent or Subsidiary of the Company; (h) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty; (i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of your Service (for any reason whatsoever whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are providing Service or the terms of your employment or service agreement, if any), and in consideration of the grant of the RSUs to which you are otherwise not entitled, you irrevocably agree never to 1 --------------------------------------------------------------------------------   [a2018equityincentiveplan047.jpg] institute any claim against the Company, the Employer (as defined below), or any other Parent or Subsidiary of the Company, waive your ability, if any, to bring any such claim, and release the Company, the Employer and its Parent or Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and (j) the following provisions apply only if you are providing Service outside the United States: (i) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purpose; and (ii) neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the RSUs or the subsequent sale of any Shares acquired upon settlement. 2. Settlement. Settlement of RSUs shall be made, in any case, on or before March 15 of the calendar year following the calendar year of the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. Settlement means the delivery to you of the Shares vested under the RSUs. Fractional Shares will not be issued. 3. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, you shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares. 4. Dividend Equivalents. Dividend equivalents, if any, shall not be credited to you, except as otherwise permitted by the Committee. 5. No Transfer. RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis. 6. Termination. If your Service terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights you have to such RSUs shall immediately terminate, without payment of any consideration to you. For purposes of this award of RSUs, your Service will be considered terminated as of the date you are no longer providing Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or the terms of your employment or service agreement, if any) and will not be extended by any notice period mandated under local employment laws (e.g., Service would not include a period of “garden leave” or similar period). In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred (including whether you may still be considered to be providing Services while on a leave of absence) and the effective date of such termination. 2 --------------------------------------------------------------------------------   [a2018equityincentiveplan048.jpg] 7. Tax Consequences. You acknowledge that there will be certain consequences with regard to income tax, national or social insurance contributions, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”) upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and you should consult a tax adviser regarding your tax obligations prior to such settlement or disposition in the jurisdiction where you are subject to tax. 8. Responsibility for Taxes. Regardless of any action the Company or, if different, your actual employer (the “Employer”) takes with respect to any or all Tax-Related Items withholding or required deductions, you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to the settlement of your RSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer, and their respective agents, to withhold taxes from the proceeds of the sale of the Shares, through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization). If any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or the vesting and settlement of the RSUs cannot be satisfied by the means previously described, then you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all applicable Tax-Related Items legally payable by you, if permissible under local law, from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, you may request alternative withholding arrangements, which may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you upon settlement of the RSUs, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares through a voluntary sale arranged by the Company, (c) your payment of a cash amount or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding prior to the taxable or withholding event. The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the Tax-Related Items. 3 --------------------------------------------------------------------------------   [a2018equityincentiveplan049.jpg] Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, as determined in the sole discretion of the Company or the Employer. In any case, you will not receive a refund from the Company of any over-withheld amount in cash and will have no entitlement to the Shares equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. You acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section. 9. Acknowledgement. The Company and you agree that the RSUs are granted under and governed by the Notice, this RSU Agreement and the provisions of the Plan. You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with the provisions in the grant documents, and (iii) hereby accept the RSUs subject to all of the terms and conditions set forth in this RSU Agreement and those set forth in the Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this RSU Agreement. 10. Entire Agreement; Enforcement of Rights. This RSU Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this RSU Agreement, nor any waiver of any rights under this RSU Agreement, shall be effective unless in writing and signed by the parties to this RSU Agreement. The failure by either party to enforce any rights under this RSU Agreement shall not be construed as a waiver of any rights of such party. 11. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer, which compliance the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Common Stock with any state, federal or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that the Company shall have unilateral authority to amend the Plan and this RSU Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. Finally, the Shares issued pursuant to this RSU Agreement shall be endorsed with appropriate legends, if any, determined by the Company. 12. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult 4 --------------------------------------------------------------------------------   [a2018equityincentiveplan050.jpg] with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan. 13. Governing Law; Venue. This RSU Agreement, all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice and this RSU Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California in Santa Barbara County, California, or the federal courts of the United States for the Southern District of California and no other courts. 14. Severability. If one or more provisions of this RSU Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this RSU Agreement, (ii) the balance of this RSU Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this RSU Agreement shall be enforceable in accordance with its terms. 15. No Rights as Employee, Director or Consultant. Nothing in this RSU Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without Cause. 16. Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By your acceptance of this award of RSUs, you consent to the electronic delivery of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its stockholders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSUs. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at sonos-stockadmin@sonos.com. You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at sonos-stockadmin@sonos.com. Finally, you understand that you are not required to consent to electronic delivery. 5 --------------------------------------------------------------------------------   [a2018equityincentiveplan051.jpg] 17. Insider Trading Restrictions/Market Abuse Laws. You acknowledge that, depending on your country, you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell the Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter. 18. Language. If you have received this RSU Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. 19. International Supplement. Notwithstanding any provisions in this RSU Agreement, this award of RSUs shall be subject to the Supplement if you live or work outside the United States, including any special terms and conditions set forth therein for your country. Moreover, if you relocate to a country other than the United States, then the Supplement, including the special terms and conditions for such country will, apply to you to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Supplement constitutes part of this RSU Agreement. 20. Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 21. Waiver. You acknowledge that a waiver by the Company of breach of any provision of this RSU Agreement shall not operate or be construed as a waiver of any other provision of this RSU Agreement, or of any subsequent breach by you or any other Participant. 22. Code Section 409A. For purposes of this RSU Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”). Notwithstanding anything else provided herein, to the extent any payments provided under this RSU Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the six-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of 6 --------------------------------------------------------------------------------   [a2018equityincentiveplan052.jpg] Section 409A. Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. 23. Lock-Up Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however and whenever acquired (other than those included in the registration), except pursuant to a transfer for no consideration in accordance with Section 5 above, without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement. 24. Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the RSUs shall be subject to clawback or recoupment pursuant to any clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other Service that is applicable to you. In addition to any other remedies available under such policy, applicable law may require the cancellation of your RSUs (whether vested or unvested) and the recoupment of any gains realized with respect to your RSUs. BY ACCEPTING THIS RESTRICTED STOCK UNIT AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. 7 --------------------------------------------------------------------------------
Exhibit 10.160   -------------------------------------------------------------------------------- [***] DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.   INTEL/MICRON CONFIDENTIAL   PRODUCT DESIGNS ASSIGNMENT AGREEMENT   This PRODUCT DESIGNS ASSIGNMENT AGREEMENT (“Agreement”) is made and entered into as of this 6th day of January, 2006 (“Effective Date”), by and between Intel Corporation, a Delaware corporation (“Intel”), and Micron Technology, Inc., a Delaware corporation (“Micron”).  (Micron and Intel are referred to in this Agreement individually as a “Party” and collectively, as the “Parties.”)   RECITALS   A.                                   Micron has produced certain NAND Flash Memory Designs (as defined hereinafter).   B.                                     Micron and Intel have agreed that Micron will transfer and assign to Intel all of Micron’s ownership in and to certain NAND Flash Memory Designs (as defined hereinafter), upon the terms and subject to the conditions of this Agreement.   AGREEMENT   NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound do hereby agree as follows:   ARTICLE 1   DEFINITIONS; CERTAIN INTERPRETIVE MATTERS   1.1                                 DEFINITIONS.   In addition to the terms defined elsewhere in this Agreement, capitalized terms used in this Agreement shall have the respective meanings set forth below:   “Affiliate” means, a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.   “Agreement” shall have the meaning set forth in the preamble to this Agreement.   “Applicable Law” means any applicable laws, statutes, rules, regulations, ordinances, orders, codes, arbitration awards, judgments, decrees or other legal requirements of any Governmental Entity.   “[***]” shall mean the [***], if any, from the list set forth in Schedule 5 within the time period specified therein.   “Business Day” means a day that is not a Saturday, Sunday or other day on which commercial banking institutions in the State of Delaware are authorized or required by Applicable Law to be closed.   --------------------------------------------------------------------------------   “Confidentiality Agreement” means that Mutual Confidentiality Agreement by and among the Joint Venture Company, Intel and Micron dated as of the Effective Date.   “Controller Supporting Materials” shall have the meaning set forth in Section 3.1(b).   “Effective Date” shall have the meaning set forth in the preamble to this Agreement.   “Flash Memory Integrated Circuit” means a non-volatile memory integrated circuit that contains memory cells that are electrically programmable and electrically erasable whereby the memory cells consist of one or more transistors that have a floating gate, charge-trapping regions or any other functionally equivalent structure utilizing one or more different charge levels (including binary or multi-level cell structures) with or without any on-chip control, I/O and other support circuitry.   “Force Majeure Event” means the occurrence of an event or circumstance beyond the reasonable control of a Party and includes, without limitation, (a) explosions, fires, flood, earthquakes, catastrophic weather conditions, or other elements of nature or acts of God; (b) acts of war (declared or undeclared), acts of terrorism, insurrection, riots, civil disorders, rebellion or sabotage; (c) acts of federal, state, local or foreign governmental authorities or courts; (d) labor disputes, lockouts, strikes or other industrial action, whether direct or indirect and whether lawful or unlawful; (e) failures or fluctuations in electrical power or telecommunications service or equipment; and (f) delays caused by the other Party or third-party nonperformance (except for delays caused by a Party’s subcontractors or agents).   “Governmental Entity” means any governmental authority or entity, including any agency, board, bureau, commission, court, department, subdivision or instrumentality thereof, or any arbitrator or arbitration panel.    “In-Process Designs” means those Pre-existing Product Designs listed on Schedule 1 indicated as “In-Process.”   “Intel” shall have the meaning set forth in the preamble to this Agreement.   “[***]” means that [***].   “IP Rights” means copyrights, trade secrets, Mask Work Rights and registrations of any of the foregoing anywhere in the world.   “Joint Venture Company” means IM Flash Technologies, LLC, a Delaware limited liability company that is the subject of the Joint Venture Documents.   “Joint Venture Documents” means that certain Master Agreement by and between the Parties dated November 18, 2005 and each agreement referenced therein (whether directly or indirectly through reference in any of such referenced agreements).   2 --------------------------------------------------------------------------------   “LLC Operating Agreement” means the Limited Liability Company Operating Agreement, dated as of the Effective Date, by and between the Parties.   “Losses” shall mean, collectively, any and all liabilities, damages, losses, costs and expenses (including reasonable attorneys’ and consultants’ fees and expenses).   “Mask Work Rights” means rights under the United States Semiconductor Chip Protection Act of 1984, as amended from time to time, and under any similar counterpart laws in countries other than the United States.   “Micron” shall have the meaning set forth in the preamble to this Agreement.   “Missing Materials” shall have the meaning set forth in Section 2.4.   “NAND Controller” means a discrete integrated circuit device that controls the data input and output to/from the memory array of the NAND Flash Memory Die.   “NAND Flash Memory Design” means, with respect to a NAND Flash Memory Die, the corresponding design components, materials and information listed on Schedule 2, and all IP Rights in and to those design components, materials and information listed on Schedule 2.  Notwithstanding anything to the contrary in the foregoing, NAND Flash Memory Design shall not include any Patent Rights.   “NAND Flash Memory Die” means a discrete integrated circuit die, wherein such die includes at least one NAND Flash Memory Integrated Circuit and such die is designed, developed, marketed and used primarily as a non-volatile memory die.   “NAND Flash Memory Die Package” means a discrete integrated circuit package for a NAND Flash Memory Die, including TSOP, COB, BOC, BGA and FBGA or other type package, wherein such package contains only one or more NAND Flash Memory Die but no other die.   “NAND Flash Memory Integrated Circuit” means a Flash Memory Integrated Circuit wherein the memory cells included in the Flash Memory Integrated Circuit are arranged in groups of serially connected memory cells (each such group of serially connected memory cells called a “string”) in which the drain of each memory cell of a string (other than the first memory cell in the string) is connected in series to the source of another memory cell in such string, the gate of each memory cell in such string is directly accessible, and the drain of the uppermost bit of such string is coupled to the bitline of the memory array.   “NAND Flash Memory Product” means any NAND Flash Memory Wafer, NAND Flash Memory Die or NAND Flash Memory Die Package.   “NAND Flash Memory Wafer” means a prime wafer that has been processed to the point of containing multiple NAND Flash Memory Die and that has undergone Probe Testing, but before singulation of said die into individual semiconductor die.   3 --------------------------------------------------------------------------------   “Party” and “Parties” shall have the meaning set forth in the preamble to this Agreement.   “Patent Rights” means any and all issued and unexpired patents and pending patent applications in any country in the world, together with any and all divisionals, continuations, continuations-in-part, reissues, reexaminations, extensions, foreign counterparts or equivalents of any of the foregoing, wherever and whenever existing.   “Permitted Affiliate” means, with respect to a Party, any Affiliate of such Party except to the extent otherwise agreed by Intel and Micron in any other Joint Venture Document (such exception being applicable only while any applicable term(s) of the Joint Venture Documents remain in effect).   “Person” means any natural person, corporation, joint stock company, limited liability company, association, partnership, firm, joint venture, organization, individual, business, trust, estate or any other entity or organization of any kind or character from any form of association.   “Pre-existing Product Designs” means the NAND Flash Memory Designs, as and to the extent that each element thereof exists on the Effective Date, for each of the NAND Flash Memory Products listed on Schedule 1.   “Probe Testing” means testing, using a wafer test program as set forth in the applicable Specifications, of a wafer that has completed all processing steps deemed necessary to complete the creation of the desired NAND Flash Memory Integrated Circuits in the die on such wafer, the purpose of which test is to determine how many and which of the die meet the applicable criteria for such die set forth in the Specifications.   “Publicly Available Software” means (a) any Software that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed as free Software, open source Software (e.g. Linux) or similar licensing or distribution models; and (b) any Software that requires as a condition of use, modification and/or distribution of such Software that such Software or other Software incorporated into, derived from or distributed with such Software (i) be disclosed or distributed in source code form, (ii) be licensed for the purpose of making derivative works, or (iii) be redistributable at no charge.  Publicly Available Software includes Software licensed or distributed under any of the following:  (1) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (2) the Artistic License (e.g., PERL); (3) the Mozilla Public License; (4) the Netscape Public License; (5) the Sun Community Source License (SCSL); (6) the Sun Industry Source License (SISL); and (7) the Apache Software license.   “Software” means computer program instruction code, whether in human-readable source code form, machine-executable binary form, firmware, scripts, interpretive text, or otherwise.  For avoidance of doubt, Software does not include databases and other information stored in electronic form, other than executable instruction codes or source code that is intended to be compiled into executable instruction codes.   “Specifications” means those specifications used to describe, characterize, and define the quality, functionality and/or performance of any NAND Flash Memory Die, including any interim performance requirements at Probe Testing or other testing.   4 --------------------------------------------------------------------------------   “Supporting Materials” means, with respect to each NAND Flash Memory Design, those things set forth on Schedule 3 solely as and to the extent (a) such things exist on the Effective Date, (b) they are either owned by Micron or are licensed to Micron with the right to sublicense without any further payment to any Third Party, and (c) Micron is not prohibited by Applicable Law or contractual restriction from disclosing or licensing as contemplated under this Agreement.   “Tangible Design Package” shall have the meaning set forth in Section 2.3 below.   “Term” shall have the meaning set forth in Section 8.1.   “Third Party” means any Person other than Micron or Intel.   1.2                                 CERTAIN INTERPRETIVE MATTERS.   (A)                                  UNLESS THE CONTEXT REQUIRES OTHERWISE, (1) ALL REFERENCES TO SECTIONS, ARTICLES, EXHIBITS, APPENDICES OR SCHEDULES ARE TO SECTIONS, ARTICLES, EXHIBITS, APPENDICES OR SCHEDULES OF OR TO THIS AGREEMENT, (2) EACH ACCOUNTING TERM NOT OTHERWISE DEFINED IN THIS AGREEMENT HAS THE MEANING COMMONLY APPLIED TO IT IN ACCORDANCE WITH GAAP, (3) WORDS IN THE SINGULAR INCLUDE THE PLURAL AND VISA VERSA, (4) THE TERM “INCLUDING” MEANS “INCLUDING WITHOUT LIMITATION,” AND (5) 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 “DAY” OR “DAYS” WILL MEAN CALENDAR DAYS.   (B)                                 NO PROVISION OF THIS AGREEMENT WILL BE INTERPRETED IN FAVOR OF, OR AGAINST, ANY OF THE PARTIES BY REASON OF THE EXTENT TO WHICH ANY 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.   ARTICLE 2   PRE-EXISTING DESIGNS   2.1                                 ASSIGNMENT.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, MICRON, ON BEHALF OF ITSELF AND ITS AFFILIATES, HEREBY  GRANTS, CONVEYS AND ASSIGNS (AND AGREES TO CAUSE ITS AFFILIATES TO GRANT, CONVEY AND ASSIGN) TO INTEL, BY EXECUTION OF THIS AGREEMENT (OR, WHERE APPROPRIATE OR REQUIRED, BY EXECUTION OF SEPARATE INSTRUMENTS OF ASSIGNMENT), ALL RIGHT, TITLE AND INTEREST THAT MICRON AND AFFILIATES OF MICRON HAVE IN AND TO THE  PRE-EXISTING PRODUCT DESIGNS AND [***], TO BE HELD AND ENJOYED BY INTEL AND INTEL’S SUCCESSORS AND ASSIGNS.   2.2                                 FURTHER ASSURANCES.  FOR A PERIOD OF [***] FROM THE EFFECTIVE DATE, MICRON WILL, WITHOUT RECEIVING ANY FURTHER CONSIDERATION, AT THE REASONABLE REQUEST OF INTEL, DO (AND CAUSE AFFILIATES OF MICRON TO DO) ALL LAWFUL AND JUST ACTS THAT ARE NECESSARY TO RECORD AND PERFECT THE TRANSFER OF OWNERSHIP TO INTEL OF ANY IP RIGHTS IN AND TO THE PRE-EXISTING PRODUCT DESIGNS AND [***], INCLUDING EXECUTION AND ACKNOWLEDGEMENT OF (AND CAUSING ITS AFFILIATES TO EXECUTE AND ACKNOWLEDGE) ASSIGNMENTS AND OTHER INSTRUMENTS IN A FORM REASONABLY   5 --------------------------------------------------------------------------------   required by Intel for each relevant jurisdiction.  All costs and expenses associated with recording or perfecting such transfer of ownership shall be borne solely by Intel.   2.3                                 DELIVERY.  PROMPTLY FOLLOWING THE EFFECTIVE DATE, EXCEPT FOR THE IN-PROCESS DESIGNS, MICRON SHALL DELIVER TO INTEL THE TANGIBLE INFORMATION AND MATERIALS EMBODYING THE PRE-EXISTING PRODUCT DESIGNS AND SUPPORTING MATERIALS IN FORMATS AND ON STORAGE MEDIA MUTUALLY AGREED TO BY THE PARTIES (HEREINAFTER, THE “TANGIBLE DESIGN PACKAGE”), IN ACCORDANCE WITH THE DELIVERY PROTOCOL SET FORTH ON SCHEDULE 6.  WITHIN [***] OF THE EFFECTIVE DATE, MICRON SHALL DELIVER TO INTEL THE DATASHEETS AND ALL ERRATA THERETO (AS IDENTIFIED IN SCHEDULE 2) ASSOCIATED WITH THE PRE-EXISTING PRODUCT DESIGNS OTHER THAN THE IN-PROCESS DESIGNS.   2.4                                 MISSING MATERIALS.  IF WITHIN [***] OF THE EFFECTIVE DATE, INTEL IDENTIFIES ANY INFORMATION, DOCUMENTS OR ANY OTHER MATERIALS THAT IS/ARE MISSING FROM THE TANGIBLE DESIGN PACKAGE (“MISSING MATERIALS”) SUBSEQUENT TO DELIVERY OF THE TANGIBLE DESIGN PACKAGE BY MICRON, INTEL MAY REQUEST MICRON IN WRITING TO DELIVER THE MISSING MATERIALS TO INTEL WITHIN A PERIOD OF TIME IDENTIFIED BY INTEL, AND MICRON SHALL DELIVER SUCH MISSING MATERIALS WITHIN SUCH PERIOD OF TIME AND IN ACCORDANCE WITH THE DELIVERY PROTOCOL SET FORTH ON SCHEDULE 6, PROVIDED THAT:   (A)                                  THE PERIOD OF TIME IDENTIFIED BY INTEL FOR DELIVERY OF THE MISSING MATERIALS IS REASONABLE CONSIDERING (I) THE NATURE OF THOSE SPECIFIC MISSING MATERIALS, AND (II) THE REASON WHY THOSE MISSING MATERIALS WERE NOT PREVIOUSLY DELIVERED, AND   (B)                                 INTEL DESCRIBES THE MISSING MATERIALS WITH A DEGREE OF SPECIFICITY THAT MICRON IS REASONABLY ABLE TO ASCERTAIN.   If Intel identifies any Missing Materials after the foregoing [***] time period but before [***] after the delivery of the Pre-existing Product Designs other than the In-Process Designs, Intel may request Micron in writing to deliver the Missing Materials to the Intel within a period of time identified by Intel consistent with foregoing clauses (a) and (b), and Micron shall use reasonable efforts to deliver such Missing Materials to the extent in existence at the time of such request in the form that should have been delivered previously.   2.5                                 TRAINING.  DURING THE [***] PERIOD COMMENCING ON THE EFFECTIVE DATE, MICRON WILL PROVIDE A REASONABLE LEVEL OF TRAINING TO DESIGN PERSONNEL OF INTEL REGARDING THE PRE-EXISTING PRODUCT DESIGNS, OTHER THAN THE IN-PROCESS DESIGNS, AND EACH SUCH DESIGN’S CORRESPONDING SUPPORTING MATERIALS.   ARTICLE 3   LICENSES AND RESERVATION OF RIGHTS   3.1                                 LICENSE TO SUPPORTING MATERIALS.   (A)                                  MICRON HEREBY GRANTS TO INTEL [***], PERPETUAL, [***], FULLY PAID UP, [***], LICENSE UNDER ALL IP RIGHTS OWNED OR LICENSABLE BY MICRON IN THE SUPPORTING MATERIALS [***], SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT AND, FOR SO LONG AS ANY APPLICABLE TERM(S) OF THE JOINT VENTURE   6 --------------------------------------------------------------------------------   Documents remain in effect, the applicable terms of the Joint Venture Documents.  The foregoing license further includes the [***].  The license granted in the first sentence of this Section 3.1(a) includes the [***].   (B)                                 WITH RESPECT TO ANY OF THE SUPPORTING MATERIALS IDENTIFIED ON SCHEDULE 3 INDICATED AS SPECIFICALLY RELATED TO A “NAND CONTROLLER BOARD” (“CONTROLLER SUPPORTING MATERIALS”), THE LICENSE UNDER SECTION 3.1(A) IS [***], BUT INTEL SHALL NOT EXTRACT OR SEPARATE THE CONTROLLER SUPPORTING MATERIALS FROM SUCH BOARD OR ATTEMPT TO REVERSE ENGINEER OR COPY SUCH CONTROLLER SUPPORTING MATERIALS.   (C)                                  WITH RESPECT TO ANY OF THE SUPPORTING MATERIALS IDENTIFIED ON SCHEDULE 3 THAT CONSTITUTE AN “IBIS MODEL”, THE LICENSE UNDER SECTION 3.1(A) INCLUDES THE [***].   3.2                                 NO OTHER RIGHTS.  NO OTHER RIGHTS ARE GRANTED HEREUNDER BY EITHER PARTY, BY IMPLICATION, ESTOPPEL, STATUTE OR OTHERWISE, EXCEPT AS EXPRESSLY PROVIDED HEREIN.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, (A) INTEL AGREES AND ACKNOWLEDGES THAT NO RIGHTS ARE GRANTED UNDER THIS AGREEMENT BY MICRON TO ANY PATENT RIGHTS, COPYRIGHT, MASK WORK RIGHTS, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT EXCEPT AS EXPRESSLY GRANTED HEREUNDER WITH RESPECT TO THE PRE-EXISTING PRODUCT DESIGNS OR THE SUPPORTING MATERIALS, AND (B) MICRON AGREES AND ACKNOWLEDGES THAT NO RIGHTS ARE GRANTED UNDER THIS AGREEMENT BY INTEL TO ANY PATENT RIGHTS, COPYRIGHT, MASK WORK RIGHTS, TRADE SECRET, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT WITH RESPECT TO THE PRE-EXISTING PRODUCT DESIGNS.  [***].   3.3                                 LIMITATION ON OBLIGATION TO DISCLOSE OR LICENSE.  ANYTHING TO THE CONTRARY NOTWITHSTANDING, MICRON SHALL NOT BE OBLIGATED TO DISCLOSE TO INTEL (OR ANY OTHER PERSON) OR LICENSE TO INTEL ANY PORTION OF THE SUPPORTING MATERIALS WITH RESPECT TO WHICH MICRON IS PREVENTED BY APPLICABLE LAW OR CONTRACTUAL RESTRICTION FROM SO DISCLOSING OR LICENSING OR WHICH WOULD REQUIRE PAYMENT BY MICRON TO ANY THIRD PARTY.  MOREOVER, USE OF THE NAND FLASH MEMORY DESIGNS, TANGIBLE DESIGN PACKAGE AND SUPPORTING MATERIALS MAY REQUIRE USE OF SOFTWARE OWNED BY A THIRD PARTY FOR WHICH NO RIGHTS TO USE SUCH SOFTWARE ARE CONFERRED BY MICRON TO INTEL HEREUNDER.  ANY SUCH SOFTWARE OR HARDWARE REQUIRED TO USE THE SUPPORTING   7 --------------------------------------------------------------------------------   Materials or Tangible Design Package is solely the responsibility of Intel.  If Micron determines that it is unable to deliver any of the Supporting Materials or Tangible Design Package due to the limitations in this Section 3.3, then Micron will promptly notify Intel of same.   ARTICLE 4   PRICE AND PAYMENT   4.1                                 PRICE FOR ASSIGNMENT OF PRODUCT DESIGNS.  IN FULL CONSIDERATION FOR (A) THE ASSIGNMENT OF THE PRE-EXISTING PRODUCT DESIGNS AND THE DELIVERY OF THE TANGIBLE DESIGN PACKAGE AND (B) THE [***], INTEL SHALL PAY TO MICRON ON THE EFFECTIVE DATE THE RESPECTIVE AMOUNTS THEREFOR SPECIFIED ON SCHEDULE 4.  FOR CLARIFICATION, IN NO EVENT SHALL INTEL OR ANY AFFILIATE OF INTEL OWE TO MICRON, AFFILIATES OF MICRON, OR ANY OTHER PERSON ANY MONEY IN CONNECTION WITH THIS AGREEMENT BEYOND THE AMOUNT SPECIFIED ON SCHEDULE 4.   4.2                                 PAYMENTS.  ALL AMOUNTS OWED UNDER THIS AGREEMENT ARE STATED, CALCULATED AND SHALL BE PAID IN UNITED STATES DOLLARS ($ U.S.).   4.3                                 TAXES.   (A)                                  TRANSFER OF INTANGIBLE RIGHTS.  THE PARTIES AGREE THAT ANY RIGHTS TRANSFERRED PURSUANT TO THIS AGREEMENT CONSTITUTE INTANGIBLE PERSONAL PROPERTY RIGHTS COMPRISED OF A COPYRIGHT INTEREST AND/OR A PATENT INTEREST (AS SUCH TERMS ARE DEFINED IN CALIFORNIA SALE AND USE TAX REGULATION 1507).  CONSEQUENTLY, THIS AGREEMENT IS CONSIDERED TO BE A “TECHNOLOGY TRANSFER AGREEMENT” AS DEFINED IN CALIFORNIA REVENUE AND TAXATION CODE SECTION 6012(C)(10) AND CALIFORNIA SALE AND USE TAX REGULATIONS 1507.  BECAUSE THIS AGREEMENT REPRESENTS A TRANSFER OF INTANGIBLE PROPERTY RIGHTS, AND BECAUSE THIS AGREEMENT IS CONSIDERED TO BE A TECHNOLOGY TRANSFER AGREEMENT, NO SALES OR USE TAXES SHOULD BE IMPOSED BY THE STATE OF UTAH, IDAHO OR VIRGINIA, OR IN CALIFORNIA, RESPECTIVELY, ON THE TRANSFERS PURSUANT TO THIS AGREEMENT, OTHER THAN TO THE VALUE OF ANY TANGIBLE PERSONAL PROPERTY INCLUDED IN SUCH TRANSFER AS PROVIDED IN SECTION 4.3(B) BELOW, AND NEITHER PARTY HAS AN OBLIGATION UNDER THIS AGREEMENT TO COLLECT OR REMIT SALES OR USE TAX ON THE TRANSFER OF SUCH INTANGIBLE PERSONAL PROPERTY RIGHTS.   (B)                                 TANGIBLE PERSONAL PROPERTY INCLUDED IN TRANSFERS.  TO THE EXTENT THAT THE RIGHTS TRANSFERRED PURSUANT TO THIS AGREEMENT ARE TRANSFERRED THROUGH THE USE OF TANGIBLE PROPERTY SUCH AS TAPE OR COMPACT DISC, THE PARTIES AGREE THAT THE AMOUNT OF ANY APPLICABLE SALES OR USE TAX SHALL BE DETERMINED BASED UPON A REASONABLE DETERMINATION OF FAIR MARKET VALUE FOR SUCH TANGIBLE PROPERTY, AND THAT ANY AND ALL SALES OR USE TAX SHALL BE STATED SEPARATELY ON MICRON’S INVOICE, COLLECTED FROM INTEL, AND SHALL BE REMITTED BY MICRON TO THE APPROPRIATE TAX AUTHORITY, UNLESS INTEL PROVIDES VALID PROOF OF TAX EXEMPTION PRIOR TO THE EFFECTIVE DATE OR OTHERWISE AS PERMITTED BY LAW PRIOR TO THE TIME MICRON IS REQUIRED TO PAY SUCH TAXES TO THE APPROPRIATE TAX AUTHORITY.   ARTICLE 5   WARRANTIES; DISCLAIMERS   5.1                                 WARRANTIES.  MICRON REPRESENTS AND WARRANTS TO INTEL THAT, TO THE BEST OF MICRON’S KNOWLEDGE, AS OF THE EFFECTIVE DATE:   8 --------------------------------------------------------------------------------   (A)                                  MICRON HAS FULL TITLE TO, AND OWNERSHIP OF, THE [***] AND THE [***] FREE AND CLEAR OF ALL LIENS AND HAS THE RIGHT TO TRANSFER SUCH OWNERSHIP TO INTEL;   (B)                                 [***];   (C)                                  MICRON HAS THE RIGHT TO TRANSFER THE TANGIBLE DESIGN PACKAGE TO INTEL;   (D)                                 MICRON HAS THE RIGHT TO GRANT THE LICENSES TO THE SUPPORTED MATERIALS GRANTED HEREUNDER;   (E)                                  MICRON HAS NOT GRANTED ANY RIGHTS IN OR TO THE PRE-EXISTING PRODUCT DESIGNS OR SUPPORTING MATERIALS THAT CONFLICT WITH THE RIGHTS GRANTED TO INTEL UNDER THIS AGREEMENT;   (F)                                    THERE ARE NO UNRESOLVED CLAIMS, DEMANDS OR PENDING LITIGATION RELATING TO THE PRE-EXISTING PRODUCT DESIGNS OR SUPPORTING MATERIALS; AND   (G)                                 THE PRE-EXISTING PRODUCT DESIGNS AND SUPPORTING MATERIALS DO NOT CONTAIN ANY PUBLICLY AVAILABLE SOFTWARE.   The foregoing representations and warranties shall terminate as of the tenth (10th) anniversary of the Effective Date, except for Section 5.1(f), which shall terminate as of the second (2nd) anniversary of the Effective Date.  Any claim by Intel that any representation or warranty was untrue must be made before expiration of the applicable foregoing time period, otherwise Micron shall have no liability whatsoever with respect to any such representations and warranties.   5.2                                 NO IMPLIED OBLIGATION.  NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS:   (A)                                  A WARRANTY OR REPRESENTATION BY EITHER OF THE PARTIES TO THIS AGREEMENT AS TO THE VALIDITY, ENFORCEABILITY OR SCOPE OF ANY CLASS OR TYPE OF INTELLECTUAL PROPERTY ASSIGNED OR LICENSED HEREUNDER;   (B)                                 A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE, SALE, LEASE, USE OR OTHER DISPOSITION OF THE PRE-EXISTING PRODUCT DESIGNS, TANGIBLE DESIGN PACKAGE, SUPPORTING MATERIALS  OR ANY PRODUCTS BASED ON ANY OF THE FOREGOING WILL BE FREE FROM INFRINGEMENT, MISAPPROPRIATION OR OTHER VIOLATION OF ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OTHER THAN THE INTELLECTUAL PROPERTY LICENSED HEREUNDER;   (C)                                  AN AGREEMENT TO BRING OR PROSECUTE PROCEEDINGS AGAINST THIRD PARTIES FOR INFRINGEMENT OR CONFERRING ANY RIGHT TO BRING OR PROSECUTE PROCEEDINGS AGAINST THIRD PARTIES FOR INFRINGEMENT OF ANY OF THE SUPPORTING MATERIALS;   (D)                                 CONFERRING ANY RIGHT TO USE IN ADVERTISING, PUBLICITY, OR OTHERWISE, ANY TRADEMARK, TRADE NAME OR NAMES, OR ANY CONTRACTION, ABBREVIATION OR SIMULATION THEREOF, OF EITHER PARTY; OR   9 --------------------------------------------------------------------------------   (E)                                  REQUIRING EITHER PARTY TO DEFEND ANY PROCEEDING BROUGHT BY A THIRD PARTY CHALLENGING OR CONCERNING THE VALIDITY OF THE IP RIGHTS IN THE PRE-EXISTING PRODUCT DESIGNS OR SUPPORTING MATERIALS, [***].   5.3                                 DISCLAIMER.  EXCEPT AS PROVIDED IN SECTION 5.1, MICRON ASSIGNS THE PRE-EXISTING PRODUCT DESIGNS, TRANSFERS THE TANGIBLE DESIGN PACKAGE AND LICENSES THE SUPPORTING MATERIALS ON AN “AS IS,” “WHERE IS” (BUT SUBJECT TO MICRON’S DELIVERY OBLIGATIONS UNDER ARTICLE 2) BASIS, WITH ALL FAULTS AND DEFECTS, AND WITHOUT ANY WARRANTY OF ANY KIND WHATSOEVER.  WITHOUT LIMITING THE FOREGOING, EXCEPT AS PROVIDED IN SECTION 5.1, MICRON DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT WITH RESPECT TO THE FOREGOING.  EXCEPT AS PROVIDED IN SECTION 5.1, MICRON MAKES NO WARRANTIES WITH RESPECT TO INTEL’S ABILITY TO:  (A) USE ANY OF THE PRE-EXISTING PRODUCT DESIGNS, TANGIBLE DESIGN PACKAGE OR SUPPORTING MATERIALS, OR (B) MANUFACTURE OR HAVE MANUFACTURED ANY PRODUCTS BASED THEREON.  [***].  SUCH DISCLAIMERS ARE NOT INTENDED TO AFFECT ANY DIRECT CLAIMS OR REMEDIES INTEL MAY ASSERT AGAINST ANY THIRD PARTY OR PREVENT THE PASS-THROUGH OR ASSIGNMENT TO INTEL OF ANY RIGHTS MICRON MAY HAVE AGAINST ANY THIRD PARTY.   ARTICLE 6   LIMITATION OF LIABILITY   6.1                                 LIMITATION OF LIABILITY.  EXCEPT FOR A BREACH OF ARTICLE 7, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR OTHER INDIRECT DAMAGES OR ANY PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER SUCH DAMAGES ARE BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHER THEORY OF LIABILITY.  THESE LIMITATIONS SHALL APPLY EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY.  THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS ON POTENTIAL LIABILITIES SET FORTH HEREIN ARE AN ESSENTIAL   10 --------------------------------------------------------------------------------   ELEMENT IN THE CONSIDERATION PROVIDED BY EACH PARTY UNDER THIS AGREEMENT.   ARTICLE 7   CONFIDENTIALITY   7.1                                 CONFIDENTIALITY OBLIGATIONS.  ALL INFORMATION PROVIDED, DISCLOSED OR OBTAINED IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE OF ANY OF THE PARTIES’ ACTIVITIES UNDER THIS AGREEMENT SHALL BE SUBJECT TO ALL APPLICABLE PROVISIONS OF THE CONFIDENTIALITY AGREEMENT.   (A)                                  ALL PRE-EXISTING PRODUCT DESIGNS AND THE PORTIONS OF THE TANGIBLE DESIGN PACKAGE RELATED THERETO SHALL BE CONSIDERED “CONFIDENTIAL INFORMATION” UNDER THE CONFIDENTIALITY AGREEMENT FOR WHICH MICRON SHALL BE CONSIDERED A “RECEIVING PARTY” UNDER SUCH AGREEMENT.   (B)                                 ALL SUPPORTING MATERIALS AND THE PORTIONS OF THE TANGIBLE DESIGN PACKAGE RELATED THERETO SHALL BE CONSIDERED “CONFIDENTIAL INFORMATION” UNDER THE CONFIDENTIALITY AGREEMENT FOR WHICH INTEL SHALL BE CONSIDERED A “RECEIVING PARTY” UNDER SUCH AGREEMENT.   (C)                                  THE TERMS AND CONDITIONS OF THIS AGREEMENT SHALL BE CONSIDERED “CONFIDENTIAL INFORMATION” UNDER THE CONFIDENTIALITY AGREEMENT FOR WHICH MICRON AND INTEL SHALL EACH BE CONSIDERED A “RECEIVING PARTY” UNDER SUCH AGREEMENT.   7.2                                 PERMITTED DISCLOSURES.   (A)                                  WITH RESPECT TO ANY OF THE SUPPORTING MATERIALS THAT CONSTITUTE AN [***] (AND THAT IS CONFIDENTIAL INFORMATION), INTEL OR ITS SUBLICENSED PERMITTED AFFILIATE(S) HEREUNDER [***].   (B)                                 INTEL OR ITS SUBLICENSED PERMITTED AFFILIATE(S) [***].   (C)                                  INTEL OR ITS SUBLICENSED PERMITTED AFFILIATE(S) [***].   11 --------------------------------------------------------------------------------   (D)                                 WITH RESPECT TO ANY “CONFIDENTIAL INFORMATION” (AS THAT TERM IS DEFINED IN THE CONFIDENTIALITY AGREEMENT) LISTED IN [***].   (E)                                  INTEL SHALL NOT AND SHALL CAUSE IT PERMITTED AFFILIATES NOT TO [***].   7.3                                 CONFLICTS.  TO THE EXTENT THERE IS A CONFLICT BETWEEN THIS AGREEMENT AND THE CONFIDENTIALITY AGREEMENT, THE TERMS OF THIS AGREEMENT SHALL CONTROL.   ARTICLE 8   TERM AND TERMINATION   8.1                                 TERM.  THE TERM OF THIS AGREEMENT COMMENCES ON THE EFFECTIVE DATE AND CONTINUES IN EFFECT IN PERPETUITY (SUCH PERIOD OF TIME, THE “TERM”).   8.2                                 NO TERMINATION.  THIS AGREEMENT MAY NOT BE TERMINATED FOR ANY REASON, INCLUDING BREACH BY A PARTY.   ARTICLE 9   MISCELLANEOUS   9.1                                 NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN UPON (A) TRANSMITTER’S CONFIRMATION OF A RECEIPT OF A FACSIMILE TRANSMISSION, (B) CONFIRMED DELIVERY BY A STANDARD OVERNIGHT CARRIER OR WHEN DELIVERED BY HAND, (C) THE EXPIRATION OF FIVE (5) BUSINESS DAYS AFTER THE DAY WHEN MAILED IN THE UNITED STATES BY CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID, OR (D) DELIVERY IN PERSON, ADDRESSED AT THE FOLLOWING ADDRESSES (OR AT SUCH OTHER ADDRESS FOR A PARTY AS SHALL BE SPECIFIED BY LIKE NOTICE):   IF TO INTEL:   Intel Corporation 1900 Prairie City Road FM3-63 Folsom, CA 95630 Attention:  [***] Fax: [***]   12 --------------------------------------------------------------------------------   with a copy to:   Intel Corporation 2200 Mission College Blvd. Santa Clara, CA  95054 Attention:  General Counsel Facsimile:  (408) 653-8050   If to Micron:   Micron Technology, Inc. 8000 S. Federal Way Mail Stop 1-507 Boise, ID  83716 Telephone:     (208) 368-4517 Facsimile:      (208) 368-4537 Attention:       General Counsel   9.2                                 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 THE OTHER PARTY CONSTITUTE A WAIVER OF ANY OTHER BREACH OF THE SAME OR ANY OTHER PROVISION NOR CONSTITUTE A WAIVER OF THE RESPONSIBILITY OR OBLIGATION ITSELF.   9.3                                 ASSIGNMENT.  THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE SUCCESSORS AND ASSIGNS OF EACH PARTY HERETO.  EXCEPT AS PERMITTED BY THE JOINT VENTURE DOCUMENTS, NEITHER THIS AGREEMENT NOR ANY RIGHT OR OBLIGATION HEREUNDER MAY BE ASSIGNED OR DELEGATED BY EITHER PARTY IN WHOLE OR IN PART TO ANY OTHER PERSON, WITHOUT THE PRIOR WRITTEN CONSENT OF THE NONASSIGNING PARTY.   9.4                                 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 HERETO, ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR IN RESPECT OF THIS AGREEMENT OR ANY COVENANT, CONDITION OR OTHER PROVISION CONTAINED HEREIN.   9.5                                 CHOICE OF LAW.  [***].   9.6                                 JURISDICTION; VENUE.  [***].   13 --------------------------------------------------------------------------------   9.7                                 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.   9.8                                 FORCE MAJEURE.  THE PARTIES HERETO SHALL BE EXCUSED FROM ANY FAILURE TO PERFORM ANY OBLIGATION HEREUNDER TO THE EXTENT SUCH FAILURE IS CAUSED BY A FORCE MAJEURE EVENT.   9.9                                 EXPORT CONTROL.  EACH PARTY AGREES THAT IT WILL NOT KNOWINGLY:  (I) EXPORT OR RE-EXPORT, DIRECTLY OR INDIRECTLY, ANY TECHNICAL DATA (AS DEFINED BY THE U.S. EXPORT ADMINISTRATION REGULATIONS) PROVIDED BY THE OTHER PARTY OR (II) DISCLOSE SUCH TECHNICAL DATA FOR USE IN, OR EXPORT OR RE-EXPORT DIRECTLY OR INDIRECTLY, ANY DIRECT PRODUCT OF SUCH TECHNICAL DATA, INCLUDING SOFTWARE, TO ANY DESTINATION TO WHICH SUCH EXPORT OR RE-EXPORT IS RESTRICTED OR PROHIBITED BY UNITED STATES OR NON-UNITED STATES LAW, WITHOUT OBTAINING PRIOR AUTHORIZATION FROM THE U.S. DEPARTMENT OF COMMERCE AND OTHER COMPETENT GOVERNMENT ENTITIES TO THE EXTENT REQUIRED BY APPLICABLE LAWS.   9.10                           ENTIRE AGREEMENT.  THIS AGREEMENT, TOGETHER WITH THE SCHEDULES ATTACHED HERETO AND THE AGREEMENTS AND INSTRUMENTS EXPRESSLY PROVIDED FOR HEREIN, AND, FOR SO LONG AS ANY APPLICABLE TERM(S) OF THE JOINT VENTURE DOCUMENTS REMAIN IN EFFECT, THE APPLICABLE TERMS OF THE JOINT VENTURE DOCUMENTS, CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, ORAL AND WRITTEN, BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.   9.11                           SEVERABILITY.  SHOULD ANY PROVISION OF THIS AGREEMENT BE DEEMED IN CONTRADICTION WITH THE LAWS OF ANY JURISDICTION IN WHICH IT IS TO BE PERFORMED OR UNENFORCEABLE FOR ANY REASON, SUCH PROVISION SHALL BE DEEMED NULL AND VOID, BUT THIS AGREEMENT SHALL REMAIN IN FULL FORCE IN ALL OTHER RESPECTS.  SHOULD ANY PROVISION OF THIS AGREEMENT BE OR BECOME INEFFECTIVE BECAUSE OF CHANGES IN APPLICABLE LAWS 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 PROVISIONS OF THIS AGREEMENT SHALL NOT BE AFFECTED THEREBY.  IF SUCH CIRCUMSTANCES ARISE, THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH APPROPRIATE MODIFICATIONS TO THIS AGREEMENT TO REFLECT THOSE CHANGES THAT ARE REQUIRED BY APPLICABLE LAW.   9.12                           COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN SEVERAL COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.   Signature Page Follows   14 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the Effective Date.       INTEL CORPORATION           By: /s/ ARVIND SODHANI     Name: Arvind Sodhani   Title: Senior Vice President, Intel Corporation     President, Intel Capital           MICRON TECHNOLOGY, INC.           By: /s/ STEVEN R. APPLETON     Name: Steven R. Appleton   Title: Chief Executive Officer and President   THIS IS THE SIGNATURE PAGE FOR THE PRODUCT DESIGNS ASSIGNMENT AGREEMENT ENTERED INTO BY AND BETWEEN INTEL CORPORATION AND MICRON TECHNOLOGY, INC.   15 --------------------------------------------------------------------------------   SCHEDULES   Schedule 1 Pre-Existing Product Design Designations     Schedule 2 NAND Flash Memory Design Materials and Information     Schedule 3 Supporting Materials     Schedule 4 Payments     Schedule 5 [***]     Schedule 6 Delivery Protocol   16 --------------------------------------------------------------------------------
Exhibit 10.3     -------------------------------------------------------------------------------- --------------------------------------------------------------------------------           Credit Agreement dated as of November 5, 2008 between Micrus Endovascular Corporation, as Borrower, and Wells Fargo Bank, National Association, as Bank     -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   - i - --------------------------------------------------------------------------------   Table of Contents ARTICLE I DEFINITIONS 1       SECTION 1.1. CERTAIN DEFINED TERMS 1 SECTION 1.2. CERTAIN RULES OF CONSTRUCTION 16       ARTICLE II   17       SECTION 2.1. REVOLVING LINE OF CREDIT 17 SECTION 2.2. PROCEDURES FOR BORROWING 18 SECTION 2.3. PREPAYMENTS 19 SECTION 2.4. INTEREST/ APPLICABLE RATES 20 SECTION 2.5. COMPUTATIONS OF INTEREST AND FEES 20 SECTION 2.6. PAYMENTS GENERALLY; COLLECTION OF PAYMENTS 21 SECTION 2.7. COLLATERAL 21 SECTION 2.8. GUARANTIES 22       ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 22       SECTION 3.1. ILLEGALITY 22 SECTION 3.2. INABILITY TO DETERMINE RATES 22 SECTION 3.3. INCREASED COSTS 23 SECTION 3.4. COMPENSATION FOR LOSSES 24 SECTION 3.5. SURVIVAL 24       ARTICLE IV CONDITIONS 25       SECTION 4.1. CONDITION OF INITIAL EXTENSION OF CREDIT 25 SECTION 4.2. CONDITION OF EACH EXTENSION OF CREDIT 26       ARTICLE V REPRESENTATIONS AND WARRANTIES 26       SECTION 5.1. LEGAL STATUS 26 SECTION 5.2. AUTHORIZATION AND VALIDITY 27 SECTION 5.3. NO VIOLATION 27 SECTION 5.4. LITIGATION 27 SECTION 5.5. CORRECTNESS OF FINANCIAL STATEMENT 27 SECTION 5.6. INCOME TAX RETURNS 27 SECTION 5.7. NO SUBORDINATION 27 SECTION 5.8. PERMITS, FRANCHISES 28 SECTION 5.9. ERISA COMPLIANCE 28 SECTION 5.10. OTHER OBLIGATIONS 28 SECTION 5.11. ENVIRONMENTAL MATTERS 28 SECTION 5.12. ELIGIBLE ACCOUNTS 28       - ii - --------------------------------------------------------------------------------   ARTICLE VI AFFIRMATIVE COVENANTS 28       SECTION 6.1. PUNCTUAL PAYMENTS 29 SECTION 6.2. ACCOUNTING RECORDS; ONE-TIME COLLATERAL EXAMS 29 SECTION 6.3. FINANCIAL STATEMENTS 29 SECTION 6.4. COMPLIANCE 30 SECTION 6.5. INSURANCE 30 SECTION 6.6. FACILITIES 30 SECTION 6.7. TAXES AND OTHER LIABILITIES 30 SECTION 6.8. LITIGATION 31 SECTION 6.9. FINANCIAL CONDITION 31 SECTION 6.10. NOTICE TO BANK 31 SECTION 6.11. SUBSIDIARIES 31       ARTICLE VII NEGATIVE COVENANTS 32       SECTION 7.1. USE OF FUNDS 32 SECTION 7.2. CAPITAL EXPENDITURES 32 SECTION 7.3. LEASE EXPENDITURES 33 SECTION 7.4. OTHER INDEBTEDNESS 33 SECTION 7.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS 33 SECTION 7.6. GUARANTIES 33 SECTION 7.7. LOANS, ADVANCES, INVESTMENTS 33 SECTION 7.8. DIVIDENDS, DISTRIBUTIONS 33 SECTION 7.9. PLEDGE OF ASSETS 34 SECTION 7.10. SALE AND LEASEBACKS 34 SECTION 7.11. TRANSACTIONS WITH AFFILIATES 34       ARTICLE VII EVENTS OF DEFAULT 34       SECTION 8.1. EVENTS OF DEFAULT 34 SECTION 8.2. REMEDIES 36       ARTICLE IX MISCELLANEOUS 36       SECTION 9.1. NO WAIVER 36 SECTION 9.2. NOTICES 36 SECTION 9.3. EXPENSES; INDEMNITY; DAMAGE WAIVER 37 SECTION 9.4. SUCCESSORS, ASSIGNMENT 38 SECTION 9.5. ENTIRE AGREEMENT; AMENDMENT 38 SECTION 9.6. NO THIRD PARTY BENEFICIARIES 38 SECTION 9.7. TIME 38 SECTION 9.8. SEVERABILITY OF PROVISIONS 38 SECTION 9.9. COUNTERPARTS 39 SECTION 9.10. GOVERNING LAW 39 SECTION 9.11. ARBITRATION 39       - iii - --------------------------------------------------------------------------------   SCHEDULES       1.1-A Permitted Indebtedness 1.1-B Permitted Investments 1.1-C Permitted Liens 5.1 Subsidiaries 5.4 Litigation 5.11 Environmental Matters     EXHIBITS       A Form of Revolving Line of Credit Note B Form of Loan Notice C Form of Financial Covenant Compliance Certificate D Form of Borrowing Base Certificate     - iv - --------------------------------------------------------------------------------   Credit Agreement   This Credit Agreement (this “Agreement”) is entered into as of November 5, 2008, by and between Micrus Endovascular Corporation, a Delaware corporation (“Borrower”), and Wells Fargo Bank, National Association (“Bank”).   Recitals   Whereas, Borrower has requested that Bank extend credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.   Now, Therefore, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:   Article I   Definitions   Section 1.1.Certain Defined Terms.   As used in this Agreement, the following terms shall have the meaning set forth below:   “AAA” has the meaning ascribed to such term in Section 9.11(b) hereof.   “Account Debtor” means any Person who is or who may become obligated under, with respect to, or on account of, an Account, chattel paper, or a General Intangible.   “Accounts” means all of Borrower’s now owned or hereafter acquired right, title, and interest with respect to “accounts” (as that term is defined in the UCC), and any and all supporting obligations in respect thereof.   “Advance Rate” means the lesser of (i) 80% and (ii) the percentage set by Bank in its sole discretion following the completion of the Initial Collateral Audit.   “Affiliate” means, with respect to any Person, any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person.  A Person shall be deemed to control another Person for the purposes of this definition if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through common directors, trustees or officers, by contract, by law, or otherwise.   “Agreement” has the meaning ascribed to such term in the introductory paragraph hereof.   - 1 - --------------------------------------------------------------------------------     “Applicable Rate” means, from time to time, with respect to any Base Rate Loan or LIBOR Loan, as the case may be, the applicable rate per annum set forth as follows: (i) for any LIBOR Loan 3.5% (three and fifty hundredths percent), and (ii) for any Base Rate Loan, the sum of 2.25% (two and twenty-five hundredths percent) plus the Applicable Rate Adjustment Factor.   “Applicable Rate Adjustment Factor” means, as of any date of determination, the sum of (i) the Base Rate as of the close of business on the Closing Date minus three-month LIBOR as of the close of business on the Closing Date, minus (ii) the Base Rate as of the close of business as of the last Business Day for the fiscal quarter ending on, or most recently ended as of, such date of determination minus three-month LIBOR as of the close of business as of the last Business Day for the fiscal quarter ending on, or most recently ended as of, such date of determination.   “Availability Period” means the period from the Closing Date to the earlier of (i) the Maturity Date and (ii) the date that Bank’s commitment to make Revolving Credit Loans terminates pursuant to Section 8.2.   “Bank” has the meaning ascribed to such term in the introductory paragraph hereof.   “Bankruptcy Code” means the Bankruptcy Reform Act of 1978 (United States Code Sections 101 et seq.)   “Bankruptcy Laws” means, collectively:  (a) the Bankruptcy Code; and (b) all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.   “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making reference thereto, on the first day of an Interest Period for delivery of funds on said date for a period of time approximately equal to the number of days in such Interest Period and in an amount approximately equal to the principal amount to which such Interest Period applies.  Borrower understands and agrees that Bank may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the London interbank offered market as Bank in its discretion deems appropriate including, but not limited to, the rate offered for Dollar deposits on the London interbank offered market.   “Base Rate” means, for any day, the per annum rate of interest in effect for such day as publicly announced from time to time by Bank as its “Prime Rate,” such rate being the rate of interest most recently announced within Bank at its principal office as its “Prime Rate,” with the understanding that Bank’s “Prime Rate” is one of Bank’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate.  Any change in Bank’s “Prime Rate” as announced by Bank shall take effect at the opening of business on the day specified in the public announcement of such change.   - 2 - -------------------------------------------------------------------------------- “Base Rate Loan” means a Revolving Credit Loan that bears interest based upon the Base Rate.   “Borrower” has the meaning ascribed to such term in the introductory paragraph hereof.   “Borrowing Base” means, as of any date of determination, the greater of (i) $7,500,000 and (ii) the product of the Advance Rate multiplied by Eligible Accounts.     “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit D.   “Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in California are authorized or required by law to close; provided that, if any such day relates to LIBOR or any LIBOR Loan, such day must also be a day on which dealings in Dollar deposits are conducted by and between banks in the London interbank offered market.   “Change in Law” means the occurrence, after the date of this Agreement, of:  (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.   “Change of Control” means an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group  has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of thirty-five percent or more of the Equity Interests of Borrower entitled to vote for members of the board of directors or equivalent governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right).   “Closing Date” means November 5, 2008.   “Code” means the Internal Revenue Code of 1986.   “Compliance Certificate” means a certificate substantially in the form of Exhibit C.   “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.   - 3 - --------------------------------------------------------------------------------     “Default” means any event or condition that constitutes an Event of Default or that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.   “Default Rate” means a per annum interest rate equal to the sum of:  (i) the Base Rate; plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans; plus (iii) three percent (3.0%) per annum; provided that, with respect to a LIBOR Loan, the Default Rate shall be a per annum interest rate equal to the sum of:  (A) the interest rate (including any Applicable Rate) otherwise applicable to such Revolving Credit Loan; plus (B) three percent (3.0%) per annum.   “Dollar” and “$” mean lawful money of the United States.   “Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.   “Eligible Accounts” means those Accounts created by Borrower in the ordinary course of its business, that arise out of Borrower’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made by Borrower in the Loan Documents, upon which Borrower’s right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, in which Bank has a perfected security interest of first priority, and that are not excluded as ineligible by virtue of one or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by Bank in Bank’s sole and absolute discretion to address the results of any audit performed by Bank from time to time after the Closing Date.  In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash remitted to Borrower.  Eligible Accounts shall not include the following:   (i)     any Account which is more than ninety (90) days past due;   (ii)    any Account that is disputed or subject to a claim of offset or other potential credit or a contra account;   (iii)   any Account not yet earned by the final delivery of goods or rendition of services, as applicable, by Borrower to the customer;   (iv)  any Account for services not yet rendered or for goods not yet shipped, including, without limitation, that portion of any Account, which represents         interim or progress billings or retention rights on the part of the Account Debtor;   (v)   Accounts constituting proceeds of copyrightable material unless such copyrightable material shall have been registered with the United States         Copyright Office and shall be covered by a duly executed copyright security agreement, in form and substance reasonably satisfactory to Bank, and  filed in the United States Copyright Office;   (vi)  Accounts owed by an Account Debtor that is not Solvent, the subject of an insolvency proceeding or has gone out of business;   - 4 - --------------------------------------------------------------------------------     (vii)   Accounts owed by an owner, Subsidiary, Affiliate, officer or employee of Borrower;   (viii)  Accounts not subject to a duly perfected security interest in Bank’s favor or which are subject to any Lien other than a Permitted Lien;   (ix)    that portion of any Account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the ordinary course of          business to promote prompt payment) or for which any defense or counterclaim has been asserted in writing;   (x)     that portion of Accounts that has been restructured, extended, amended or modified;   (xi)    that portion of Accounts that constitutes advertising, finance charges, service charges or sales or excise taxes;   (xii)   any Account which represents an obligation of any Account Debtor (or an Affiliate of such Account Debtor), regardless of whether otherwise eligible,          when twenty percent (20%) or more of Borrower’s Accounts from such Account Debtor are not eligible pursuant to (i) above;   (xiii)  Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on          approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional;   (xiv)  Accounts that are not payable in Dollars;   (xv)  Accounts with respect to which the Account Debtor is not organized under the laws of the United States and Canada (except the province of Quebec)           unless the Account is covered by credit insurance in form, substance, and amount, and by an insurer, reasonably satisfactory to Bank in its sole and          absolute discretion;   (xvi)  any Account which represents an obligation of any state or municipal government or of the United States government or any political subdivision          thereof unless Bank determines, in its sole and absolute discretion based on the advice of counsel, that such Account is not subject to the Federal          Assignment of Claims Act of 1940, as amended, or any state equivalent thereto and provides written notice to Borrower to such effect; or   (xvii) any Account deemed ineligible by Bank when Bank, in its sole and absolute discretion, deems the creditworthiness or financial condition of the          Account Debtor, or the industry in which the Account Debtor is engaged, to be unsatisfactory.   - 5 - --------------------------------------------------------------------------------     “Environmental Claims” means all claims, however asserted, by any Governmental Authority or other Person alleging Environmental Liabilities.   “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, health and safety, air emissions and discharges to waste or public systems.   “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any Guarantor or any of their respective Subsidiaries directly or indirectly resulting from or based upon:  (a) violation of any Environmental Law; (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials; (c) exposure to any Hazardous Materials; (d) the release or threatened release of any Hazardous Materials into the environment; or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.   “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.   “ERISA” means the Employee Retirement Income Security Act of 1974.   “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Borrower or any Subsidiary thereof within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).   “ERISA Event” means any of the following:  (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition that constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.   - 6 - -------------------------------------------------------------------------------- “Event of Default” has the meaning ascribed to such term in Article VIII hereof.   “Exchange Act” means the Securities Exchange Act of 1934.   “Foreign Subsidiary” means any Subsidiary organized under the laws of a country (or political subdivision thereof) other than the United States (or political subdivision thereof).   “GAAP” means generally accepted accounting principles applicable in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.   “GAAP Profit/Loss” means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the sum of: (a) the revenue for such period; minus (b) the cost of goods sold during such period; minus (c) the operating expenses for such period; provided, that for purposes of determining operating expenses, no effect shall be given to (i) any stock-based compensation expenses incurred during such period; and (ii) any stock-based acquisition expenses incurred during such period.   “General Intangibles” means all of Borrower’s general intangibles, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future intellectual property rights, customer or supplier lists and contracts, manuals, operating instructions, permits, franchises, the right to use Borrower’s name, and the goodwill of Borrower’s business.   “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).   “Guarantor” or “Guarantors” have the meanings ascribed to such terms in Section 2.8 hereof.   “Guaranty” or “Guaranties” have the meanings ascribed to such terms in Section 2.8 hereof.   - 7 - --------------------------------------------------------------------------------     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.   “Indemnitees” has the meaning ascribed thereto in Section 9.3(b).   “Initial Collateral Audit” means that certain audit by Bank of any collateral under this Agreement, including the examination of any books, records, documents, instruments or agreements relating to any accounts requested to be Eligible Accounts hereunder.  The results and conclusions of Bank as a result of such audit are confidential and will not be shared with Borrower, with the exception of Exhibit A to such audit, which is incorporated herein by reference.   “Interest Payment Date” means the last Business Day of each calendar month.   “Interest Period” means, as to each LIBOR Loan, the period commencing on the date such LIBOR Loan is disbursed or converted to or continued as a LIBOR Loan and ending on the date one, two or three months thereafter, as selected by Borrower in its related Loan Notice; provided that:  (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (c) no Interest Period for any Revolving Credit Loan shall extend beyond the Maturity Date.   “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested (but shall exclude the portion of the amount invested that constitutes the direct proceeds of Equity Interests issued by Borrower), without adjustment for subsequent increases or decreases in the value of such Investment.   - 8 - --------------------------------------------------------------------------------     “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/100 of 1%) and determined pursuant to the following formula:     LIBOR =   Base LIBOR       100% - LIBOR Reserve Percentage   “LIBOR Loan” means a Revolving Credit Loan that bears interest based upon LIBOR.   “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected changes in such reserve percentage during the applicable Interest Period.   “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any easement, right of way or other encumbrance on title to real property).   “Loan Documents” means this Agreement, the Revolving Line of Credit Note, the Security Agreement, the Guaranties, the Pledge Agreement, the Subsidiary Security Agreement and each other contract, instrument and document required by or delivered to Bank in connection with this Agreement.   “Loan Notice” means a notice, pursuant to Section 2.2(a), of:  (a) a borrowing of Revolving Credit Loans; (b) a conversion of Revolving Credit Loans from one Type to the other (other than a conversion of a LIBOR Loan into a Base Rate Loan); or (c) a continuation of LIBOR Loans; which, if in writing, shall be substantially in the form of Exhibit B.   “Material Adverse Effect” means a material adverse effect on (i) the business operations or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay all debt, principal, interest, expenses and other amounts owed to Bank by Borrower pursuant to this Agreement, the Revolving Line of Credit Note, and the other Loan Documents, or to otherwise perform its material obligations under the Loan Documents, or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest or lien in, the collateral described in Section 2.8 hereof.   “Material Subsidiary” means (i) any Subsidiary of Borrower with annual revenues in excess of 0.5% of the aggregate annual consolidated revenues of Borrower and its Subsidiaries for any fiscal period ending after the Closing Date or (ii) any Subsidiary of Borrower with total assets in excess of 1.0% of the aggregate consolidated assets of Borrower and its Subsidiaries as of the last day of any fiscal period ending after the Closing Date; provided that each Subsidiary of Borrower that is not a Material Subsidiary shall be deemed a Material Subsidiary to the extent that such Subsidiary’s designation as a Subsidiary that is not a Material Subsidiary would result in aggregate annual revenues for all such Subsidiaries that are not Material Subsidiaries in excess of $1.00.   - 9 - -------------------------------------------------------------------------------- “Maturity Date” means November 1, 2009.   “Modified Quick Ratio” means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the ratio of:  (a) the sum of (i) unrestricted cash plus (ii) unrestricted short-term marketable securities plus (iii) net accounts receivable to (b) current liabilities.   “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.   “Obligations” means all advances, debts, liabilities, obligations, covenants and duties of Borrower or any Guarantor under any Loan Document, whether with respect to any Revolving Credit Loan or otherwise, 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 Borrower or any Guarantor or any affiliate thereof of any proceeding under any Bankruptcy Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.   “PBGC” means the Pension Benefit Guaranty Corporation.   “Pension Plan” means any “employee pension benefit plan” (as that term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.   “Permitted Indebtedness” means:   (a)    the liabilities of Borrower to Bank under this Agreement and the other Loan Documents;   (b)    any other liabilities of Borrower existing as of the Closing Date and listed on Schedule 1.1-A;   (c)     unsecured indebtedness to trade creditors incurred in the ordinary course of business;   - 10 - --------------------------------------------------------------------------------     (d)    guaranty obligations of a Subsidiary with respect to indebtedness of Borrower permitted under Section 7.6;   (e)    indebtedness secured by Permitted Liens identified in paragraphs (d), (e), (f), (g) (but solely with respect to Permitted Liens permitted under such paragraph (g) that are related to extensions, renewals or refinancings of indebtedness secured by liens identified in paragraph (d) of the definition of Permitted Liens) and (j) of the definition of Permitted Liens;   (f)     Indebtedness incurred by Foreign Subsidiaries in an aggregate principal amount outstanding not to exceed $250,000;   (g)    Other unsecured Indebtedness of Borrower not existing on the Closing Date, provided that the aggregate principal amount of all such Indebtedness does not exceed $100,000; and   (h)    extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness identified in (a) through (d), (f) and (g) above, provided that the principal amount is not increased beyond the lesser of (i) the original principal amount and (ii) the amount outstanding on the Closing Date nor the terms modified to impose more burdensome terms upon Borrower or its Subsidiaries, as the case may be.   “Permitted Investments” means:   (a)    Investments by Borrower existing as of the Closing Date and listed on Schedule 1.1-B;   (b)    Investments by Borrower in (i) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any state thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Services, Inc., (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts;   (c)    Investments by Borrower consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business of Borrower;   (d)    Investments by Borrower consisting of deposit accounts in which Bank has a first priority perfected security interest;   (e)    Investments, in the aggregate not to exceed $1,000,000.00, by Borrower (i) in Subsidiaries formed or acquired after the Closing Date, so long as Borrower hasControl of such Subsidiary immediately following the effectiveness of such acquisition, Borrower has executed a pledge agreement pledging all equity interests in such Subsidiary to Bank and such Subsidiary, to the extent that such Subsidiary is a Material Subsidiary and is not a Foreign Subsidiary, has executed a guaranty in favor of Bank pursuant to the terms of Section 2.8 and/or (ii) constituting the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit;   - 11 - -------------------------------------------------------------------------------- (f)    Investments by Borrower not to exceed $250,000.00 in the aggregate in any fiscal year consisting of  (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower pursuant to employee stock purchase plans or agreements approved by Borrower’s board of directors;   (g)    Investments (including debt obligations) by Borrower not to exceed $50,000.00 in the aggregate outstanding at any time received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; and   (h)   Investments by Borrower not to exceed $250,000.00 in the aggregate outstanding at any time consisting of notes receivable of, or prepaid royalties and other credit extensions to, customers and suppliers who are not affiliates, in the ordinary course of business; provided that this paragraph (h) shall not apply to investments of Borrower in any Subsidiary.   “Permitted Liens” means:   (a)    liens and security interests in favor of Bank created under any Loan Document;   (b)    liens and security interests existing as of the Closing Date and listed on Schedule 1.1-C;   (c)    liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP;   (d)   purchase money liens not to exceed $500,000.00 in the aggregate (i) on equipment acquired or held by Borrower incurred for financing the acquisition of such equipment, or (ii) existing on equipment when acquired, if the lien is confined to the property so acquired and improvements thereon, and the proceeds of such equipment;   (e)    statutory liens arising in the ordinary course of business and not overdue for a period of more than thirty days or being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP, not to exceed $100,000.00 in the aggregate, securing claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other persons imposed without action of such parties;   (f)    liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business not delinquent or being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP;   (g)   liens incurred in the extension, renewal or refinancing of the indebtedness secured by liens identified in paragraphs (b) and (d) of this definition, so long as such indebtedness is Permitted Indebtedness, provided that any extension, renewal or replacement lien shall be limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;   (h)    leases or subleases of real property granted in the ordinary course of business, and leases; and subleases, non-exclusive licenses or sublicenses of property (other than real property or intellectual property) granted in the ordinary course of Borrower’s business;   (i)    Liens in the form of zoning restrictions, easements, rights of way, licenses, reservations, covenants, conditions or other restrictions on the use of real property that (1) secure Indebtedness or (2) materially interfere with the ordinary conduct of Borrower and its Subsidiaries;   - 12 - -------------------------------------------------------------------------------- (j)    Liens not for borrowed money in the form of pledges or deposits securing bids, tenders, performance, payment of insurance premiums, statutory obligations, surety bonds, appeal bonds, leases to which Borrower or any of its Subsidiaries is a party and other obligations of a like nature, in each case, made in the ordinary course of business and in any event not to exceed $250,000.00;   (k)   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;   (l)    statutory liens or liens arising by law arising in the ordinary course of business and not overdue for a period of thirty days or being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP, not to exceed $100,000.00 in the aggregate, securing claims existing solely with respect to cash and Permitted Investments on deposit in one or more accounts maintained by Borrower or any Subsidiary of Borrower, in favor of the bank or banks which such accounts are maintained, securing amounts owing to such bank with respect to cash management or other account arrangements, including those involving pooled accounts and netting arrangements, provided that in no case shall any such liens secure (either directly or indirectly) the repayment of any Indebtedness;   (m)   Liens on assets of Foreign Subsidiaries to secure any items of Permitted Indebtedness identified in clause (g) of such definition; and   (n)    non-exclusive licenses of intellectual property granted to third parties in the ordinary course of business.   “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.   “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.   “Pledge Agreement” means a pledge agreement, in form and substance reasonably satisfactory to Bank, made by Borrower for the benefit of Bank.   “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.   “Responsible Officer” means the chief executive officer, the president, the chief financial officer, any vice president, the general counsel and/or secretary, the assistant secretary, the controller of Borrower, the director of finance of Borrower, or any other officer of Borrower having substantially the same authority and responsibility as any of the foregoing.   “Revolving Credit Borrowing” means a borrowing of a Revolving Credit Loan of a particular Type.   “Revolving Credit Loan” has the meaning ascribed thereto in Section 2.1(a).   “Revolving Line of Credit” has the meaning ascribed to such term in Section 2.1(a).   “Revolving Line of Credit Note” has the meaning ascribed to such term in Section 2.1(a).   “Rules” has the meaning ascribed to such term in Section 9.11(b) hereof.   “SEC” means the United States Securities and Exchange Commission.   - 13 - --------------------------------------------------------------------------------     “Security Agreement” means that certain Security Agreement, dated as of the date hereof, executed by Borrower and each Domestic Subsidiary in existence as of the Closing Date in favor of Bank.   “Solvent” means, as to any Person at any time, that:  (a) the fair value of the property of such Person on a going concern basis is greater than the amount of such Person’s liabilities (including contingent liabilities), as such value is established and such liabilities are evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in the alternative, for purposes of the California Uniform Fraudulent Transfer Act or any similar state statute applicable to Borrower or any Subsidiary thereof; (b) the present fair salable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including contingent liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (e) 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 unreasonably small capital.   “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Borrower.   “Subsidiary Security Agreement” means a security agreement, in form and substance reasonably satisfactory to Bank, made by a Material Subsidiary that is not a Foreign Subsidiary for the benefit of Bank.   “Type” means, with respect to any Revolving Credit Loan, its character as a Base Rate Loan or a LIBOR Loan.   “UCC” means the California Uniform Commercial Code; provided that, to the extent that the UCC is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further that, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.   - 14 - --------------------------------------------------------------------------------   Section 1.2.Certain Rules of Construction.   (a)   Unless the context requires otherwise, the meaning of a defined term is applicable equally to the singular and plural forms thereof.   (b)   The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and, unless otherwise specified, Article, Section, subsection, clause, Schedule and Exhibit references are to this Agreement.   (c)            (i)   The term “documents” includes instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.   (ii)   The terms “include” and “including” are not limiting.   (iii)  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”   (iv)  Unless the context clearly requires otherwise, the terms “property,” “properties,” “asset” and “assets” refer to both personal property (whether tangible or intangible) and real property.   (d)   Unless otherwise expressly provided herein:  (i) references to documents (including this Agreement) shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document; and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.   (e)   Unless otherwise specified, all references herein to times of day shall be references to Pacific time (daylight or standard, as applicable).   (f)    The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.   (g)   This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall be performed in accordance with their respective terms.   (h)   This Agreement and the other Loan Documents are the result of negotiations among, and have been reviewed by counsel to, Borrower, the Guarantors and Bank and are the products of all parties.  Accordingly, they shall not be construed against Bank merely because of the involvement of any or all of the preceding Persons in their preparation.   - 15 - --------------------------------------------------------------------------------   (i)   Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and Bank shall so request, Bank and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended:  (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein; and (ii) Borrower shall provide to Bank financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.   (j)   References herein to “fiscal year” refer to the fiscal year of Borrower.   (k)   Any financial ratios required to be maintained by Borrower pursuant to the Loan Documents shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number using the common – or symmetric arithmetic – method of rounding (in other words, rounding-up if there is no nearest number).   Article II   Credit Terms   Section 2.1.Revolving Line of Credit.   (a)   Revolving Line of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to make loans (each such loan, a “Revolving Credit Loan”) to Borrower from time to time on any Business Day during the Availability Period, not to exceed at any time the aggregate principal amount of Fifteen Million Dollars ($15,000,000.00) (the “Revolving Line of Credit”), the proceeds of which shall be used for working capital and general corporate purposes.  Borrower’s obligation to repay advances under the Revolving Line of Credit shall be evidenced by a promissory note dated as of November 5, 2008 (the “Revolving Line of Credit Note”), in the form attached hereto as Exhibit A, all terms of which are incorporated herein by this reference.   (b)   Borrowing Availability.  There is no availability under this Agreement until Bank’s completion of the Initial Collateral Audit.  After the completion of the Initial Collateral Audit, outstanding borrowings under the Revolving Line of Credit, to a maximum of the principal amount set forth above, shall not at any time exceed the Borrowing Base.  The foregoing shall be determined by Bank upon receipt and review of all collateral reports required hereunder and such other documents and collateral information as Bank may from time to time require.  If the outstanding principal balance of the Revolving Line of Credit on any date is greater than the Borrowing Base, then Borrower shall make a principal reduction on the Revolving Line of Credit on such date in an amount sufficient to reduce the then outstanding principal balance thereof to an amount not greater than such maximum allowable principal amount.   (c)   Borrowing and Repayment.  Borrower may from time to time during the Availability Period, partially or wholly repay its outstanding borrowings under the Revolving Line of Credit, and reborrow, subject to all of the limitations, terms and conditions contained herein; provided that, the total outstanding borrowings under the Revolving Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.  On the Maturity Date, Borrower shall repay to Bank in full the aggregate outstanding principal balance of all Revolving Credit Loans, together with all accrued and unpaid interest due thereon.   - 16 - --------------------------------------------------------------------------------   Section 2.2.Procedures For Borrowing.   (a)   Each Revolving Credit Borrowing, each conversion of Revolving Credit Loans from one Type to the other and each continuation of LIBOR Loans shall be made upon Borrower’s irrevocable notice to Bank, which may be given by telephone or by approved electronic communications.  Each such notice must be received by Bank not later than 11:00 a.m. on the requested date of any Revolving Credit Borrowing, conversion or continuation.  Notwithstanding anything to the contrary contained herein, any telephonic notice or other electronic communication by Borrower pursuant to this Section 2.2(a) may be given by an individual who has been authorized in writing to do so by an appropriate Responsible Officer of Borrower.  Each such telephonic notice or other electronic communication must be confirmed promptly by delivery to Bank of a written Loan Notice, appropriately completed and signed by an appropriate Responsible Officer of Borrower.   (b)   Each Revolving Credit Borrowing of, conversion to or continuation of LIBOR Loans shall be in a principal amount of $100,000 or more.  Each Revolving Credit Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $100,000 or more.   (c)   Each Loan Notice (whether telephonic or written) shall specify:  (i) whether Borrower is requesting:  (A) a Revolving Credit Borrowing; (B) a conversion of outstanding Revolving Credit Loans from one Type to the other (other than LIBOR Loans to Base Rate Loans); or (C) a continuation of LIBOR Loans; (ii) the requested date of such Revolving Credit Borrowing, conversion or continuation, as the case may be (which shall be a Business Day); (iii) the principal amount of the Revolving Credit Loans to be borrowed, converted or continued; (iv) the Type of Revolving Credit Loans to be borrowed or to which existing Revolving Credit Loans are to be converted; and (v) if applicable, the duration of the Interest Period with respect thereto.  If Borrower fails to specify a Type of Revolving Credit Loan in a Loan Notice or if Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Revolving Credit Loan(s) shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Loans.  If Borrower requests a Revolving Credit Borrowing of, conversion to, or continuation of LIBOR Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.   (d)   Except as otherwise provided herein, a LIBOR Loan may be continued or converted only on the last day of an Interest Period for such LIBOR Loan.  During the existence of an Event of Default:  (i) no Revolving Credit Loans may be requested as, converted to or continued as LIBOR Loans without the consent of Bank; and (ii) Bank may demand that any or all of the then outstanding Revolving Credit Loans that are LIBOR Loans be converted immediately to Base Rate Loans, whereupon Borrower shall pay any amounts due under Section 3.4 in accordance with the terms thereof due to any such conversion.   (e)   Bank shall promptly notify Borrower of the interest rate applicable to any Interest Period for LIBOR Loans upon determination of such interest rate.   (f)   After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type, there shall not be more than five Interest Periods in effect.   Section 2.3.Prepayments.   Borrower may, upon notice to Bank, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty; provided that:  (A) such notice must be received by Bank not later than 11:00 a.m.:  (1) three Business Days prior to any date of prepayment of Revolving Credit Loans that are LIBOR Loans; and (2) one Business Day prior to the date of prepayment of Revolving Credit Loans that are Base Rate Loans; and (B) any prepayment of any Revolving Credit Loans that are:  (1) LIBOR Loans shall be in a principal amount of $100,000 or more, or, if less, the entire principal amount thereof then outstanding; and (2) Base Rate Loans shall be in a principal amount of $100,000 or more, or, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Revolving Credit Loans to be prepaid.  If Borrower gives such notice, then Borrower’s prepayment obligation shall be irrevocable, and Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Revolving Credit Loan that is a LIBOR Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.4.   - 17 - --------------------------------------------------------------------------------   Section 2.4.Interest/Applicable Rates.   (a)   Subject to the provisions of subsection Section 2.4(b):  (i) each LIBOR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to LIBOR for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.   (b)  (i)    If any amount of principal of any Revolving Credit Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.         (ii)   If any amount (other than principal of any Revolving Credit Loan) payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.        (iii)  While any Event of Default exists, Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.        (iv)  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.   (c)   Interest on each Revolving Credit Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Bankruptcy Law.   Section 2.5.Computations of Interest and Fees.   All computations of interest for Base Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of interest and fees hereunder shall be made on the basis of a year of 360 days and actual days elapsed.  Interest shall accrue on each Revolving Credit Loan for the day on which the Revolving Credit Loan is made, and shall not accrue on a Revolving Credit Loan, or any portion thereof, for the day on which the Revolving Credit Loan or such portion is paid, provided that any Revolving Credit Loan that is repaid on the same day on which it is made shall bear interest for one day. Each determination by Bank of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.   Section 2.6.Payments Generally; Collection of Payments.   (a)  General.  All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Bank in Dollars and in immediately available funds not later than 4:00 p.m. on the date specified herein.  All payments received by Bank after 4:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.   (b)  Collection of Payments.  Borrower authorizes Bank to collect all principal and interest due under each credit created by the Loan Documents by charging Borrower’s deposit account number 41121041941 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof.  Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.   - 18 - --------------------------------------------------------------------------------   Section 2.7.Collateral.   As security for all indebtedness of Borrower to Bank created by the Loan Documents, Borrower hereby grants to Bank security interests of first priority (except for Permitted Liens that are senior to Bank’s security interests), and shall cause each Domestic Subsidiary that is a Material Subsidiary (including, as required by Section 6.11(a) and subject to the timeframes established therein, any Domestic Subsidiary formed or acquired after the  Closing Date) to grant to Bank security interests of first priority (except for Permitted Liens that are senior to Bank’s security interest), in all of Borrower’s and each such Domestic Subsidiary’s personal property (including, without limitation, all of Borrower’s ownership interests in Subsidiaries, accounts receivable, inventory, equipment and intellectual property now owned or hereafter acquired), but excluding interests shares of voting stock of each Foreign Subsidiary that represent more than 65% of the voting stock of such Foreign Subsidiary.   As additional security for all indebtedness of Borrower to Bank created by the Loan Documents, Borrower shall cause each Domestic Subsidiary that is a Material Subsidiary to grant to Bank security interests of first priority (except for Permitted Liens that are senior to Bank’s security interest) in all such Domestic Subsidiary’s ownership interest in any other Domestic Subsidiary or Foreign Subsidiary, but excluding shares of voting stock of each Foreign Subsidiary that represent more than 65% of the voting stock of such Foreign Subsidiary and, with respect to each Foreign Subsidiary, subject to the time frames established in Section 6.11(b).   All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds or mortgages, and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank.  Borrower shall reimburse Bank within 7 days after written demand for all costs and expenses incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.   Section 2.8.Guaranties.   Subject to the time frames established in Section 6.11(a) hereof, all Obligations shall be guaranteed jointly and severally by each Domestic Subsidiary (each a “Guarantor” and, collectively, the “Guarantors”), as evidenced by and subject to the terms of guaranties (each a “Guaranty” and, collectively, the “Guaranties”) in form and substance satisfactory to Bank.   Article III   Taxes, Yield Protection   and Illegality   Section 3.1.Illegality.   If Bank determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for Bank to make, maintain or fund LIBOR Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of Bank to purchase or sell, or to take deposits of, Dollars in the London interbank offered market, then, on notice thereof by Bank to Borrower, any obligation of Bank to make or continue LIBOR Loans or to convert Revolving Credit Loans that are Base Rate Loans to LIBOR Loans shall be suspended until Bank notifies Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, Borrower shall, upon demand from Bank, prepay or, if applicable, convert all LIBOR Loans to Base Rate Loans, either on the last day of the Interest Period therefor, if Bank may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if Bank may not lawfully continue to maintain such LIBOR Loans.  Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due under Section 3.4 in accordance with the terms thereof due to such prepayment or conversion.   - 19 - --------------------------------------------------------------------------------   Section 3.2.Inability to Determine Rates.   If Bank determines in connection with any request for a LIBOR Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank offered market for the applicable amount and Interest Period of such LIBOR Loan, (b) adequate and reasonable means do not exist for determining LIBOR for any requested Interest Period with respect to a proposed LIBOR Loan, or (c) LIBOR for any requested Interest Period with respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost to Bank of funding such Revolving Credit Loan, then Bank will promptly so notify Borrower.  Thereafter, the obligation of Bank to make or maintain LIBOR Loans shall be suspended until Bank revokes such notice.  Upon receipt of such notice, Borrower may revoke any pending request for a Revolving Credit Borrowing of, conversion to or continuation of LIBOR Loans or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing consisting of Base Rate Loans in the amount specified therein.   Section 3.3.Increased Costs.   (a)  Increased Costs Generally.  If any Change in Law shall:   (i)   impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, Bank (except any reserve requirement reflected in LIBOR);   (ii)  subject Bank to any tax of any kind whatsoever with respect to this Agreement or any LIBOR Loan made by it, or change the basis of taxation of payments to Bank in respect thereof (except for taxes covered by paragraph (c) below); or   (iii)  impose on Bank or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Loans made by Bank;   and the result of any of the foregoing shall be to increase the cost to Bank of making or maintaining any LIBOR Loan (or of maintaining its obligation to make any such Revolving Credit Loan), or to reduce the amount of any sum received or receivable by Bank hereunder (whether of principal, interest or any other amount), then, upon written request of Bank (together with a certificate as described in Section 3.3(d)), Borrower will pay to Bank such additional amount or amounts as will compensate Bank for such additional costs incurred or reduction suffered.   (b)  Capital Requirements.  If Bank determines that any Change in Law affecting Bank or Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on Bank’s capital or on the capital of Bank’s holding company, if any, as a consequence of this Agreement or the Revolving Credit Loans made by Bank, to a level below that which Bank or Bank’s holding company could have achieved but for such Change in Law (taking into consideration Bank’s policies and the policies of Bank’s holding company with respect to capital adequacy), then from time to time, upon written request of Bank (together with a certificate as described in Section 3.3(d)), Borrower will pay to Bank such additional amount or amounts as will compensate Bank or Bank’s holding company for any such reduction suffered.                  (c)  Taxes.  Borrower shall pay to Bank within 10 days after written demand, in addition to any other amounts due or to become due hereunder, any and all withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR.  In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower absent manifest error.   - 20 - -------------------------------------------------------------------------------- (d)   Certificates for Reimbursement.  A certificate of Bank setting forth the amount or amounts necessary to compensate Bank or its holding company, as the case may be, as specified in subsection (a), (b) or (c) of this Section, as well as the basis for determining such amount or amounts, and delivered to Borrower shall be conclusive absent manifest error.  Borrower shall pay Bank the amount shown as due on any such certificate within ten days after receipt thereof.   (e)   Delay in Requests.  Failure or delay on the part of Bank to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of Bank’s right to demand such compensation, provided that Borrower shall not be required to compensate Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six months prior to the date that Bank notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to in this subsection shall be extended to include the period of retroactive effect thereof).   Section 3.4.Compensation for Losses.   Upon written demand of Bank from time to time, Borrower shall promptly compensate Bank for and hold Bank harmless from any loss, cost or expense incurred by it as a result of:   (a)   any continuation, conversion, payment or prepayment of any Revolving Credit Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Revolving Credit Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or   (b)  any failure by Borrower (for a reason other than the failure of Bank to make a Revolving Credit Loan) to prepay, borrow, continue or convert any Revolving Credit Loan other than a Base Rate Loan on the date or in the amount notified by Borrower; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Revolving Credit Loan or from fees payable to terminate the deposits from which such funds were obtained.  Borrower shall also pay any customary administrative fees charged by Bank in connection with the foregoing.  For purposes of calculating amounts payable by Borrower to Bank under this Section 3.4, Bank shall be deemed to have funded each LIBOR Loan made by it by a matching deposit or other borrowing in the London interbank offered market for a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded.   Section 3.5.Survival.   All obligations of Borrower under this Article III shall survive repayment, satisfaction or discharge of all the Obligations.   - 21 - --------------------------------------------------------------------------------     Article IV   Conditions   Section 4.1.Conditions of Initial Extension of Credit.  The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s satisfaction of all of the following conditions:   (a)   Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel.   (b)   Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:   (i)     this Agreement and the Note;   (ii)    the Security Agreement;   (iii)   each of the Guaranties required pursuant to Section 2.8 hereof;   (iv)   the Subsidiary Security Agreement;   (v)    the Pledge Agreement;   (vi)   such certificates of resolutions or other action, incumbency certificates or other certificates of Responsible Officers of each of Borrower and each Guarantor as Bank may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with the Loan Documents to which such Person is a party;   (vii)  such documents and certifications as Bank may reasonably require to evidence that Borrower and each Guarantor is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in:  (A) the State in which it is incorporated, organized or formed; and (B) each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification;   (viii) a favorable opinion of counsel to Borrower and Guarantors reasonably acceptable to Bank addressed to Bank, as to such matters as are reasonably required by Bank with respect to Borrower and the Guarantors and the Loan Documents;   (ix)   a duly completed Compliance Certificate as of the last day of the fiscal quarter of Borrower ended September 30, 2008, signed by an appropriate Responsible Officer of Borrower; and   (x)    such other documents as Bank may require under any other Section of this Agreement.   (c)   Financial Condition.  There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower and its Subsidiaries, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower.   (d)  Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower’s property, in form, substance, amounts, covering risks and issued by companies reasonably satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.   (e)  Fees.  Borrower shall have paid all fees, charges and disbursements of counsel to Bank to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Bank).   - 22 - --------------------------------------------------------------------------------   Section 4.2.Conditions of Each Extension of Credit.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions:   (a)   Compliance.  The representations and warranties contained herein and in each of the other Loan Documents executed by Borrower or any Guarantor shall be true in all material respects on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date (provided, however, that those representations and warranties expressly referring to another date shall be true and correct in all material respects as of such date), and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.   (b)   Compliance Certificate.  Bank shall have received a duly completed Compliance Certificate as of the last fiscal month, signed by an appropriate Responsible Officer of Borrower.   (c)   Documentation.  Bank shall have received all additional documents which may be required in connection with such extension of credit.   Article V   Representations and Warranties   Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank created by the Loan Documents.   Section 5.1.Legal Status.  Borrower and each of its Subsidiaries, and each Subsidiary of a Subsidiary, is a corporation, partnership or limited liability company, duly organized and existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, and is qualified or licensed to do business (and is in good standing as a foreign entity, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed would have a Material Adverse Effect.  All of   the Subsidiaries of Borrower in existence as of the Closing Date are listed on Schedule 5.1 hereto.   Section 5.2.Authorization and Validity.  This Agreement and each of the Loan Documents executed by Borrower or any Guarantor have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.   Section 5.3.No Violation.  The execution, delivery and performance by Borrower and the Guarantors of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of such Person’s organizational documents, or result in any breach of or default under any contract, obligation, indenture or other instrument to which any such Person is a party or may be bound which violation contravention, breach or default would individually or in the aggregate reasonably be expected to have a Material Adverse Effect.   - 23 - -------------------------------------------------------------------------------- Section 5.4.Litigation.  There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency, against Borrower, any Subsidiary, or any Subsidiary of a Subsidiary, which is reasonably likely to be adversely determined, and if adversely determined would have a Material Adverse Effect, other than those disclosed on Schedule 5.4.   Section 5.5.Correctness of Financial Statement.  The annual financial statement of Borrower dated March 31, 2008, and all interim financial statements delivered by Borrower to Bank since such date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and presents fairly in all material respects the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under GAAP, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP.  Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor (exclusive of Permitted Liens) has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing or pursuant to this Agreement.   Section 5.6.Income Tax Returns.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.   Section 5.7.No Subordination.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower’s or any Guarantor’s obligations created by the Loan Documents to any other obligation of Borrower or such Guarantor.   Section 5.8.Permits, Franchises.  Borrower and each of its Subsidiaries, and each Subsidiary of a Subsidiary, possess, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law the failure of which to comply with would have a Material Adverse Effect.   Section 5.9.ERISA Compliance.  Each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state law.  Each Plan which is intended to qualify under subsection 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and nothing has occurred that would cause the loss of such qualification.  Borrower and each ERISA Affiliate have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan; and there are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan; no ERISA Event has occurred or is reasonably expected to occur; and no event or circumstance has occurred or exists that would create an Event of Default under Section 8.1(j).   Section 5.10.Other Obligations.  None of Borrower or any Subsidiary (including any Subsidiary of a Subsidiary) is in default (i) as of the Closing Date, on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation, and (ii) after the Closing Date, on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation in excess of $250,000.00.   Section 5.11.Environmental Matters.  Borrower is in compliance in all material respects with all applicable Environmental Laws.  None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.   Section 5.12.Eligible Accounts.  All accounts that are included in the Borrowing Base are Eligible Accounts and meet the definition thereof.   - 24 - -------------------------------------------------------------------------------- Article VI   Affirmative Covenants   Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower created by the Loan Documents, Borrower shall, and shall (except in the case of the covenants set forth in Section 6.3 and Section 6.10) cause each of its Subsidiaries (including Subsidiaries of Subsidiaries) to, unless Bank otherwise consents in writing:   Section 6.1.Punctual Payments.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein.   Section 6.2.Accounting Records; One-Time Collateral Exams.  Maintain adequate books and records in accordance with GAAP, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect its properties.  From time to time, as Bank shall require in the exercise of its reasonable discretion, permit Bank, or its employees, accountants, attorneys or agents, to conduct, with respect to each such Person, examinations and inspections of any collateral required hereby or any other property of Borrower or such Subsidiary, as applicable.  Such examination and inspection shall be conducted during ordinary business hours and upon one Business Day’s advance notice (unless an Event of Default shall have occurred and be continuing, in which case no notice shall be required).  Unless an Event of Default shall have occurred and be continuing, Borrower shall only be required to reimburse Bank for the out-of-pocket costs incurred by it in connection with any such inspection, audit or exam in an amount not to exceed $10,000.00 per fiscal year.   Section 6.3.Financial Statements.  Provide to Bank all of the following, in form and detail satisfactory to Bank:   (a)   not later than 20 days after and as of the end of each month, company prepared monthly consolidated and consolidating unaudited financial statements of Borrower, which financial statements shall include Borrower’s balance sheet as of the end of such month and the related statements of Borrower’s income, reconciliation of retained earnings and cash flows for the month then ended and any footnotes thereto, all in reasonable detail and prepared in accordance with GAAP;   (b)   promptly after the sending or filing thereof, but in no event later than 45 days after the end of each fiscal quarter of Borrower copies of each Form 10-Q report filed by Borrower with the SEC or any successor agency;   (c)   promptly after the sending or filing thereof, but in no event later than 75 days after the end of each fiscal year of Borrower, copies of each Form 10-K report filed by Borrower with the SEC or any successor agency;   (d)   not later than March 31 of each year, projected consolidated and consolidating balance sheets, income statements and cash flow statements for such year for Borrower, in reasonable detail, representing Borrower’s good faith projections and certified by the chief financial officer of Borrower as being Borrower’s good faith projections and identical to the projections to be used by Borrower for internal planning purposes, together with a statement of underlying assumptions and such supporting schedules and information as Bank may in its discretion reasonably require (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results);   - 25 - --------------------------------------------------------------------------------   (e)   (i) prior to any advances that will increase the aggregate outstanding amount under the Revolving Line of Credit above Seven Million Five Hundred Thousand Dollars ($7,500,000); and (ii) within fifteen (15) days after the end of each month during which the aggregate amount outstanding under the Revolving Line of Credit exceeds Seven Million Five Hundred Thousand Dollars ($7,500,000), a duly completed Borrowing Base Certificate signed by an appropriate Responsible Officer of Borrower;   (f)    as soon as available, but in no event later than ten (10) days after and as of the end of each month, an aging report for Borrower’s Accounts;   (g)   as soon as available, but in no event later than ten (10) days after and as of the end of each month, an account statement for Borrower’s accounts maintained with Wells Fargo Institutional Brokerage/Wells Capital Management; and   (h)   from time to time such other information as Bank may reasonably request.   Section 6.4.Compliance.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which it is organized and/or which govern its continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to it and/or its business, in each case the failure of which to preserve and maintain would result in a Material Adverse Effect.   Section 6.5.Insurance.  Maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to, and in similar geographic locations as, that of such Person, including but not limited to fire, extended coverage, public liability, flood, property damage and workers’ compensation, with all such insurance carried with companies and in amounts reasonably satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect.   Section 6.6.Facilities.  Keep all properties useful or necessary to such Person’s business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.   Section 6.7.Taxes and Other Liabilities.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except such (a) as such Person may in good faith contest or as to which a bona fide dispute may arise, and (b) for which such Person has made provision, in accordance with GAAP, for eventual payment thereof in the event such Person is obligated to make such payment.   - 26 - --------------------------------------------------------------------------------     Section 6.8.Litigation.  Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower or any of its Subsidiaries with a claim in excess of $500,000.00.   Section 6.9.Financial Condition.  For any period during which there is at any time any outstanding Revolving Credit Borrowing under the Revolving Line of Credit, maintain Borrower’s financial condition as follows using GAAP (except to the extent modified by the definitions herein):   (a)   As of each calendar month end, Modified Quick Ratio of not less than 1.25 to 1.00.   (b)   As of each fiscal quarter end of Borrower and for the then ending fiscal quarter, GAAP Profit/Loss not less than: For the fiscal quarter ending September 30, 2008: negative Three Million Dollars (-$3,000,000) For the fiscal quarter ending December 31, 2008: negative Seven Hundred Fifty Thousand Dollars (-$750,000) For the fiscal quarter ending March 31, 2009 and each fiscal quarter thereafter: Five Hundred Thousand Dollars ($500,000)   (c)   As of each calendar month end, a duly completed Compliance Certificate signed by an appropriate Responsible Officer of Borrower.   Section 6.10.Notice to Bank.  Promptly (but in no event more than five (5) business days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s property in excess of an aggregate of $250,000.00.   Section 6.11.Subsidiaries.   (a)   Domestic Subsidiaries.  By not later than (i) with respect to each Domestic Subsidiary that is a Material Subsidiary in existence as of the Closing Date, the Closing Date, and (ii) with respect to each Domestic Subsidiary that is a Material Subsidiary formed or acquired on or after the Closing Date, twenty (20) calendar days after the formation or acquisition of such Domestic Subsidiary, cause such Domestic Subsidiary to execute and deliver to Bank (X) a Guaranty in satisfaction of the requirements of Section 2.8 hereof, (Y) a security agreement in satisfaction of the requirements of Section 2.7 hereof and (Z) such other documents as Bank shall reasonably request, in form and substance satisfactory to Bank, evidencing the authority of such Domestic Subsidiary to execute and deliver such Guaranty and security agreement, and the incumbency of the Persons executing such Guaranty and security agreement on behalf of such Domestic Subsidiary.   (b)   Foreign Subsidiaries.  By not later than (i) with respect to each Foreign Subsidiary in existence as of the Closing Date, the Closing Date, and (ii) with respect to each Foreign Subsidiary formed or acquired on or after the Closing Date, forty-five (45) calendar days after the formation or acquisition of such Foreign Subsidiary, execute, or cause to be executed, such further agreements, documents or instruments, or take such other actions, as Bank reasonably deems necessary in order to effectuate the pledge to Bank of security interests in Borrower’s, and/or Borrower’s Subsidiaries’, ownership interest in such Foreign Subsidiary (such pledge exclusive of shares of voting stock of such Foreign Subsidiary that represent more than 65% of the voting stock of such Foreign Subsidiary, as described in Section 2.8 hereof), including, without limitation, (A) executing and delivering to each such Foreign Subsidiary, a notice of the pledge of Borrower’s and/or Borrower’s Subsidiaries’ interests therein to Bank, and (B) causing such Foreign Subsidiary to execute and deliver to Bank an acknowledgment of pledge related to Borrower’s and/or such Subsidiaries’ pledge of its or their interest in such Foreign Subsidiary, in each case, in form in substance satisfactory to Bank.   (c)  Upon the request of Bank, with respect to Borrower’s Equity Interests in Subsidiaries pledged to Bank as collateral under the Loan Documents, Borrower shall promptly deliver stock certificates (or other comparable certificates) for all certificated securities now or at any time constituting such collateral, duly endorsed in blank for transfer or accompanied by an appropriate assignment or assignments or an appropriate undated stock power or powers, in every case sufficient to transfer title thereto.   - 27 - -------------------------------------------------------------------------------- Article VII   Negative Covenants   Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower created by the Loan Documents, Borrower will not, and will not permit any Subsidiary (including Subsidiaries of Subsidiaries) of Borrower to, without Bank’s prior written consent:   Section 7.1.Use of Funds.  Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article II hereof.   Section 7.2.Capital Expenditures.  Make any additional investment in fixed assets in any fiscal period such that, after giving effect to such investment: (a) the aggregate investments in fixed assets made by Borrower and all Subsidiaries in the fiscal quarters ending December 31, 2008 and March 31, 2009 would exceed $4,250,000.00; and (b) the aggregate investments in    fixed assets made by Borrower and all Subsidiaries in fiscal year 2010 would exceed $6,500,000.00   Section 7.3.Lease Expenditures.  Incur operating lease expense in any fiscal year such that, after giving effect to such operating lease expense, the aggregate operating lease expense incurred by Borrower and all Subsidiaries in such year is in excess of $1,200,000.00.   Section 7.4.Other Indebtedness.  Create, incur, assume or permit to exist any indebtedness resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, other than Permitted Indebtedness.   Section 7.5.Merger, Consolidation, Transfer of Assets.  Merge into or consolidate with any other entity, other than pursuant to a Permitted Investment (provided that a Subsidiary may merge or consolidate into another Subsidiary or into Borrower); make any substantial change in the nature of such Person’s business as conducted as of the date hereof or reasonably incidental thereto; acquire all or substantially all of the assets of any other entity, other than pursuant to a Permitted Investment; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of such Person’s assets (collectively, a “Transfer”), other than: (i) Transfers of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (iii) Transfers of worn-out, surplus or obsolete Equipment which was not financed by Bank; or (iv) other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $100,000 during any fiscal year.   Section 7.6.Guaranties.  Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of such Person as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank constituting Permitted Indebtedness.   Section 7.7.Loans, Advances, Investments.  Make any loans or advances to or investments in any person or entity, other than Permitted Investments.   Section 7.8.Dividends, Distributions.  Declare or pay any dividend or distribution either in cash, stock or any other property on such Person’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of such Person’s stock now or hereafter outstanding, except that Borrower may (i) pay dividends consistent with prior priorities in common stock of Borrower, (ii) repurchase the stock of former employees, consultants or directors of Borrower pursuant to stock repurchase agreements so long as an Event of Default does not exist prior to such repurchase and would not exist after giving effect to such repurchase and (iii) repurchase the stock of former employees pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees to Borrower so long as an Event of Default does not exist prior to such repurchase and would not exist after giving effect to such repurchase.   - 28 - --------------------------------------------------------------------------------     Section 7.9.Pledge of Assets.  Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of such Person’s assets now owned or hereafter acquired, other than Permitted Liens.   Section 7.10.Sale and Leasebacks.  Enter into any arrangement, directly or indirectly, with any other Person whereby Borrower or such Subsidiary, as applicable, shall sell or transfer any real or personal property, whether now owned or hereafter acquired, and then or thereafter rent or lease as lessee such property or any part thereof or any other property which Borrower or such Subsidiary, as applicable, intends to use for substantially the same purpose or purposes as the property being sold or transferred.   Section 7.11.Transactions with Affiliates.  Enter into any transaction of any kind with any affiliate of Borrower, irrespective of whether in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or a Subsidiary of Borrower as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an affiliate.   Article VIII   Events of Default   Section 8.1.Events of Default.  The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:   (a)   Borrower shall fail to pay (i) when due any principal or any interest, or (ii) any fees or other amounts payable under any of the Loan Documents (and such default shall continue unremedied for a period of three Business Days); or   (b)   Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower, any Subsidiary or any other party under this Agreement or any other Loan Document, shall prove to be incorrect, false or misleading in any material respect when furnished or made; or   (c)  Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those referred to in subsections (a) and (b) above), and with respect to any such default which by its nature can be cured, such default shall continue for a period of twenty (20) days from the date of its occurrence; or   (d)  Any default in the payment or performance of any material obligation in excess of $250,000.00, or any defined event of default, under the terms of any contract or instrument (other than any of the Loan Documents) pursuant to which Borrower or any Subsidiary has incurred any debt or other material liability to any person or entity, including Bank, in excess of $50,000.00; or   - 29 - --------------------------------------------------------------------------------     (e)  The filing of a notice of judgment lien against Borrower or any Subsidiary; or the recording of any abstract of judgment against Borrower or any Subsidiary in any county in which Borrower or such Subsidiary has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Subsidiary; or the entry of a judgment against Borrower or any Subsidiary; or   (f)   Borrower or any Subsidiary shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Subsidiary shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Code, or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Subsidiary and such involuntary bankruptcy is not dismissed within 45 days or Borrower or any Subsidiary shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Subsidiary shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Subsidiary by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors; or   (g)   There shall exist or occur any event or condition which Bank in good faith believes could reasonably be expected to have a Material Adverse Effect; or   (h)   Except to the extent permitted pursuant to Section 7.5, the dissolution or liquidation of Borrower or any Subsidiary which is a corporation, partnership, joint venture or other type of entity; or Borrower or any such Subsidiary, or any of their directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or any such Subsidiary; or   (i)   There shall exist a material deficiency in any collateral required hereunder, as identified by Bank pursuant to one or more of the collateral examinations and inspections referenced in Section 6.2 hereof; or   (j)(i) The occurrence of any ERISA Event with respect to a Pension Plan or Multiemployer Plan which results in or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000.00; or (ii) the failure by Borrower or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $100,000.00; or   (k)   Any Loan Document or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder, ceases to be in full force and effect; or Borrower or any Subsidiary contests in any manner the validity or enforceability of any Loan Document or any provision thereof; or Borrower or any Subsidiary denies that it has any further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document or any provision thereof; or   - 30 - --------------------------------------------------------------------------------                 (l)   There occurs a Change of Control.   Section 8.2.Remedies.  Upon the occurrence of any Event of Default:  (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit created by the Loan Documents and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence and during the continuance of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.   Article IX   Miscellaneous   Section 9.1.No Waiver.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.   Section 9.2.Notices.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address: Borrower:Micrus Endovascular Corporation 821 Fox Lane San Jose, CA 95131   Bank:Wells Fargo Bank, National Association Peninsula Regional Commercial Banking Office 400 Hamilton Ave., Suite 110 Palo Alto, California  94301 Attention:  Customer Service Manager   - 31 - --------------------------------------------------------------------------------   or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.   Section 9.3.Expenses; Indemnity; Damage Waiver.   (a)   Borrower shall pay to Bank within 7 days after written demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel and collateral review fees), expended or incurred by Bank in connection with (i) the negotiation and preparation of this Agreement and the other Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (ii) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (iii) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.   (b)   Borrower shall indemnify Bank and Bank’s affiliates and the partners, members, directors, officers, employees, agents and advisors of Bank and Bank’s affiliates (each such Person, an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys, who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any Guarantor, or any Subsidiary of Borrower or any Guarantor, arising out of, in connection with, or as a result of:  (i) the execution or delivery of this Agreement, any other Loan Document or any document contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby; (ii) any Revolving Credit Loan or the use or proposed use of the proceeds therefrom; (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Borrower, any Guarantor or any Subsidiary of Borrower or any Guarantor, or any Environmental Claim or Environmental Liability related in any way to Borrower, any Guarantor or any Subsidiary of Borrower or any Guarantor; or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower, any Guarantor or any Subsidiary of Borrower or any Guarantor, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses result from the gross negligence or willful misconduct of such Indemnitee.   (c)   To the fullest extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any document contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Revolving Credit Loan or the use of the proceeds thereof.  No Indemnitee referred to in Section 9.3(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.   - 32 - -------------------------------------------------------------------------------- (d)   The agreements in this Section 9.3 shall survive the termination of Bank’s commitment to make Revolving Credit Loans and the repayment, satisfaction or discharge of all other Obligations.   Section 9.4.Successors, Assignment.  This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto; provided that Borrower may not assign or transfer its interest hereunder without Bank’s prior written consent.  Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents, provided that so long as no Event of Default exists Bank shall not so sell, assign, transfer, negotiate or grant participations in to any direct competitor of Borrower without Borrower’s prior written consent.   Section 9.5.Entire Agreement; Amendment.  This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit created by this Agreement and the other Loan Documents and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof and thereof.  This Agreement may be amended or modified only in writing signed by each party hereto.   Section 9.6.No Third Party Beneficiaries.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.   Section 9.7.Time.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.   Section 9.8.Severability of Provisions.  If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.   Section 9.9.Counterparts.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be as effective as delivery of a manually executed counterpart of this Agreement.   Section 9.10.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.   Section 9.11.Arbitration.   (a)   Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.   - 33 - -------------------------------------------------------------------------------- (b)   Governing Rules.  Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.   (c)   No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.   (d)   Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided, however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.   (e)   Discovery.  In any arbitration proceeding discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.   (f)   Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.   (g)   Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.   - 34 - --------------------------------------------------------------------------------     (h)   Real Property Collateral; Judicial Reference.  Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable.  If any such dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638.  A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures.  Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.   (i)   Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties. (j)    Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.   [Continues with Signatures on Next Page]   - 35 - --------------------------------------------------------------------------------     In Witness Whereof, the parties hereto have caused this Credit Agreement to be executed as of the day and year first written above.   MICRUS ENDOVASCULAR CORPORATION   WELLS FARGO BANK NATIONAL       ASSOCIATION                     By: /s/ Gordon Sangster   By: /s/ Matt Burke Name: Gordon Sangster   Name: Matt Burke Title: CFO   Title: Vice President                         Credit Agreement     --------------------------------------------------------------------------------   Exhibit A   Form of Revolving Line of Credit Note [See attached.]     --------------------------------------------------------------------------------   Exhibit B   Form of Loan Notice Date:  ___________, __ _____ To:Wells Fargo Bank, National Association   Ladies and Gentlemen:   Reference is hereby made to that certain Credit Agreement, dated as of November 5, 2008 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement”), between Micrus Endovascular Corporation (“Borrower”) and Wells Fargo Bank, National Association.  Unless otherwise defined herein, each capitalized term used herein has the meaning ascribed thereto in the Agreement.   The undersigned Borrower hereby requests (select one):   _____A Revolving Credit Borrowing of Revolving Credit Loans   _____A conversion of LIBOR Rate Loans   _____A Revolving Credit Borrowing of LIBOR Rate Loans   _____A continuation of LIBOR Rate Loans   1.   On _______ (a Business Day).   2.   In the amount of $_______.   3.   [Insert for LIBOR Rate Loans: With an Interest Period of _______ months.]     --------------------------------------------------------------------------------     The Revolving Credit Borrowing, if any, requested herein complies with Section 2.1 of the Agreement.   Micrus Endovascular Corporation       By:   Name:   Title:     --------------------------------------------------------------------------------   Exhibit C   Form of Financial Covenant Compliance Certificate     TO:Wells Fargo Bank, National Association (“Bank”) under that certain Credit Agreement, dated as of November 5, 2008 (as amended, restated, modified and/or supplemented from time to time, the “Credit Agreement”), between Micrus Endovascular Corporation, a Delaware corporation (“Borrower”), and Bank.   This Compliance Certificate is delivered this ___ day of ____________, 20__, by the undersigned, as a senior financial officer of Borrower to Bank in accordance with Section 6.9(c) of the Credit Agreement.   The undersigned hereby certifies on behalf of Borrower that:   1.   Attached hereto are the consolidated and consolidating company prepared monthly financial statements of Borrower, presented fairly in all material respects in accordance with GAAP that are required to be delivered pursuant to Section 6.3(a) of the Credit Agreement for the period ending ______________, 20__ (the “End Date”).   2.   As of the date of this Compliance Certificate, no Default or Event of Default has occurred and was continuing.   3.  The financial condition covenants and other compliance calculations and information set forth on Schedule 1 attached hereto are true, complete and accurate in all material respects on and as of the date of this Compliance Certificate.   The foregoing certifications, together with the computations set forth in Schedule 1 hereto, are made and delivered, and the financial statements referenced above are made or posted, as applicable, this ____ day of _____, 200_, pursuant to the provisions of the Credit Agreement.   By:   [                                                             ]   [                                                             ]   of Micrus Endovascular Corporation     --------------------------------------------------------------------------------   Schedule 1 to Compliance Certificate A.   Modified Quick Ratio at each fiscal month end of Borrower, commencing with the fiscal month ending October 31, 2008 of 1.25:1.0. 1. Modified Quick Ratio:       a.  unrestricted cash and marketable securities $___________     b.  net accounts receivable $___________     c.  current liabilities $___________   2. Quick Ratio ((1a+1b)/1c):   ___________ 3. In compliance (yes / no)?   ___________ B.   Minimum GAAP Profit/Loss for the fiscal quarter ending September 30, 2008 of negative Three Million Dollars (-$3,000,000), for the fiscal quarter ending December 31, 2008 of negative Seven Hundred Fifty Thousand Dollars (-$750,000) and for each fiscal quarter ending after December 31, 2008 of Five Hundred Thousand Dollars ($500,000). 1. GAAP Profit/Loss:       a.  revenue $___________     b.  cost of goods sold $___________     c.  operating expenses $___________     d.  stock-based compensation expenses $___________     e.  stock-based acquisition expenses $___________   2. Operating Expenses (1c - 1d - 1e):   ___________ 3. GAAP Profit/Loss (1a - 1b - 2):   ___________ 3. In compliance (yes / no)?   ___________     --------------------------------------------------------------------------------   Exhibit D Form of Borrowing Base Certificate Schedule 1.1-A   Permitted Indebtedness   [Borrower to provide.]     --------------------------------------------------------------------------------   Schedule 1.1-B   Permitted Investments   [Borrower to provide.]     --------------------------------------------------------------------------------   Schedule 1.1-C   Permitted Liens   [Borrower to provide.]     --------------------------------------------------------------------------------   Schedule 5.1   Subsidiaries 1.Domestic Subsidiaries [Borrower to provide.] 2.Foreign Subsidiaries [Borrower to provide.] Schedule 5.4   Litigation   [Borrower to provide.]
Exhibit 10.02     EXECUTION VERSION     DATED JANUARY 24, 2012     REGISTRATION RIGHTS AGREEMENT   BY AND BETWEEN   COLFAX CORPORATION   AND   MITCHELL P. RALES         --------------------------------------------------------------------------------       TABLE OF CONTENTS     ARTICLE I DEFINITIONS 1   Section 1.1 Certain Defined Terms. 1   Section 1.2 Terms Generally. 4       ARTICLE II REGISTRATION RIGHTS 4   Section 2.1 Shelf Registration. 4   Section 2.2 Demand Registrations. 6   Section 2.3 Piggyback Registrations 8   Section 2.4 Shelf Take-Downs. 9   Section 2.5 Lock-Up Agreements. 9   Section 2.6 Registration Procedures. 10   Section 2.7 Indemnification. 14   Section 2.8 Rule 144; Rule 144A. 17   Section 2.9 Underwritten Registrations. 17   Section 2.10 Registration Expenses. 17       ARTICLE III MISCELLANEOUS 18   Section 3.1 Termination. 18   Section 3.2 Amendment and Waiver. 18   Section 3.3 Severability. 18   Section 3.4 Entire Agreement. 18   Section 3.5 Successors and Assigns. 18   Section 3.6 Counterparts; 19   Section 3.7 Remedies. 19   Section 3.8 Notices. 19   Section 3.9 Governing Law; Consent to Jurisdiction. 20     ANNEX A: JOINDER AGREEMENT     --------------------------------------------------------------------------------   REGISTRATION RIGHTS AGREEMENT dated as of January 24, 2012, by and between Mr. Mitchell P. Rales (“Purchaser”) and Colfax Corporation, a Delaware corporation (the “Company”).   WHEREAS, the Company and Purchaser have entered into the Securities Purchase Agreement, dated as of September 12, 2011 (as amended, supplemented, restated or otherwise modified from time to time, the “Purchase Agreement”), pursuant to and subject to the terms and conditions of which, among other things, the Company has agreed to sell to Purchaser, and Purchaser has agreed to purchase from the Company, certain shares (the “Common Stock”) of the Company’s common stock par value $0.001 per share; and   WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to provide to Purchaser certain rights as set forth herein.   NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows:   ARTICLE I DEFINITIONS   Section 1.1             Certain Defined Terms. As used herein, the following terms shall have the following meanings:   “Action” means any legal, administrative, regulatory or other suit, action, claim, audit, assessment, arbitration or other proceeding, investigation or inquiry.     “Agreement” means this Registration Rights Agreement as it may be amended, supplemented, restated or modified from time to time     “Beneficial Ownership” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act; provided, that for purposes of determining Beneficial Ownership, in no event will any Person be deemed to Beneficially Own any securities which it has the right to acquire (pursuant to options, warrants, the conversion provisions of other securities or otherwise) unless, and then only to the extent that, such Person shall have actually exercised, or committed to exercise, such right. The term “Beneficially Own” shall have a correlative meaning.     “Business Day” means any day, other than a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized or obligated to close.     “Capital Stock” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however     1 --------------------------------------------------------------------------------       designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited) or equivalent ownership interests in or issued by such Person.     “Closing Date” has the meaning set forth in the Purchase Agreement.     “Covered Securities” means any shares of Common Stock,.     “Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated by the SEC from time to time thereunder.     “Governmental Entity” shall mean any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign and any applicable industry self-regulatory organization.     “Holders” means Purchaser and any Transferee of Registrable Securities.     “Holders’ Representative” means Purchaser or any or any other Holder designated by Purchaser as a Holders’ Representative.     “Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.     “Law” means any statute, law, code, ordinance, rule or regulation of any Governmental Entity.     “Other Securities” means Covered Securities or shares of other Capital Stock which are contractually entitled to registration rights or which the Company is registering pursuant to a registration statement covered by this Agreement.     “Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any group (within the meaning of Section 13(d)(3) of the Exchange Act) comprised of two or more of the foregoing.     “Prospectus” means the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, any Issuer Free Writing Prospectus related thereto, and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.     “Registrable Securities” means the Covered Securities, provided, however, that the     2 --------------------------------------------------------------------------------       Covered Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been distributed to the public in accordance with Rule 144 under the Securities Act or are able to be sold pursuant to Rule 144 under the Securities Act (or any similar provision then in force, but not Rule 144A) without volume, manner of sale or notice limitations or requirements or (iii) they shall have ceased to be outstanding.     “Registration Statement” means any registration statement of the Company under the Securities Act which permits the public offering of any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.     “Rule 144” means Rule 144 under the Securities Act.     “SEC” means the United States Securities and Exchange Commission.     “Securities Act” means the U.S. Securities Act of 1933, and the rules and regulations promulgated by the SEC from time to time thereunder.     “Selling Holder” means each Holder of Registrable Securities included in a registration pursuant to Article II.     “Shelf Registration Statement” means a Registration Statement of the Company filed with the SEC on either (a) Form S-3 (or any successor form or other appropriate form under the Securities Act) or (b) if the Company is not permitted to file a Registration Statement on Form S-3, an evergreen Registration Statement on Form S-1 (or any successor form or other appropriate form under the Securities Act), in each case for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act covering Registrable Securities. To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act), a “Shelf Registration Statement” shall be deemed to refer to an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”) on Form S-3.     “Stockholders” means Mr. Steven M. Rales, Markel Corporation and BDT CF Acquisition Vehicle, LLC and any transferee of Other Securities entitled to benefits as a transferee under the registration rights agreements entered into by Mr. Steven M. Rales, Markel Corporation or BDT CF Acquisition Vehicle,     3 --------------------------------------------------------------------------------       LLC, respectively, and the Company on January 24, 2012.     “Subsidiary” shall mean, with respect to any Person, any other Person of which 50% or more of the shares of the voting securities or other voting interests are owned or controlled, or the ability to select or elect 50% or more of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries.     “Transfer” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition.     “Transferee” means any of (i) the transferee of all or any portion of the Registrable Securities held by Purchaser or (ii) the subsequent transferee of all or any portion of the Registrable Securities held by any Transferee; provided, that no Transferee shall be entitled to any benefits of a Transferee hereunder unless such Transferee executes and delivers to the Company an instrument substantially in the form provided as Exhibit A attached hereto.   Section 1.2             Terms Generally.  The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, unless the context expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs, clauses, Exhibits or Schedules shall be deemed references to Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to this Agreement, unless the context requires otherwise. Unless otherwise expressly defined, terms defined in this Agreement have the same meanings when used in any Exhibit or Schedule hereto. Unless otherwise specified, the words “this Agreement”, “herein”, “hereof”, “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole (including the Schedules and Exhibits) and not to any particular provision of this Agreement. The term “or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. Unless expressly stated otherwise, any Law defined or referred to herein means such Law as from time to time amended, modified or supplemented, including by succession of comparable successor Laws and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.   ARTICLE II REGISTRATION RIGHTS   Section 2.1            Shelf Registration.         4 --------------------------------------------------------------------------------     (a)              Subject to the terms and conditions of this Agreement, the Company agrees that no later than the date that is three months after the Closing Date, it shall file with the SEC a Shelf Registration Statement relating to the offer and sale of all of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by such holders and set forth in the Shelf Registration Statement and shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act no later than the date that is six months after the Closing Date.   (b)              The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by Holders until the earlier of (i) the date as of which all Registrable Securities have been sold pursuant to the Shelf Registration Statement or another registration statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder) and (ii) the date as of which each of the Holders is permitted to sell its Registrable Securities without registration pursuant to Rule 144 under the Securities Act without volume limitation (or a Holder can sell all of its Registrable Securities in a three-month period) or other restrictions on transfer thereunder (such period of effectiveness, the “Shelf Period”).   (c)              The Company shall be entitled to postpone (but not more than twice in any 12-month period), for a reasonable period of time not in excess of 90 days, the filing or initial effectiveness of, or suspend the use of, a Shelf Registration Statement if the Company notifies the Holders’ Representative that, in the good faith judgment of the Board of Directors of the Company, such registration, offering or use would reasonably be expected to materially adversely affect or materially interfere with any bona fide material financing of the Company or any material transaction under consideration by the Company or would require the disclosure of information that has not been, and is not otherwise required to be, disclosed to the public, the premature disclosure of which would materially adversely affect the Company.   (d)              If any of the Registrable Securities to be sold pursuant to a Shelf Registration Statement are to be sold in a firm commitment underwritten offering, and the managing underwriter(s) of such underwritten offering advise the Holders in writing that it is their good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering, together with any Other Securities proposed to be included by holders thereof which are entitled to include securities in such Registration Statement, exceeds the total number or dollar amount of such securities that can be sold without having an adverse effect on the price, timing or distribution of the Registrable Securities to be so included together with all such Other Securities, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities and such Other Securities that in the opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated for inclusion as follows:     5 --------------------------------------------------------------------------------     (i)      first, the Registrable Securities for which inclusion in such underwritten offering was requested by the Holders and any Other Securities proposed to be included by the Stockholders, pro rata (if applicable), based on the number of Registrable Securities Beneficially Owned by each such Holder and any Other Securities Beneficially Owned by each such Stockholder until all such securities have been allocated for inclusion; and   (ii)      second, among any other holders of Other Securities, pro rata, based on the number of Other Securities Beneficially Owned by each such holder of Other Securities.   (e)              The Holders’ Representative shall have the right to notify the Company that it has determined that the Shelf Registration Statement be abandoned or withdrawn, in which event the Company shall promptly abandon or withdraw such Shelf Registration Statement.   Section 2.2             Demand Registrations.   (a)              If, following the date hereof, the Company is unable to file, cause to be effective or maintain the effectiveness of a Shelf Registration Statement as required under Section 2.1, the Holders' Representative shall have the right by delivering a written notice to the Company (a "Demand Notice") to require the Company to, pursuant to the terms of this Agreement, register under and in accordance with the provisions of the Securities Act the number of Registrable Securities Beneficially Owned by any Holders and requested by such Demand Notice to be so registered (a "Demand Registration"); provided, however, that if a Demand Notice is made in respect of a number of Registrable Securities that is less than all of the Registrable Securities Beneficially Owned by any Holders, then the sale of the Registrable Securities requested to be registered by the Holders' Representative must be reasonably expected to result in aggregate gross cash proceeds in excess of $50,000,000 (without regard to any underwriting discount or commission). A Demand Notice shall also specify the expected method or methods of disposition of the applicable Registrable Securities. Following receipt of a Demand Notice, the Company shall use its reasonable best efforts to file, as promptly as reasonably practicable, but not later than 45 days after receipt by the Company of such Demand Notice (subject to paragraph (d) of this Section 2.2), a Registration Statement relating to the offer and sale of the Registrable Securities requested to be included therein by the Holders thereof in accordance with the methods of distribution elected by such Holders (a "Demand Registration Statement") and shall use its reasonable best efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof.   (b)              If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter(s) of such underwritten offering advise the Holders in writing that it is their good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering, together with any Other Securities proposed to be included by holders thereof which are entitled to include securities in such Registration     6 --------------------------------------------------------------------------------     Statement, exceeds the total number or dollar amount of such securities that can be sold without having an adverse effect on the price, timing or distribution of the Registrable Securities to be so included together with all such Other Securities, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities and such Other Securities that in the opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated for inclusion as follows:   (i)      first, the Registrable Securities for which inclusion in such underwritten offering was requested by the Holders and any Other Securities proposed to be included by the Stockholders, pro rata (if applicable), based on the number of Registrable Securities Beneficially Owned by each such Holder and any Other Securities Beneficially Owned by each such Stockholder until all such securities have been allocated for inclusion; and   (ii)      second, among any other holders of Other Securities, pro rata, based on the number of Other Securities Beneficially Owned by each such holder of Other Securities.   (c)              In the event of a Demand Registration, the Company shall be required to maintain the continuous effectiveness of the applicable Registration Statement for a period of at least 180 days after the effective date thereof or such shorter period in which all Registrable Securities included in such Registration Statement have actually been sold.   (d)              The Company shall be entitled to postpone (but not more than twice in any 12-month period), for a reasonable period of time not in excess of 90 days, the filing or initial effectiveness of, or suspend the use of, a Demand Registration Statement if the Company delivers to the Holders' Representative a certificate signed by both the Chief Executive Officer and Chief Financial Officer of the Company certifying that, in the good faith judgment of the Board of Directors of the Company, such registration, offering or use would reasonably be expected to materially adversely affect or materially interfere with any bona fide material financing of the Company or any material transaction under consideration by the Company or would require the disclosure of information that has not been, and is not otherwise required to be, disclosed to the public, the premature disclosure of which would materially adversely affect the Company. Such certificate shall contain a statement of the reasons for such postponement or suspension and an approximation of the anticipated delay.   (e)              The Holders' Representative shall have the right to notify the Company that it has determined that the Registration Statement relating to a Demand Registration be abandoned or withdrawn, in which event the Company shall promptly abandon or withdraw such Registration Statement     7 --------------------------------------------------------------------------------     Section 2.3             Piggyback Registrations   (a)              If, other than pursuant to Section 2.1 and Section 2.2, the Company proposes or is required to file a registration statement under the Securities Act with respect to an offering of Common Stock or any other of the Company’s equity securities or securities convertible into or exchangeable or exercisable for any of the Company’s equity securities, whether for sale for its own account or for the account of another Person (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with any employee benefit or dividend reinvestment plan), then the Company shall give prompt written notice of such proposed filing at least 30 days before the anticipated filing date (the “Piggyback Notice”) to the Holders. The Piggyback Notice shall offer the Holder the opportunity to include in such registration statement the number of Registrable Securities (for purposes of this Section 2.3, “Registrable Securities” shall be deemed to mean solely securities of the same type and class as those proposed to be offered by the Company for its own account) as they may request (a “Piggyback Registration”). Subject to Section 2.3(b) hereof, the Company shall include in each such Piggyback Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after notice has been given to the Holders. The Holders shall be permitted to withdraw all or part of the Registrable Securities from a Piggyback Registration at any time at least 5 Business Days prior to the effective date of the Registration Statement relating to such Piggyback Registration.   (b)              If any of the securities to be registered pursuant to the registration giving rise to the Holders’ rights under this Section 2.3 are to be sold in an underwritten offering, the Holders shall be permitted to include all Registrable Securities requested to be included in such registration in such offering on the same terms and conditions as any other shares of Capital Stock, if any, of the Company included therein; provided, however, that if such offering involves a firm commitment underwritten offering and the managing underwriter(s) of such underwritten offering advise the Company in writing that it is their good faith opinion that the total amount of Registrable Securities requested to be so included, together with all Other Securities that the Company and any other Persons having rights to participate in such registration intend to include in such offering, exceeds the total number or dollar amount of such securities that can be sold without having an adverse effect on the price, timing or distribution of the Registrable Securities to be so included together with all Other Securities, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities and such Other Securities that in the opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated for inclusion as follows:   (i)      first, all Other Securities being sold by the Stockholders or by any Person (other than a Holder) exercising a contractual right to demand registration until all such Other Securities have been allocated for inclusion;   (ii)      second, all Registrable Securities requested to be included by the Holders and any Other Securities proposed to be included by     8 --------------------------------------------------------------------------------     the Stockholders (other than a Stockholder selling Other Securities under (i)Section 2.3(b)(i)), pro rata (if applicable), based on the number of Registrable Securities Beneficially Owned by each such Holder and any Other Securities Beneficially Owned by each such Stockholder until all such Registrable Securities have been allocated for inclusion; and   (iii)        third, among any other holders of Other Securities requesting such registration, pro rata, based on the number of Other Securities Beneficially Owned by each such holder of Other Securities.   Section 2.4             Shelf Take-Downs.  At any time that a Shelf Registration Statement covering Registrable Securities pursuant to Section 2.1, Section 2.2 or Section 2.3 is effective, if the Holders’ Representative delivers a notice to the Company (a “Shelf Take-Down Notice”) stating that one or more of the Holders intends to effect an underwritten offering of all or part of the Registrable Securities included by the Holders on the Shelf Registration Statement (a “Shelf Underwritten Offering”) or any other offering of such securities and stating the number of the Registrable Securities to be included in such Shelf Underwritten Offering or other offering, then the Company shall amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities and Other Securities, as the case may be, to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Other Securities by any other holders pursuant to this Section 2.4) or other offering. In connection with any Shelf Underwritten Offering, the Company shall also deliver the Shelf Take-Down Notice to all other holders whose securities are included on such Shelf Registration Statement and permit each holder to include its Other Securities included on the shelf registration statement in the Shelf Underwritten Offering if such other holder notifies the Proposing Holder and the Company within 5 Business Days after delivery of the Shelf Take-Down Notice to such other holder; and in the event that the managing underwriter(s) have informed the Company in writing that it is their good faith opinion that the total amount of Registrable Securities requested to be so included in such Shelf Underwritten Offering, together with all Other Securities that the Company and any other Persons having rights to participate in such Shelf Underwritten Offering exceeds the total number or dollar amount of such securities that can be included in such Shelf Underwritten Offering without having an adverse effect on the price, timing or distribution of the securities proposed to be included in such Shelf Underwritten Offering, then there shall be included in such Shelf Underwritten Offering the number or dollar amount of such securities that in the opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated (A) if the applicable Registration Statement was filed pursuant to Section 2.1, then in accordance with Section 2.1(d); and (B) if the applicable Shelf Registration Statement was filed pursuant to Section 2.3, then in accordance with Section 2.3(b).   Section 2.5             Lock-Up Agreements.   (a)              Each Holder agrees, in connection with any underwritten offering made pursuant to a Registration Statement filed pursuant to this Article II in which such Holder has elected to include Registrable Securities, or, solely as to the Stockholders, which underwritten offering is being effected by the Stockholders for their own account, if     9 --------------------------------------------------------------------------------     requested (pursuant to a written notice) by the managing underwriter(s) not to effect any public sale or distribution of any common equity securities of the Company (or securities convertible into or exchangeable or exercisable for such common equity securities) (except as part of such underwritten offering) during such period as the managing underwriter(s) shall advise is customary in underwritten offerings (not to exceed 180 days); provided, that the Holders shall only be so bound so long as and to the extent that any other stockholder having registration rights with respect to the securities of the Company is similarly bound.   Section 2.6             Registration Procedures.  If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Article II, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:   (a)              Prepare and file with the SEC a Registration Statement or Registration Statements on such form which shall be available for the sale of the Registrable Securities by the Holders or the Company in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective as provided (and subject to the exceptions set forth) herein; provided, however, that before filing a Registration Statement or Prospectus (including any Issuer Free Writing Prospectus related thereto) or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Selling Holders, their counsel and the managing underwriter(s), if any, copies of all such documents proposed to be filed and shall reasonably consider any comments thereto from the Selling Holders and their counsel.   (b)              Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement, and cause the related Prospectus to be supplemented by any Prospectus supplement or Issuer Free Writing Prospectus as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act.   (c)              Notify each Selling Holder and the managing underwriter(s), if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other Governmental Entity for amendments or supplements to a Registration Statement or related Prospectus or Issuer Free Writing Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the     10 --------------------------------------------------------------------------------     Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event, or the existence of any facts or circumstance, in each case that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference or any Issuer Free Writing Prospectus related thereto untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus, documents or Issuer Free Writing Prospectus so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of any Prospectus or Issuer Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.   (d)              Use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the reasonably earliest practical date.   (e)              If requested by the managing underwriter(s), if any, or the Holders of a majority of the Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement, post-effective amendment or Issuer Free Writing Prospectus such information as the managing underwriter(s), if any, or such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such Prospectus supplement, such post-effective amendment or Issuer Free Writing Prospectus as soon as practicable after the Company has received such request.   (f)               Furnish or make available to each Selling Holder, and each managing underwriter, if any, without charge, such number of conformed copies of the Registration Statement and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits, unless requested in writing by such Holder, counsel or managing underwriter(s)), and such other documents, as such Holders or such managing underwriter(s) may reasonably request, and upon request a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other Governmental Entity relating to such offering.   (g)              Deliver to each Selling Holder, and the managing underwriter(s), if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus and any Issuer Free Writing Prospectus related to any such Prospectuses) and each amendment or supplement thereto as such Persons may reasonably request in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 2.6, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the Selling Holders and the managing     11 --------------------------------------------------------------------------------     underwriter(s), if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto.   (h)              Prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the Selling Holders, the managing underwriter(s), if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions within the United States as any seller or managing underwriter(s) reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such Selling Holders to consummate the disposition of such Registrable Securities in such jurisdiction; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject.   (i)               Cooperate with the Selling Holders and the managing underwriter(s), if any, to facilitate the preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Selling Holder that the Registrable Securities represented by the certificates so delivered by such Selling Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriter(s), if any, or the Selling Holders may request at least 2 Business Days prior to any sale of Registrable Securities.   (j)               Upon the occurrence of any event contemplated by Section 2.6(c)(ii), (c)(iii), (c)(iv) or (c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference or an Issuer Free Writing Prospectus related thereto, or file any other required document so that, as thereafter delivered to the Selling Holders, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.   (k)              Use its reasonable best efforts to cause all shares of Registrable Securities covered by such Registration Statement to be authorized to be listed on each national securities exchange, if any, on which similar securities issued by the Company are then listed.   (l)               Enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the disposition of such Registrable Securities, and in connection     12 --------------------------------------------------------------------------------     therewith, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Selling Holders and the managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the Selling Holders of such Registrable Securities customary opinions of counsel to the Company and updates thereof, addressed to each of the managing underwriter(s), if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and managing underwriter(s), (iii) use its reasonable best efforts to obtain “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 2.7 hereof with respect to all parties to be indemnified pursuant to said Section except as otherwise agreed by the Holders of a majority of the Registrable Securities being sold in connection therewith and the managing underwriter(s) and (v) deliver such documents and certificates as may be reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.   (m)             Upon execution of a customary confidentiality agreement, make available for inspection by a representative of the Selling Holders, the managing underwriter(s), if any, and any attorneys or accountants retained by such Selling Holders or managing underwriter(s), at the offices where normally kept, during reasonable business hours, financial and other records, pertinent corporate documents and properties of the Company and its Subsidiaries, and cause the officers, directors and employees of the Company and its Subsidiaries to supply all information in each case reasonably requested by any such representative, managing underwriter(s), attorney or accountant in connection with such Registration Statement.   (n)              Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC and any applicable national securities exchange, and make available to its security holders, as soon as reasonably practicable (but not more than 18 months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act.   The Company may require each Selling Holder to furnish to the Company in writing such information required in connection with such registration regarding such Selling Holder and     13 --------------------------------------------------------------------------------   the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of any Selling Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.   Each Selling Holder agrees that, upon receipt of any notice from the Company of (x) the happening of any event of the kind described in Section 2.6(c)(ii), (c)(iii), (c)(iv) or (c)(v) hereof, or (y) that the Company is suspending use of a Registration Statement as permitted by Section 2 hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 2.6(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, in the case of (y) above that the Company shall extend the time periods under Section 2.2 and 2.3 with respect to the length of time that the effectiveness of a Registration Statement must be maintained by the amount of time the Holder is required to discontinue disposition of such securities.   Section 2.7             Indemnification.   (a)              Indemnification by the Company. The Company shall indemnify and hold harmless, to the fullest extent permitted by Law, each Selling Holder whose Registrable Securities are covered by a Registration Statement or Prospectus, the officers, directors and employees of each of them, each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) each such Selling Holder and the officers, directors and employees of each such controlling person, each underwriter (including any Holder that is deemed to be an underwriter pursuant to any SEC comments or policies), if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively, “Holder Indemnitees”), from and against any and all losses, claims, damages, liabilities, expenses (including, without limitation, costs of preparation and reasonable attorneys’ fees and any other reasonable fees or expenses incurred by such party in connection with any investigation or Action), judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon any untrue statement (or alleged untrue statement) of a material fact contained in any applicable Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto) or any amendment of or supplement to any of the foregoing or other document incident to any such registration, qualification, or compliance, or based on any omission (or alleged omission) to state therein (in the case of a final or preliminary Prospectus, in light of the circumstances under which they were made) a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that the Company will not be liable to a Selling Holder or underwriter in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission by such Selling Holder or underwriter, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto),     14 --------------------------------------------------------------------------------     offering circular, amendment of or supplement to any of the foregoing or other document in reliance upon and in conformity with written information furnished to the Company by such Selling Holder or underwriter specifically for inclusion in such document. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder Indemnitee or any other Holder and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability that the Company may otherwise have to each Holder Indemnitee.   (b)              Indemnification by Selling Holders. In connection with any Registration Statement in which a Selling Holder is participating by registering Registrable Securities, such Selling Holder shall furnish to the Company in writing such information as the Company reasonably requests specifically for use in connection with any Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the fullest extent permitted by Law, severally and not jointly, the Company, the officers, directors and employees of the Company, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, and each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively, “Company Indemnitees”), from and against all Losses, as incurred, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto) or any other offering circular or any amendment of or supplement to any of the foregoing or any other document incident to such registration, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a final or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case solely to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto), offering circular, or any amendment of or supplement to any of the foregoing or other document in reliance upon and in conformity with written information furnished to the Company by such Selling Holder expressly for inclusion in such document; and provided, however, that the liability of each Selling Holder hereunder shall be limited to the net proceeds received by such Selling Holder from the sale of Registrable Securities covered by such Registration Statement.   (c)              Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnity hereunder (an “indemnified party”), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the “indemnifying party”) of any claim or of the commencement of any Action with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been actually prejudiced by such delay or failure. The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or Action, to assume, at the indemnifying party’s expense, the defense of any such Action, with counsel reasonably     15 --------------------------------------------------------------------------------     satisfactory to such indemnified party; provided, however, that an indemnified party shall have the right to employ separate counsel in any such Action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless: (i) the indemnifying party agrees to pay such fees and expenses; (ii) the indemnifying party fails promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such Action or fails to employ counsel reasonably satisfactory to such indemnified party, in which case the indemnified party shall also have the right to employ counsel and to assume the defense of such Action; or (iii) in the indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such Action; provided, further, however, that the indemnifying party shall not, in connection with any one such Action or separate but substantially similar or related Actions in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the indemnifying party, such indemnified party will not be subject to any liability for any settlement made without its consent. The indemnifying party shall not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation.   (d)              Contribution.   (i)      If the indemnification provided for in this Section 2.7 is unavailable to an indemnified party in respect of any Losses (other than in accordance with its terms), then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.   (ii)      The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.7(d) 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 the immediately preceding paragraph. Notwithstanding anything to the contrary contained in this Section 2.7(d), an indemnifying party that is a Selling Holder shall not be required to contribute any amount in excess of the amount by which the net proceeds from the sale of the     16 --------------------------------------------------------------------------------     Registrable Securities sold by such indemnifying party exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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.   Section 2.8             Rule 144; Rule 144A.  The Company covenants that it will file the reports required to be filed by it under the Exchange Act (or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long as necessary to permit sales pursuant to Rule 144 or 144A under the Securities Act), and at any time it is not registered under the Exchange Act, it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 or 144A under the Securities Act, as such Rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.   Section 2.9             Underwritten Registrations.   (a)              No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell the Registrable Securities or Other Securities it desires to have covered by the registration on the basis provided in any underwriting arrangements in customary form and (ii) completes and executes all reasonable and customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.   Section 2.10           Registration Expenses.   The Company shall pay all fees and expenses incident to the performance of or compliance with its obligations under this Article II, including (i) all registration and filing fees (including fees and expenses (A) with respect to filings required to be made with all applicable securities exchanges and/or the Financial Industry Regulatory Authority and (B) of compliance with securities or Blue Sky laws including any fees and disbursements of counsel for the underwriter(s) in connection with Blue Sky qualifications of the Registrable Securities pursuant to Section 2.6(h)), (ii) printing expenses (including expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriter(s), if any), (iii) messenger, telephone and delivery expenses of the Company, (iv) fees and disbursements of counsel for the Company, (v) expenses of the Company incurred in connection with any road show, (vi) fees and disbursements of all independent certified public accountants (including, without limitation, the expenses of any “cold comfort” letters required by this Agreement) and any other persons, including special experts retained by the Company, and (vii) the reasonable fees and disbursements of one counsel for the Selling Holders as a group (such counsel to be selected by the Company) in connection with transactions covered by this Agreement in which the Selling Holders participate. For the avoidance of doubt, the Company shall not pay any other expenses of Selling Holders or underwriting commissions attributable to securities sold by any Selling Holder in an underwritten offering. In addition, the Company shall bear all of its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and     17 --------------------------------------------------------------------------------   expenses incurred in connection with the listing of the securities to be registered on any securities exchange on which similar securities issued by the Company are then listed and rating agency fees and the fees and expenses of any Person, including special experts, retained by the Company.   ARTICLE III MISCELLANEOUS   Section 3.1             Termination.  This Agreement shall terminate upon the later of the expiration of the Shelf Period and such time as there are no Registrable Securities, except for the provisions of Section 2.7, 2.8, 2.10 and this Article III, which shall survive such termination.   Section 3.2             Amendment and Waiver.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Company and Purchaser (or, in the case of an amendment at any time when Purchaser is not the sole Holder, signed on behalf of each of (i) the Company and (ii) the Holders of a majority of the aggregate number of Registrable Securities then held by all Holders). Any party hereto may waive any right of such party hereunder only by an instrument in writing signed by such party and delivered to the other parties (or, in the case of a waiver of any rights of the Holders at any time when Purchaser is not the sole Holder, by an instrument in writing signed by the Holders of a majority of the aggregate number of Registrable Securities then held by all Holders and delivered to the Company and the Holders’ Representative). The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.   Section 3.3             Severability.  If any provision of this Agreement shall be declared by any court of competent jurisdiction to be illegal, void or unenforceable, all other provisions of this Agreement shall not be affected and shall remain in full force and effect.   Section 3.4             Entire Agreement.  Except as otherwise expressly set forth herein, this Agreement and the Purchase Agreement, together with the several agreements and other documents and instruments referred to herein or therein or annexed hereto or thereto, embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, that may have related to the subject matter hereof in any way.   Section 3.5             Successors and Assigns.  Neither this Agreement nor any right or obligation hereunder is assignable in whole or in part by any party without the prior written consent of the other party hereto, provided that Purchaser may transfer its rights and obligations hereunder (in whole or in part) to any Transferee (and any Transferee may transfer such rights and obligations to any subsequent Transferee) without the prior written consent of the Company. Any such assignment shall be effective upon receipt by the Company of (x) written notice from the transferring Holder stating the name and address of any Transferee and identifying the number of shares of Registrable Securities with respect to which the rights under this Agreement are being transferred and the nature of the rights so transferred and (y) a written agreement in substantially the form attached as Exhibit A hereto from such Transferee to be bound by the applicable terms of this Agreement.     18 --------------------------------------------------------------------------------   Section 3.6             Counterparts; Execution by Facsimile Signature. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature(s).   Section 3.7             Remedies.   (a)              Each party hereto acknowledges that monetary damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement is not performed in accordance with its terms, and it is therefore agreed that, in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach or threatened breach and enforcing specifically the terms and provisions hereof. Each party hereto agrees not to oppose the granting of such relief in the event a court determines that such a breach has occurred, and to waive any requirement for the securing or posting of any bond in connection with such remedy.   (b)              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 or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.   Section 3.8             Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next Business Day or (iii) one Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the addresses set forth below or such other address or facsimile number as a party may from time to time specify by notice to the other parties hereto:   If to the Company:    Colfax Corporation 8170 Maple Lawn Blvd, Suite 180 Fulton, MD 20759 Attention: A. Lynne Puckett         Fax: (818) 225-4055    with a copy (which shall not constitute notice) to:        Skadden, Arps, Slate, Meagher & Flom (UK) LLP      40 Bank Street      London E14 5DS      United Kingdom       19 --------------------------------------------------------------------------------         Attention:     Scott V. Simpson      James A. McDonald      Fax: +44 20 7072 7183    If to Purchaser:    2200 Pennsylvania Avenue NW Suite 800W Washington DC 20037 Attention: Michael G. Ryan   With a copy to:   DLA Piper LLP (US) 6225 Smith Avenue Baltimore, Maryland 21209 Attention:  Jason C. Harmon, Esq.       Section 3.9             Governing Law; Consent to Jurisdiction.   (a)              This Agreement shall be governed by the laws of the State of New York.   (b)              Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Federal or state court located in the Borough of Manhattan in the City of New York, New York in the event any dispute arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement in any court other than a Federal or state court located in the Borough of Manhattan in the City of New York, New York.   (c)              Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury in any legal action or proceeding in relation to this Agreement and for any counterclaim therein.       [Signature page follows.]     20 --------------------------------------------------------------------------------           IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first written above.   COLFAX CORPORATION       By: /s/ C.S. Brannan____________________  Name: C. Scott Brannan  Title:   SVP, CFO and Treasurer       MITCHELL P. RALES      _/s/Mitchell P. Rales____________________         21 --------------------------------------------------------------------------------   EXHIBIT A   JOINDER   By execution of this Joinder, the undersigned agrees to become a party to that certain Registration Rights Agreement, dated as of January 24, 2012 (the “Agreement”), between Colfax Corporation and Mitchell P. Rales. By execution of this Joinder, the undersigned shall have all the rights and shall observe all the obligations of a Holder (as defined in the Agreement) contained in the Agreement.   Name: _______________________  ___          Address for Notices:  __________________________  __________________________  __________________________  __________________________  __________________________    With Copies to:  __________________________  __________________________  __________________________  __________________________  __________________________        Signature: _____________________________   _      Date: __________________________________
Exhibit 10.31 Accretive Health, Inc. Restricted Stock Award Agreement GENERAL TERMS AND CONDITIONS This Restricted Stock Award is granted to the Participant on a stand-alone basis, outside the Accretive Health, Inc. 2010 Stock Incentive Plan (the “Plan”), as a material inducement for the Participant to accept the position of Chief Executive Officer of the Company and enter into the Offer Letter Agreement with the Company dated July 10, 2014 (the “Offer Letter Agreement”). Notwithstanding the foregoing, it is intended that all of the terms and conditions of the Plan that would otherwise have been applicable to this Restricted Stock Award had this Restricted Stock Award been granted under the Plan (except as otherwise expressly provided herein) be applicable to this Restricted Stock Award, and accordingly, references to the Plan are made herein for such purpose and those terms are incorporated herein by reference. The Plan is attached as Exhibit 10.23 to Amendment No. 4 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on April 26, 2010. For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows: 1. Issuance of Restricted Shares. (a) In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to the Participant on July 21, 2014 (the “Grant Date”), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (this “Agreement”) and the Plan, an award of 1,000,000 restricted shares of common stock, $0.01 par value per share, of the Company (the “Restricted Stock”). (b) The Restricted Stock will initially be issued by the Company in book entry form only, in the name of the Participant. Following the vesting of any Restricted Stock pursuant to Section 2 below, the Company shall, if requested by the Participant, issue and deliver to the Participant a certificate representing the vested shares of Restricted Stock. The Participant agrees that the Restricted Stock shall be subject to the forfeiture provisions set forth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement. 2. Vesting. (a) General. Except as provided in Sections 2(b) and 2(c) hereof, so long as the Participant is employed by the Company, this award shall become vested as follows: (i) Fifty percent (50%) of this award shall become vested in four (4) equal annual installments on each of the first, second, third and fourth anniversaries of the Grant Date, and thus shall become fully vested as to all such shares of Restricted Stock no later than the fourth anniversary of the Grant Date, subject to the Participant’s continued employment with the Company on each applicable vesting date (the “Time Vesting Tranche”).   -------------------------------------------------------------------------------- (ii) Fifty percent (50%) of this award shall become vested upon achievement of the “Stock Price Goal” (as defined below), subject to the Participant’s continued employment with the Company as of the date on which the Stock Price Goal is achieved (the “Performance Vesting Tranche”). For purposes of the Performance Vesting Tranche, the “Stock Price Goal” shall mean a Fair Market Value of a share of the Company’s common stock equal to at least two (2) times the Fair Market Value of a share of the Company’s common stock on the Grant Date, subject to the provisos in each of Section 2(b)(iii) hereof and Section 2(c)(ii) hereof. The Stock Price Goal shall be measured based on the average per share closing price of a share of the Company’s common stock as reported on the New York Stock Exchange (or if not then traded on such exchange, on the principal national securities exchange in the United States on which it is then traded), and must be equaled or exceeded for at least twenty (20) consecutive trading days based on the average closing price for such twenty (20)-consecutive trading day period. Any fractional shares resulting from the application of the vesting provisions contained in this Section 2 shall be rounded down to the nearest whole number of shares. (b) Termination Without Cause or For Good Reason. Notwithstanding the provisions of Section 2(a) hereof, in the event of the Participant’s termination of employment by the Company without “Cause” or by the Participant for “Good Reason” (each, as defined in the Offer Letter Agreement), the unvested portion of the Time Vesting Tranche and the Performance Vesting Tranche shall become vested as of the date of such termination as follows, subject to the otherwise applicable provisions hereof: (i) a pro rata portion of the Time Vesting Tranche shall become vested determined by multiplying the number of shares of Restricted Stock subject to the Time Vesting Tranche that would have become vested on the anniversary of the Grant Date immediately following the date of such termination had such termination not occurred, by a fraction, the numerator of which is the number of days in which the Participant was employed by the Company for the period beginning on the anniversary of the Grant Date immediately preceding the date of such termination (or the Grant Date, if such termination occurs prior to the first anniversary of the Grant Date) and ending on the date of such termination, and the denominator of which is 365; plus (ii) an additional portion of the Time Vesting Tranche shall become vested with respect to 25% of the shares of Restricted Stock subject to the Time Vesting Tranche; and (iii) with regard to the Performance Vesting Tranche, to the extent that the Stock Price Goal has not previously been achieved as of the date of such termination, the Stock Price Goal shall be measured as of the date of such termination in accordance with Section 2(a)(ii) hereof, and the Performance Vesting Tranche either shall become fully vested upon the occurrence of such termination if the Stock Price Goal is achieved, or shall be immediately forfeited upon the occurrence of such termination if the Stock Price Goal is not so achieved; provided that, for purposes of measuring the achievement of the Stock Price Goal as of the date of such termination, if such termination occurs prior to the second anniversary of the Grant Date, the two (2) times multiple contained in the definition of the term “Stock Price Goal” set forth in Section 2(a)(ii) hereof shall be replaced with one of the following multiples, as applicable: (A) if -------------------------------------------------------------------------------- such termination occurs prior to the first anniversary of the Grant Date, then the applicable multiple shall be one and one-half (1.5) times; or (B) if such termination occurs on or following the first anniversary of the Grant Date but prior to the second anniversary of the Grant Date, then the applicable multiple shall be one and three-quarters (1.75) times. (c) Change in Control. (i) Notwithstanding the provisions of Sections 2(a)(i), 2(b)(i) and 2(b)(ii) hereof, in the event of the Participant’s termination of employment by the Company without Cause or by the Participant for Good Reason, in either case, upon or within two (2) years following the occurrence of a “Change in Control” (as defined below), any unvested portion of the Time Vesting Tranche outstanding at the time of such termination shall become vested as of the date of such termination, subject to the otherwise applicable provisions hereof. (ii) Notwithstanding the provisions of Sections 2(a)(ii) and 2(b)(iii) hereof, with regard to the Performance Vesting Tranche, upon the occurrence of the first Change in Control to occur following the date hereof and while the Participant remains in the continued employment of the Company, to the extent that the Stock Price Goal has not previously been achieved, the Stock Price Goal shall be measured as of the date of such Change in Control based on the highest price per share to be paid for the Company’s common stock in the Change in Control (the “Change in Control Price”), and the Performance Vesting Tranche either shall become fully vested upon the occurrence of such Change in Control if the Stock Price Goal is achieved based on the Change in Control Price, or shall be immediately forfeited upon the occurrence of such Change in Control if the Stock Price Goal is not so achieved based on the Change in Control Price; provided that, for purposes of measuring the achievement of the Stock Price Goal as of the date of such Change in Control based on the Change in Control Price, if such Change in Control occurs prior to the second anniversary of the Grant Date, the two (2) times multiple contained in the definition of the term “Stock Price Goal” set forth in Section 2(a)(ii) hereof shall be replaced with one of the following multiples, as applicable: (A) if such Change in Control occurs prior to the first anniversary of the Grant Date, then the applicable multiple shall be one and one-half (1.5) times; or (B) if such termination occurs on or following the first anniversary of the Grant Date but prior to the second anniversary of the Grant Date, then the applicable multiple shall be one and three-quarters (1.75) times. For purposes hereof, the term “Change in Control” means: (i) any “person”, as such term is used as of the Grant Date in Section 13(d) of the Securities Exchange Act of 1934, as amended, or group of persons, becomes (directly or indirectly) a “beneficial owner”, as such term is used as of the Grant Date in Rule 13d-3 promulgated under that Securities Exchange Act of 1934, as amended, of a percentage of the outstanding voting securities of the Company (measured either by number of outstanding voting securities or by voting power) equal to at least fifty percent (50%) of the outstanding voting securities of the Company; (ii) a majority of the members of the Board of Directors of the Company consists of individuals other than “Incumbent Directors,” which term means the members of such Board of Directors on the Grant Date; provided that any individual becoming a director subsequent to such date whose election or nomination for election was supported (other than in connection with any actual or threatened proxy contest) by two-thirds of the directors who then comprised the Incumbent Directors will be -------------------------------------------------------------------------------- considered to be an Incumbent Director; or (iii) (A) the Company combines with another entity and is the surviving entity, or (B) all or substantially all of the assets or business of the Company is disposed of pursuant to a sale, merger, consolidation, liquidation, dissolution or other transaction or series of transactions (collectively, a “Triggering Event”), unless the holders of the Company’s outstanding voting securities immediately prior to such Triggering Event own, directly or indirectly, by reason of their ownership of the Company’s outstanding voting securities immediately prior to such Triggering Event, more than fifty percent (50%) of the outstanding voting securities (measured both by number of outstanding voting securities and by voting power) of (x) in the case of a combination in which the Company is the surviving entity, the surviving entity, and (y) in any other case, the entity (if any) that succeeds to substantially all of the Company’s business and assets. 3. Forfeiture of Unvested Restricted Stock Upon Cessation of Service. Except as otherwise expressly provided in Section 2 hereof, in the event that the Participant ceases to perform services to the Company for any reason or no reason, with or without cause, all of the shares of Restricted Stock that are unvested as of the time of such cessation shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation. The Participant shall have no further rights with respect to any shares of Restricted Stock that are so forfeited. If the Participant provides services to a subsidiary of the Company, any references in this Agreement to provision of services to the Company shall instead be deemed to refer to service with such subsidiary. 4. Restrictions on Transfer. The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any shares of Restricted Stock, or any interest therein, until such shares of Restricted Stock have vested, except that the Participant may transfer such shares of Restricted Stock: (a) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Compensation Committee (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives, provided that such Restricted Stock shall remain subject to this Agreement (including, without limitation, the forfeiture provisions set forth in Section 3 hereof and the restrictions on transfer set forth in this Section 4) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement; or (b) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation). The Company shall not be required (i) to transfer on its books any of the shares of Restricted Stock which have been transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Restricted Stock or to pay dividends to any transferee to whom such shares of Restricted Stock have been transferred in violation of any of the provisions of this Agreement. -------------------------------------------------------------------------------- 5. Restrictive Legends. The book entry account reflecting the issuance of the shares of Restricted Stock in the name of the Participant shall bear a legend or other notation upon substantially the following terms: “These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Award Agreement between the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.” 6. Rights as a Shareholder. Except as otherwise provided in this Agreement, for so long as the Participant is the registered owner of the Restricted Stock, the Participant shall have all rights as a shareholder with respect to the Restricted Stock, whether vested or unvested, including, without limitation, rights to vote the Restricted Stock and act in respect of the Restricted Stock at any meeting of shareholders; provided, however, that the payment of dividends on unvested Restricted Stock shall be deferred until after such shares vest and shall be paid to the Participant within thirty (30) days following the applicable vesting date of such shares of Restricted Stock. 7. Provisions of the Plan. This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement. 8. Tax Matters. (a) Acknowledgments; Section 83(b) Election. The Participant acknowledges that he is responsible for obtaining the advice of the Participant’s own tax advisors with respect to the acquisition of the Restricted Stock and the Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents with respect to the tax consequences relating to the Restricted Stock. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of the Restricted Stock. The Participant acknowledges that he has been informed of the availability of making an election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Stock and that the Participant has decided not to file a Section 83(b) election. (b) Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the shares of Restricted Stock. On each date on which shares of Restricted Stock vest, the Company shall deliver written notice to the Participant of the amount of withholding taxes due with respect to the vesting of the shares of Restricted Stock that vest on such date; provided, however, that the total tax withholding cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). The Participant shall -------------------------------------------------------------------------------- satisfy such tax withholding obligations by transferring to the Company, on each date on which shares of Restricted Stock vest under this Agreement, such number of shares of Restricted Stock that vest on such date as have a fair market value (calculated using the last reported sale price of the common stock of the Company on the New York Stock Exchange (or if not then traded on such exchange, on the principal national securities exchange in the United States on which it is then traded) on the trading date immediately prior to such vesting date) equal to the amount of the Company’s tax withholding obligation in connection with the vesting of such Restricted Stock (such withholding method a “Surrender”) unless, prior to any vesting date, the Compensation Committee determines that a Surrender shall not be available to the Participant, in which case, the Participant shall be required to satisfy his tax obligations hereunder in a manner permitted by the Plan upon the vesting date. 9. Restrictive Covenants. (a) General. This award represents a substantial economic benefit to the Participant. The Participant, by virtue of such Participant’s role with the Company, has access to, and is involved in the formulation of, certain confidential and secret information of the Company regarding its operations and each Participant could materially harm the business of the Company by competing with the Company or soliciting employees or customers of the Company. (b) Non-Solicitation. During the time in which Participant performs services for the Company and for a period of twenty-four (24) months after the Participant ceases to perform services for the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with any person, firm, association, company or corporation: (i) Hire, recruit, solicit or otherwise attempt to employ or retain or enter into any business relationship with, any person who is or was an employee of the Company within the twelve (12)-month period immediately preceding the cessation of Participant’s service with the Company; or (ii) Solicit the sale of any products or services that are similar to or competitive with products or services offered by, manufactured by, designed by, or distributed by the Company, to any person, company or entity which was or is a customer or potential customer of the Company for such products or services. (iii) For the avoidance of doubt, the Participant shall not be considered to have solicited away any business or customer of the Company if that business or customer contacts the Participant without any solicitation by the Participant or any other person who is acting in concert with, or at the direction of, the Participant. Further, for the avoidance of doubt, the Participant shall not be considered to have solicited, diverted or taken away any employee of the Company if that employee contacts the Participant without any solicitation by the Participant or any other person who is acting in concert with, or at the direction of, the Participant, it being the parties’ intention that the Participant will not be prohibited from accepting solicitations from any employee when neither the Participant nor any other person acting in concert with, or at the direction of, the Participant contacted or otherwise solicited the employee, provided that the foregoing shall in no way limit the application of the restriction on hiring employees contemplated by Section 9(b)(i) hereof. -------------------------------------------------------------------------------- (c) Non-Disclosure. (i) Participant will not, without the Company’s prior written permission, directly or indirectly, utilize for any purpose other than for a legitimate business purpose solely on behalf of the Company, or directly or indirectly, disclose to anyone outside of the Company, either during or after Participant’s relationship with the Company ends, the Company’s Confidential Information, as long as such matters remain Confidential Information. (ii) This Agreement shall not prevent Participant from revealing evidence of criminal wrongdoing to law enforcement or prohibit Participant from divulging the Company’s Confidential Information by order of a court or agency of competent jurisdiction. However, Participant shall promptly inform the Company of any such situations and shall take such reasonable steps to prevent disclosure of the Company’s Confidential Information until the Company has been informed of such requested disclosure and the Company has had an opportunity to respond to the court or agency. (d) Return of Company Property. Participant agrees that, in the event that Participant’s service to the Company is terminated for any reason, Participant shall immediately return all of the Company’s property, including, without limitation, (i) tools, pagers, computers, printers, key cards, documents or other tangible property of the Company, and (ii) the Company’s Confidential Information in any media, including paper or electronic form, and Participant shall not retain in Participant’s possession any copies of such information. (e) Ownership of Software and Inventions. All discoveries, designs, improvements, ideas, inventions, software, whether patentable or copyrightable or not, shall be works-made-for-hire and the Company shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, with the rights to use the same in perpetuity in any manner the Company determines in its sole discretion without any further payment after the term of this Agreement to Participant whatsoever. If, for any reason, any of such results and proceeds which relate to the business shall not legally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Participant hereby irrevocably assigns and agrees to quitclaim any and all of Participant’s right, title and interest thereto including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed to the Company, and the Company shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines without any further payment to Participant whatsoever. Participant shall, from time to time, as may be reasonably requested by the Company, at the Company’s expense, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent Participant has any rights in the results and proceeds of Participant’s services that cannot be assigned in the manner described above, Participant unconditionally and irrevocably waives the enforcement of such rights. Notwithstanding anything to the contrary set forth herein, works developed by the Participant (i) which are developed independently from the work developed for the Company regardless of whether such work was developed before or after the Participant performed services for the Company; or (ii) applications independently developed which are -------------------------------------------------------------------------------- unrelated to the business and which Participant develops during non-business hours using non-business property shall not be deemed work for hire and shall not be the exclusive property of the Company. (f) Non-Competition. (i) During the time in which Participant performs services for the Company and for a period of twenty-four (24) months after the cessation of Participant’s service to the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with any person, firm, association, company or corporation, within the Restricted Area, own, manage, operate, or participate in the ownership, management, operation, or control of, or be employed by or provide services to, a “Competing Business”. For the purposes of this Agreement, the term “Competing Business” shall mean any entity or business: (1) engaged in the business of offering finance-related services to health care systems and hospitals, including, but not limited to, the collection of medical debt, hospital billings and revenue management; or (2) engaged in any other business or activity in which the Company has been engaged prior to the date hereof or in which the Company is engaged during the term of the Participant’s employment. (ii) Notwithstanding anything to the contrary, nothing in this paragraph (f) prohibits Participant from being a passive owner of not more than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded, so long as Participant has no active participation in the business of such corporation. (g) Acknowledgments. The Participant acknowledges and agrees that the restrictions contained in this Agreement with respect to time, geographical area and scope of activity are reasonable and do not impose a greater restraint than is necessary to protect the goodwill and other legitimate business interests of the Company and that the Participant has had the opportunity to review the provisions of this Agreement with his legal counsel. (h) Enforcement. The Participant agrees that the restrictions contained in this Agreement are necessary for the protection of the business, the Confidential Information, customer relationships and goodwill of the Company and are considered by the Participant to be reasonable for that purpose and that the scope of restricted activities, the geographic scope and the duration of the restrictions set forth in this Agreement are considered by the Participant to be reasonable. The Participant further agrees that any breach of any of the restrictive covenants in this Agreement would cause the Company substantial, continuing and irrevocable harm for which money damages would be inadequate and therefore, in the event of any such breach or any threatened breach, in addition to such other remedies as may be available, the Company shall be entitled to specific performance and injunctive relief. This Agreement shall not in any way limit the remedies in law or equity otherwise available to the Company or its Affiliates. The Participant further agrees that to the extent any provision or portion of the restrictive covenants of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law. Without limitation to any other remedies available hereunder or at law, in the event of any breach of any of the restrictive -------------------------------------------------------------------------------- covenants in this Agreement by the Participant, the Participant agrees that any vested shares of Restricted Stock issued by the Company to the Participant pursuant to this Agreement shall be forfeited for no consideration. In the event that the Participant sold the shares issued to the Participant pursuant to this Agreement, then the Participant shall be required to pay to the Company in cash, within thirty (30) days of a request by the Company for such payment, the price at which the Participant sold the Shares. (i) Severability; Modification. It is expressly agreed by Participant that: (i) Modification. If, at the time of enforcement of this Agreement, a court holds that the duration, geographical area or scope of activity restrictions stated herein are unreasonable under circumstances then existing or impose a greater restraint than is necessary to protect the goodwill and other business interests of the Company, Participant agrees that the maximum duration, scope or area reasonable under such circumstances will be substituted for the stated duration, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum duration, scope and area permitted by law, in all cases giving effect to the intent of the parties that the restrictions contained herein be given effect to the broadest extent possible. (ii) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, such invalidity, illegality or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein. (iii) Non-Disparagement. Participant understands and agrees that Participant will not disparage the Company, its officers, directors, administrators, representatives, employees, contractors, consultants or customers and will not engage in any communications or other conduct which might interfere with the relationship between the Company and its current, former, or prospective employees, contractors, consultants, customers, suppliers, regulatory entities, and/or any other persons or entities. (j) Definitions. (i) Affiliate. “Affiliate” means any entity controlling or controlled by or under common control with the Company or another Affiliate, at the time of execution of the Agreement and any time thereafter, where “control” is defined as the ownership of at least fifty percent (50%) of the equity or beneficial interest of such entity, and any other entity with respect to which the Company has significant management or operational responsibility (even though the Company may own less than fifty percent (50%) of the equity of such entity). (ii) Confidential Information. “Confidential Information” as used in this Agreement shall include the Company’s trade secrets as defined under Illinois law, as well as any other information or material which is not generally known to the public, and which: -------------------------------------------------------------------------------- a) is generated, collected by or utilized in the operations of the Company’s business and relates to the actual or anticipated business, research or development of the Company; or b) is suggested by or results from any task assigned to Participant by the Company or work performed by Participant for or on behalf of the Company. Confidential Information shall not be considered generally known to the public if Participant or others improperly reveal such information to the public without the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company. Examples of Confidential Information include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, product designs, technical know-how, engineering data, pricing and cost information, research and development work, software, business plans, proprietary data, projections, market research, perceptual studies, strategic plans, marketing information, financial information (including financial statements), sales information, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to the Company, whether or not it is in tangible form, and including, without limitation, any of the foregoing contained or described on paper or in computer software or other storage devices, as the same may exist from time to time. (iii) Restricted Area. For purposes of this Agreement, the term “Restricted Area” shall mean the United States of America. 10. Miscellaneous. (a) Authority of Compensation Committee. In making any decisions or taking any actions with respect to the matters covered by this Agreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in the Plan. All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretion and shall be final and binding on the Participant. (b) No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of the Restricted Stock is contingent upon his continued service to the Company, this Agreement does not constitute an express or implied promise of continued service relationship with the Participant or confer upon the Participant any rights with respect to a continued service relationship with the Company. (c) Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws provisions. (d) Exclusive Jurisdiction/Venue. All disputes that arise from or relate to this Agreement shall be decided exclusively by binding arbitration in Cook County, Illinois under the Commercial Arbitration Rules of the American Arbitration Association. The parties agree that the arbitrator’s award shall be final, and may be filed with and enforced as a final judgment by any court of competent jurisdiction. Notwithstanding the foregoing, any disputes related to the enforcement of the restrictive covenants contained in Section 9 of this Agreement shall be subject to and determined under Delaware law and adjudicated in Illinois courts. -------------------------------------------------------------------------------- (e) Participant Representations. The Participant hereby acknowledges, represents and warrants the following: (a) the Participant is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, and is an experienced and sophisticated investor and has such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of an investment in the Company, (b) the Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended, and may be subject to the limitations of Rule 144, (c) the Participant has no intention of offering or selling any of the shares of Restricted Stock issued hereunder in a transaction that would violate the Securities Act of 1933, as amended, or the securities laws of any state of the United States of America or any other applicable jurisdiction, (d) the Participant has been furnished with, and has had access to, such information as the Participant considers necessary or appropriate for deciding whether to accept the grant of the shares of Restricted Stock hereunder, and the Participant has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of such shares of Restricted Stock, and (e) the Participant is able, without impairing the Participant’s financial condition, to hold the shares of Restricted Stock to be issued hereunder for an indefinite period and to suffer a complete loss of the Participant’s investment in such shares of Restricted Stock. I hereby acknowledge that I have read this Agreement, have received and read the Plan, and understand and agree to comply with the terms and conditions of this Agreement and the Plan.   PARTICIPANT ACCEPTANCE   Dated: July 21, 2014   /s/ Emad Rizk   Emad Rizk
Exhibit 10.1 (NORTHWEST BIOTHERAPEUTICS LOGO) [c71278c7127801.gif]           Northwest   t (425) 608-3008   www.nwbio.com Biotherapeutics, Inc.   (800)-519-0755   OTCBB: NWBO     f (425) 608-3009     18701 120th Avenue NE         Suite 101         Bothell, WA 98011         September 14, 2007 Dear Mr. Deasey: The Board of Directors proposes to enter into an employment agreement effective October 1, 2007 with you for four years of service in the senior management of the Company, with the following key terms:   •   Title: Chief Financial Officer and Senior Vice President of Finance     •   Board of Directors seat: Effective October 1, pending BOD approval     •   Term: 4 years     •   Annual Salary: $275,000 (subject to potential increases based on annual review by the Compensation Committee of the Board of Directors)     •   Location of Employment: Bethesda, MD     •   Bonuses: To be determined in the Board’s discretion for extraordinary and unanticipated accomplishments.     •   Equity: Sufficient options to result in your holding 1.0% of the stock of the Company, on a fully diluted basis (i.e., including all of the shares issuable under options and warrants outstanding or reserved in the employee pool) immediately after Admission of the AIM Placing Shares for trading. (The number of options is thus anticipated to be approximately 769,208.) Vesting shall occur over a 4-year period as defined in the Stock Option Grant Notice, with 25% vesting on the first anniversary of your full time employment and the remaining 75% vesting monthly over the 36 months following the first anniversary.     •   Change in Control: For purposes of this agreement Change in Control shall mean the merger or acquisition of the Company by another entity in whole or in part so as to hold majority ownership of the Company. Upon such an event if it should occur in the first year of employment which would be prior to vesting of the first 25% of options, this first year vesting of 25% of options shall be accelerated and vested.     •   Termination: Employment will be at will. The Company may terminate your employment with no notice “For Cause” or with 90 days notice “Without Cause.” “Cause” is defined as, but not limited to, malfeasance, material non-performance or materially inadequate performance of your duties following written notice or other communication from the Board of such non-performance or inadequate performance and a reasonable period of time to cure it one time.     --------------------------------------------------------------------------------     •   Notice of resignation: If you resign, you will give at least 60 days advance notice if resignation is prior to October 1, 2009, and 30 days after October 1, 2009. During the 60 or 30 days prior to departure, you will devote best efforts, in good faith, to the Company’s business and any personnel transition. Failure to give the 60 or 30 days notice will result in clawback of any bonuses paid to you and option vesting that occurred in the 6 months prior to the resignation announcement.     •   Effect of termination or resignation on options: Vesting of your stock options will cease upon the termination of your employment or resignation.   •   If your employment is terminated For Cause, options which are already vested as of the date of termination shall expire one business day after such termination.     •   If your employment is terminated Without Cause, options will vest until the last day of your employment and will be exercisable for up to 120 days following your termination Without Cause, so long as you execute a separation and release agreement reasonably acceptable to the Company.     •   If you resign or your 4 year contract expires, the vesting of your options will cease on the last day of your employment. If your resignation complies with the 60 — or 30-day notice, best efforts and good faith requirements above, your options will be exercisable for 60 days following the last day of your employment so long as you do not work for or with a Competing Company (as defined below) in any capacity (employee, director, adviser, collaborator, etc.) during the one year following the termination of your employment. The term “Competing Company” means a business that is developing immunotherapies for cancer. If your resignation does not comply with the notice, best efforts and good faith requirements above, your options will expire one business day after your resignation.   •   Outside activities: During the term of this Agreement, you shall not engage in any outside business activities except with express prior approval of the Board. It is recognized that you have limited transitional activities with your former employer and the Company acknowledges that these transitional activities are not in conflict with this specific clause.     •   Non-competition: You agree not to work for or with any Competing Company (as defined above) for 1 year after resignation, termination for cause or expiration of your employment with the Company. You must execute a non-competition agreement with the Company providing for this arrangement.     •   Assignment of inventions; confidentiality: All inventions conceived or developed by you during your employment by the Company must be assigned to the Company. You must also execute the Company’s standard invention assignment agreement and a limited power of attorney enabling the Company to make filings and take actions necessary to implement your assignments of inventions. You must also execute the standard confidentiality agreement.     --------------------------------------------------------------------------------     •   Vacation and sick leave: 4 weeks of vacation, no carryover (use it or lose it) except in special circumstances with prior Board approval and then only up to 2 weeks; 2 weeks of sick leave, to be used only for sickness and medical appointments for yourself or family members. The Board hopes that you will find these terms agreeable. If so, please indicate your acceptance by countersigning below. We look forward to your continued important role in the Company for the next several years. Sincerely,       NWBT BOARD OF DIRECTORS   I have read and accept this employment offer: By:   By:                   Name: Alton L. Boynton   Name: Title: President & CEO     Date: September 14, 2007   Date:
Exhibit 10.1   SEPARATION AND RELEASE AGREEMENT   This SEPARATION AND RELEASE AGREEMENT (this “Agreement”) is entered into by and between Midstates Petroleum Company, Inc. (the “Company”) and Stephen C. Pugh (“Executive”), effective as of the date indicated on Executive’s signature block below (the “Effective Date”).  Executive and the Company are referred to herein individually as a “Party” and collectively as the “Parties.”   WHEREAS, the Company and Executive are parties to that certain Executive Employment Agreement made and entered into as of April 25, 2012 (the “Employment Agreement”);   WHEREAS, Executive’s employment with the Company will be deemed to have ended effective as of October 3, 2013 (the “Separation Date”); and   WHEREAS, the Parties wish for Executive to receive certain severance benefits, which such benefits are conditioned upon Executive’s entry into, and non-revocation of, this Agreement; and   WHEREAS, for the purposes of avoiding the uncertainty, expense, and burden associated with any dispute, the Parties desire to settle any potential disputes, including without limitation those that may arise by virtue of either the employment relationship that existed between them or the end of the employment relationship.   NOW, THEREFORE, in consideration of the promises and benefits set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Executive and the Company, the Parties agree as follows:   1.                                      Separation from Employment.  Executive’s employment with the Company shall be deemed to have ended as of the Separation Date.   2.                                      Severance Payment and Benefits.  Provided that Executive executes this Agreement and returns it to the Company so that it is received no later than October 21, 2013, and does not exercise his revocation rights pursuant to Section 6 below and abides by his continuing obligations hereunder (including, without limitation, the Restrictive Covenants, as defined below), then the Company shall:   (a)                                 pay to Executive his accrued 2013 bonus, to be paid in such amount and at such time as the Company’s Board of Directors determines pursuant to the terms and conditions of the Company’s 2013 Short-Term Incentive Plan, which shall serve as full satisfaction of the Accrued Incentives under the Employment Agreement;   (b)                                 provide Executive with a payment for the Average Bonus (as defined in Section 4(d)(3) the Employment Agreement) equal to $88,000, which shall be paid to Executive on the Delayed Payment Date (as defined in Section 4(g) of the Employment Agreement);   (c)                                  continue to pay to Executive an annualized sum equal to $360,000 for a period of 18 months following the Separation Date (the “Salary Continuation”), which such Salary Continuation shall be paid in installments in accordance with the normal payroll practices of the Company; provided, however, that the first installment payment shall not be made until the Delayed   --------------------------------------------------------------------------------   Payment Date and such first installment shall include any Salary Continuation accrued during the period from the Separation Date to the Delayed Payment Date; and   (d)                                 During the portion, if any, of the 18-month period following the Separation Date that Executive elects to continue coverage for Executive and Executive’s spouse and eligible dependents, if any, under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and Section 4980B of the Internal Revenue Code of 1986, the Company shall promptly reimburse Executive on a monthly basis for the amount Executive pays to effect and continue such coverage (“COBRA Reimbursement Amounts”); provided, however, that payment of the COBRA Reimbursement Amounts by the Company to Executive shall cease immediately upon the date that Executive begins providing services to a subsequent employer.  Nothing contained herein is intended to limit or otherwise restrict Executive’s rights to continued group health plan pursuant to COBRA at Executive’s own expense following the period described in the preceding sentence of this Section 2(c).   3.                                      Complete Release of Claims.   (a)                                 In exchange for the consideration received by Executive herein, which such consideration Executive was not entitled to but for his entry into this Agreement, Executive hereby releases, discharges and forever acquits the Company, each of its affiliates and subsidiaries, and their respective past, present and future members, shareholders, owners, investors, partners (including but not limited to general partners and limited partners), directors, trustees, officers, managers, employees, agents, attorneys, heirs, legal representatives, insurers, employee benefit plans (including fiduciaries and administrators of any such plans) successors and assigns of the foregoing, in their personal and representative capacities (collectively, the “Company Parties”), from liability for, and hereby waives, any and all claims, damages, or causes of action of any kind related to Executive’s employment with any Company Party, the termination of such employment, and any other acts or omissions related to any matter occurring on or prior to the date that Executive executes this Agreement, including without limitation any alleged violation through the date that Executive executes this Agreement of:  (i) the Age Discrimination in Employment Act of 1967, as amended; (ii) Title VII of the Civil Rights Act of 1964, as amended; (iii) the Civil Rights Act of 1991, as amended; (iv) Sections 1981 through 1988 of Title 42 of the United States Code, as amended; (v) the Executive Retirement Income Security Act of 1974, as amended; (vi) the Immigration Reform Control Act, as amended; (vii) the Americans with Disabilities Act of 1990, as amended; (viii) the National Labor Relations Act, as amended; (ix) the Occupational Safety and Health Act, as amended; (x) the Family and Medical Leave Act of 1993, as amended; (xi) any state or federal anti-discrimination or anti-retaliation law, (xii) any state or federal wage and hour law; (xiii) any other local, state or federal law, regulation or ordinance; (xiv) any public policy, contract, tort, or common law claim; (xv) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in the matters referenced herein; (xvi) any and all rights, benefits or claims Executive may have under the any employment contract (including without limitation the Employment Agreement) except to the extent expressly provided for under this Agreement; and (xvii) any and all claims Executive may have arising as the result of any alleged breach of contract, compensation plan or agreement with any Company Party (collectively, the “Released Claims”).  This Agreement is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious.  Rather, Executive is simply agreeing that, in exchange for the consideration recited in the first sentence of this paragraph, any and all potential claims of this nature that Executive may have against the Company Parties, regardless of whether they actually exist, are expressly settled,   2 --------------------------------------------------------------------------------   compromised and waived.  By signing this Agreement, Executive is bound by it.  Anyone who succeeds to Executive’s rights and responsibilities, such as heirs or the executor of Executive’s estate, is also bound by this Agreement.  This release also applies to any claims brought by any person or agency or class action under which Executive may have a right or benefit.  THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY PARTIES.   (b)                                 Notwithstanding this release of liability, nothing in this Agreement prevents Executive from filing any non-legally waivable claim (including a challenge to the validity of this Agreement) with the Equal Employment Opportunity Commission (“EEOC”) or comparable state or local agency or participating in any investigation or proceeding conducted by the EEOC or comparable state or local agency; however, Executive understands and agrees that Executive is waiving any and all rights to recover any monetary or personal relief or recovery as a result of such EEOC or comparable state or local agency proceeding or subsequent legal actions.  Further, in no event shall the Released Claims include (i) any claim which arises after the date that this Agreement is executed by Executive, or (ii) any claim to vested benefits under an executive benefit plan.   (c)                                  Executive represents that Executive has not brought or joined any lawsuit or filed any charge or claim against any of the Company Parties in any court or before any government agency and has made no assignment of any rights Executive has asserted or may have against any of the Company Parties to any person or entity, in each case, with respect to any Released Claims.   4.                                      Executive’s Representations.   (a)                                 In entering into this Agreement, Executive expressly acknowledges and agrees that he has received all leaves (paid and unpaid) to which he was entitled during his employment and he has received all wages and benefits and been paid all sums that he is owed or ever could be owed by the Company and the other Company Parties (other than as expressly provided for in this Agreement).  Executive further acknowledges and agrees that, with the exception of any amounts owed to him pursuant to this Agreement, he has no entitlement to any further sums from the Company or any other Company Party, including, but not limited to, any bonuses, severance or other payments.  This Agreement extinguishes all rights, if any, that Executive may have and ever may have, contractual or otherwise, relating to or arising out of the Employment Agreement and Executive acknowledges that, in entering this Agreement, all of the Company’s obligations under the Employment Agreement are deemed satisfied in full.  For the avoidance of doubt, Executive expressly acknowledges and agrees that this Agreement extinguishes any and all rights that he has or ever may have under the Employment Agreement and that he has no further rights to any payments or potential payments under the Employment Agreement (including, without limitation, under Section 4(d) of the Employment Agreement).  Notwithstanding the foregoing or any other provision in this Agreement, to the extent not already paid or provided as of the date of this Agreement, nothing herein shall waive Executive’s right or entitlement to the Accrued Obligations,.   (b)                                 By executing and delivering this Agreement, Executive expressly acknowledges that:   (i)                                     Executive has carefully read this Agreement;   3 --------------------------------------------------------------------------------   (ii)           Executive has had at least twenty-one (21) days to consider this Agreement before the execution and delivery hereof to the Company;   (iii)          Executive has been and hereby is advised in writing to discuss this Agreement with an attorney of Executive’s choice and that Executive has had adequate opportunity to do so prior to executing this Agreement; and   (iv)          Executive fully understands the final and binding effect of this Agreement; the only promises made to Executive to sign this Agreement are those stated herein; and Executive is signing this Agreement voluntarily and of Executive’s own free will, and that Executive understands and agrees to each of the terms of this Agreement.   (c)                                  Executive acknowledges and agrees that in connection with his employment with the Company, he has obtained Confidential Information, as defined in the Employment Agreement, and that he has continuing obligations to the Company pursuant to Sections 7, 8 and 9 of the Employment Agreement (collectively, the “Restrictive Covenants”).  For clarity, the Non-Competition section of the Employment Agreement will apply to the named parishes in Louisiana, listed on Exhibit A to the Employment Agreement, and the following counties in Oklahoma: Woods, Alfalfa, Lincoln, Roger Mills, Dewey, Ellis and Woodward; and the following counties in Texas: Lipscomb, Ochiltree and Hansford; and for the avoidance of doubt shall not include any other geographic areas.  In entering into this Agreement, Executive acknowledges the continued effectiveness and enforceability of the Restrictive Covenants and expressly reaffirms his commitment to abide by the terms of the Restrictive Covenants, except to the extent that any act or omission by Executive that would otherwise be prohibited by the Restrictive Covenants is expressly permitted by the Board of Directors of the Company in writing.   5.                                      Incentive Unit Awards.  Executive acknowledges and agrees that the 200 Class B Incentive Units held by Executive as of the Separation Date shall be, pursuant to the First Amendment to Amended and Restated Limited Liability Company Agreement of Midstates Incentive Holdings LLC, effective as of June 1, 2012, “capped” or limited to the Termination Date Amount, as defined therein.  Executive further acknowledges and agrees the Termination Date Amount, as of the Separation Date, is $0.00, and Executive will receive no value, now or in the future, from the Executive’s ownership of Incentive Units.   6.             Restricted Shares.  Executive’s restricted shares of the Company’s common stock shall vest proportionally based on the Separation Date as follows:   4/25/2012 Grant:  On April 25, 2014, 26,923 shares shall vest; and   2/21/2013 Grant:  On February 21, 2014, 30,000 shares shall vest.   All other restricted shares for which the restrictions have not lapsed shall become null and void and shall be forfeited to the Company as of the Separation Date, in accordance with the terms of the restricted stock agreement pursuant to which such restricted shares were granted and such terms shall not be further altered by this Agreement.   4 --------------------------------------------------------------------------------   7.             Revocation Rights.  Notwithstanding the initial effectiveness of this Agreement, Executive may revoke the delivery (and therefore the effectiveness) of this Agreement within the seven-day period beginning on the date Executive executes this Agreement (such seven day period being referred to herein as the “Release Revocation Period”).  To be effective, such revocation must be in writing signed by Executive and must be delivered to the Company, care of John P. Foley, Vice President and Corporate Counsel, at 4400 Post Oak Parkway, Suite 1900, Houston, Texas 77027 (e-mail: john.foley@midstatespetroleum.com) before 11:59 p.m., Houston, Texas time, on the last day of the Release Revocation Period.  If an effective revocation is delivered in the foregoing manner and timeframe, this Agreement shall be of no force or effect and shall be null and void ab initio.  No consideration shall be paid pursuant to Section 2 of this Agreement if this Agreement is revoked by Executive in the foregoing manner.   8.             No Waiver.  No failure by any Party hereto at any time to give notice of any breach by any other Party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.   9.             Applicable Law.  This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Texas without reference to the principles of conflicts of law thereof.   10.          Severability.  To the extent permitted by applicable law, the Parties agree that any term or provision of this Agreement that renders such term or provision or any other term or provision hereof invalid or unenforceable in any respect shall be modified to the extent necessary to avoid rendering such term or provision invalid or unenforceable, and such modification shall be accomplished in the manner that most nearly preserves the benefit of the Parties’ bargain hereunder.   11.          Withholding of Taxes and Other Executive Deductions.  The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, local, and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling.   12.          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.   13.          Assignment.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, by merger or otherwise.  The Company may assign its rights hereunder to an affiliate.  Except as set forth in the previous two sentences, and except that any payments due Executive under this Agreement shall be assignable by the Executive by will or the laws of descent and distribution, this Agreement and the rights and obligations of the Parties hereunder are personal and neither this Agreement nor any right, benefit or obligation of any Party hereto shall be subject to voluntary or involuntary assignment, alienation or transfer, whether by operation of law or otherwise, without the prior written consent of the other Party.   14.          Amendment; Entire Agreement.  This Agreement may not be changed orally but only by an agreement in writing agreed to and signed by Executive and the Company.  This   5 --------------------------------------------------------------------------------   Agreement (and the Restrictive Covenants) constitutes the entire agreement of the Parties with regard to the subject matter hereof.   15.                               Confidentiality.  Executive agrees to keep the terms of this Agreement and the discussions with the Company regarding this Agreement confidential and shall not disclose the terms of, or details about, this Agreement to any third party; provided, however, that nothing herein shall prevent Executive from making disclosures required by law or from disclosing this Agreement and the terms thereof to his spouse or legal or accounting advisors so long as such persons or entities agree to preserve the confidentiality of this Agreement.   [Signatures begin on the following page]   6 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date(s) set forth by their signatures below.     MIDSTATES PETROLEUM COMPANY, INC.           By: /s/ John A. Crum   Name: John A. Crum   Title: President and Chief Executive Officer               Date: October 3, 2013             STEPHEN C. PUGH           /s/ Stephen C. Pugh   Stephen C. Pugh         Date: October 3, 2013   7 --------------------------------------------------------------------------------
[e42276-1634113133319044d6_1.jpg] PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT This Performance-Based Restricted Stock Agreement dated January 29, 2016 is made by and between Lionbridge Technologies, Inc., a Delaware corporation (hereinafter referred to as the “Company”), and [NAME], a key employee of the Company or a subsidiary of the Company (hereinafter referred to as the “Employee”). This is an Agreement between the Company and the Employee with respect to restricted stock granted under the 2011 Stock Incentive Plan of Lionbridge Technologies, Inc., (the “Plan”). Capitalized terms not defined herein shall have such meanings ascribed to them in the Plan. WHEREAS, the Nominating and Compensation Committee of the Company’s Board of Directors (the “Committee”), appointed to administer the Plan, has determined that it would be to the advantage and best interest of the Company and its shareholders to grant the Restricted Stock (as hereinafter defined) provided for herein to the Employee; NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I GRANT OF PERFORMANCE-BASED RESTRICTED STOCK Section 1.1 — Grant of Restricted Stock In consideration of the Employee’s agreement to remain in the employ of the Company or its Subsidiary and for other good and valuable consideration, the value of which exceeds the par value of the Restricted Stock, on the date hereof the Company grants to the Employee [XXXX #] shares of its common stock $0.01 par value (the “Restricted Stock”), upon the terms and conditions set forth in this Agreement. ARTICLE II TERMS OF RESTRICTED STOCK Section 2.1 — Restrictions on Transfer The Employee may not sell, assign, transfer, pledge, hypothecate, mortgage or otherwise dispose of, by gift or otherwise, or in any way encumber all or any of the Restricted Stock until such time as the Restricted Stock becomes vested pursuant to the provisions of this Agreement. Section 2.2 — Vesting of Restricted Stock (a) In general.  All shares of Restricted Stock shall be subject to forfeiture (“unvested”) and shall be forfeited in accordance with the Forfeiture Schedules set forth in Section 2.2(b) below based on upon the achievement of revenue and profitability targets (the “Revenue Target” and the “Profitability Target”), during the calendar year of the grant and the following calendar year (the “Measuring Period”).   (b)   Forfeiture Schedule. All shares of Restricted Stock shall be subject to forfeiture (“unvested”) and shall be forfeited in accordance with the following schedule based on percent completion of the Revenue Target and the Profitability Target within the requisite Measurement Period as follows:              Percent of Revenue target achieved   Percent of Incentive Restricted Stock within the Measurement Period   Forfeited 100%     0 %           99%     3 %           98%     6 %           97%     9 %           96%     12 %           95%     15 %           94%     18 %           93%     21 %           92%     24 %           91%     27 %           90%     30 %           89%     33 %           88%     36 %           87%     39 %           86%     42 %           85%     45 %           84%     48 %           83%     51 %           82%     54 %           81%     57 %           80%     60 %           < 80%     100 %           1           Percent of Profitability target     achieved within the Measurement   Percent of Incentive Restricted Stock Period   Forfeited 100%     0 %           99%     2 %           98%     4 %           97%     6 %           96%     8 %           95%     10 %           94%     12 %           93%     14 %           92%     16 %           91%     18 %           90%     20 %           89%     22 %           88%     24 %           87%     26 %           86%     28 %           85%     30 %           84%     32 %           83%     34 %           82%     36 %           81%     38 %           80%     40 %           79%     42 %           78%     44 %           77%     46 %           76%     48 %           75%     50 %           74%     52 %           73%     54 %           72%     56 %           71%     58 %           70%     60 %           < 70%     100 %           (c) To the extent earned in accordance with the above schedule and provided he or she remained an employee of the Company continuously to January 1st of the year immediately following the Measuring Period, the Grantee’s rights to the Restricted Stock shall become nonforfeitable (“vested”) on the date the Company publicly releases earnings for the second year of the Measuring Period.   (d) In the event of the Grantee’s death, Disability or a termination of employment of the Grantee by the Company (or a Subsidiary thereof) other than a termination for cause, if the event occurs after the end of the calendar year of the Grant but before the end of the Measuring Period, the Grantee’s rights to one-half of the Restricted Stock that would otherwise become nonforfeitable (“vested”) on the date the Company publicly releases earnings for the second year of the Measuring Period shall become nonforfeitable as of such date.   (e) In the event of a Reorganization Event, all shares of Restricted Stock shall vest without any further action on the part of the Company or the Grantee immediately prior to the Change of Control.    (f) Definitions.     (i)   For all purposes of this Agreement, the term “Reorganization Event” shall have the meaning set forth in Section 11 of the Plan.   (ii)   The term “Revenue Target” means $      billion to be achieved on a cumulative basis within the Measurement Period.   (iii)   The term “Profitability Target” means $       million to be achieved on a cumulative basis within the Measurement Period and determined as follows: Income from Operations, plus Merger, Restructuring & other charges Amortization of Acquisition Related Intangibles Depreciation Amortization, and Stock Based Compensation Expense (g) The Grantee acknowledges and agrees that the Nominating and Compensation Committee of the Board of Directors may in its sole discretion adjust either Target to reflect the impact of foreign currency exchange rate fluctuations during the Measurement Period or any other extraordinary events.      Section 2.3 — Forfeiture of Restricted Stock Until the Restricted Stock is vested in accordance with Section 2.2 of this Agreement, it will be forfeited to the Company immediately upon a termination of employment for any reason. Section 2.4 — Escrow The Secretary of the Company shall retain physical custody of the certificates representing the Restricted Stock until all of the restrictions imposed pursuant to this Agreement expire or shall have been removed. Section 2.5 — Legend The certificates evidencing the Restricted Stock shall bear a legend substantially as follows until all of the restrictions imposed pursuant to this Agreement expire or have been removed: The shares represented by this certificate are subject to restrictions on transfer until the date the Company publicly releases its earnings for 2017 and may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with and subject to all of the terms and conditions of a Restricted Stock Agreement dated as of January 29, 2016, a copy of which the Company shall furnish to the holder of this certificate upon request and without charge. ARTICLE III OTHER PROVISIONS Section 3.1 — Notices Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary, and any notice to be given to the Employee shall be addressed to such Employee at the address given beneath such Employee’s signature hereto. By a notice given pursuant to this Section 3.1, either party may hereafter designate a different address for notices to be given to such party. Any notice which is required to be given to the Employee shall, if the Employee is then deceased, be given to the Employee’s personal representative if such representative has previously informed the Company of such representative’s status and address by written notice under this Section 3.1. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. Section 3.2. – Acknowledgement. By entering into this Agreement and accepting the Award, Employee acknowledges that: (a) the Plan is discretionary and may be modified, suspended or terminated by the Company at any time as provided in the Plan; (b) the grant of the Restricted Stock is a one-time benefit and does not create any contractual or other right to receive future grants of awards or benefits in lieu of awards; (c) all determinations with respect to any such future grants, including, but not limited to, the times when awards will be granted, the number of shares subject to each award, the award price, if any, and the time or times when each award will be settled, will be at the sole discretion of the Company; (d) Employee’s participation in the Plan is voluntary; (e) the value of the Restricted Stock is an extraordinary item which is outside the scope of Employee’s service contract, if any; (f) the Restricted Stock is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance, resignation, termination, redundancy, end of service payments, bonuses, pension or retirement benefits or similar payments; (g) the future value of the Common Stock subject to the Restricted Stock is unknown and cannot be predicted with certainty, (h) neither the Plan, nor the issuance of the Restricted Stock confers upon Employee any right to continue in the service of (or any other relationship with) the Company or any Related Company, (i) the grant of the Restricted Stock will not be interpreted to form an employment relationship with the Company or any Related Company, and (j) he or she reconfirms his or her contractual and legal obligations of confidentiality to the Company and his or her obligations not to compete with the Company, as such as described in his or her Non-Disclosure Agreement, Non-Competition Agreement and/or Business Protection Agreement with the Company. Section 3.3 – Recoupment and Forfeiture on Certain Conditions The Employee expressly understands and agrees that this grant of Restricted Stock is conditioned on Employee’s agreement and consent that the Board of Directors of the Company or its Nominating and Compensation Committee has the sole discretion to require the Employee or Employee’s estate to repay to the Company, in cash and upon demand, any Proceeds (as defined below) resulting from the sale or other disposition (including to the Company) of Shares issuable or issued upon vesting of Restricted Stock (a) in the event of a  restatement (other than a restatement due to a change in accounting policies) of the Company’s financial results where the restatement  results in a material impact on the financial statements for the period affecting the achievement of the performance conditions for this grant of Restricted Stock in Section 2.2 or (b) if the Board or the Committee determines that the Employee has engaged in fraud or misconduct (“Misconduct) that resulted in or substantially resulted in vesting of any or all of this grant of Restricted Shares due to achievement of the performance conditions in Section 2.2.   The amount to be repaid shall be determined by the Committee in its sole discretion based on its determination of the effect of the Misconduct or the restatement on the Corporation’s stock price, up to an amount equal to the market value per Share at the time of such sale or other disposition multiplied by the number of shares sold or disposed of.  If Shares have vested and have not been disposed of, Shares will be subject to forfeiture (together with any cash amounts described in the prior sentence, “Proceeds”).  Any determination by the Committee with respect to the foregoing shall be final, conclusive and binding on all interested parties.  This provision expires on the earlier of (a) a Change of Control or (b) three years from the date of grant of the Award. Section 3.4 — Construction In the event of any discrepancy between the terms of this Agreement and the terms of the Plan itself, the Plan will control. This Agreement shall be administered, interpreted and enforced under the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto. LIONBRIDGE TECHNOLOGIES, INC. By:        Rory J. Cowan Chief Executive Officer       [NAME] 2
Exhibit 10.7   FIRST MODIFICATION TO BUSINESS LOAN AND SECURITY AGREEMENT   THIS FIRST MODIFICATION TO BUSINESS LOAN AND SECURITY AGREEMENT (this “Modification”) is made as of the 1st day of July, 2002, by and among (i) CITIZENS BANK OF PENNSYLVANIA, a Pennsylvania state chartered bank (“Citizens Bank”), acting in its capacity as a Lender, Swing Line Lender and as the Administrative Agent for the Lenders (hereinafter defined), having offices at 8521 Leesburg Pike, Suite 405, Vienna, Virginia 22182; (ii) PNC BANK, NATIONAL ASSOCIATION, a national banking association (“PNC”), acting in its capacity of Lender and as the Documentation Agent for the Lenders, having offices at One PNC Plaza, 6th Floor, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222; (iii) BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, a Virginia banking corporation (“BB&T”), having offices at 8200 Greensboro Drive, Suite 250, McLean, Virginia 22102, (iv) CHEVY CHASE BANK, F.S.B., a federal savings bank (“Chevy Chase”) having offices at 7501 Wisconsin Avenue, 12th Floor, Bethesda, Maryland 20814, (v) any other Lender parties to the Loan Agreement (hereinafter defined) from time to time; (vi) MANTECH INTERNATIONAL CORPORATION, a Delaware corporation (“MIC”); MANTECH ADVANCED SYSTEMS INTERNATIONAL, INC.; a Virginia corporation, MANTECH SYSTEMS ENGINEERING CORPORATION, a Virginia corporation; NSI TECHNOLOGY SERVICES CORPORATION, a California corporation; MANTECH SYSTEMS CORPORATION, a New Jersey corporation; MANTECH SOLUTIONS CORPORATION, a Virginia corporation; MANTECH ENVIRONMENTAL TECHNOLOGY, INC., a Virginia corporation; MANTECH SUPPORT TECHNOLOGY, INC., a Virginia corporation; MANTECH AUSTRALIA INTERNATIONAL, INC., a Virginia corporation formerly known as ManTech Computer Company, Inc.; FIELD SUPPORT SERVICES MÜHENDISLIK LIMITED SIRKETI, a corporation organized and existing under the laws of Turkey; MASI U.K. LIMITED, a corporation organized and existing under the laws of the United Kingdom; MANTECH TELECOMMUNICATIONS AND INFORMATION SYSTEMS CORPORATION, a Delaware corporation formerly known as ManTech Strategic Associates, Ltd.; TECHNOLOGY MANAGEMENT CORPORATION, a Virginia corporation; SCIENCE ENGINEERING & ANALYSIS, INCORPORATED, a Virginia corporation; MANTECH ENVIRONMENTAL RESEARCH SERVICES CORP., a Virginia corporation; NSI ENVIRONMENTAL SOLUTIONS, INC., a Virginia corporation; MANTECH ENVIRONMENTAL CORPORATION, a Virginia corporation; MANTECH SYSTEMS SOLUTIONS CORPORATION, a Virginia corporation formerly known as Tidewater Consultants, Inc.; MANTECH SOLUTIONS & TECHNOLOGIES CORPORATION, a Virginia corporation formerly known as ManTech Systems Integration Corporation; MANTECH TEST SYSTEMS, INC., a Virginia corporation; MANTECH U.K. SYSTEMS CORPORATION, a Virginia corporation; REDESMUNDIAL, S.A., a corporation organized and existing under the laws of the Republic of Panama formerly known as ManTech International Panama, Inc.; MANTECH GERMANY SYSTEMS CORPORATION, a Virginia corporation; MANTECH CHINA SYSTEMS CORPORATION, a Virginia corporation; MANTECH ADVANCED DEVELOPMENT GROUP, INC., a California corporation; MANTECH ENTERPRISE SOLUTIONS, INC., a Virginia corporation; MANTECH ADVANCED RECOGNITION LIMITED, a private company registered in England under the number 885326 formerly known as Advanced Recognition Limited; VOBIX CORPORATION, a Virginia corporation; MANTECH DATABASE SERVICES EUROPE LIMITED, a corporation organized and existing under the laws of the United Kingdom; MANTECH SECURITY TECHNOLOGIES --------------------------------------------------------------------------------   CORPORATION, a Virginia corporation (each, a “Borrower” and collectively, the “Borrowers”), and (vii) each other person or entity hereafter becoming a “Borrower” party to the Loan Agreement (as hereinafter defined) by executing a “Joinder Agreement” pursuant to the Loan Agreement. For purposes of this Modification, (a) Citizens Bank (acting in its capacity as a Lender), PNC (acting in its capacity as a Lender), BB&T and Chevy Chase are collectively referred to herein as the “Lenders”; (b) the Administrative Agent and the Documentation Agent are collectively referred to herein as the “Agents”; and (c) all other capitalized terms used but not defined herein shall have the meanings attributed to such terms in the Loan Agreement.   W  I  T  N  E  S  S  E  T  H    T   H  A  T:   WHEREAS, pursuant to that certain Business Loan and Security Agreement dated as of December 17, 2001 (as the same may be amended or modified from time to time, the “Loan Agreement”), by and among the Lenders, the Original Borrowers and the Agents, the Original Borrowers obtained a loan (the “Loan”) from the Lenders in the original aggregate maximum principal amount of Seventy-one Million Four Hundred Thousand and No/100 Dollars ($71,400,000.00), evidenced by the Notes and secured by, among other things, certain collateral more fully described in Section 3.1 of the Loan Agreement; and   WHEREAS, the Borrowers have requested that (a) the maximum ratio of Total Debt to EBITDA, set forth in Section 6.15(c), of the Loan Agreement be adjusted; and (b) the negative covenant set forth in Section 7.1(d) of the Loan Agreement (prohibiting mergers and acquisitions) be modified to allow the Borrowers to effect certain mergers and acquisitions without the Administrative Agent’s consent;   WHEREAS, the Lenders have agreed to amend the Loan Agreement as requested subject to, among other things, the terms, covenants, agreements and limitations set forth in this Modification, as hereinafter provided.   NOW, THEREFORE, in consideration of the foregoing premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:   1.  The foregoing recitals are hereby incorporated herein by this reference and made a part hereof, with the same force and effect as if fully set forth herein.   2.  The following definitions are hereby added to the “Certain Definitions” section of the Loan Agreement in their appropriate alphabetical location:   “ “Target” shall have the meaning assigned to such term in Section 7.1(d)(i) of this Agreement.   “ “Total Consideration” shall have the meaning assigned to such term in Section 7.1(d)(ii) of this Agreement. 2 --------------------------------------------------------------------------------   “ “Permitted Merger or Acquisition” shall have the meaning assigned to such term in Section 7.1(d) of this Agreement.”   3.    Section 1.2 of the Loan Agreement is hereby deleted in its entirety and the following substituted in lieu thereof:   “Use of Proceeds.    The Loan shall be used by the Borrowers only for the following purposes: (i) to refinance certain existing indebtedness of the Borrowers; (ii) to finance any Permitted Merger or Acquisition; and (iii) for working capital and general corporate needs. Each Borrower agrees that it will not use or permit the Loan proceeds to be used for any other purpose without the prior written consent of the Administrative Agent.”   Section 6.15(c) of the Loan Agreement is hereby deleted in its entirety and the following substituted in lieu thereof:   “(c)    Total Debt to EBITDA Ratio.    The Borrowers will maintain on a consolidated basis for each quarter ending during the periods specified below, a Total Debt to EBITDA ratio of not more than the following:   Period --------------------------------------------------------------------------------      Required Total Debt to EBITDA Ratio -------------------------------------------------------------------------------- From the date of this Agreement through December 31, 2001      3.25 to 1.0 From January 1, 2002 through the Maturity Date      3.00 to 1.0   For purposes of the foregoing, “Total Debt” shall have the meaning attributed to such term in the “Certain Definitions” section of this Agreement. The Total Debt to EBITDA ratio shall be measured on the last day of each fiscal quarter through the term of the Loan.”   4.    Section 7.1(d) of the Loan Agreement is hereby deleted in its entirety and the following shall be substituted in lieu thereof:   “(d)    permit any Borrower or any subsidiary or affiliate of any Borrower to merge or consolidate with any company or enterprise, or acquire or purchase any company or enterprise or acquire or purchase substantially all of the assets of any company or enterprise, it being understood and agreed that (x) mergers between Borrowers shall not require the consent of the Administrative Agent so long as (I) after giving effect to such merger, the Administrative Agent has a perfected security interest in and to all of the assets of the surviving Borrower constituting Collateral, and (II) the Borrowers shall have provided not less than twenty (20) days prior written notice to the Administrative Agent and Lenders of any merger 3 -------------------------------------------------------------------------------- or consolidation between Borrowers; and (y) any Permitted Merger or Acquisition (as defined in Section 7.1(d)(i) of this Agreement) shall not require the consent of the Administrative Agent.   (i)    “Permitted Merger or Acquisition” shall mean a merger or acquisition by any Borrower(s) with or of a non-Borrower (a “Target”) which (A) results in the acquisition by the Borrower(s) of all or substantially all of the assets of the Target or at least eighty-five percent (85%) of all of the issued and outstanding equity or ownership interests in the Target, and (B) meets all of the criteria set forth in Section 7.1(d)(ii) of this Agreement; and   (ii)    In order for a merger or acquisition to be a Permitted Merger or Acquisition, the transaction must meet all of the following criteria:   (A)  the Target is in a similar line of business as that of the Borrowers;   (B)  the Target is headquartered, and primary operations are conducted, in the United States;   (C)  the Target is a going concern, not involved in any material litigation that is not fully covered by reserves and/or insurance and shall have had EBITDA in excess of One Cent ($0.01) for the twelve (12)-month period ending on the date of the merger or acquisition;   (D)  the subject transaction does not constitute a hostile acquisition or merger, nor does it involve the acquisition or merger of any equity interests in, or assets of an existing customer of any Lender;   (E)  both before and after giving effect to the merger or acquisition, no Event of Default shall have occurred;   (F)  the Borrowers will be in compliance with all financial covenants set forth in Section 6.15 of this Agreement after giving pro forma effect to the merger or acquisition;   (G)  after giving effect to the merger or acquisition, there is at least Seven Million and No/100 Dollars ($7,000,000.00) of excess availability under Facility A;   (H)  if, both immediately prior to and immediately after giving effect to the merger or acquisition, the aggregate outstanding principal balance of the Loan does not exceed Twenty-five Million and No/100 Dollars ($25,000,000.00), then, both prior to and after giving effect to the subject transaction, the aggregate amount of cash consideration, whether paid or 4 -------------------------------------------------------------------------------- unpaid, for all mergers and/or acquisitions that have occurred during the term of the Loan shall not exceed Eighty Million and No/100 Dollars ($80,000,000.00), in the aggregate;   (I)  if, immediately prior to or immediately after giving effect to the merger or acquisition, the aggregate outstanding principal balance of the Loan exceeds Twenty-five Million and No/100 Dollars ($25,000,000.00), or if, after giving effect to the subject transaction, the aggregate amount of cash consideration, whether paid or unpaid, for all mergers and/or acquisitions that have occurred during the term of the Loan exceeds Eighty Million and No/l00 Dollars ($80,000,000.00), in the aggregate, then the total consideration (i.e., cash, equity, employee contracts, earnouts, assumed debt and the like) (“Total Consideration”) for the subject transaction shall not exceed Twenty-five Million and No/100 Dollars ($25,000,000.00), in the aggregate;   (J)  the Borrowers shall not assume any indebtedness as a condition of such merger or acquisition other than capitalized leases entered into in the ordinary course of business and other indebtedness permitted under Section 7.7 of this Agreement;   (K)  the Borrowers shall have certified in writing, or concurrent with the consummation of the subject merger or acquisition shall certify in writing, to the Administrative Agent that the subject merger or acquisition meets the requirements of a Permitted Merger or Acquisition as set forth in this Section 7.1(d); and   (L)  the Target shall be joined as a Borrower within fifteen (15) days of the closing of the merger or acquisition.   (iii)    In the event that the Administrative Agent issues its consent to a hostile acquisition or an acquisition involving the stock or assets of existing customers of any Lender, such consent shall be subject to the Borrowers’ agreement to indemnify, defend and hold the Lenders harmless from and against any and all claims, demands, losses, liabilities, damages, costs and expenses of every kind and nature, including without limitation, reasonable attorneys’ fees, related to, arising out of or in connection with such acquisition, pursuant to an indemnity agreement satisfactory to the Lenders in all respects;   (iv)    The Borrowers expressly acknowledge and agree that, unless and until the Administrative Agent shall have conducted a field audit with respect to a Target, the assets of such Target will not be included in the calculation of the Maximum Borrowing Base without the Administrative Agent’s prior approval; provided, however, that the Administrative Agent agrees to complete its field audit 5 -------------------------------------------------------------------------------- with respect to a Target by thirty (30) days after the later of (A) the date of the subject acquisition or merger or (B) the Administrative Agent’s receipt of notice of the subject acquisition or merger, provided that the Borrowers have provided to the Administrative Agent the information necessary to evaluate the assets of the Target, including access thereto, within a reasonable period of time prior to the expiration of such thirty (30)-day period.   5.    Each Borrower hereby acknowledges and agrees that (i) there are no set-offs or defenses against the Notes, the Loan Agreement or any other Loan Document; (ii) except as specifically amended hereby, all of the terms and conditions of the Notes, the Loan Agreement and the other Loan Documents shall remain unmodified and in full force and effect; (iii) the Notes, the Loan Agreement (as modified hereby) and the other Loan Documents are hereby expressly approved, ratified and confirmed; and (iv) the execution, delivery and performance by each Borrower of this Modification (a) is within its corporate powers, (b) has been duly authorized by all necessary corporate action, and (c) does not require the consent or approval of any other person or entity.   6.    The Borrowers hereby represent and warrant that the representations and warranties set forth in the Loan Agreement and the other Loan Documents are true and correct as of the date hereof with the same force and effect as though made on and as of the date hereof.   7.    This Modification may be executed by facsimile and in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same document.   8.    This Modification shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to choice of law principles. This Modification shall be binding upon the Borrowers, each Lender, the Agents and their respective successors and assigns.   9.    The section and other headings contained in this Modification (if any) are for convenience of reference only, and in no way define limit or describe the scope of this Modification or the intent of any provision hereof.         [Remainder of Page Intentionally Left Blank] 6 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, this Modification has been signed, sealed and delivered as of the date and year first above written.   WITNESS:       MANTECH INTERNATIONAL CORPORATION, a Delaware corporation; By:   /s/    JEFFREY S. BROWN         --------------------------------------------------------------------------------       By:   /s/    MATTHEW P. GALASKI         --------------------------------------------------------------------------------     Name:    Jeffrey S. Brown           Name:    Matthew P. Galaski Title:      Vice President   MANTECH ADVANCED SYSTEMS INTERNATIONAL, INC., a Virginia corporation; MANTECH SYSTEMS ENGINEERING CORPORATION,  a Virginia corporation; NSI TECHNOLOGY SERVICES CORPORATION, a California corporation; MANTECH SYSTEMS CORPORATION, a New Jersey corporation; MANTECH SOLUTIONS CORPORATION, a Virginia corporation; MANTECH ENVIRONMENTAL TECHNOLOGY, INC., a Virginia corporation; MANTECH SUPPORT TECHNOLOGY, INC., a Virginia corporation; MANTECH AUSTRALIA INTERNATIONAL, INC., a Virginia corporation formerly known as ManTech Computer Company, Inc.; FIELD SUPPORT SERVICES MÜHENDISLIK LIMITED SIRKETI, a corporation organized and existing under the laws of Turkey; MANTECH TELECOMMUNICATIONS AND INFORMATION SYSTEMS CORPORATION, a Delaware corporation formerly known as ManTech Strategic Associates, Ltd.;   WITNESS:         By:   /s/    JEFFREY S. BROWN         --------------------------------------------------------------------------------       By:   /s/    MATTHEW P. GALASKI         --------------------------------------------------------------------------------     Name:    Jeffrey S. Brown           Name:    Matthew P. Galaski Title:      Vice President   7 --------------------------------------------------------------------------------   TECHNOLOGY MANAGEMENT CORPORATION, a Virginia corporation; SCIENCE ENGINEERING & ANALYSIS, INCORPORATED, a Virginia corporation; MANTECH ENVIRONMENTAL RESEARCH SERVICES CORP., a Virginia corporation; NSI ENVIRONMENTAL SOLUTIONS, INC., a Virginia corporation; MANTECH ENVIRONMENTAL CORPORATION, a Virginia corporation; MANTECH SYSTEMS SOLUTIONS CORPORATION, a Virginia corporation formerly known as Tidewater Consultants, Inc. MANTECH TEST SYSTEMS, INC., a Virginia corporation; MANTECH SOLUTIONS & TECHNOLOGIES CORPORATION, a Virginia corporation formerly known as ManTech Systems Integration Corporation; MANTECH U.K. SYSTEMS CORPORATION, a Virginia corporation; REDESMUNDIAL, S.A., a corporation organized and existing under the laws of the Republic of Panama, formerly known as ManTech International Panama, Inc.; MANTECH CHINA SYSTEMS CORPORATION, a Virginia corporation; MANTECH GERMANY SYSTEMS CORPORATION, a Virginia corporation; MANTECH ADVANCED DEVELOPMENT GROUP, INC., a California corporation; MANTECH ENTERPRISE SOLUTIONS, INC., a Virginia corporation; VOBIX CORPORATION, a Virginia corporation MANTECH SECURITY TECHNOLOGIES CORPORATION, a Virginia corporation   WITNESS:         By:   /s/    JEFFREY S. BROWN         --------------------------------------------------------------------------------       By:   /s/    MATTHEW P. GALASKI         --------------------------------------------------------------------------------     Name:    Jeffrey S. Brown           Name:    Matthew P. Galaski Title:      Vice President 8 --------------------------------------------------------------------------------     MASI U.K. LIMITED, a corporation organized and existing under the laws of the United Kingdom; MANTECH ADVANCED RECOGNITION LIMITED, a private company registered in England under the number 885326, formerly known as Advanced Recognition Limited; and MANTECH DATABASE SERVICES EUROPE LIMITED, a United Kingdom corporation WITNESS:         By:   /s/ JEFFREY S. BROWN --------------------------------------------------------------------------------       By:   /s/ MATTHEW P. GALASKI --------------------------------------------------------------------------------     Name:    Jeffrey S. Brown           Name:    Matthew P. Galaski Title:      Attorney-in-Fact     LENDERS(S): CITIZENS BANK OF PENNSYLVANIA, a Pennsylvania state chartered bank By:   /s/ LESLIE A. GRIZZARD --------------------------------------------------------------------------------     Name:    Leslie A. Grizzard Title:      Vice President PNC BANK, NATIONAL ASSOCIATION, a national banking association By:   /s/ DOREEN K. CASEY --------------------------------------------------------------------------------     Name:    Doreen K. Casey Title:      Vice President CHEVY CHASE BANK, F.S.B., a federal savings bank By:   /s/ ERIC A. PIETRAS --------------------------------------------------------------------------------     Name:    Eric A. Pietras Title:      Vice President 9 --------------------------------------------------------------------------------   ADMINISTRATIVE AGENT:   CITIZENS BANK OF PENNSYLVANIA, a Pennsylvania state chartered bank By:   /s/    LESLIE A. GRIZZARD         --------------------------------------------------------------------------------     Name:    Leslie A. Grizzard Title:      Vice President   DOCUMENTATION AGENT:   PNC BANK, NATIONAL ASSOCIATION, a national banking association By:   /s/    DOREEN K. CASEY         --------------------------------------------------------------------------------     Name:    Doreen K. Casey Title:      Vice President 10
Loan No.: 50-2860706 Peachtree Medical Office Portfolio INDEMNITY AND GUARANTY AGREEMENT THIS INDEMNITY AND GUARANTY AGREEMENT (as the same may hereafter be amended, consolidated, renewed or replaced, this “Agreement”), made as of May      , 2007, by NNN HEALTHCARE/OFFICE REIT, INC., a Maryland corporation (“Indemnitor”), whose address is c/o Triple Net Properties, LLC, 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705, in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, “Lender”), whose address is Commercial Real Estate Services, 8739 Research Drive URP - 4, NC 1075, Charlotte, North Carolina 28262. W I T N E S S E T H: WHEREAS, NNN Healthcare/Office REIT Peachtree, LLC, a Delaware limited liability company (the “Borrower”), has obtained a loan (the “Loan”) in the principal amount of Thirteen Million Five Hundred Thirty Thousand ($13,530,000.00) from Lender; and WHEREAS, the Loan is evidenced by a Promissory Note (as the same may from time to time be amended, consolidated, renewed or replaced, the “Note”) dated of even date herewith, executed by Borrower and payable to the order of Lender, in the stated principal amount of Thirteen Million Five Hundred Thirty Thousand ($13,530,000.00), and is secured by a Deed to Secure Debt, Security Agreement and Fixture Filing dated of even date herewith (as the same may from time to time be amended, consolidated, renewed or replaced, the “Security Instrument”) from Borrower for the benefit of Lender, encumbering that certain real property situated in the County of Fayette, State of Georgia, as more particularly described on Exhibit “A” attached hereto and incorporated herein by this reference, together with the buildings, structures and other improvements now or hereafter located thereon (the “Property”) and by other documents and instruments (the Note, the Security Instrument and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the “Loan Documents”); and WHEREAS, as a condition to making the Loan to Borrower, Lender has required that Indemnitor indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Security Instrument; and WHEREAS, the extension of the Loan to Borrower is of substantial benefit to Indemnitor and, therefore, Indemnitor desires to indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Security Instrument. NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby covenants and agrees for the benefit of Lender, as follows: 1. Indemnity and Guaranty. Indemnitor hereby assumes liability for, hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against any and all liabilities, obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees), causes of action, suits, claims, demands and judgments of any nature or description whatsoever (collectively, “Costs”) which may at any time be imposed upon, incurred by or awarded against Lender as a result of: (a) Proceeds paid under any insurance policies (or paid as a result of any other claim or cause of action against any person or entity) by reason of damage, loss or destruction to all or any portion of the Property, to the full extent of such proceeds not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender; (b) Proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of all or any portion of the Property to the full extent of such proceeds or awards not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender; (c) All tenant security deposits or other refundable deposits paid to or held by Borrower or any other person or entity in connection with leases of all or any portion of the Property, which are not applied in accordance with the terms of the applicable lease or other agreement; (d) Rent and other payments received from tenants under leases of all or any portion of the Property paid more than one (1) month in advance; (e) Rents, issues, profits and revenues of all or any portion of the Property received or applicable to a period after the occurrence of an Event of Default under the Loan Documents, or any event which with notice or the passage of time, or both, would constitute an Event of Default, which are not either applied to the ordinary and necessary expenses of owning and operating the Property or paid to Lender; (f) Waste committed on the Property, damage to the Property as a result of the intentional misconduct or gross negligence of Borrower or any of its principals, officers, general partners or members, any guarantor, any indemnitor, or any agent or employee of any such persons, or any removal of all or any portion of the Property in violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred by Lender and/or any of its affiliates on account of such occurrence; (g) Failure to pay any valid taxes, assessments, mechanic’s liens, materialmen’s liens or other liens which could create liens on any portion of the Property which would be superior to the lien or security title of the Security Instrument or the other Loan Documents except, with respect to any such taxes or assessments, to the extent that funds have been deposited with Lender pursuant to the terms of the Security Instrument specifically for the applicable taxes or assessments and not applied by Lender to pay such taxes and assessments; and (h) Fraud, intentional misrepresentation, failure to disclose a material fact, any untrue statement of a material fact or omission to state a material fact in the written materials and/or information provided to Lender or any of its affiliates by or on behalf of Borrower or any of its affiliates, principals, officers, general partners or members, any guarantor, any indemnitor, or any agent, employee or other person authorized or apparently authorized to make statements, representations or disclosures on behalf of Borrower, any affiliate, principal, officer, general partner or member of Borrower, or any guarantor or any indemnitor, to the full extent of any losses, damages and expenses of Lender and/or any of its affiliates on account thereof. In addition to the foregoing, and notwithstanding anything to the contrary set forth in this Agreement or any of the other Loan Documents, Indemnitor shall be fully liable for all principal, interest and other amounts which may be due and owing by Borrower under the Note, the Security Instrument and any other Loan Document from and after (i) a default by Borrower, Indemnitor or any general partner, manager or managing member of Borrower of any of the covenants set forth in Section 2.9 or Section 2.29 of the Security Instrument, or (ii) the Property or any part thereof becoming an asset in (x) a voluntary bankruptcy or insolvency proceeding of Borrower or Indemnitor, or (y) an involuntary bankruptcy or insolvency proceeding of Borrower or Indemnitor in which Borrower or Indemnitor colludes with creditors in such bankruptcy or insolvency proceeding and which is not dismissed within sixty (60) days of filing. This is a guaranty of payment and performance and not of collection. The liability of Indemnitor under this Agreement shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower or any other person (including, without limitation, other guarantors, if any), nor against the collateral for the Loan. Indemnitor waives any right to require that an action be brought against Borrower or any other person or to require that resort be made to any collateral for the Loan or to any balance of any deposit account or credit on the books of Lender in favor of Borrower or any other person. In the event of a default under the Loan Documents which is not cured within any applicable grace or cure period, Lender shall have the right to enforce its rights, powers and remedies (including, without limitation, foreclosure of all or any portion of the collateral for the Loan) thereunder or hereunder, in any order, and all rights, powers and remedies available to Lender in such event shall be non-exclusive and cumulative of all other rights, powers and remedies provided thereunder or hereunder or by law or in equity. If the indebtedness and obligations guaranteed hereby are partially paid or discharged by reason of the exercise of any of the remedies available to Lender, this Agreement shall nevertheless remain in full force and effect, and Indemnitor shall remain liable for all remaining indebtedness and obligations guaranteed hereby, even though any rights which Indemnitor may have against Borrower may be destroyed or diminished by the exercise of any such remedy. 2. Indemnification Procedures. (a) If any action shall be brought against Lender based upon any of the matters for which Lender is indemnified hereunder, Lender shall notify Indemnitor in writing thereof and Indemnitor shall promptly assume the defense thereof, including, without limitation, the employment of counsel acceptable to Lender and the negotiation of any settlement; provided, however, that any failure of Lender to notify Indemnitor of such matter shall not impair or reduce the obligations of Indemnitor hereunder. Lender shall have the right, at the expense of Indemnitor (which expense shall be included in Costs), to employ separate counsel in any such action and to participate in the defense thereof. In the event Indemnitor shall fail to discharge or undertake to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder, Lender may, at its sole option and election, defend or settle such claim, loss or liability. The liability of Indemnitor to Lender hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation, attorneys’ fees and disbursements, incurred by Lender in effecting such settlement. In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitor shall pay the same as hereinafter provided. Lender’s good faith in any such settlement shall be conclusively established if the settlement is made on the advice of independent legal counsel for Lender. (b) Indemnitor shall not, without the prior written consent of Lender: (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to Lender of a full and complete written release of Lender (in form, scope and substance satisfactory to Lender in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit, proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay any sum or perform any obligation as determined by Lender in its sole discretion. (c) All Costs shall be immediately reimbursable to Lender when and as incurred and, in the event of any litigation, claim or other proceeding, without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceeding, and Indemnitor shall pay to Lender any and all Costs within ten (10) days after written notice from Lender itemizing the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of Indemnitor to periodically pay such Costs, such Costs, if not paid within said ten-day period, shall bear interest at the Default Interest Rate (as defined in the Note). 3. Reinstatement of Obligations. If at any time all or any part of any payment made by Indemnitor or received by Lender from Indemnitor under or with respect to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of Indemnitor or Borrower), then the obligations of Indemnitor hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitor, or receipt of payment by Lender, and the obligations of Indemnitor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitor had never been made. 4. Waivers by Indemnitor. To the extent permitted by law, Indemnitor hereby waives and agrees not to assert or take advantage of: (a) Any right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power or under any other agreement before proceeding against Indemnitor hereunder; (b) Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons; (c) Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender; (d) Any defense based upon an election of remedies by Lender; (e) Any right or claim of right to cause a marshalling of the assets of Indemnitor; (f) Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Agreement; (g) Any duty on the part of Lender to disclose to Indemnitor any facts Lender may now or hereafter know about Borrower or the Property, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Indemnitor intends to assume or has reason to believe that such facts are unknown to Indemnitor or has a reasonable opportunity to communicate such facts to Indemnitor, it being understood and agreed that Indemnitor is fully responsible for being and keeping informed of the financial condition of Borrower, of the condition of the Property and of any and all circumstances bearing on the risk that liability may be incurred by Indemnitor hereunder; (h) Any lack of notice of disposition or of manner of disposition of any collateral for the Loan; (i) Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents; (j) Any deficiencies in the collateral for the Loan or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed; (k) An assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Indemnitor or the collateral for the Loan; (l) Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise; and (m) Any action, occurrence, event or matter consented to by Indemnitor under Section 6(g) hereof, under any other provision hereof, or otherwise. 5. Representation and Warranty. Indemnitor hereby represents, warrants and covenants that Indemnitor’s net worth is, and at all times while this Agreement shall be in effect, shall be not less than $10,000,000 with Liquid Assets (as hereinafter defined) exceeding $1,000,000. For the purposes of this Section 5, “Liquid Assets” shall mean assets in the form of cash, cash deposits, available lines of credit, accounts receivables, “soft” earnest money deposits, obligations of (or fully guaranteed as to principal and interest by) the United States or any agency or instrumentality thereof (provided the full faith and credit of the United States supports such obligation or guarantee), securities listed and traded on a recognized stock exchange or traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations, or liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market. 6. General Provisions. (a) Fully Recourse. All of the terms and provisions of this Agreement are recourse obligations of Indemnitor and not restricted by any limitation on personal liability set forth in any of the Loan Documents. (b) Survival. This Agreement shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Security Instrument or any of the other Loan Documents, including, without limitation, any foreclosure or deed in lieu thereof, even if, as a part of such remedy, the Loan is paid or satisfied in full. (c) No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction by Indemnitor of any liability hereunder, Indemnitor shall not have any right of subrogation, contribution, reimbursement or indemnity whatsoever or any right of recourse to or with respect to the assets or property of Borrower or to any collateral for the Loan. In connection with the foregoing, Indemnitor expressly waives any and all rights of subrogation to Lender against Borrower, and Indemnitor hereby waives any rights to enforce any remedy which Lender may have against Borrower and any right to participate in any collateral for the Loan. In addition to and without in any way limiting the foregoing, Indemnitor hereby subordinates any and all indebtedness of Borrower now or hereafter owed to Indemnitor to all indebtedness of Borrower to Lender, and agrees with Lender that Indemnitor shall not demand or accept any payment of principal or interest from Borrower, shall not claim any offset or other reduction of Indemnitor’s obligations hereunder because of any such indebtedness and shall not take any action to obtain any of the collateral from the Loan. Further, Indemnitor shall not have any right of recourse against Lender by reason of any action Lender may take or omit to take under the provisions of this Agreement or under the provisions of any of the Loan Documents. (d) Reservation of Rights. Nothing contained in this Agreement shall prevent or in any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which Lender may have against Borrower, Indemnitor or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. §9601 et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved. (e) Financial Statements. Indemnitor hereby agrees, as a material inducement to Lender to make the Loan to Borrower, to furnish to Lender, from time to time, promptly upon demand by Lender annual financial statements for Indemnitor, within one hundred twenty (120) days after the end of each calendar year, certified by or on behalf of Indemnitor, in form and substance acceptable to Lender. Indemnitor hereby warrants and represents unto Lender that any and all balance sheets, net worth statements and other financial data which have heretofore been given or may hereafter be given to Lender with respect to Indemnitor did or will at the time of such delivery fairly and accurately present the financial condition of Indemnitor. (f) Rights Cumulative; Payments. Lender’s rights under this Agreement shall be in addition to all rights of Lender under the Note, the Security Instrument and the other Loan Documents. Further, payments made by Indemnitor under this Agreement shall not reduce in any respect Borrower’s obligations and liabilities under the Note, the Security Instrument and the other Loan Documents except with respect to, and to the extent of, Borrower’s obligation and liability for the payment made by Indemnitor. (g) No Limitation on Liability. Indemnitor hereby consents and agrees that Lender may at any time and from time to time without further consent from Indemnitor do any of the following events (if applicable), and the liability of Indemnitor under this Agreement shall be unconditional and absolute and shall in no way be impaired or limited by any of the following events, whether occurring with or without notice to Indemnitor or with or without consideration: (i) any extensions of time for performance required by any of the Loan Documents or extension or renewal of the Note; (ii) any sale, assignment or foreclosure of the Note, the Security Instrument or any of the other Loan Documents or any sale or transfer of the Property or any portion thereof; (iii) any change in the composition of Borrower, including, without limitation, the withdrawal or removal of Indemnitor from any current or future position of ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor herein or by Borrower in any of the Loan Documents; (v) the release of Borrower or of any other person or entity from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Lender’s voluntary act or otherwise; (vi) the release or substitution in whole or in part of any security for the Loan; (vii) Lender’s failure to record the Security Instrument or to file any financing statement (or Lender’s improper recording or filing thereof) or to otherwise perfect, protect, secure or insure any lien or security interest given as security for the Loan; (viii) the modification of the terms of any one or more of the Loan Documents; or (ix) the taking of, or failure to take any action of any type whatsoever. No such action which Lender shall take or fail to take in connection with the Loan Documents or any collateral for the Loan, nor any course of dealing with Borrower or any other person, shall limit, impair or release Indemnitor’s obligations hereunder, affect this Agreement in any way or afford Indemnitor any recourse against Lender. Nothing contained in this Section shall be construed to require Lender to take or refrain from taking any action referred to herein. (h) Entire Agreement; Amendment; Severability. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements, whether written or oral, between the parties respecting such matters. Any amendments or modifications hereto, in order to be effective, shall be in writing and executed by the parties hereto. A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances. (i) Governing Law. THIS AGREEMENT SHALL BE EXCLUSIVELY GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING. (j) Binding Effect; Waiver of Acceptance. This Agreement shall bind Indemnitor and its heirs, personal representatives, successors and assigns and shall inure to the benefit of Lender and the officers, directors, shareholders, agents and employees of Lender and their respective heirs, successors and assigns. Notwithstanding the foregoing, Indemnitor shall not assign any of its rights or obligations under this Agreement without the prior written consent of Lender, which consent may be withheld by Lender in its sole discretion. Indemnitor hereby waives any acceptance of this Agreement by Lender, and this Agreement shall immediately be binding upon Indemnitor. (k) Notice. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by law shall be in writing and shall be deemed to have been validly given or served by delivery of the same in person to the intended addressee, or by depositing the same with Federal Express or another reputable private courier service for next business day delivery to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided, or by depositing the same in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided. All notices, demands and requests shall be effective upon such personal delivery, or one (1) business day after being deposited with the private courier service, or two (2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’ prior written notice thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America. (l) No Waiver; Time of Essence; Business Day. The failure of any party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such right or remedy must be in writing and signed by the party to be bound. This Agreement is subject to enforcement at law or in equity, including actions for damages or specific performance. Time is of the essence hereof. The term “business day” as used herein shall mean a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in New York, New York are authorized by law to be closed. (m) Captions for Convenience. The captions and headings of the sections and paragraphs of this Agreement are for convenience of reference only and shall not be construed in interpreting the provisions hereof. (n) Reasonable Attorney’s Fees. In the event it is necessary for Lender to retain the services of an attorney or any other consultants in order to enforce this Agreement, or any portion thereof, Indemnitor agrees to pay to Lender, in addition to Indemnitor’s other obligations to pay Lender hereunder, any and all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be included in Costs. (o) Successive Actions. A separate right of action hereunder shall arise each time Lender acquires knowledge of any matter indemnified or guaranteed by Indemnitor under this Agreement. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action, and Indemnitor hereby waives and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments. (p) Joint and Several Liability. Notwithstanding anything to the contrary contained herein, the representations, warranties, covenants and agreements made by Indemnitor herein, and the liability of Indemnitor hereunder, is joint and several if Indemnitor is comprised of more than one person or entity. (q) Reliance. Lender would not make the Loan to Borrower without this Agreement. Accordingly, Indemnitor intentionally and unconditionally enters into the covenants and agreements as set forth above and understands that, in reliance upon and in consideration of such covenants and agreements, the Loan shall be made and, as part and parcel thereof, specific monetary and other obligations have been, are being and shall be entered into which would not be made or entered into but for such reliance. (r) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages. (s) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.   (1)   INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY AND STATE IN WHICH THE PROPERTY IS LOCATED, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT INDEMNITOR WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).   (2)   INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. (t) Waiver by Indemnitor. Indemnitor covenants and agrees that, upon the commencement of a voluntary or involuntary bankruptcy proceeding by or against Borrower, Indemnitor shall not seek or cause Borrower or any other person or entity to seek a supplemental stay or other relief, whether injunctive or otherwise, pursuant to 11 U.S.C. §105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law, (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against Indemnitor or the collateral for the Loan by virtue of this Agreement or otherwise. (u) SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS AGREEMENT INCLUDES INDEMNIFICATION PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES, COULD INCLUDE AN INDEMNIFICATION BY INDEMNITOR OF LENDER FROM CLAIMS OR LOSSES ARISING AS A RESULT OF LENDER’S OWN NEGLIGENCE. (v) Secondary Market. Lender may sell, transfer and deliver the Loan Documents to one or more investors in the secondary mortgage market. In connection with such sale or otherwise, Lender may retain or assign responsibility for servicing the Loan or may delegate some or all of such responsibility and/or obligations to a servicer, including, but not limited to, any subservicer or master servicer, on behalf of the investors. All references to Lender herein shall refer to and include, without limitation, any such servicer, to the extent applicable. (w) Decisions. Wherever pursuant to this Agreement (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory or acceptable to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove or to accept or not accept, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein. (x) Dissemination of Information. If Lender determines at any time to sell, transfer or assign the Note, the Security Instrument and the other Loan Documents, and any or all servicing rights with respect thereto, or to grant participations therein (the “Participations”) or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”), Lender may forward to each purchaser, transferee, assignee, servicer, participant, investor, or their respective successors in such Participations and/or Securities (collectively, the “Investor”) or any Rating Agency (as defined in the Security Instrument) rating such Securities, each prospective Investor and each of the foregoing’s respective counsel, all documents and information which Lender now has or may hereafter acquire relating to the Loan and to Borrower, any Indemnitor and the Property, which shall have been furnished by Borrower, or any Indemnitor as Lender determines necessary or desirable. (y) Costs. Wherever pursuant to this Agreement it is provided that Indemnitor shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, reasonable legal fees and disbursements of Lender. (z) Other Guaranties. This Agreement is in addition to any and all other guaranties relating to the Debt (as defined in the Security Instrument) or any portion thereof. To the extent Indemnitor may become liable under this Agreement and one or more other indemnitors may become liable under the terms of any other guaranty made in favor of Lender with respect to the Debt, Lender shall be entitled to exercise any and all of its remedies against Indemnitor under this Agreement as well as any and all of its remedies against any one or more indemnitors under such other guaranties jointly and severally. [The Remainder of the Page is Intentionally Blank] 1 IN WITNESS WHEREOF, Indemnitor has executed this Indemnity and Guaranty Agreement as of the day and year first written above. INDEMNITOR: NNN HEALTHCARE/OFFICE REIT, INC., a Maryland corporation By: /s/ Shannon K S Johnson Name: Shannon K S Johnson Title: Chief Financial Officer 2 EXHIBIT “A” [Legal Description] 3
Exhibit 10.8 AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT This AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) dated as of March 31, 2010, is made by FLOTEK INDUSTRIES, INC., a Delaware corporation (the “Borrower”), and each subsidiary of the Borrower signatory hereto (together with the Borrower, the “Grantors” and individually, a “Grantor”), in favor of Whitebox Advisors LLC, as Administrative Agent for the Lenders (as defined in the Credit Agreement described below) (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the benefit of each of the Secured Parties (as defined in the Credit Agreement described below). WITNESSETH: A. The Borrower, Wells Fargo Bank, National Association, as administrative agent (the “Original Agent”), and various lenders party thereto (the “Original Lenders”) are parties to that certain Credit Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Credit Agreement”). B. In connection with the Original Credit Agreement, the Grantors executed a Pledge and Security Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Pledge and Security Agreement”) in favor of the Original Agent. C. Pursuant to a Nonrecourse Assignment Agreement (Syndicated Facility) dated as of March 17, 2010, the Original Lenders and the Original Agent assigned all of their rights and obligations under, among other things, the Original Credit Agreement and the Original Pledge and Security Agreement to the Administrative Agent and the Lenders (as defined in the Credit Agreement defined below). D. The Borrower, the Administrative Agent and the lenders party thereto from time to time (the “Lenders”) are party to that certain Amended and Restated Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Borrower, the Administrative Agent and the Lenders agreed to amended and restate the Original Credit Agreement in its entirety. E. It is a condition precedent to the effectiveness of the Credit Agreement that the Grantors execute and deliver this Security Agreement to amend and restate the Original Pledge and Security Agreement in its entirety as set forth herein, without constituting a novation of the obligations, liabilities and indebtedness of the Grantors thereunder. F. Each Grantor will derive substantial direct and indirect benefits from the transactions contemplated by the Credit Agreement, each Grantor is willing to execute and deliver and perform its obligations under this Security Agreement to secure its obligations under the Credit Agreement, the Guaranty and the other Credit Documents. -------------------------------------------------------------------------------- NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of the Secured Parties, to amend and restate the Original Pledge and Security Agreement as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): “Administrative Agent” is defined in the preamble. “Certificated Equipment” means any Equipment the ownership of which is evidenced by a certificate of title or for which applicable Legal Requirement requires the issuance of a certificate of title. “Collateral” is defined in Section 2.1. “Collateral Account” is defined in Section 4.3(b). “Computer Hardware and Software Collateral” means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form, (b) software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above, (c) all firmware associated therewith, (d) all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c), and (e) all rights with respect to all of the foregoing, including copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing. “Control Agreement” means an authenticated record in form and substance reasonably satisfactory to the Administrative Agent, that provides for the Administrative Agent (for the ratable benefit of the Secured Parties) to have “control” (as defined in the UCC) over certain Collateral. “Copyright Collateral” means all copyrights of any Grantor, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantor’s rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, including without limitation those copyrights referred to in Item C of Schedule III hereto, and registrations and recordings thereof   -2- -------------------------------------------------------------------------------- and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all Proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Grantor. “Credit Agreement” is defined in the first recital. “Distributions” means all cash, cash dividends, stock dividends, other distributions, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, and all other distributions or payments (whether similar or dissimilar to the foregoing) on or with respect to, or on account of, any Pledged Share or Pledged Interest or other rights or interests constituting Collateral. “Equipment” is defined in Section 2.1(a). “Excluded Stock” means 34% of the Equity Interests in each direct Foreign Subsidiary of the Grantors. “General Intangibles” means all “general intangibles” and all “payment intangibles”, each as defined in the UCC, and shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations and all Intellectual Property Collateral (in each case, regardless of whether characterized as general intangibles under the UCC). “Governmental Approval” is defined in Section 2.1(f). “Grantor” is defined in the preamble. “Indemnified Parties” is defined in Section 6.4(a). “Intellectual Property Collateral” means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral. “Inventory” is defined in Section 2.1(b). “Lenders” is defined in the first recital. “Obligor” means the Borrower or any Guarantor. “Patent Collateral” means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including without limitation those patents referred to in Item A of Schedule III hereto, and any patent applications in preparation for filing, (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all Proceeds of, and rights associated with, the   -3- -------------------------------------------------------------------------------- foregoing (including licenses, royalties income, payments, claims, damages and Proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license. “Permitted Liens” means all Liens permitted by Section 6.2 of the Credit Agreement or any other Credit Document. “Pledged Interests” means all Equity Interests or other ownership interests of any Pledged Interests Issuer described in Item A of Schedule I hereto; all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledge Interests Issuer taken in extension or renewal thereof or substitution therefor. “Pledged Interests Issuer” means each Person identified in Item A of Schedule I hereto as the issuer of the Pledged Shares or the Pledged Interests identified opposite the name of such Person. “Pledged Note Issuer” means each Person identified in Item B of Schedule I hereto as the issuer of the Pledged Notes identified opposite the name of such Person. “Pledged Notes” means all promissory notes of any Pledged Note Issuer evidencing Debt incurred pursuant to Section 6.1(b) of the Credit Agreement in form and substance reasonably satisfactory to the Administrative Agent delivered by any Grantor to the Administrative Agent as Pledged Property hereunder, as such promissory notes, in accordance with Section 7.3, are amended, modified or supplemented from time to time and together with any promissory note of any Pledged Note Issuer taken in extension or renewal thereof or substitution therefor. “Pledged Property” means all Pledged Notes, Pledged Interests, Pledged Shares, all assignments of any amounts due or to become due with respect to the Pledged Interests or the Pledged Shares, all other instruments which are now being delivered by any Grantor to the Administrative Agent or may from time to time hereafter be delivered by any Grantor to the Administrative Agent for the purpose of pledge under this Security Agreement or any other Credit Document, and all proceeds of any of the foregoing. “Pledged Shares” means all Equity Interests of any Pledged Interests Issuer identified under Item A of Schedule I which are delivered by any Grantor to the Administrative Agent as Pledged Property hereunder. “Receivables” is defined in Section 2.1(c). “Related Contracts” is defined in Section 2.1(c). “Secured Obligations” is defined in Section 2.2. “Secured Party” is defined in the preamble.   -4- -------------------------------------------------------------------------------- “Securities Act” is defined in Section 6.2(a). “Security Agreement” is defined in the preamble. “Termination Date” means the date that all Secured Obligations (other than contingent Obligations with respect to indemnity and reimbursement of expenses as to which no claim has been made as of the time of determination) have been paid in full in cash, all Hedging Arrangements with any Secured Party have been terminated or novated to a counterparty that is not a Secured Party, and all Commitments shall have terminated. “Trademark Collateral” means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including without limitation those trademarks referred to in Item B of Schedule III hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the “Trademark”), (b) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, (c) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world. “Trade Secrets Collateral” means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor, (all of the foregoing being collectively called a “Trade Secret”), including all Documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license. “UCC” means the Uniform Commercial Code as in effect in the State of New York, as the same may be amended from time to time. SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.   -5- -------------------------------------------------------------------------------- SECTION 1.3. UCC Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings. ARTICLE II SECURITY INTEREST SECTION 2.1. Grant of Security Interest. Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Administrative Agent, for its benefit and the ratable benefit of each of the other Secured Parties, and hereby grants to the Administrative Agent, for its benefit and the ratable benefit of each of the other Secured Parties, a continuing security interest in all of such Grantor’s following property, whether now or hereafter existing, owned or acquired by such Grantor, and wherever located, (collectively, the “Collateral”): (a) all equipment in all of its forms (including but not limited to drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Grantor, vehicles, motor vehicles, rolling stock, vessels, aircraft), of such Grantor, wherever located, and all machinery, apparatus, installation facilities and other tangible personal property, and all parts thereof and all accessions, additions, attachments, improvements, substitutions, replacements and proceeds thereto and therefore (any and all of the foregoing being the “Equipment”); (b) all inventory in all of its forms of such Grantor, wherever located, including (i) all oil, gas, or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefore, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), and (iii) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefore (any and all such inventory, materials, goods, accessions, products and documents being the “Inventory”); (c) all accounts, money, payment intangibles, deposit accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles of such Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles (any and all such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper,   -6- -------------------------------------------------------------------------------- documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles being the “Receivables”, and any and all such security agreements, guaranties, leases, agreements and other contracts being the “Related Contracts”); (d) all Intellectual Property Collateral of such Grantor; (e) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information in all forms, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.1; (f) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees (each a “Governmental Approval”), to the extent a security interest may be granted therein; provided that any Governmental Approval that by its terms or by operation of law would be void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder is expressly excepted and excluded from the Liens and terms of this Security Agreement, including the grant of security interest in this Section 2.1; (g) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices (including, without limitation, any Hedging Arrangement); (h) to the extent not included in the foregoing, all bank accounts, investment property, fixtures and supporting obligations; (i) all Pledged Interests, Pledged Notes, Pledged Shares and any other Pledged Property whether now or hereafter delivered to the Administrative Agent in connection with this Security Agreement and all Distributions, interest, and other payments and rights with respect to such Pledged Property; (j) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in clauses (a), (b), (c), (d), (e), (f), (g), (h), and (i) and proceeds deposited from time to time in any lock boxes of such Grantor, and, to the extent not otherwise included, all payments and proceeds under insurance (whether or not the Administrative Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the Collateral); and (k) all of such Grantor’s other property and rights of every kind and description and interests therein, including without limitation, all other “Accounts”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claims”, “Commodity   -7- -------------------------------------------------------------------------------- Accounts”, “Commodity Contracts”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit Rights”, “Letters of Credit”, “Money”, “Proceeds”, “Promissory Notes”, “Securities”, “Securities Account”, “Security Entitlements”, “Supporting Obligations” and “Uncertificated Securities” as such terms are defined in the UCC. Notwithstanding anything to the contrary contained herein, Excluded Stock shall be excluded from the lien and security interest granted hereunder (and shall, as applicable, not be included as “Collateral”, “General Intangibles”, “Investment Property”, or “Pledged Property” for the purposes hereof). SECTION 2.2. Security for Obligations. This Security Agreement, and the Collateral in which the Administrative (for the benefit of the Secured Parties) is granted a security interest hereunder by each Grantor, secures the prompt and indefeasible payment in full and performance of all Obligations (as defined in the Credit Agreement) of each Grantor and each other Obligor now or hereafter existing, whether for principal, interest, costs, fees, expenses or otherwise, howsoever created, arising or evidenced, whether direct or indirect, primary or secondary, fixed or absolute or contingent, joint or several, now or hereafter existing (all such Obligations, collectively, the “Secured Obligations”). SECTION 2.3. Continuing Security Interest; Transfer of Loans; Reinstatement. This Security Agreement shall create continuing security interests in the Collateral and shall (a) remain in full force and effect until the Termination Date, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each other Secured Party and its respective successors, transferees and assigns, subject to the limitations set forth in the Credit Agreement. Without limiting the generality of the foregoing clause (c), any Lender may assign or otherwise transfer (in whole or in part) any Note or any Advance held by it as provided in Section 9.7 of the Credit Agreement, and any successor or assignee thereof shall thereupon become vested with all the rights and benefits in respect thereof granted to such Secured Party under any Credit Document (including this Security Agreement), or otherwise, subject, however, to any contrary provisions in such assignment or transfer, and as applicable to the provisions of Section 9.7 and Article 8 of the Credit Agreement. If at any time all or any part of any payment theretofore applied by the Administrative Agent or any Secured Party to any of the Secured Obligations is or must be rescinded or returned by the Administrative Agent or any such Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy, reorganization or other similar proceeding of any Grantor or any other Person), such Secured Obligations shall, for purposes of this Security Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued to be in existence, notwithstanding any application by the Administrative Agent or such Secured Party or any termination agreement or release provided to any Grantor, and this Security Agreement shall continue to be effective or reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Administrative Agent or such Secured Party had not been made.   -8- -------------------------------------------------------------------------------- SECTION 2.4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed, (b) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (c) neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Administrative Agent nor any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. SECTION 2.5. Delivery of Pledged Property. (a) Other than as provided in the last sentence of Section 4.5 below, all certificates or instruments representing or evidencing any Collateral, including all Pledged Shares and Pledged Notes, shall be delivered to and held by or on behalf of (or in the case of the Pledged Notes, endorsed to the order of) the Administrative Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary indorsements or instruments of transfer or assignment, duly executed in blank. (b) To the extent any of the Collateral constitutes an “uncertificated security” (as defined in Section 8-102(a)(18) of the UCC) or a “security entitlement” (as defined in Section 8-102(a)(17) of the UCC), the applicable Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant “control” (as defined in Section 8-106 of the UCC) to the Administrative Agent (for the ratable benefit of the Secured Parties) over such Collateral. SECTION 2.6. Distributions on Pledged Shares. In the event that any Distribution with respect to any Pledged Shares or Pledged Interests pledged hereunder is permitted to be paid (in accordance with Section 6.9 of the Credit Agreement), such Distribution or payment may be paid directly to the applicable Grantor. If any Distribution is made in contravention of Section 6.9 of the Credit Agreement, the applicable Grantor shall hold the same segregated and in trust for the Administrative Agent until paid to the Administrative Agent in accordance with Section 4.1(e). SECTION 2.7. Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until the Termination Date. All rights of the Secured Parties and the security interests granted to the Administrative Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of each Grantor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (a) any lack of validity, legality or enforceability of any Credit Document, (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Credit Document or otherwise, or (ii) to exercise any   -9- -------------------------------------------------------------------------------- right or remedy against any other guarantor of, or collateral securing, any Secured Obligations, (c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligations, (d) any reduction, limitation, impairment or termination of any Secured Obligations (except in the case of the occurrence of the Termination Date) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Credit Document, (f) any addition, exchange or release of any Collateral, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Obligor, any surety or any guarantor. SECTION 2.8. Waiver of Subrogation. Until one year and one day after the Termination Date, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Obligor that arise from the existence, payment, performance or enforcement of such Grantor’s obligations under this Security Agreement or any other Credit Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Secured Party against any Obligor or any collateral which any Secured Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and the Secured Obligations shall not have been indefeasibly paid in full in cash or all Commitments and all other commitments by any Secured Party to any Obligor have not been terminated or expired, then such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Administrative Agent (on behalf of the Secured Parties), and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 2.8 is knowingly made in contemplation of such benefits. SECTION 2.9. Election of Remedies. Except as otherwise provided in the Credit Agreement, if any Secured Party may, under applicable law, proceed to realize its benefits under any of this Security Agreement or the other Credit Documents giving any Secured Party a Lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Security Agreement. If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Obligor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based   -10- -------------------------------------------------------------------------------- upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party. ARTICLE III REPRESENTATIONS AND WARRANTIES In order to induce the Secured Parties to enter into the Credit Agreement and make Advances thereunder, each Grantor represents and warrants unto each Secured Party, as at date hereof and at the date of each pledge and delivery hereunder by such Grantor to the Administrative Agent of any Collateral (including each pledge and delivery of any Pledged Shares or Pledged Notes), as set forth in this Article. SECTION 3.1. Validity, etc. This Security Agreement and the other Credit Documents to which such Grantor is a party constitutes the legal, valid and binding obligations of such Grantor, enforceable against such Grantor in accordance with their respective terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity). SECTION 3.2. Ownership, No Liens, etc. Such Grantor is the legal and beneficial owner of, and has good and defensible title to (and has full right and authority to pledge, grant and assign) the Collateral, free and clear of all Liens, except for any Lien (a) granted pursuant to this Security Agreement in favor of the Administrative Agent, or (b) that is a Permitted Lien. No effective UCC financing statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Administrative Agent relating to this Security Agreement, Permitted Liens or as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to the Administrative Agent on the Restatement Effective Date. This Security Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, except for the proper filing of the applicable filing statements with the Secretary of State of the States of Delaware, Texas and Oklahoma, all filings and other actions necessary to perfect and protect such security interest have been duly taken and such security interest shall be a first priority security interest. SECTION 3.3. As to Equity Interests of the Subsidiaries, Investment Property. (a) With respect to the Pledged Shares, all such Pledged Shares are duly authorized and validly issued, fully paid and non-assessable, and represented by a certificate. (b) With respect to the Pledged Interests, no such Pledged Interests (i) are dealt in or traded on securities exchanges or in securities markets, (ii) expressly provide that such Pledged Interests are securities governed by Article 8 of the UCC, or (iii) are held in a Securities Account, except, with respect to this clause (b), Pledged Interests (A) for which the Administrative Agent is the registered owner or (B) with respect to which the Pledged Interests Issuer has agreed in an authenticated record with such Grantor and the Administrative Agent to comply with any instructions of the Administrative Agent without the consent of such Grantor.   -11- -------------------------------------------------------------------------------- (c) Such Grantor has delivered all Certificated Securities constituting Collateral held by such Grantor to the Administrative Agent, together with duly executed undated blank stock powers, or other equivalent instruments of transfer reasonably acceptable to the Administrative Agent. (d) With respect to Uncertificated Securities constituting Collateral owned by such Grantor, such Grantor has caused the Pledged Interests Issuer or other issuer thereof either (i) to register the Administrative Agent as the registered owner of such security, or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such Pledged Interests Issuer or other issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor. (e) The percentage of the issued and outstanding Pledged Shares and Pledged Interests of each Issuer pledged by such Grantor hereunder is as set forth on Schedule I. All of the Pledged Shares and Pledged Interests constitute one hundred percent (100%) of such Grantor’s interest in the applicable Pledged Interests Issuer and the percentage of the total membership, partnership and/or other equity interests in the Pledged Interests Issuer indicated on Schedule I. (f) Such Grantor has no outstanding rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding whereby any Person would be entitled to acquire shares, member interests or units of any Pledged Interest Issuer. (g) In the case of each Pledged Note, all of such Pledged Notes have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and are not in default. SECTION 3.4. Grantor’s Name, Location, etc. (a) (i) The jurisdiction in which such Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Item A-1 of Schedule II hereto, (ii) the place of business of such Grantor or, if such Grantor has more than one place of business, the chief executive office of such Grantor and the office where such Grantor keeps its records concerning the Receivables, and all originals of all chattel paper which evidence Receivables, is set forth in Item A-2 of Schedule II hereto, and (iii) such Grantor’s federal taxpayer identification number is set forth in Item A-3 of Schedule II hereto. (b) Such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Item B of Schedule II hereto. (c) Such Grantor is not a party to any federal, state or local government contract except contracts with Mineral Management Services or other Federal leases.   -12- -------------------------------------------------------------------------------- (d) Such Grantor does not maintain any Deposit Accounts, Securities Accounts or Commodity Accounts with any Person, in each case, except as set forth on Item C of Schedule II. (e) None of the Receivables is evidenced by a promissory note or other instrument other than a promissory note or instrument that has been delivered to the Administrative Agent (with appropriate endorsements). (f) Such Grantor is not the beneficiary of any Letters of Credit, except as set forth on Item D of Schedule II (as such schedule may be amended or supplemented from time to time) hereto and such Grantor has obtained the consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the assignment of the proceeds of the letter of credit to the Administrative Agent. (g) Such Grantor does not have Commercial Tort Claims (i) in which a suit has been filed by such Grantor, and (ii) where the amount of damages reasonably expected to be claimed exceeds $250,000, except as set forth on Item E of Schedule II. (h) The name set forth on the signature page attached hereto is the true and correct legal name (as defined in the UCC) of such Grantor. (i) Such Grantor has obtained a legal, valid and enforceable consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the assignment of the Proceeds of such Letter of Credit to the Administrative Agent and has not consented to, and is otherwise aware of, any Person (other than the Administrative Agent pursuant hereto) having control (within the meaning of Section 9-107 of the UCC) over, or any other interest in any of such Grantor’s rights in respect thereof. SECTION 3.5. Possession of Inventory, Control; etc. Such Grantor (a) has exclusive possession and control, subject to Permitted Liens, of the Equipment and Inventory, and (b) is the sole entitlement holder of its Accounts and no other Person (other than the Administrative Agent pursuant to this Security Agreement or any other Person with respect to Permitted Liens) has “control” or “possession” of, or any other interest in, any of its Accounts or any other securities or property credited thereto except as permitted pursuant to this Security Agreement. SECTION 3.6. Negotiable Documents, Instruments and Chattel Paper. Such Grantor has delivered to the Administrative Agent possession of all originals of all Documents, Instruments, Promissory Notes, Pledged Notes and tangible Chattel Paper owned or held by such Grantor (duly endorsed, in blank, if requested by the Administrative Agent). SECTION 3.7. Intellectual Property Collateral. Such Grantor represents that except for any Patent Collateral, Trademark Collateral, and Copyright Collateral specified in Item A, Item B and Item C, respectively, of Schedule III hereto, and any Trade Secrets Collateral, such Grantor neither owns and nor has any other interest in any Intellectual Property Collateral as of the date hereof, other than the Computer Hardware and Software Collateral. Such Grantor further represents and warrants that, with respect to all Intellectual Property Collateral (a) such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part except as could not   -13- -------------------------------------------------------------------------------- reasonably be expected to result in a Material Adverse Change, (b) such Grantor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral, subject to Permitted Liens, and no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party in any material respects, (c) such Grantor has made all necessary filings and recordations to protect its interest in such material Intellectual Property Collateral, including recordations of any of its interests in the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world, and, to the extent necessary, has used proper statutory notice in connection with its use of any material patent, trademark and copyright in any of the Intellectual Property Collateral, (d) such Grantor has taken all reasonable steps to safeguard its Trade Secrets and to its knowledge none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor, (e) to such Grantor’s knowledge, no third party is infringing upon any material Intellectual Property owned or used by such Grantor in any material respect, or any of its respective licensees, (f) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any Intellectual Property except as would not reasonably be expected to result in a Material Adverse Change, (g) such Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of any Intellectual Property for purposes of granting a security interest or as Collateral that has not been terminated or released, (h) such Grantor uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with any trademarks and has taken all commercially reasonable action necessary to insure that any licensees of any trademarks owned by such Grantor use such adequate standards of quality, (i) the consummation of the transactions contemplated by the Credit Agreement and this Security Agreement will not result in the termination or material impairment of any material portion of the Intellectual Property Collateral, and (j) such Grantor owns directly or is entitled to use by license or otherwise, any patents, trademarks, tradenames, Trade Secrets, copyrights, mask works, licenses, technology, know-how, processes and rights with respect to any of the foregoing used in, and necessary for the conduct of such Grantor’s business in any material respect. SECTION 3.8. Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no Governmental Approval, authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either (a) for the grant by such Grantor of the security interest granted hereby or for the execution, delivery and performance of this Security Agreement by such Grantor, (b) for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the filing statements or, with respect to Intellectual Property Collateral, the recordation of any agreements with the U.S. Patent and Trademark Office or the U.S. Copyright Office) or the exercise by the Administrative Agent of its rights and remedies hereunder, or (c) for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement, except (i) with respect to any Pledged Shares or Pledged Interests, as may be required in connection with a disposition of such Pledged Shares or Pledged Interests by laws affecting the offering and sale of securities generally and (ii) any “change of control” or similar filings required by state licensing agencies.   -14- -------------------------------------------------------------------------------- SECTION 3.9. Best Interests. It is in the best interests of each Grantor (other than the Borrower) to execute this Security Agreement in as much as such Grantor will, as a result of being an Affiliate or Subsidiary of the Borrower, derive substantial direct and indirect benefits from the Loans and other extensions of credit made from time to time to one or both of the Borrower by the Lenders and the Issuing Lender pursuant to the Credit Agreement, and each Grantor agrees that the Secured Parties are relying on this representation in agreeing to make such Loans and other extensions of credit pursuant to the Credit Agreement to the Borrower. SECTION 3.10. Certificated Equipment. Such Grantor has delivered, or will deliver as set forth in Section 4.5, to the Administrative Agent possession of the originals of all certificates of title (with any necessary endorsements) with respect to Certificated Equipment owned or held by such Grantor. SECTION 3.11. Reaffirmation of Representations and Warranties. All of the representations and warranties made by the Borrower or any other Obligor regarding any Grantor in the Credit Agreement or in any other Credit Document are true and correct in all respects as if such representations and warranties were incorporated herein in their entirety and made by such Grantor. ARTICLE IV COVENANTS Each Grantor covenants and agrees that, until the Termination Date, it will perform, comply with and be bound by the obligations set forth below. SECTION 4.1. As to Investment Property, etc. (a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Uncertificated Securities, (ii) that is a partnership or limited liability company, to (A) issue Equity Interests that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its organizational documents that its Equity Interests are securities governed by Article 8 of the UCC, or (C) place such Subsidiary’s Equity Interests in a Securities Account, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Equity Interests, and (iii) to issue Equity Interests in addition to or in substitution for the Pledged Property or any other Equity Interests pledged hereunder, except for additional Equity Interests issued to such Grantor; provided that (A) such Equity Interests are immediately pledged and delivered to the Administrative Agent, and (B) such Grantor delivers a supplement to Schedule I to the Administrative Agent identifying such new Equity Interests as Pledged Property, in each case pursuant to the terms of this Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing or that entitle any Person to purchase any of the foregoing, and except for   -15- -------------------------------------------------------------------------------- this Security Agreement, any other Credit Document or the 2010 Indenture (and the other documents related to the Permitted Liens securing the 2010 Convertible Senior Notes), shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Property. (b) Investment Property (other than Certificated Securities). With respect to any Deposit Accounts, Securities Accounts, Commodity Accounts, Commodity Contracts or Security Entitlements constituting Investment Property owned or held by any Grantor, such Grantor will, unless otherwise permitted under the Credit Agreement, upon the Administrative Agent’s request either (i) cause the intermediary maintaining such Investment Property to execute a Control Agreement relating to such Investment Property pursuant to which such intermediary agrees to comply with the Administrative Agent’s instructions with respect to such Investment Property without further consent by such Grantor, or (ii) transfer such Investment Property to intermediary’s that have or will agree to execute such Control Agreements. With respect to any Uncertificated Securities (other than Uncertificated Securities credited to a Securities Account) constituting Investment Property owned or held by any Grantor, such Grantor will cause the Pledged Interests Issuer or other issuer of such securities to either (i) register the Administrative Agent as the registered owner thereof on the books and records of the issuer, or (ii) execute a Control Agreement relating to such Investment Property pursuant to which the Pledged Interests Issuer or other issuer agrees to comply with the Administrative Agent’s instructions with respect to such Uncertificated Securities without further consent by such Grantor. (c) Certificated Securities (Stock Powers). Each Grantor agrees that all Pledged Shares (and all other certificated shares of Equity Interests constituting Collateral) delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly endorsed undated blank stock powers, or other equivalent instruments of transfer acceptable to the Administrative Agent. Each Grantor will, from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, satisfactory in form and substance to the Administrative Agent, with respect to the Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent during the continuance of any Default, promptly transfer any Pledged Shares, Pledged Interests or other shares of Equity Interests constituting Collateral into the name of any nominee designated by the Administrative Agent. (d) Continuous Pledge. Each Grantor will (subject to the terms of the Credit Agreement) deliver to the Administrative Agent and at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis all Pledged Property, Investment Property, all Dividends and Distributions with respect thereto, all Payment Intangibles to the extent they are evidenced by a Document, Instrument, Promissory Note or Chattel Paper, and all interest and principal with respect to such Payment Intangibles, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral. Each Grantor agrees that it will, promptly (but in any event no later than ten (10) Business Days)   -16- -------------------------------------------------------------------------------- following receipt thereof, deliver to the Administrative Agent possession of all originals of Pledged Interests, Pledged Shares, Pledged Notes and any other Pledged Property, negotiable Documents, Instruments, Promissory Notes and Chattel Paper that it acquires following the date of this Security Agreement and shall deliver to the Administrative Agent a supplement to Schedule I identifying any such new Pledged Interests, Pledged Shares, Pledged Notes or other Pledged Property. (e) Voting Rights; Dividends, etc. Each Grantor agrees: (i) that promptly upon receipt of notice of the occurrence and continuance of an Event of Default from the Administrative Agent and without any request therefor by the Administrative Agent, so long as such Event of Default shall continue, to deliver (properly endorsed where required hereby or requested by the Administrative Agent) to the Administrative Agent all Distributions with respect to Investment Property, all interest, principal and other cash payments on Payment Intangibles, the Pledged Property and all Proceeds of the Pledged Property or any other Collateral, in case thereafter received by such Grantor, all of which shall be held by the Administrative Agent as additional Collateral; and (ii) if an Event of Default shall have occurred and be continuing and the Administrative Agent has notified such Grantor of the Administrative Agent’s intention to exercise its voting power under this Section 4.1(e)(ii), (A) the Administrative Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Shares, Investment Property or other Equity Interests constituting Collateral. EACH GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND (B) the Grantor shall promptly deliver to the Administrative Agent such additional proxies and other documents as may be necessary to allow the Administrative Agent to exercise such voting power. All Distributions, interest, principal, cash payments, Payment Intangibles and Proceeds that may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Administrative Agent, shall, until delivery to the Administrative Agent, be held by such Grantor separate and apart from its other property in trust for the Administrative Agent. The Administrative Agent agrees that unless a Default shall have occurred and be continuing and the Administrative Agent shall have given the notice referred to in Section 4.1(e), each Grantor shall be entitled to receive and retain all Distributions and shall have the exclusive voting power, and is granted a proxy, with respect to any Equity Interests   -17- -------------------------------------------------------------------------------- (including any of the Pledged Shares) constituting Collateral. The Administrative Agent shall, upon the written request of any Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power with respect to any such Equity Interests (including any of the Pledged Shares) constituting Collateral; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would violate any provision of the Credit Agreement or any other Credit Document (including this Security Agreement). SECTION 4.2. Organizational Documents; Change of Name, etc. No Grantor will change its state of incorporation, formation or organization or its name, identity, organizational identification number or corporate structure unless such Grantor shall have (a) given the Administrative Agent at least thirty (30) days’ prior notice of such change, (b) obtained the consent of the requisite Secured Parties, if such consent is so required by the Credit Documents, and (c) taken all actions necessary or as requested by the Administrative Agent to ensure that the Liens on the Collateral granted in favor of the Administrative Agent for the benefit of the Lender Parties remain perfected, first-priority Liens. SECTION 4.3. As to Accounts. (a) Each Grantor shall have the right to collect all Accounts so long as no Event of Default shall have occurred and be continuing. (b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the delivery of notice by the Administrative Agent to each Grantor, all Proceeds of Collateral received by any Grantor shall be delivered in kind to the Administrative Agent for deposit in a Deposit Account of such Grantor (A) maintained with the Administrative Agent or (B) maintained at a depositary bank other than the Administrative Agent to which such Grantor, the Administrative Agent and the depositary bank have entered into a Control Agreement in form and substance acceptable to the Administrative Agent in its sole discretion providing that the depositary bank will comply with the instructions originated by the Administrative Agent directing disposition of the funds in the account without further consent by such Grantor (any such Deposit Accounts, together with any other Deposit Accounts pursuant to which any portion of the Collateral is deposited with the Administrative Agent, a “Collateral Account,” and collectively, the “Collateral Accounts”), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the benefit of the Administrative Agent until delivery thereof is made to the Administrative Agent. (c) Following the delivery of notice pursuant to clause (b)(ii), the Administrative Agent shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations which are due and payable or in accordance with the Credit Documents. (d) With respect to each of the Collateral Accounts, it is hereby confirmed and agreed that (i) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (ii) such Collateral Account shall be under the control of the Administrative Agent and (iii) the Administrative Agent shall have the sole right of withdrawal over such Collateral Account; provided that withdrawals shall only be made during the existence of a Default.   -18- -------------------------------------------------------------------------------- (e) No Grantor shall adjust, settle, or compromise the amount or payment of any Receivable, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon; provided that, a Grantor may make such adjustments, settlements or compromises and release wholly or partly any account debtor or obligor thereof and allow any credit or discounts thereon so long as (i) no Event of Default has occurred and is continuing, (ii) such action is taken in the ordinary course of business and consistent with past practices, (iii) such action is, in such Grantor’s good faith business judgment, commercially reasonable, and (iv) the aggregate amount of such adjustments, settlements and compromises which are effected each fiscal year shall not exceed $200,000. SECTION 4.4. As to Grantor’s Use of Collateral. (a) Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory normally held by such Grantor for such purpose, and use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by such Grantor for such purpose, (ii) shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Administrative Agent may request following the occurrence and during the continuance of a Default or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral. (b) At any time following the occurrence and during the continuance of a Default, whether before or after the maturity of any of the Secured Obligations, the Administrative Agent may (i) revoke any or all of the rights of any Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder, and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. (c) Upon request of the Administrative Agent following the occurrence and during the continuance of a Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder. (d) At any time following the occurrence and during the continuation of a Default, the Administrative Agent may endorse, in the name of the applicable Grantor, any item, howsoever received by the Administrative Agent, representing any payment on or other Proceeds of any of the Collateral.   -19- -------------------------------------------------------------------------------- SECTION 4.5. As to Equipment and Inventory and Goods. Not later than 30 days following the date of this Security Agreement, each Grantor shall deliver the original certificates of title (with any necessary endorsements) with respect to all Certificated Equipment now owned by such Grantor to the Administrative Agent. Each Grantor hereby agrees that it shall (a) keep all of the Equipment and Inventory (other than Inventory sold in the ordinary course of business) and Goods located in a jurisdiction within the United States of America or its offshore waters where all representations and warranties set forth in Article III shall be true and correct, and all action required pursuant to the second sentence of Section 4.12 shall have been taken with respect to the Equipment and Inventory and Goods, and (b) pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory and Goods, except to the extent the validity thereof is being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside. Notwithstanding the foregoing, the Grantors may keep Equipment, Inventory and Goods located in a jurisdiction outside of the United States of America or its offshore waters so long as the aggregate book value of the Equipment, Inventory and Goods located in such foreign jurisdictions does not exceed $2,500,000 at any time. With respect to Certificated Equipment hereafter owned by a Grantor, such Grantor shall promptly deliver such title to the Administrative Agent and take any other action necessary to enable the Administrative Agent perfect its Lien in such Equipment, including endorsing certificates of title or executing applications for transfer of title, as is reasonably required by the Administrative Agent to enable it to properly perfect and protect its Lien on such Certificated Equipment and to transfer the same. SECTION 4.6. As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor: (a) such Grantor will not (i) do or fail to perform any act whereby any material Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable, (ii) permit any of its licensees to (A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral, (C) fail to employ all of the Trademark Collateral registered with any federal or state or foreign authority with an appropriate notice of such registration, (D) adopt or use any other Trademark which is confusingly similar or a colorable imitation of any of the Trademark Collateral, (E) use any of the Trademark Collateral registered with any federal, state or foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made, or (F) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except   -20- -------------------------------------------------------------------------------- upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall either (x) reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor, or (y) the loss of the Intellectual Property Collateral would not be reasonably likely to result in a Material Adverse Change; (b) such Grantor shall promptly notify the Administrative Agent if it knows that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantor’s ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same; (c) in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any material Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Administrative Agent, and upon request of the Administrative Agent (subject to the terms of the Credit Agreement), executes and delivers all agreements, instruments and documents as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual Property Collateral; (d) such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or (subject to the terms of the Credit Agreement) any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, each material Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b)); (e) following the obtaining of an interest in any material Intellectual Property by such Grantor, such Grantor shall deliver a supplement to Schedule II identifying such new Intellectual Property; and (f) following the obtaining of an interest in any material Intellectual Property by such Grantor or, following the occurrence and during the continuance of an Event of Default, upon the request of the Administrative Agent, such Grantor shall deliver all agreements, instruments and documents the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual   -21- -------------------------------------------------------------------------------- Property Collateral and as may otherwise be required to acknowledge or register or perfect the Administrative Agent’s interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (with the consent of the Administrative Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor. SECTION 4.7. As to Letter-of-Credit Rights. (a) Each Grantor, by granting a security interest in its Letter-of-Credit Rights to the Administrative Agent, intends to (and hereby does) collaterally assign to the Administrative Agent its rights (including its contingent rights) to the Proceeds of all Letter-of-Credit Rights of which it is or hereafter becomes a beneficiary or assignee. Promptly following the date on which any Grantor obtains any Letter of Credit Rights after the date hereof, such Grantor shall (i) deliver a supplement to Schedule II identifying such new Letter-of-Credit Right and (ii) with respect to Letter of Credit Rights in excess of $250,000 cause the issuer of each Letter of Credit and each nominated person (if any) with respect thereto to consent to such assignment of the Proceeds thereof in a consent agreement in form and substance reasonably satisfactory to the Administrative Agent and deliver written evidence of such consent to the Administrative Agent. (b) During the existence of an Event of Default, each Grantor will, promptly upon request by the Administrative Agent, (i) notify (and each Grantor hereby authorizes the Administrative Agent to notify) the issuer and each nominated person with respect to each of the Letters of Credit that the Proceeds thereof have been assigned to the Administrative Agent hereunder and any payments due or to become due in respect thereof are to be made directly to the Administrative Agent and (ii) arrange for the Administrative Agent to become the transferee beneficiary Letter of Credit. SECTION 4.8. As to Commercial Tort Claims. Each Grantor covenants and agrees that, until the Termination Date, with respect to any Commercial Tort Claim in excess of $250,000 individually or in the aggregate hereafter arising, it shall deliver to the Administrative Agent a supplement to Schedule II in form and substance reasonably satisfactory to the Administrative Agent, identifying such new Commercial Tort Claims. SECTION 4.9. Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the U.S. Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, with a value in excess of $250,000, such Grantor shall promptly notify the Administrative Agent thereof and, at the request of the Administrative Agent, shall take such action as the Administrative Agent may request to vest in the Administrative Agent control (for the ratable benefit of Secured Parties) under Section 9-105 of the UCC of such electronic chattel paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Administrative Agent agrees with each Grantor that the Administrative Agent will   -22- -------------------------------------------------------------------------------- arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agent’s loss of control, for such Grantor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the U.S. Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record. SECTION 4.10. Transfers and Other Liens. No Grantor shall: (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except Inventory in the ordinary course of business or as specifically permitted by the Credit Agreement, or (b) create or suffer to exist any Lien or other charge or encumbrance upon or with respect to any of the Collateral to secure Debt of any Person or entity, except for the security interest created by this Security Agreement and except for Permitted Liens. SECTION 4.11. Taxes. Each Grantor agrees to comply in all material respects with all applicable law, including the appropriate payment (before the same become delinquent), by, or on behalf of, such Grantor of all Taxes imposed upon such Grantor or any of its direct or indirect Subsidiaries or upon their property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on the books of such Grantor or such Subsidiaries, as applicable. SECTION 4.12. Further Assurances, etc. Each Grantor shall warrant and defend the right, title and interest herein granted unto the Administrative Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Administrative Agent may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Each Grantor agrees that, upon the acquisition after the date hereof by such Grantor of any Collateral, with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Collateral or any part thereof as required by the Credit Documents. Without limiting the generality of the foregoing, each Grantor will: (a) from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to such Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent, after the occurrence and during the continuance of any Event of Default, promptly transfer any securities constituting Collateral into the name of any nominee designated by the Administrative Agent; if any Collateral shall be evidenced by an Instrument, negotiable Document, Promissory Note or tangible Chattel Paper, deliver and pledge to the Administrative Agent hereunder such Instrument, negotiable Document, Promissory Note, Pledged Note   -23- -------------------------------------------------------------------------------- or tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to the Administrative Agent; (b) file (and hereby authorizes the Administrative Agent to file after delivery of a copy thereof to such Grantor) such filing statements or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or that the Administrative Agent may request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Administrative Agent hereby. The authorization contained in this Section 4.12 shall be irrevocable and continuing until the Termination Date; (c) deliver to the Administrative Agent and at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis (except for Permitted Liens), at the request of the Administrative Agent, all Investment Property constituting Collateral, all Distributions with respect thereto (which shall only be delivered to the Administrative Agent during the continuance of a Default), and all interest and principal with respect to Promissory Notes, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral; (d) not take or omit to take any action the taking or the omission of which would result in any impairment or alteration of any obligation of the maker of any Payment Intangible or other Instrument constituting Collateral, except as provided in Section 4.4; (e) not create any tangible Chattel Paper without placing a legend on such tangible Chattel Paper reasonably acceptable to the Administrative Agent indicating that the Administrative Agent has a security interest in such Chattel Paper; (f) furnish to the Administrative Agent, from time to time at the Administrative Agent’s request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail; and (g) do all things reasonably requested by the Administrative Agent in accordance with this Security Agreement in order to enable the Administrative Agent to have and maintain control over the Collateral consisting of Investment Property, Deposit Accounts, Letter-of-Credit-Rights and Electronic Chattel Paper. Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law. Each Grantor hereby authorizes the Administrative Agent to file financing statements describing as the collateral covered thereby “all of the debtor’s personal property or assets”, “all assets” or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.   -24- -------------------------------------------------------------------------------- ARTICLE V THE ADMINISTRATIVE AGENT SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Administrative Agent’s discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (a) above, (c) to file any claims or take any action or institute any proceedings which the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral, and (d) to perform the affirmative obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL THE TERMINATION DATE. SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Administrative Agent may itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.4 hereof and Section 9.1 of the Credit Agreement and the Administrative Agent may from time to time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein. SECTION 5.3. Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property and any other Pledged Property, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. SECTION 5.4. Reasonable Care. The Administrative Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral (a) if such Collateral is accorded treatment   -25- -------------------------------------------------------------------------------- substantially equal to that which the Administrative Agent accords its own personal property, or (b) if the Administrative Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of an Event of Default; provided, further, that failure of the Administrative Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care. ARTICLE VI REMEDIES SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred and be continuing: (a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may (i) take possession of any Collateral not already in its possession without demand and without legal process, (ii) require any Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place to be designated by the Administrative Agent that is reasonably convenient to both parties, (iii) subject to applicable law or agreements with landlords, enter onto the property where any Collateral is located and take possession thereof without demand and without legal process, (iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ prior notice to the applicable Grantor of the time and place of any public sale or the time of any private sale is to be made shall constitute reasonable notification; provided, however, that with respect to Collateral that is (x) perishable or threatens to decline speedily in value, or (y) is of a type customarily sold on a recognized market (including but not limited to, Investment Property), no notice of sale or disposition need be given. For purposes of this Article VI, notice of any intended sale or disposition of any Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or email, and shall be deemed to have been “sent” upon deposit in the U.S. Mails with adequate postage properly affixed, upon delivery to an express delivery service or upon electronic submission through telephonic or internet services, as applicable. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) Each Grantor agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Goods, Computer Hardware and Software Collateral, or Intellectual Property may be by lease or license of, in addition to the sale   -26- -------------------------------------------------------------------------------- of, such Collateral. Each Grantor further agrees and acknowledges that each of the following shall be deemed a reasonable commercial disposition: (i) a disposition made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition, and (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition. (c) All cash Proceeds received by the Administrative Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Administrative Agent against, all or any part of the Obligations as set forth in Section 7.7 of the Credit Agreement. The Administrative Agent shall not be obligated to apply or pay over for application noncash proceeds of collection or enforcement unless (i) the failure to do so would be commercially unreasonable, and (ii) the affected party has provided the Administrative Agent with a written demand to apply or pay over such noncash proceeds on such basis. (d) The Administrative Agent may do any or all of the following: (i) transfer all or any part of the Collateral into the name of the Administrative Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to the Administrative Agent of any amount due or to become due thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with respect to any Collateral Account or any other Deposit Account subject to an Account Control Agreement, (iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (v) endorse any checks, drafts, or other writings in the applicable Grantor’s name to allow collection of the Collateral, (vi) take control of any Proceeds of the Collateral, or (vii) execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral. SECTION 6.2. Securities Laws. If the Administrative Agent shall determine to exercise its right to sell all or any of the Collateral that are Equity Interests pursuant to Section 6.1, each Grantor agrees that, upon request of the Administrative Agent, such Grantor will, at its own expense: (a) execute and deliver, and cause (or, with respect to any issuer which is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each Pledged Interests Issuer or other issuer of the Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of the Administrative Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the “Securities Act”), and cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in   -27- -------------------------------------------------------------------------------- the reasonable opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto; (b) use its reasonable efforts to exempt the Collateral under the state securities or “Blue Sky” laws and to obtain all necessary Governmental Approvals for the sale of the Collateral, as requested by the Administrative Agent; (c) cause (or, with respect to any issuer that is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each such Pledged Interests Issuer or other issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and (d) do or cause to be done all such other acts and things as may be reasonably necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law. Each Grantor acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Administrative Agent or the Secured Parties by reason of the failure by such Grantor to perform any of the covenants contained in this Section and consequently agrees that, if such Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value (as reasonably determined by the Administrative Agent in good faith) of such Collateral on the date the Administrative Agent shall demand compliance with this Section 6.2. SECTION 6.3. Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Administrative Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Administrative Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. SECTION 6.4. Indemnity and Expenses. (a) Without limiting the generality of the provisions of Section 9.2 of the Credit Agreement, each Grantor hereby indemnifies and holds harmless the Administrative Agent, each Secured Party and each of their respective officers, directors, employees and agents (the “Indemnified Parties”) from and against any and all claims, losses and liabilities arising out of or resulting from this Security Agreement or any other   -28- -------------------------------------------------------------------------------- Credit Document (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from such Indemnified Party’s gross negligence, willful misconduct or unlawful acts; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable law. (b) Other than as set forth in clause (c) below, each Grantor will upon demand pay to the Administrative Agent and any counsel the amount of any and all expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent and any counsel may incur in connection herewith, including without limitation in connection with the administration of this Security Agreement and the custody, preservation, use or operation of, any of the Collateral. (c) Each Grantor will upon demand pay to the Administrative Agent and any counsel the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent and any counsel may incur in connection (i) the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Administrative Agent and any local counsel or any of the Secured Parties hereunder, or (iii) the failure by any Grantor to perform or observe any of the provisions hereof. SECTION 6.5. Warranties. The Administrative Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Administrative Agent may disclaim any warranties of title or the like. Each Grantor agrees that this procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 7.1. Credit Document. This Security Agreement is a Credit Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article 9 thereof. SECTION 7.2. Binding on Successors, Transferees and Assigns; Assignment. This Security Agreement shall remain in full force and effect until the Termination Date, shall be binding upon each Grantor and its successors, transferees and assigns and, subject to the limitations set forth in the Credit Agreement, shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that no Grantor shall (unless otherwise permitted under the terms of the Credit Agreement or this Security Agreement) assign any of its obligations hereunder without the Administrative Agent’s prior written consent.   -29- -------------------------------------------------------------------------------- SECTION 7.3. Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on behalf of the Lenders or the Majority Lenders, as the case may be, pursuant to Section 9.3 of the Credit Agreement) and such Grantor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 7.4. Notices. Except as otherwise provided in this Security Agreement, all notices and other communications provided for hereunder shall be in writing, by facsimile or by email and addressed, delivered or transmitted to the appropriate party at the address, facsimile number or email address of such party specified in the Credit Agreement, on the signature pages of this Security Agreement or at such other address, facsimile number or email address as may be designated by such party in a notice to the other party. Except as otherwise provided in this Security Agreement, any notice or other communication, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or other communication, if transmitted by facsimile or email, shall be deemed given when transmitted and electronically confirmed. SECTION 7.5. Release of Liens. Upon (a) the disposition of Collateral in accordance with the Credit Agreement or (b) the occurrence of the Termination Date, the security interests granted herein shall automatically terminate with respect to (i) such Collateral (in the case of clause (a)) or (ii) all Collateral (in the case of clause (b)). Upon any such disposition or termination, the Administrative Agent will deliver to the applicable Grantor, at such Grantor’s sole expense, without any representations, warranties or recourse of any kind whatsoever, all Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination. SECTION 7.6. No Waiver; Remedies. In addition to, and not in limitation of Section 2.7, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 7.7. Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof. SECTION 7.8. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 7.9. Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Security Agreement.   -30- -------------------------------------------------------------------------------- SECTION 7.10. Consent as Holder of Equity. Each Grantor hereby consents to (a) the execution by each other Grantor of this Security Agreement and grant by each other Grantor of a security interest, encumbrance, pledge and hypothecation in all Pledged Interests and other Collateral of such other Grantor to the Administrative Agent pursuant hereto, and (b) without limiting the generality of the foregoing, each Grantor consents to the transfer of any Pledged Interest to the Administrative Agent or its nominee following an Event of Default and to the substitution of the Secured Party or its nominee as a partner under the limited partnership agreement or as a member under the limited liability company agreement, in any case, as heretofore and hereafter amended. SECTION 7.11. Additional Grantors. Additional Subsidiaries of either Borrower may from time to time enter into this Security Agreement as a Grantor. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement. SECTION 7.12. Conflicts with Credit Agreement. To the fullest extent possible, the terms and provisions of the Credit Agreement shall be read together with the terms and provisions of this Security Agreement so that the terms and provisions of this Security Agreement do not conflict with the terms and provisions of the Credit Agreement; provided, however, notwithstanding the foregoing, in the event that any of the terms or provisions of this Security Agreement conflict with any terms or provisions of the Credit Agreement, the terms or provisions of the Credit Agreement shall govern and control for all purposes; provided that the inclusion in this Security Agreement of terms and provisions, supplemental rights or remedies in favor of the Administrative Agent not addressed in the Credit Agreement shall not be deemed to be a conflict with the Credit Agreement and all such additional terms, provisions, supplemental rights or remedies contained herein shall be given full force and effect. SECTION 7.13. Waiver of Jury Trial. EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, ANY OTHER SECURED PARTY OR ANY OBLIGOR IN CONNECTION THEREWITH. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE CREDIT DOCUMENTS.   -31- -------------------------------------------------------------------------------- SECTION 7.14. Governing Law, Entire Agreement, etc. This Security Agreement shall be deemed to be a contract made under and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York. SECTION 7.15. Miscellaneous. THIS WRITTEN AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN 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 BETWEEN THE PARTIES. SECTION 7.16. Amendment to and Restatement of Earlier Agreement. This Security Agreement constitutes an amendment to, and a complete restatement of, the Original Pledge and Security Agreement, but does not constitute a novation of the obligations, liabilities and indebtedness of any of the Grantors thereunder. [Remainder of this page intentionally left blank. Signature pages follow.]   -32- -------------------------------------------------------------------------------- IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.   GRANTORS: FLOTEK INDUSTRIES, INC. By   /s/ John Chisholm         John Chisholm         President TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC   By   /s/ John Chisholm         John Chisholm         President SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.   By   /s/ John Chisholm         John Chisholm         Chief Executive Officer FLOTEK INDUSTRIES FZE   By   /s/ John Chisholm         John Chisholm         President Signature Page to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- ADMINISTRATIVE AGENT: WHITEBOX ADVISORS LLC By:   /s/ Mark Strefling   Name:   Mark Strefling   Title:   Chief Legal Officer Signature Page to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- SCHEDULE I to Amended and Restated Pledge and Security Agreement ITEM A – PLEDGED INTERESTS Common Stock   Pledged Interests Issuer (corporate)    Cert. #    # of Shares    Authorized Shares    % of Shares Pledged   Padko International Incorporated    2    50,000    500,000    100 %  USA Petrovalve, Inc.    2    1,000    100,000    100 %  Turbeco, Inc.    4    500    100,000    100 %  Petrovalve, Inc.    2    1,000    1,000    100 %  Material Translogistics, Inc.    1    1,000    100,000    100 %  Flotek Paymaster, Inc.    1    1,000    100,000    100 %  CESI Chemical, Inc.    1    500    5,000,000    100 %  Teledrift Company    2    1,000    10,000    100 %  Flotek Industries FZE    22924    1    1    100 %  Flotek International, Inc.    1    1,000    100,000    100 %  Limited Liability Company Interests   Pledged Interests Issuer (limited liability company)    % of Limited Liability Company Interests Pledged     Type of Limited Liability Company Interests Pledged Sooner Energy Services, LLC    100 %    Membership Interests CESI Manufacturing. LLC    100 %    Membership Interests Flotek Ecuador Management, LLC    100 %    Membership Interests Flotek Ecuador Investments, LLC    100 %    Membership Interests Schedule I to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Partnership Interests   Pledged Interests Issuer (partnership)    % of Partnership Interests Owned    % of Partnership Interests Pledged NONE.       ITEM B – PLEDGED NOTES 1. Pledged Note Issuer Description: NONE. Schedule I to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- SCHEDULE II to Amended and Restated Pledge and Security Agreement   Item A-1. Location of Grantor for purposes of UCC. Flotek Industries, Inc.: Delaware Padko International Incorporated: Oklahoma Sooner Energy Services, LLC: Oklahoma USA Petrovalve, Inc.: Texas CESI Manufacturing, LLC: Oklahoma Turbeco, Inc.: Texas Petrovalve, Inc.: Delaware Material Translogistics, Inc.: Texas Flotek Paymaster, Inc.: Texas CESI Chemical, Inc.: Oklahoma Teledrift Company: Delaware Flotek Industries FZA: Jebel Ali Free Zone, Dubai, United Arab Emirates Flotek International, Inc.: Delaware Flotek Ecuador Investments, LLC: Texas Flotek Ecuador Management, LLC: Texas   Item A-2. Grantor’s place of business or principal office. Flotek Industries, Inc., USA Petrovalve, Inc., Turbeco, Inc., Petrovalve, Inc., Material Translogistics, Inc., Flotek Paymaster, Inc., Teledrift Company, Flotek International, Inc., Flotek Ecuador Investments, LLC, and Flotek Ecuador Management, LLC: 2930 W. Sam Houston Pkwy N. Houston, Texas 77043 Padko International Incorporated, Sooner Energy Services, LLC, CESI Chemical, Inc., and CESI Manufacturing, LLC: 1004 Plainsman Road Marlow, Oklahoma 73055 Flotek Industries FZE: Jebel Ali Free Zone, Dubai, United Arab Emirates Schedule II to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Item A-3. Taxpayer ID number. Flotek Industries, Inc.: 90-0023731 Padko International Incorporated: 73-1443489 Sooner Energy Services, LLC: 73-1501526 USA Petrovalve, Inc.: 76-0448098 CESI Manufacturing, LLC: 98-0372943 Turbeco, Inc.: 76-0228889 Petrovalve, Inc.: 76-0513130 Material Translogistics, Inc.: 73-1605226 Flotek Paymaster, Inc.: 30-0094158 CESI Chemical, Inc.: 73-1591850 Teledrift Company: 26-1869123 Flotek Industries FZE: None Flotek International, Inc.: 27-2091474 Flotek Ecuador Investments, LLC: 27-2091569 Flotek Ecuador Management, LLC: 27-2091663   Item B. Merger or other corporate reorganization. Description of Merger: CESI Chemical, Inc.: Esses Inc., Equipment Specialties Inc., Plainsman Technology, Inc., IBS 2000, Inc. and Flotek Acquisition Sub, Inc. were each merged into CESI Chemical, Inc. Material Translogistics, Inc.: CESI Acquistion, Inc. was merged into Material Translogistics, Inc. Teledrift Company: Trinity Tool, Inc. and Spidle Sales & Service, Inc. were each merged into Teledrift Company. Sooner Energy Services, LLC: Sooner Energy Services, Inc. was converted into Sooner Energy Services, LLC. CESI Manufacturing, LLC: SES Holdings, Inc. was converted into and its name changed to CESI Manufacturing, LLC. Turbeco, Inc.: CAVO Drilling Motors, Ltd. Co. was merged into Turbeco, Inc.   Item C. Deposit Accounts and Securities Accounts. Deposit Accounts:   Account Description    Account Number      Wells Fargo - Flotek Industries Inc. - WellsOne Account(Master)    412-1097273    Schedule II to Amended and Restated Pledge and Security Agreement --------------------------------------------------------------------------------   Wells Fargo - Flotek Industries Inc. - WellsOne Account(Disbursement Acct)      412-1097299      Wells Fargo - Flotek Industries Inc. - WellsOne Account(Payroll)      412-1097281      Wells Fargo - Flotek Industries Inc. - WellsOne Account(Flexible Spending Acct)      412-1097265      ING Bank Alphen A/D RIJN - CESI Chemical Inc.      68.01.14.769      BankFirst - PADKO International Incorporated      500002100      BankFirst - Sooner Energy Services, LLC CD      4007006921      HSBC Bank Middle East - Flotek Industries FZE      011122215001    Securities Accounts: NONE.   Item D. Letter of Credit Rights. NONE.   Item E. Commercial Tort Claims. NONE. Schedule II to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- SCHEDULE III – A to Amended and Restated Pledge and Security Agreement INTELLECTUAL PROPERTY COLLATERAL   Item A. Patent Collateral. Issued Patents   Country   Patent No.   Filing Date   Inventor(s)   Title USA   6,533,034   3/18/2003   Troy Barger   Centralized Stop Collar for Floating Centralizer USA   5,829,952   11/3/1998   Darrel W. Shadden   Check Valve with Reversible Valve Ball and Seat Canada   2,017,405   2/21/1995     Ball and Seat-Type Valve for Downhole Rod Pump Canada   2,478,433   12/8/2009   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for Well Cleaning Venezuela   52500   10/7/1994     Ball and Seat-Type Valve for Downhole Rod Pump USA   6,761,215   7/13/2004   James Eric Morrison and Guy Morrison, III   Downhole Separator Method China (Peoples Republic)   ZL03824239.7   7/18/2007     Downhole Separator and Method Eurasian Patent Organization   007040   8/18/2006     Downhole Separator and Method Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Country   Serial No.   Filing Date   Inventor(s)   Title USA   7,122,509   10/17/2006   John Todd Sanner, Glenn S. Penny and Roger Padgham   High Temperature Foamer Formulations for Downhole Injection USA   7,544,639   6/9/2009   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for the Treatment of Hydrogen Sulfide USA   7,380,606   6/3/2008   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for Well Cleaning Australia   2003278716   1/ 8/2009     Downhole Separator and Method Pending Patent Applications   Country   Serial No.   Filing Date   Inventor(s)   Title Patent Cooperation Treaty   PCTUS9602445   2/23/1996     Improved Valve Plunger for a Ball and Seat-Type Check Valve Canada   2,497,929   8/20/2003     Downhole Separator and Method Patent Cooperation Treaty/European Patent Office   03716227.8   2/28/2003   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for Well Cleaning Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Country   Serial No.   Filing Date   Inventor(s)   Title Patent Cooperation Treaty/Norwegian National   2004 4148   2/28/2003   John T. Pursley, David L. Holcomb and Glenn S. Penny   Composition and Process for Well Cleaning USA   339,248   Abandoned 1/5/09   1/25/2006   Michael M. Brezinski   Method of Treating a Subterranean Formation in the Presence of Ferric Ions and/or Sulfide Ions USA   518,648   9/11/2006   Manoj Gopalan and Stephen B. Poe   Measurement While Drilling Apparatus and Method of Using the Same Patent Cooperation Treaty   Publication No. WO/2007/033126   9/12/2006     Measurement While Drilling Apparatus and Method of Using the Same USA   Application No. 12/156,201   5/30/2008     Process for Well Cleaning USA   Application No. 12/268,408   11/10/2008     Drag-Reducing Copolymer Compositions USA   Application No. 61/174,617   5/1/2009     Low Friction Centralizer USA   Application No. 12/618,535   Priority No. 61/114,125   11/13/2009     Water-in-Oil Microemulsions for Oilfield Applications Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Patent Applications in Preparation NONE. Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- SCHEDULE III – B to Amended and Restated Pledge and Security Agreement   Item B. Trademark Collateral Trademarks   Country   Trademark   Registration No.   Issue Date USA   STIMLUBE   3,620,715   5/12/2009 Trademark Applications in Preparation   Country   Trademark USA   FLOTEK USA   PETROVALVE USA   CESI USA   “OPEN CIRCLE” SYMBOL Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- SCHEDULE III – C to Amended and Restated Pledge and Security Agreement   Item C. Copyright Collateral. NONE. Schedule III to Amended and Restated Pledge and Security Agreement -------------------------------------------------------------------------------- Annex 1 to Amended and Restated Pledge and Security Agreement SUPPLEMENT NO.                     dated as of                     , 20    (the “Supplement”), to the Amended and Restated Pledge and Security Agreement dated as of                 , 2010 (as amended, supplemented, restated, or otherwise modified from time to time, the “Security Agreement”), among Flotek Industries, Inc., a Delaware corporation and each Subsidiary of the Borrower signatory thereto (together with the Borrower, the “Grantors” and individually, a “Grantor”), in favor of Whitebox Advisors LLC, as Administrative Agent for the Lenders (as defined in the Credit Agreement described below) (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the benefit of each of the Secured Parties (as defined in the Security Agreement) A. Reference is made to that certain Amended and Restated Credit Agreement, dated as of                 , 2010 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from time to time parties thereto (the “Lenders”), and the Administrative Agent. B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement. C. Section 7.11 of the Security Agreement provides that additional Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Borrower (the “New Grantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement. Accordingly, the Administrative Agent and the New Grantor agree as follows: SECTION 1. In accordance with Section 7.11 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns as provided in the Security Agreement, a continuing security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference. SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered   Annex I to Amended and Restated Pledge and Security Agreement Page 1 of 5 -------------------------------------------------------------------------------- by it 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 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement. SECTION 4. The New Grantor hereby agrees that the schedules attached to the Security Agreement are hereby supplemented by the corresponding schedules attached to this Supplement. The New Grantor hereby represents and warrants that the information provided in the schedules attached hereto are true and correct as of the date hereof. SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms of Section 6.4. (Indemnity and Expenses) of the Security Agreement and expressly acknowledges the irrevocable proxy provided in Section 4.1(e) of the Security Agreement. In furtherance thereof, NEW GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL THE TERMINATION DATE) EXERCISABLE UNDER THE CIRCUMSTANCES PROVIDED IN SECTION 4.1 OF THE SECURITY AGREEMENT, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL. SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect. SECTION 7. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.   Annex 1 to Amended and Restated Pledge and Security Agreement Page 2 of 5 -------------------------------------------------------------------------------- SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto. SECTION 10. The New Grantor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent. SECTION 11. NEW GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY, LENDER OR ANY GRANTOR IN CONNECTION THEREWITH. NEW GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE CREDIT DOCUMENTS. THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER CREDIT 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 HERETO.   Annex 1 to Amended and Restated Pledge and Security Agreement Page 3 of 5 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.   [Name of New Grantor] By:     Name:     Title:     Address:             Whitebox Advisors LLC, as Administrative Agent   By:     Name:     Title:       Annex I to Amended and Restated Pledge and Security Agreement Page 4 of 5 -------------------------------------------------------------------------------- SCHEDULES TO SUPPLEMENT NO. 1 [AS APPROPRIATE]   Annex I to Amended and Restated Pledge and Security Agreement Page 5 of 5
Exhibit 10.48 WARNER CHILCOTT EQUITY INCENTIVE PLAN RESTRICTED SHARE UNIT AWARD AGREEMENT You have been granted a Restricted Share Unit Award on the following terms and subject to the provisions of the Restricted Share Unit Award Agreement Terms and Conditions (“Attachment A”) appended hereto and the Warner Chilcott Equity Incentive Plan, as amended and restated (the “Plan”). Unless defined in this Restricted Share Unit Award Agreement (together with Attachment A and each annex thereto, the “Agreement”), capitalized terms will have the meanings ascribed to them in the Plan. In the event of a conflict among the provisions of the Plan, this Agreement and any descriptive materials provided to you, the provisions of the Plan will prevail.   Grantee:    [INSERT Full Name] Total Number of Restricted Share Units:    [                    ] Grant Date:    [                    ] Vesting Schedule:    Ordinary vesting is 25% on each anniversary of the Grant Date. Special vesting provisions apply in certain events (see Attachment A). -------------------------------------------------------------------------------- Attachment A RESTRICTED SHARE UNIT AWARD AGREEMENT TERMS AND CONDITIONS Section 1. Grant of Restricted Restricted Share Unit Award. (a) Grant. Subject to the terms and conditions of the Plan and this Agreement, Warner Chilcott plc (the “Company”) hereby grants to the Grantee on the Grant Date the number of Restricted Share Units set forth on the cover page of this Agreement on the terms set forth on the cover page and as more fully described herein. (b) Plan and Defined Terms. This award is granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement. Capitalized terms, unless defined herein or in any attachment or annex hereto, shall have the meaning ascribed to them in the Plan. (c) Additional Terms for Awards outside the United States. For a Grantee who resides or is employed outside the United States, this award may be subject to special terms and conditions set forth in Annex 1. In addition, if the Grantee relocates to one of the countries with additional provisions set forth in Annex 1, the special terms and conditions for such country shall apply to the Restricted Share Units, to the extent the Company determines that such application is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Company further reserves the right to impose other requirements on the Grantee’s participation in the Plan and on the Restricted Share Units, to the extent the Company determines that it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan and to require the Grantee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Section 2. Issuance of Restricted Share Units. (a) Restricted Share Unit Issuance. Each Restricted Share Unit shall represent the rights with respect to one ordinary share of the Company. (b) Voting Rights. The Grantee shall not have voting rights with respect to the ordinary shares underlying the Restricted Share Units until such ordinary shares are delivered to the Grantee in accordance with Section 4. (c) Dividends. All share dividends, if any, that are paid on ordinary shares underlying unvested Restricted Share Units and all share dividends, if any, that are paid on any share dividends relating to such ordinary shares (any such share dividends, “Share Dividends”) and all cash dividends paid on ordinary   Attachment A-1 -------------------------------------------------------------------------------- shares underlying unvested Restricted Share Units (or on Share Dividends) (“Cash Dividends”) shall be treated as set forth in Section 3(b). (d) Withholding Requirements. The Company may withhold any tax (or other governmental obligation) as a result of the grant, vesting or settlement of this award as a condition to such grant, vesting or settlement, and the Grantee shall make arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. Section 3. Certain Restrictions. The following provisions shall apply to each Restricted Share Unit until such Restricted Share Unit vests in accordance with Section 4: (a) The Restricted Share Units shall not be assigned, sold, transferred or otherwise be subject to alienation by the Grantee or the Grantee’s spouse. (b) All Share Dividends, all Cash Dividends and all new, substituted or additional securities or other property (“Additional Property”) that would be payable on the ordinary shares underlying the Restricted Share Units if such ordinary shares were issued and outstanding shall be notionally credited to the Grantee but retained and held by the Company subject to the same restrictions as the Restricted Share Units to which such Share Dividend, Cash Dividend or Additional Property relates and will be held in custody by the Company on the same terms as such Restricted Share Units. (c) The holder of such Restricted Share Units shall have no liquidation rights with respect thereto. (d) In the event that the Grantee’s employment with the Company or the applicable Subsidiary thereof is terminated by the Company (or the applicable Subsidiary thereof) for Cause or by the Grantee without Good Reason, all then unvested Restricted Share Units (and all Share Dividends, Cash Dividends and Additional Property related to such unvested Restricted Share Units) shall be forfeited, and all of the Grantee’s rights, or the rights of any spouse of such Grantee, to such unvested Restricted Share Units (and such Share Dividends, Cash Dividends and Additional Property) shall terminate and all unvested Restricted Share Units shall be redeemed and cancelled by the Company without consideration. (e) In the event that the Grantee’s employment with the Company or the applicable Subsidiary thereof terminates for any reason other than as provided in Section 3(d), the vesting of unvested Restricted Share Units as of the date of such termination shall be governed by Section (f) of Annex 2 and all unvested Restricted Share Units as of such date of termination which do not become vested as a result of the application of such Section (f) shall be forfeited by the Grantee and redeemed and cancelled by the Company without consideration.   Attachment A-2 -------------------------------------------------------------------------------- Section 4. Vesting of Restricted Share Units. (a) Vesting. Subject to the provisions of this Agreement, the Restricted Share Units shall vest in accordance with the provisions of Annex 2. (b) Effect of Vesting. Subject to the provisions of this Agreement, upon the vesting of any Restricted Share Units: (i) the restrictions referred to in Section 3 shall cease to exist with respect to such Restricted Share Units; (ii) the Company will cause a certificate or certificates to be issued and delivered or, if applicable, appropriate book entry measures to be taken for the number of ordinary shares underlying the Restricted Share Units which have so vested, and the number of ordinary shares represented by the Share Dividends, if any, paid with respect to such Restricted Share Units; and (iii) the Company will cause to be delivered to the Grantee any Cash Dividends or Additional Property with respect to such vested Restricted Share Units that are held in the custody of the Company. (c) Fully paid. All ordinary shares delivered pursuant to Section 4(b)(ii) shall be issued fully paid up to the nominal value of the ordinary shares and no further money shall be due and owing in respect of the issue of the ordinary shares. Any money required to pay up such ordinary shares may be received by the Company from a Subsidiary except where this would otherwise be prohibited by section 60 of the Irish Companies Act 1963. Section 5. Adjustment of Shares. In the event of a Recapitalization, the terms of this award (including, without limitation, the number and kind of ordinary shares subject to this award) shall be adjusted as set forth in Section 14(a) of the Plan. In the event that the Company is a party to a merger or consolidation, this award shall be subject to the agreement of merger or consolidation, as provided in Section 14(b) of the Plan. Section 6. Miscellaneous Provisions. (a) No Rights to Additional Awards or Retention. This award is a one-time discretionary award and nothing in this award or in the Plan shall confer upon the Grantee any claim to be granted future or additional awards under the Plan. The terms and conditions of this award need not be the same as with respect to other recipients of awards under the Plan. Nothing in this award or in the Plan shall confer upon the Grantee any right to continue in Service or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing the Grantee), which rights are hereby expressly reserved by the Company, to terminate the Grantee’s Service at any time and for any reason, with   Attachment A-3 -------------------------------------------------------------------------------- or without Cause and free from liability or any claim under the Plan unless otherwise expressly provided in the Plan or herein or in any other agreement binding the parties. (b) Notices. Except as otherwise expressly provided herein, all notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows: If to the Company, to: c/o Warner Chilcott (US), LLC 100 Enterprise Drive Rockaway, NJ 07866 Attention: General Counsel Facsimile: (973) 442-3283 If to the Grantee, to the address that he most recently provided to the Company, or, in each case, at such other address or fax number as such party may hereafter specify for the purpose of notices hereunder by written notice to the other party hereto. All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Any notice, request or other written communication sent by facsimile transmission shall be confirmed by certified or registered mail, return receipt requested, posted within one Business Day, or by personal delivery, whether by courier or otherwise, made within two Business Days after the date of such facsimile transmissions; provided that such confirmation mailing or delivery shall not affect the date of receipt, which will be the date that the facsimile successfully transmitted the notice, request or other communication. (c) Entire Agreement. This Agreement and the Plan and any other agreements referred to herein and therein and any annexes, attachments and other documents referred to herein or therein, constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof. (d) Amendment; Waiver. No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Grantee, except that the Company may amend or modify the Agreement without the Grantee’s consent in accordance with the   Attachment A-4 -------------------------------------------------------------------------------- provisions of the Plan or as otherwise set forth in this Agreement. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature. Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given. (e) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Grantee. (f) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Company and the Grantee and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Grantee, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. (g) Governing Law, Venue. All issues concerning the construction, validity and interpretation of this Agreement, and the rights and obligations of the parties hereunder, shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and performed entirely within such state, without regard to the conflicts of laws rules of such state. Any legal action or proceeding with respect this Agreement shall be brought in the courts of the United States for the Southern District of New York, and, by delivery and acceptance of this Agreement, each party hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of such courts. Each party irrevocably waives any objection which it may now or hereafter have to the laying of venue of the aforesaid actions or proceedings arising out of or in connection with this Agreement in the courts referred to in this paragraph and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (h) Waiver of Jury Trial. The Grantee hereby irrevocably waives all right of trial by jury in any legal action or proceeding (including counterclaims) relating to or arising out of or in connection with this Agreement or any of the transactions or relationships hereby contemplated or otherwise in connection with the enforcement of any rights or obligations hereunder. (i) Interpretation. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation apply: Headings. The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference   Attachment A-5 -------------------------------------------------------------------------------- only and do not alter the meaning of, or affect the construction or interpretation of, this Agreement. Section References. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement. Annexes. Any capitalized terms used in any annex or attachment to this Agreement but not otherwise defined therein have the meanings set forth in this Agreement or the Plan. (j) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. (k) Grantee Undertaking. The Grantee agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed on either the Grantee or upon the Restricted Share Units pursuant to the provisions of this Agreement. (l) Plan. The Grantee acknowledges and understands that material definitions and provisions concerning the Restricted Share Units and the Grantee’s rights and obligations with respect thereto are set forth in the Plan. The Grantee has read carefully, and understands, the provisions of such document. Section 7. Definitions. (a) “Affiliate” means, with respect to any Person, any other Person who, directly or indirectly, controls such first Person or is controlled by said Person or is under common control with said Person, where “control” means the power and ability to direct, directly or indirectly, or share equally in or cause the direction of, the management and/or policies of a Person, whether through ownership of voting shares or other equivalent interests of the controlled Person, by contract (including proxy) or otherwise. (b) “Business Day” means any day except a Saturday, Sunday or other day on which applicable law authorizes or requires the closure of commercial banks in (i) Dublin, Ireland, (ii) New York City or, if applicable, (iii) the place in which notices, requests or other communications are received or sent by the Grantee.   Attachment A-6 -------------------------------------------------------------------------------- (c) “Cause” has the meaning ascribed to such term in the Grantee’s employment or severance agreement, or if such Grantee is not a party to an employment or severance agreement or “Cause” is not defined therein, “Cause” means: (i) the conviction of such Grantee of a felony or comparable crime under applicable local law (other than a violation of a motor vehicle or moving violation law) or conviction of such Grantee of a misdemeanor if such misdemeanor involves moral turpitude; or (ii) voluntary engagement by such Grantee in conduct constituting larceny, embezzlement, conversion or any other act involving the misappropriation of any funds of the Company or any of its Subsidiaries in the course of such Grantee’s employment; or (iii) the willful refusal (following written notice) by such Grantee to carry out specific directions of (A) the Company or (B) any of the Company’s Subsidiaries with which such Grantee is employed or of which such Grantee is an officer, which directions are consistent with such Grantee’s duties to the Company or any of the Company’s Subsidiaries, as the case may be; or (iv) the material violation by such Grantee of any material provision of any employment, severance or related agreement to which Grantee is party (other than for reasons related only to the business performance of the Company or business results achieved by such Grantee); or (v) the commission by such Grantee of any act of gross negligence or intentional misconduct in the performance of such Grantee’s duties as an employee of the Company or any of its Subsidiaries. For purposes of this definition, no act or failure to act on such Grantee’s part shall be considered to be Cause if done, or omitted to be done, by such Grantee in good faith and with the reasonable belief that the action or omission was in the best interest of the Company or any of the Company’s Subsidiaries with which such Grantee is employed or of which such Grantee is an officer, as the case may be. (d) “Change of Control” has the meaning ascribed to such term in the Plan. (e) “Disability” has the meaning ascribed to such term in the Grantee’s employment or severance agreement, or if such Grantee is not a party to an employment or severance agreement or “Disability” is not defined therein, “Disability” has the meaning specified in any long-term disability insurance policy maintained by the Company.   Attachment A-7 -------------------------------------------------------------------------------- (f) “Employee” means any individual who is a common-law employee of the Company or a Subsidiary thereof. (g) “Good Reason”, with respect to any Grantee who is an employee of the Company, or any of its Subsidiaries (collectively, the “companies”), has the meaning ascribed to such term in such Grantee’s employment or severance agreement or, if such Grantee is not a party to an employment or severance agreement or “Good Reason” is not defined therein, “Good Reason” means: (a) the assignment to the Grantee of duties materially inconsistent with such person’s position (including status, offices, titles and reporting requirements) or any other action by any of the companies which results in a diminution of such person’s position, authority, duties or responsibilities, or (b) any of the companies requiring the Grantee to be based at any office or location other than the office or location for which such person was hired; provided, that any event described in clauses (a) or (b) above shall constitute Good Reason only if the relevant company fails to cure such event within 30 days after such company’s receipt from the Grantee of written notice of the event which constitutes Good Reason; provided further, that Good Reason shall cease to exist for an event on the 90th day following the later of its occurrence or such person’s knowledge thereof, unless such person has given the relevant company written notice thereof prior to such date. (h) “Person” means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization. (i) “Service” means service as an Employee. (j) “Subsidiary” means, with respect to any specified Person, any other Person in which such specified Person, directly or indirectly through one or more Affiliates or otherwise, beneficially owns at least 50% of either the ownership interest (determined by equity or economic interests) in, or the voting control of, such other Person.   Attachment A-8 -------------------------------------------------------------------------------- ANNEX 1 Additional Terms and Conditions of the Restricted Share Unit Award Agreement for Grants outside the United States This Annex 1 includes additional terms and conditions that govern the Restricted Share Units granted in the countries identified below. These terms are general in nature and based on the securities, tax and other laws in effect in your country as of February 2010. Such laws are often complex and subject to frequent change. As such, the Company strongly recommends that you do not rely on this summary as your only source of information relating to the consequences of your Restricted Share Unit Award and participation in the Plan and further that you consult your personal tax or legal advisors for advice as to how the laws in your country apply to your situation. Finally, note that if you are a citizen or resident of a country other than the one in which you are working in, the information contained below may not be applicable to you. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement or the Plan. All Restricted Share Unit Awards outside the United States — For awards of Restricted Share Units to Grantees outside the United States, the following additional terms apply:   A. Nature of Award.     i. The Restricted Share Units are an extraordinary item that do not constitute compensation of any kind for services of any kind rendered for the Company or any Affiliate and which are outside the scope of the Grantee’s employment contract, if any;     ii. The Restricted Share Units are not intended to replace any pension rights or compensation;     iii. The Restricted Share Units are not part of fixed, normal or expected compensation, salary or terms of employment for any purposes, including, without limitation, calculating any severance, resignation, termination , redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, any Subsidiary employing the Grantee or any Affiliate thereof; and     iv. Nothing in this Agreement or the Plan shall confer or otherwise give rise to any acquired rights and the Grantee’s acceptance and acknowledgment of this award shall constitute a waiver of any and all claims to the contrary.   Annex 1-1 -------------------------------------------------------------------------------- B. Section 4 of the Agreement is amended to include the following additional subsection at the end thereof “(d) In the event of termination of the Grantee’s employment (whether or not in breach of local labor laws), the Grantee’s right to vest in the Restricted Share Units under the Plan, if any, will, except as expressly provided in this Agreement, Annex 2 or in the Plan, terminate effective as of the date that the Grantee is no longer actively employed and will not be extended by any notice period (e.g. a period of “garden leave”) mandated under local law. In consideration of the award, the Grantee irrevocably releases the Company (and any Subsidiary employing the Grantee) and any Affiliate thereof from any claim or entitlement to compensation or damages arising from forfeiture of the Restricted Share Units resulting from termination of the Grantee’s employment.   C. Data Privacy. The Grantee hereby explicitly consents to the collection, processing, transmission and storage, in any form whatsoever, of any data of a professional or personal nature described in this Agreement, the Plan and any other grant materials by and among as applicable, the Company, a Subsidiary employing the Grantee or any Affiliates thereof that is necessary, in the discretion of the Company, for the purposes of implementing, administering and managing the Grantee’s participation in the Plan. The Company may share such information with any party located in the United States or elsewhere, including any trustee, registrar, administrative agent, broker, stock plan service provider or any other person assisting the Company with the implementation, administration, and management of this Restricted Share Unit Award and the Plan. The Grantee thus authorizes the Company and its Affiliates and any possible recipients described herein to receive, possess, use, retain and transfer the data in electronic or other form, for the sole purpose described herein. The Grantee understands that he or she may refuse or withdraw such consent or authorization without cost by contacting his or her local human resources representative, provided however, that the Grantee understands that such refusal or withdrawal may affect his or her ability to participate in the Plan.   Annex 1-2 -------------------------------------------------------------------------------- Canada     i. Section 2(a) of the Agreement is deleted in its entirety and replaced as follows: “(a) Restricted Share Unit Issuance. Each Restricted Share Unit shall represent the right to acquire one ordinary share of the Company.”     ii. Section 2(c) of the Agreement is deleted in its entirety and replaced as follows: “(c) Dividends. The Grantee will not be entitled to share or cash dividends, if any, that are paid on any ordinary shares underlying unvested Restricted Share Units and any and all references in the Agreement to Share Dividends or Cash Dividends shall be of no force or effect.”     iii. Section 3(b) and Section 4(b)(iii) of the Agreement are each deleted in their entirety.     iv. Section 6(b) of the Agreement is amended in the case of notices, requests and other communications to the Company under the Agreement by deletion of the address for the Company in Section 6(b) and the replacement thereof as follows: If to the Company, to:     v. Section A of this Annex 1 shall not apply with respect to any Restricted Share Unit granted in Canada.   Annex 1-3 -------------------------------------------------------------------------------- Germany Section 6(b) of the Agreement is amended in the case of notices, requests and other communications to the Company under the Agreement by deletion of the address for the Company in Section 6(b) and the replacement thereof as follows: If to the Company, to: Netherlands Section 6(b) of the Agreement is amended in the case of notices, requests and other communications to the Company under the Agreement by deletion of the address for the Company in Section 6(b) and the replacement thereof as follows: If to the Company, to: Spain Section 6(b) of the Agreement is amended in the case of notices, requests and other communications to the Company under the Agreement by deletion of the address for the Company in Section 6(b) and the replacement thereof as follows: If to the Company, to:   Annex 1-4 -------------------------------------------------------------------------------- Switzerland Section 6(b) of the Agreement is amended in the case of notices, requests and other communications to the Company under the Agreement by deletion of the address for the Company in Section 6(b) and the replacement thereof as follows: If to the Company, to:   Annex 1-5 -------------------------------------------------------------------------------- ANNEX 2 VESTING OF RESTRICTED SHARE UNITS Subject to the terms set forth in the Agreement and the Plan, the Restricted Share Units vest as follows: (a) 25% of the Restricted Share Units shall vest on the first anniversary of the Grant Date; (b) 25% of the Restricted Share Units shall vest on the second anniversary of the Grant Date; (c) 25% of the Restricted Share Units shall vest on the third anniversary of the Grant Date; (d) 25% of the Restricted Share Units shall vest on the forth anniversary of the Grant Date (the first, second, third and forth anniversary of the Grant Date each a “Vesting Date”). (e) In connection with a Change of Control, the Restricted Share Units still subject to vesting shall fully vest immediately prior to the consummation of the Change of Control. (f) If, prior to a Vesting Date, the Grantee’s employment with the Company or one of its Subsidiaries is terminated due to death or Disability, by the employer without Cause or by the Grantee for Good Reason (the date of such termination of employment, the “Termination Date”), then a portion of the 25% of the Restricted Share Units which were otherwise due to vest on such Vesting Date shall vest on the Termination Date as follows: (i) If the Termination Date is more than nine (9) months before the next Vesting Date, none of such Restricted Share Units shall vest; (ii) If the Termination Date is more than six (6) months but no more than nine (9) months before the next Vesting Date, 25% of such Restricted Share Units shall vest; (iii) If the Termination Date is more than three (3) months but no more than six (6) months before the next Vesting Date, 50% of such Restricted Share Units shall vest; and (iv) If the Termination Date is three (3) months or less before the next Vesting Date, 75% of such Restricted Share Units shall vest.   Annex 2-1
Exhibit 10.2   AMENDED AND RESTATED US ECOLOGY, INC. OMNIBUS INCENTIVE PLAN   Section 1.                                           Purpose of the Plan.  The purpose of the Amended and Restated US Ecology, Inc. Omnibus Incentive Plan (the “Plan”) is to assist the Company and its Subsidiaries in attracting, motivating and retaining valued Employees, Consultants and Non-Employee Directors by offering them a greater stake in the Company’s success and a closer identity with it, aligning the interests of Employees, Consultants and Non-Employee Directors with the interests of the Company’s shareholders and encouraging ownership of the Company’s stock by such Employees, Consultants and Non-Employee Directors.  In connection with, and as contemplated by, that certain Agreement and Plan of Merger, dated as of June 23, 2019, by and among US Ecology, Inc. (now known as US Ecology Holdings, Inc.), US Ecology Parent, Inc. (now known as US Ecology, Inc.), Rooster Merger Sub, Inc., ECOL Merger Sub, Inc., and NRC Group Holdings Corp. (as amended and/or restated from time to time, the “Merger Agreement”), the Company assumed the US Ecology, Inc. Omnibus Incentive Plan (the “Pre-Merger Plan”), amended and restated such plan as set forth herein and renamed it the Amended and Restated US Ecology, Inc. Omnibus Incentive Plan.  All awards granted under the Pre-Merger Plan that were outstanding as of immediately prior to the Effective Time (as defined in the Merger Agreement) were assumed by the Company at the Effective Time and converted to be in respect of Shares (as defined below), and shall be treated as if they were issued under the Plan (such awards as converted, the “Converted Awards”).   Section 2.                                           Definitions.  As used herein, the following definitions shall apply:   2.1.                            “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.   2.2.                            “Award” means any of Restricted Stock, Performance Stock, Options, SARs, Restricted Stock Units, Performance Stock Units, Other Stock-Based Awards or Cash-Based Awards under the Plan.   2.3.                            “Award Agreement” means the written agreement, instrument or document evidencing an Award.   2.4.                            “Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.   2.5.                            “Board” means the Board of Directors of the Company.   2.6.                            “Cash-Based Awards” means an Award Granted under Section 6.8 of the Plan.   2.7.                            “Cause” means,   --------------------------------------------------------------------------------   (a)                                 if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Cause” shall have the meaning provided in such agreement;   (b)                                 if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Cause” is set forth in the applicable employment, consulting, severance or similar agreement, “Cause” shall have the meaning provided in the applicable Award Agreement; or   (c)                                  if neither (a) nor (b) applies, then “Cause” shall mean (i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect; (ii) failing to adhere to the directions of superiors or the Board or the written policies and practices of the Company or its Subsidiaries or Affiliates; (iii) the commission of a felony or a crime involving any of the following: moral turpitude, dishonesty, breach of trust or unethical business conduct; or the commission of any crime involving the Company or its Subsidiaries or Affiliates; (iv) fraud, misappropriation or embezzlement; (v) a material breach of the Participant’s employment agreement (if any) with the Company or its Subsidiaries or Affiliates, whether or not such breach results in the termination of the Participant’s employment; (vi) acts or omissions constituting a material failure to perform substantially and adequately the duties assigned to the Participant; (vii) any illegal act detrimental to the Company or its Subsidiaries or Affiliates; (viii) repeated failure to devote substantially all of the Participant’s business time and efforts to the Company if required by the Participant’s employment agreement; (ix) the Participant’s abuse of illegal drugs and other controlled substances or the Participant’s habitual intoxication; or (x) any other action for which the Participant’s employment may be terminated under the Participant’s employment agreement, if any, or for which applicable law permits summary dismissal without notice.   2.8.                            “Change in Control” means, after the Effective Date:   (a)                                 if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Change in Control” shall have the meaning provided in such agreement;   (b)                                 if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Change in Control” is set forth in the applicable employment, consulting, severance or similar agreement, “Change in Control” shall have the meaning provided in the applicable Award Agreement; or   (c)                                  if neither (a) nor (b) applies, then “Change in Control” shall mean:   (i)                                     the consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company (each, a “Business Combination”), unless, following such Business Combination, all or substantially all of the individuals and entities that were the Beneficial Owners of the combined voting power of the Company’s outstanding securities immediately prior to such Business Combination beneficially own, directly or indirectly, at least 50% of the combined voting power of the then-outstanding securities of the entity   --------------------------------------------------------------------------------   resulting from such Business Combination in substantially the same proportions as their ownership of the combined voting power of the Company’s outstanding securities immediately prior to the Business Combination; provided, however, that a public offering of the Company’s securities shall not constitute a Business Combination;   (ii)                                  any transaction as a result of which any person is the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding voting securities.  For purposes of this clause (ii), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act, but shall exclude (x) a trustee or other fiduciary holding securities under an executive benefit plan of the Company or of a subsidiary and (y) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company;   (iii)                               the sale, transfer, or other disposition of all or substantially all of the Company’s assets, other than to a wholly-owned Subsidiary or to a holding company of which the Company is a direct or indirect wholly owned subsidiary prior to such transaction;   (iv)                              the consummation of a plan of complete liquidation or substantial dissolution of the Company; or   (v)                                 a change in the composition of the Board in any two-year period as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (a) are directors of the Company as of the date hereof or (b) are elected, or nominated for election, to the Board with the affirmative votes (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for election as a director without objection to such nomination) of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of the Company).   Notwithstanding the foregoing, no event shall constitute a Change in Control with respect to an Award that constitutes “non-qualified deferred compensation” (within the meaning of Section 409A of the Code) unless such Change in Control satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5).   2.9.                            “Code” means the Internal Revenue Code of 1986, as amended.   2.10.                     “Company” means US Ecology, Inc. (formerly known as US Ecology Parent, Inc.), a Delaware corporation, or any successor corporation.   2.11.                     “Committee” means the Compensation Committee of the Board.  The Committee shall have at least two members, each of whom shall be a “non-employee director” as defined in Rule 16b-3 under the Exchange Act and an “outside director” as defined in Section 162(m) of the   --------------------------------------------------------------------------------   Code and the regulations thereunder, and, if applicable, shall meet the independence requirements of the applicable stock exchange, quotation system or other regulatory organization on which Shares are traded.   2.12.                     “Consultant” means an individual other than an Employee or Non-Employee Director who provides bona fide services to the Company or a Subsidiary.   2.13.                     “Disability” means,   (a)                                 if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Disability” shall have the meaning provided in such agreement;   (b)                                 if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Disability” is set forth in the applicable employment, consulting, severance or similar agreement, “Disability” shall have the meaning provided in the applicable Award Agreement; or   (c)                                  if neither (a) nor (b) applies, then “Disability” shall mean that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.   2.14.                     “Effective Date” means the date on which the Plan becomes effective, which shall be the date on which the closing of the Parent Merger (as defined in the Merger Agreement) occurs.   2.15.                     “Employee” means an individual who is an officer or an employee of the Company or a Subsidiary.   2.16.                     “Exchange Act” means the Securities Exchange Act of 1934, as amended.   2.17.                     “Fair Market Value” means, on any given date (i) the average of the high and low sale prices reported as having occurred on the NASDAQ Global Market System (or other principal exchange or market on which the Shares are traded or listed) on such date, or, if no sale was made on such date on such principal exchange or market, on the last preceding day on which the Shares were traded or listed; or (ii) if (i) does not apply, such value as the Committee in its discretion may in good faith determine (such determination shall be made (a) in accordance with Section 409A of the Code and the regulations thereunder to the extent applicable and (b) in accordance with Section 422 of the Code and the regulations thereunder to the extent the Award granted is intended to be an Incentive Stock Option).   2.18.                     “Good Reason” means,   (a)                                 if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Good Reason” shall have the meaning provided in such agreement;   --------------------------------------------------------------------------------   (b)                                 if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Good Reason” is set forth in the applicable employment, consulting, severance or similar agreement, “Good Reason” shall have the meaning provided in the applicable Award Agreement; or   (c)                                  if neither (a) nor (b) applies, then “Good Reason” shall mean, following a Change in Control, unless cured by the Company within 30 days following notice from the Participant thereof, (i) a relocation of the Participant’s principal place of employment or other service that increases the Participant’s one-way commute by more than 50 miles; (ii) a material diminution in the Participant’s duties or responsibilities; or (iii) a decrease in the Participant’s base salary or annual bonus opportunity, other than a decrease resulting from an across-the-board reduction in salaries or annual bonus opportunities applicable to similarly situated employees or the failure to meet performance criteria applicable to incentive compensation.   2.19.                     “Grant Date” means the date specified by the Committee on which a grant of an Award shall become effective, which shall not be earlier than the date on which the Committee takes action with respect thereto.   2.20.                     “Incentive Stock Option” means an Option or portion thereof intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock Option, and if the Committee does not designate an Option as an Incentive Stock Option in the Award Agreement, the terms of the Award Agreement for such Option hereby provide that the Option will not be treated as an Incentive Stock Option under Section 422 of the Code.   2.21.                     “Non-Employee Director” means a member of the Board who is not an Employee.   2.22.                     “Non-Qualified Option” means an Option or portion thereof that does not qualify as or is not intended to be an Incentive Stock Option or that is not designated as an Incentive Stock Option in the Award Agreement.   2.23.                     “Option” means a right granted under Section 6.1 of the Plan to purchase a specified number of Shares at a specified price.  An Option may be an Incentive Stock Option or a Non-Qualified Option.   2.24.                     “Other Stock-Based Awards” means a right granted under Section 6.7 of the Plan.   2.25.                     “Participant” means any Employee, Non-Employee Director or Consultant who receives an Award.   2.26.                     “Performance Goals” means any goals established by the Committee in its sole discretion, the attainment of which is substantially uncertain at the time such goals are established. Performance Goals may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or a Subsidiary, division, department or function within the Company or Subsidiary in which the Participant is employed.  Performance Goals may be measured on an absolute or relative basis.  Relative performance may be measured by a group of peer companies, by a financial market index or by another external measure.   --------------------------------------------------------------------------------   Performance Goals may be based upon: specified levels of or increases in the Company’s, a division’s or a Subsidiary’s return on capital, equity or assets; earnings measures/ratios (on a gross, net, pre-tax or post-tax basis), including diluted earnings per share, total earnings, operating earnings, earnings growth, earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation and amortization (EBITDA); net economic profit (which is operating earnings minus a charge to capital); net income; operating income; safety and/or environmental record; sales; sales growth; gross margin; direct margin; share price (including but not limited to growth measures and total stockholder return), operating profit; operating efficiency; costs; per period or cumulative cash flow (including but not limited to operating cash flow and free cash flow) or cash flow return on investment (which equals net cash flow divided by total capital); inventory turns; financial return ratios; enterprise value; economic value added or other value added measurements; revenue; market share; balance sheet measurements such as receivable turnover; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; debt reduction; strategic innovation, including but not limited to entering into, substantially completing, or receiving payments under, relating to, or deriving from a joint development agreement, licensing agreement, or similar agreement; completion of acquisitions, business expansion or divestitures of the Company, a division or a Subsidiary; implementation of critical projects or related milestones; achievement of operational or efficiency milestones; customer or employee satisfaction; individual objectives; any financial or other measurement deemed appropriate by the Committee as it relates to the results of operations or other measurable progress of the Company and its Subsidiaries (or any business unit of the Company or any of its Subsidiaries); and any combination of any of the foregoing criteria.  Subject to Section 7.4, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Performance Goals unsuitable, the Committee may modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable.   2.27.                     “Performance Period” means the period, which shall not be less than one year, selected by the Committee during which the performance of the Company, any Subsidiary, any department of the Company or any Subsidiary, or any individual is measured for the purpose of determining the extent to which a Performance Goal has been achieved.   2.28.                     “Performance Stock” means Shares awarded by the Committee under Section 6.4 of the Plan that are subject to Performance Goals.   2.29.                     “Performance Stock Unit” means the right granted under Section 6.6 of the Plan to receive, on the date of settlement, one Share or an amount equal to the Fair Market Value of one Share that is subject to Performance Goals.  Performance Stock Units may be settled in cash, Shares or any combination thereof; provided, however, that unless otherwise provided in an Award Agreement, Performance Stock Units shall be settled in Shares.   2.30.                     “Person” means an individual, corporation, partnership, association, limited liability company, estate or other entity.   2.31.                     “Qualified Performance-Based Award” has the meaning set forth in Section 7.1.   --------------------------------------------------------------------------------   2.32.                     “Restricted Stock” means Shares awarded by the Committee under Section 6.3 of the Plan.   2.33.                     “Restricted Stock Unit” means the right granted under Section 6.5 of the Plan to receive, on the date of settlement, one Share or an amount equal to the Fair Market Value of one Share.  Restricted Stock Units may be settled in cash, Shares or any combination thereof; provided, however, that unless otherwise provided in an Award Agreement, Restricted Stock Units shall be settled in Shares.   2.34.                     “Restriction Period” means the period during which Restricted Stock and Restricted Stock Units are subject to forfeiture.   2.35.                     “SAR” means a stock appreciation right awarded by the Committee under Section 6.2 of the Plan.  SARs may be settled in cash, Shares or any combination thereof; provided, however, that unless otherwise provided in an Award Agreement, SARs shall be settled in Shares.   2.36.                     “Securities Act” means the Securities Act of 1933, as amended.   2.37.                     “Share” means a share of the Company’s common stock, par value $0.01, or any security into which Shares are converted by reason of any transaction or event of a type described in Section 9.   2.38.                     “Subsidiary” means any corporation, partnership, joint venture or other business entity of which 50% or more of the outstanding voting power is beneficially owned, directly or indirectly, by the Company.   2.39.                     “Ten Percent Stockholder” means an individual who on any given date is the Beneficial Owner (taking into account the attribution rules contained in Section 424(d) of the Code) of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or a Subsidiary.   Section 3.                                           Eligibility.    Except as otherwise specifically provided herein, any Employee, Non-Employee Director or Consultant who is selected by the Committee shall be eligible to receive an Award under the Plan.   Section 4.                                           Administration and Implementation of the Plan.   4.1.                            The Plan shall be administered by the Committee.  Any action of the Committee in administering the Plan shall be final, conclusive and binding on all Persons, including the Company, its Subsidiaries, Participants, Persons claiming rights from or through Participants and stockholders of the Company.  Notwithstanding the foregoing, the Committee may delegate to one or more officers or Board members the authority to grant Awards to eligible individuals other than Non-Employee Directors; provided that the Committee may not delegate authority to grant Awards to eligible individuals who are subject to the requirements of Rule 16b-3 of the Exchange Act or Covered Employees within the meaning of Code Section 162(m) and the regulations thereunder. Any such delegation shall be subject to the limitations of Section 157(c) of the Delaware General Corporation Law, and the Committee may revoke any such allocation or delegation at any time for any reason, with or without prior notice.   --------------------------------------------------------------------------------   4.2.                            Subject to the provisions of the Plan, the Committee shall have full and final authority in its discretion to (i) select the Employees, Non-Employee Directors and Consultants who will receive Awards pursuant to the Plan; provided that Awards granted to Non-Employee Directors shall be subject to ratification by the full Board; (ii) determine the type or types of Awards to be granted to each Participant; (iii) determine the number of Shares to which an Award will relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, restrictions as to vesting, Performance Goals relating to an Award, transferability or forfeiture, exercisability or settlement of an Award and waivers or accelerations thereof, and waivers of or modifications to Performance Goals relating to an Award, based in each case on such considerations as the Committee shall determine) and all other matters to be determined in connection with an Award; (iv) determine the exercise price, base price or purchase price (if any) of an Award; (v) determine whether, to what extent, and under what circumstances an Award may be cancelled, forfeited, or surrendered; (vi) determine how a leave of absence will impact an Award, including, without limitation, tolling the vesting schedule or treating such leave of absence as a termination of employment or other service; (vii) determine whether, and to certify that, Performance Goals to which an Award is subject are satisfied; (viii) correct any defect or supply any omission or reconcile any inconsistency in the Plan, and adopt, amend and rescind such rules, regulations, guidelines, forms of agreements and instruments relating to the Plan as it may deem necessary or advisable; (ix) construe and interpret the Plan; and (x) make all other determinations as it may deem necessary or advisable for the administration of the Plan.   Section 5.                                           Shares Subject to the Plan.   5.1.                            Subject to adjustment as provided in Section 9 hereof, the total number of Shares available for Awards under the Plan shall be 1,073,533 (the “Plan Limit”), of which 1,073,533 Shares may be issued pursuant to the exercise of Incentive Stock Options.  Notwithstanding the foregoing, (i) Awards covering no more than 100,000 Shares may be awarded to any Participant other than a Non-Employee Director in any one calendar year and (ii) Awards covering no more than 25,000 Shares may be awarded to a Non-Employee Director in any one calendar year (provided that, for purposes of these individual limits, none of the Converted Awards nor any other Awards granted by the Company through the assumption or substitution of outstanding grants from an acquired company shall count).  For purposes of determining the number of Shares available for Awards under the Plan, each Award that is denominated in Shares but settled in cash shall count against the Plan Limit based on the number of Shares underlying such Award rather than the number of Shares issued in settlement of such Award.  Any Shares tendered by a Participant in payment of an exercise price for or settlement of an Award or the tax liability with respect to an Award, including, without limitation, Shares withheld from any such Award, shall not be available for future Awards hereunder.  Shares awarded under the Plan may be reserved or made available from the Company’s authorized and unissued Shares or from Shares reacquired (through open market transactions or otherwise) and held in the Company’s treasury.  Any Shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall not reduce the number of Shares available for Awards under the Plan.  For the avoidance of doubt, Shares issued pursuant to Converted Awards shall be treated as if they were issued under the Plan and shall reduce the number of Shares available for issuance under the Plan.   5.2.                            If any Shares subject to an Award are forfeited or terminated without the issuance of Shares or settlement in cash, any Shares counted against the number of Shares available for   --------------------------------------------------------------------------------   issuance pursuant to the Plan with respect to such Award shall, to the extent of any such forfeiture or termination, again be available for Awards under the Plan; provided, however, that the Committee may adopt other procedures for the counting of Shares relating to any Award to ensure appropriate counting, avoid double counting, provide for adjustments in any case in which the number of Shares actually distributed differs from the number of Shares previously counted in connection with such Award, and if necessary, to comply with applicable law or regulations.   Section 6.                                           Awards.  Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any Award or the settlement or exercise thereof, at the Grant Date or thereafter, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including without limitation terms requiring forfeiture of Awards in the event of the termination of a Participant’s employment or other relationship with the Company or any Subsidiary; provided, however, that, except as provided in Sections 7 or 15, the Committee shall retain full power to accelerate or waive any such additional term or condition as it may have previously imposed.  The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such Performance Goals as may be determined by the Committee.  Each Award, and the terms and conditions applicable thereto, shall be evidenced by an Award Agreement.   6.1.                            Options.  Options give a Participant the right to purchase a specified number of Shares from the Company for a specified time period at a fixed exercise price, as provided in the applicable Award Agreement.  The grant of Options shall be subject to the following terms and conditions:   (a)                                 Exercise Price.  The price per share at which Shares may be purchased upon exercise of an Option shall be determined by the Committee and specified in the Award Agreement, but shall be not less than the Fair Market Value of a Share on the Grant Date.   (b)                                 Term of Options.  The term of an Option shall be specified in the Award Agreement, but shall in no event be greater than ten years.   (c)                                  Exercise of Option.  Each Award Agreement with respect to an Option shall specify the time or times at which an Option may be exercised in whole or in part and the terms and conditions applicable thereto, including (i) a vesting schedule which may be based upon the passage of time, attainment of Performance Goals or a combination thereof, (ii) whether the exercise price for an Option shall be paid in cash, Shares or any combination thereof, (iii) the methods of payment, which may include payment through cashless and net exercise arrangements, to the extent permitted by applicable law and (iv) the methods by which, or the time or times at which, Shares will be delivered or deemed to be delivered to Participants upon the exercise of such Option.   (d)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary   --------------------------------------------------------------------------------   without Cause or by the Participant for Good Reason, the unvested portion of such Participant’s Options shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels), and the Participant’s Options shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period 90 days thereafter and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of such Participant’s Options shall cease to vest and shall be forfeited with no further compensation due the Participant and the vested portion of such Participant’s Options shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period of 30 days thereafter; provided, however, that in no event shall any Option be exercisable after its stated term has expired.  All of a Participant’s Options, whether or not vested, shall be forfeited immediately upon such Participant’s termination by the Company or a Subsidiary for Cause with no further compensation due the Participant.   (e)                                  No Dividend Equivalent Rights.  No Participant shall be entitled to dividend equivalent rights or payments with respect to any Shares underlying the unexercised portion of the Participant’s Options.   (f)                                   Incentive Stock Options.  The following conditions apply to Awards of Incentive Stock Options in addition to or in lieu of those described above in provisions (a)-(e) of this Section 6.1:   (i)                                     Eligibility.  Incentive Stock Options may only be granted to Participants who are Employees.   (ii)                                  Exercise Price.  In the case of Ten Percent Stockholder, the price at which a Share may be purchased upon exercise of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of such Share on the Grant Date.   (iii)                               Term of Options.  In the case of a Ten Percent Stockholder, the term of an Incentive Stock Option shall be no greater than five years.   (iv)                              Notice.  Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he or she makes a “disqualifying disposition” (as defined in Section 421(b) of the Code) of any Shares acquired pursuant to the exercise of such Incentive Stock Option.  The Company may, if determined by the Committee and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of any period during which a disqualifying disposition could occur, subject to complying with any instructions from such Participant as to the sale of such Shares.  The aggregate Fair Market Value, determined as of the Grant Date, for Awards granted under the Plan (or any other stock option plan required to be taken into account under Section 422(d) of the Code) that are intended to be Incentive Stock Options which are first exercisable by the Participant during any calendar year shall not exceed $100,000.  To the extent an Award purporting to be an Incentive Stock   --------------------------------------------------------------------------------   Option exceeds the limitation in the previous sentence, the portion of the Award in excess of such limit shall be a Non-Qualified Option.   (v)                                 Limits on Transferability.  Notwithstanding anything in Section 13 to the contrary, no Incentive Stock Option shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company or any Subsidiary, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative.   6.2.                            Stock Appreciation Rights.  An SAR shall confer on the Participant a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the SAR as determined by the Committee, but which may never be less than the Fair Market Value of one Share on the Grant Date.  The grant of SARs shall be subject to the following terms and conditions:   (a)                                 General.  Each Award Agreement with respect to an SAR shall specify the number of SARs granted, the grant price of the SAR, the time or times at which an SAR may be exercised in whole or in part (including vesting upon the passage of time, the attainment of Performance Goals, or a combination thereof), the method of exercise, method of settlement (in cash, Shares or a combination thereof), method by which Shares will be delivered or deemed to be delivered to Participants (if applicable) and any other terms and conditions of any SAR.   (b)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of such Participant’s SARs shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels) and the Participant’s SARs shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period 90 days thereafter and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of such Participant’s SARs shall cease to vest and shall be forfeited with no further compensation due the Participant and the vested portion of such Participant’s SARs shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period of 30 days thereafter; provided, however, that in no event shall any SAR be exercisable after its stated term has expired.  All of a Participant’s SARs, whether or not vested, shall be forfeited immediately upon such Participant’s termination by the Company or a Subsidiary for Cause with no further compensation due the Participant.   --------------------------------------------------------------------------------   (c)                                  Term.  The term of an SAR shall be specified in the Award Agreement, but shall in no event be greater than ten years.   (d)                                 No Dividend Equivalent Rights.  No Participant shall be entitled to dividend equivalent rights or payments with respect to any Shares underlying the Participant’s SARs.   6.3.                            Restricted Stock.  An Award of Restricted Stock is a grant by the Company of a specified number of Shares to the Participant, which Shares are subject to forfeiture upon the happening of specified events during the Restriction Period.  An Award of Restricted Stock shall be subject to the following terms and conditions:   (a)                                 General.  Each Award Agreement with respect to Restricted Stock shall specify the duration of the Restriction Period, if any, and/or each installment thereof, the conditions under which the Restricted Stock may be forfeited to the Company, and the amount, if any, the Participant must pay to receive the Restricted Stock.  Such restrictions may include a vesting schedule based upon the passage of time.   (b)                                 Transferability.  During the Restriction Period, if any, the transferability of Restricted Stock shall be prohibited or restricted in the manner and to the extent prescribed in the applicable Award Agreement.  Such restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee.   (c)                                  Stockholder Rights.  Unless otherwise provided in the applicable Award Agreement, during the Restriction Period the Participant shall have all the rights of a stockholder with respect to Restricted Stock, including, without limitation, the right to receive dividends thereon (whether in cash or Shares), at the same time such dividends are paid on Shares generally, and to vote such shares of Restricted Stock.   (d)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Award of Restricted Stock held by such Participant shall vest in full and the applicable Restriction Period shall expire and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Award of Restricted Stock held by such Participant shall be forfeited with no further compensation due the Participant.   6.4.                            Performance Stock.  An Award of Performance Stock is a grant by the Company of a specified number of Shares to the Participant, which Shares are conditional on the achievement of Performance Goals during the Performance Period and subject to forfeiture upon the happening   --------------------------------------------------------------------------------   of specified events during the Restriction Period.  An Award of Performance Stock shall be subject to the following terms and conditions:   (a)                                 General.  Each Award Agreement with respect to Performance Stock shall specify the duration of the Performance Period and the Restriction Period, if any, and/or each installment thereof, the Performance Goals applicable to the Performance Stock and the conditions under which the Performance Stock may be forfeited to the Company, and the amount, if any, the Participant must pay to receive the Performance Stock.  Such restrictions may include a vesting schedule based on the attainment of Performance Goals measured on a milestone basis or in respect of the Performance Period.   (b)                                 Transferability.  During the Restriction Period, if any, the transferability of Performance Stock shall be prohibited or restricted in the manner and to the extent prescribed in the applicable Award Agreement.  Such restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Performance Stock to a continuing substantial risk of forfeiture in the hands of any transferee.   (c)                                  Stockholder Rights.  Unless otherwise provided in the applicable Award Agreement, during the Restriction Period the Participant shall have all the rights of a stockholder with respect to Performance Stock; provided that the Participant shall not have the right to receive or accumulate dividends paid on or with respect to Performance Stock during the applicable Performance Period (whether in cash or Shares), which dividends shall be forfeited to the Company with no compensation due therefor; provided, further, that the Participant shall have the right to receive dividends paid after the expiration of the Performance Period with respect to earned Shares, whether or not such Shares are subject to restriction under Section 6.3, at the same time such dividends are paid on Shares generally.   (d)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Award of Performance Stock held by such Participant shall vest in full (with the Performance Goals being deemed to have been achieved at target or, if greater, actual levels) and the applicable Restriction Period shall expire and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Award of Performance Stock held by such Participant shall be forfeited with no further compensation due the Participant.   6.5.                            Restricted Stock Units.  Restricted Stock Units are solely a device for the measurement and determination of the amounts to be paid to a Participant under the Plan. Restricted Stock Units do not constitute Shares and shall not be treated as (or as giving rise to) property or as a trust fund of any kind.  The right of any Participant in respect of an Award of   --------------------------------------------------------------------------------   Restricted Stock Units shall be no greater than the right of any unsecured general creditor of the Company.  The grant of Restricted Stock Units shall be subject to the following terms and conditions:   (a)                                 Restriction Period.  Each Award Agreement with respect to Restricted Stock Units shall specify the duration of the Restriction Period, if any, and/or each installment thereof and the conditions under which such Award may be forfeited to the Company.  Such restrictions may include a vesting schedule based upon the passage of time.   (b)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Award of Restricted Stock Units credited to such Participant shall vest in full, the applicable Restriction Period shall expire and each such Award of Restricted Stock Units shall be settled in accordance with Section 6.5(c) and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Award of Restricted Stock Units credited to such Participant shall be forfeited with no compensation due the Participant.   (c)                                  Settlement.  Unless otherwise provided in an Award Agreement, subject to the Participant’s continued employment or other service with the Company or a Subsidiary from the Grant Date through the expiration of the Restriction Period (or applicable portion thereof), the vested portion of an Award of Restricted Stock Units shall be settled within 30 days after the expiration of the Restriction Period (or applicable portion thereof).   (d)                                 Stockholder Rights.  Nothing contained in the Plan shall be construed to give any Participant rights as a stockholder with respect to an Award of Restricted Stock Units (including, without limitation, any voting, dividend or derivative or other similar rights).   6.6.                            Performance Stock Units.  Performance Stock Units are solely a device for the measurement and determination of the amounts to be paid to a Participant under the Plan.  Performance Stock Units do not constitute Shares and shall not be treated as (or as giving rise to) property or as a trust fund of any kind.  The right of any Participant in respect of an Award of Performance Stock Units shall be no greater than the right of any unsecured general creditor of the Company.  The grant of Performance Stock Units shall be subject to the following terms and conditions:   (a)                                 Restriction Period.  Each Award Agreement with respect to Performance Stock Units shall specify the duration of the Performance Period and the Restriction Period, if any, and/or each installment thereof, the Performance Goals applicable to the Performance Stock Units and the conditions under which the Performance Stock Units may   --------------------------------------------------------------------------------   be forfeited to the Company.  Such restrictions may include a vesting schedule based on the attainment of Performance Goals measured on a milestone basis or in respect of the Performance Period.   (b)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Award of Performance Stock Units credited to such Participant shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels), the applicable Restriction Period shall expire and each such Award of Performance Stock Units shall be settled in accordance with Section 6.6(c) and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Award of Performance Stock Units credited to such Participant shall be forfeited with no compensation due the Participant.   (c)                                  Settlement.  Unless otherwise provided in an Award Agreement, subject to the Participant’s continued employment or other service with the Company or a Subsidiary from the Grant Date through the expiration of the Restriction Period (or applicable portion thereof), the vested portion of an Award of Performance Stock Units shall be settled within 30 days after the expiration of the Restriction Period (or applicable portion thereof).   (d)                                 Stockholder Rights.  Nothing contained in the Plan shall be construed to give any Participant rights as a stockholder with respect to an Award of Performance Stock Units (including, without limitation, any voting, dividend or derivative or other similar rights).   6.7.                            Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants any type of award (in addition to those Awards provided in Section 6.1, 6.2, 6.3, 6.4, 6.5 or 6.6 hereof) that is payable in, or valued in whole or in part by reference to, Shares, and that is deemed by the Committee to be consistent with the purposes of the Plan.  Such Awards may include deferred Shares or Share purchase Awards, as well as the outright grant of Shares that are not subject to any restrictions as to vesting or other forfeiture conditions, and shall be subject to such additional terms as the Committee determines in its sole discretion, consistent with provisions of the Plan.   (a)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Other   --------------------------------------------------------------------------------   Stock-Based Award held by such Participant shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels) and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Other Stock-Based Award shall be forfeited with no further compensation due the Participant.   6.8.                            Cash-Based Awards.  The Committee is hereby authorized to grant Cash-Based Awards denominated in cash in such amounts and subject to such terms and conditions as the Committee may determine.  Each such Cash-Based Award shall specify a payment amount or payment range as determined by the Committee.  Cash-Based Awards may be based on the attainment of Performance Goals and designed to constitute Qualified Performance-Based Awards.  The maximum amount payable pursuant to Cash-Based Awards granted to a Participant during any one calendar year shall not exceed $10,000,000.   (a)                                 Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, (i) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries (A) at any time, due to the Participant’s death or Disability or (B) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the unvested portion of each Cash-Based Award held by such Participant shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels) and become payable and (ii) upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any other reason, the unvested portion of each Cash-Based Award held by such Participant shall be forfeited with no further compensation due the Participant.   Section 7.                                           Code Section 162(m).   7.1.                            General Requirements.  If at any time the Company is subject to Code Section 162(m), the Committee may grant Awards that satisfy the following requirements for the exception to Code Section 162(m) for qualified performance-based compensation (“Qualified Performance-Based Awards”):   (a)                                 Eligibility.  Only Participants who are “Covered Employees” within the meaning of Section 162(m) of the Code shall be eligible to receive Qualified Performance-Based Awards. The Committee shall designate in its sole discretion which Covered Employees shall be Participants for a Performance Period within the earlier of the (i) first 90 days of the Performance Period and (ii) the lapse of 25% of the Performance Period.   (b)                                 Performance Goals.  The Committee shall establish in writing within the earlier of the (i) first 90 days of a Performance Period and (ii) the lapse of 25% of the Performance Period, and in any event, while the outcome is substantially uncertain, (x) Performance Goals for the Performance Period, and (y) in respect of such Performance Goals, a minimum acceptable level of achievement below which no Award shall be made, and an objective formula or other method for determining the Award to be made if   --------------------------------------------------------------------------------   performance is at or above such minimum acceptable level but falls short of the maximum achievement of the specified Performance Goals.   (c)                                  Certification.  Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the amount of the Qualified Performance-Based Awards earned for the period based upon the Performance Goals and the related formulas or methods as determined pursuant to Section 7.1(b).  The Committee shall then determine the actual number of Shares issuable under each Participant’s Award for the Performance Period, and, in doing so, may reduce or eliminate the amount of the Award, as permitted in the Award Agreement.  In no event shall the Committee have the authority to increase Award amounts to any Covered Employee.   (d)                                 Termination of Employment.  Notwithstanding anything herein to the contrary, the Committee shall not permit the payment or other settlement of a Qualified Performance-Based Award following a Participant’s termination of employment with the Company and its Subsidiaries for any reason other than the Participant’s death or Disability or following a Change in Control unless such Qualified Performance-Based Award would have been paid or settled based on the actual outcome of the applicable Performance Goals during the applicable Performance Period absent such termination of employment.  Notwithstanding anything herein to the contrary, unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee, upon a Participant’s termination of employment with the Company and its Subsidiaries (i) at any time, due to the Participant’s death or Disability or (ii) within 24 months following a Change in Control, by the Company or a Subsidiary without Cause or by the Participant for Good Reason, the Participant’s Qualified Performance-Based Awards shall be paid or settled in full based on the assumption that the applicable Performance Goals have been achieved at target or, if greater, actual levels.  Upon a Participant’s termination of employment with the Company and its Subsidiaries for Cause, 100% of a Participant’s Qualified Performance-Based Awards shall be forfeited with no compensation due therefor.   7.2.                            Notwithstanding anything in Section 5.1 to the contrary, the maximum number of Shares underlying Qualified Performance-Based Awards that may be granted to a Participant in any one Performance Period is 100,000 and the maximum number of shares that may be granted to a Participant pursuant to Options and SARs is 100,000, in each case, subject to adjustment as provided in Section 9.  The maximum amount payable to a Participant pursuant to Cash-Based Awards that are intended to constitute Qualified Performance-Based Awards during any one calendar year shall not exceed $10,000,000.  For purposes of the foregoing limitations, Converted Awards shall be treated as if they were granted in the year, and with respect to the performance period, in which the award granted under the Pre-Merger Plan from which they were converted was granted.   7.3.                            The Committee may, without the consent of a Participant, make any amendment, alteration or other modification to the Plan as would have a material adverse affect on the rights   --------------------------------------------------------------------------------   of such Participant if such modification is necessary to ensure a deduction under Code Section 162(m).   7.4.                            The Committee is authorized, in its sole discretion, to adjust or modify a Performance Goal for a Performance Period, including, without limitation, the applicable minimum, target and maximum levels of achievement, in connection with any one or more of the following events: (a) asset write-downs; (b) significant litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting standards or principles, or other laws or regulatory rules affecting reporting results; (d) any reorganization and restructuring programs or change in the corporate structure or capital structure of the Company; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year or period; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events or objectively determinable category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.  Except as otherwise provided above in this Section 7.4, the Committee may not (i) adjust or otherwise amend any Performance Goal if such adjustment or amendment would adversely affect the status of an Award as a Qualified Performance-Based Award; or (ii) change any material term of a Performance Goal without stockholder approval as required by Section 162(m) and the regulations thereunder.   7.5.                            Other than certain of the Converted Awards, no Awards granted on or after the Effective Date are intended to be Qualified Performance-Based Awards or shall be subject to this Section 7.   Section 8.                                           Change in Control.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, a Change in Control shall not, in and of itself, accelerate the vesting, settlement or exercisability of outstanding Awards.  Notwithstanding the foregoing and unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, if (i) the successor corporation (or its parent) does not agree to assume an outstanding Award or does not agree to substitute or replace such Award with an award involving the ordinary shares of such successor corporation (or its parent) on terms and conditions necessary to preserve the rights of the applicable Participant with respect to such Award, (ii) the securities of the Company or the successor corporation will not be publicly traded on a U.S. securities exchange or (iii) the Change in Control is not approved by a majority of the Incumbent Directors immediately prior to such Change in Control, the Committee, in its sole discretion, may take one or more of the following actions with respect to all, some or any such Awards: (a) accelerate the vesting, settlement and, if applicable, exercisability of such Awards such that the Awards are fully vested, settled and, if applicable, exercisable (effective immediately prior to such Change in Control); provided that Awards subject to performance-based vesting conditions shall be paid or settled in full based on the actual level of achievement of the applicable Performance Goals through the date of the Change in Control or, if doing so would result in the Participant’s receipt of a larger payment or settlement amount, using the applicable target (or, in the case of a Change in Control described in clause (ii), maximum) level of achievement through the date of such Change in Control rather than such actual level of achievement; (b) cancel outstanding Options or SARs in exchange for a cash payment in an amount equal to the excess, if   --------------------------------------------------------------------------------   any, of the Fair Market Value of the Shares underlying the unexercised portion of the Option or SAR as of the date of the Change in Control over the exercise price or grant price, as the case may be, of such portion, provided that any Option or SAR with an exercise price or grant price, as the case may be, that equals or exceeds the Fair Market Value of the Shares on the date of the Change in Control shall be cancelled with no payment due the Participant; or (c) take such other actions as the Committee deems appropriate to preserve the rights of Participants with respect to their Awards.  The judgment of the Committee with respect to any matter referred to in this Section shall be conclusive and binding upon each Participant without the need for any amendment to the Plan.  Notwithstanding the foregoing, no Award that constitutes “non-qualified deferred compensation” (within the meaning of Section 409A of the Code) shall be payable upon the occurrence of a Change in Control unless such Change in Control satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5).  In addition to the actions described above, and without the consent of any Participant, effective upon the occurrence of a Change in Control, the Committee may, in its sole discretion, terminate all Awards granted under the Plan that are treated as “non-qualified deferred compensation” under Section 409A of the Code and settle such shares for a cash payment equal to the Fair Market Value of such Shares or any benchmark, if any, provided that (1) such Change in Control satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5) and (2) all other arrangements that would be aggregated with such Awards under Section 409A of the Code are terminated and liquidated within 30 days before or 12 months after such Change in Control.   Section 9.                                           Adjustments upon Changes in Capitalization.   9.1.                            In the event that the Committee shall determine that any stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall proportionately and equitably adjust any or all of (i) the number and kind of Shares which may thereafter be issued in connection with Awards, (ii) the number and kind of Shares issuable in respect of outstanding Awards, (iii) the aggregate number and kind of Shares available under the Plan, (iv) the limits described in Section 5 of the Plan and (v) the exercise price or grant price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award; provided, however, in each case, that each adjustment shall be made in a manner consistent with Section 7.   9.2.                            In addition, the Committee is 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, events described in Section 9.1) affecting the Company or any Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. Notwithstanding the foregoing, all adjustments shall be made in a manner consistent with Section 7 and no adjustment shall be made in a manner that would adversely affect the status of an Award as a Qualified Performance-Based Award.   --------------------------------------------------------------------------------   Section 10.                                    Termination and Amendment.   10.1.                     Changes to the Plan and Awards.  The Board may amend, alter, suspend, discontinue, or terminate the Plan without the consent of the Company’s stockholders or Participants, except that any such amendment, alteration, suspension, discontinuation, or termination shall be subject to the approval of the Company’s stockholders if (i) such action would increase the number of Shares subject to the Plan, (ii) such action results in the repricing, replacement or cash buyout/repurchase of any Option, SAR or other Award, or (iii) such stockholder approval is required by any applicable law or regulation or the rules of any stock exchange on which the Shares may then be listed, and the Board may otherwise, in its discretion, determine to submit such other changes to the Plan to the Company’s stockholders for approval; provided, however, that without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any outstanding Award, except insofar as any such action is necessary to ensure the Plan’s compliance with applicable law or regulation or the listing requirements of an applicable securities exchange, including, without limitation, Code Sections 162(m) or 409A.   10.2.                     The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that without the consent of an affected Participant, no such amendment, alteration, suspension, discontinuation, or termination of any Award may materially and adversely affect the rights of such Participant under such Award, except insofar as any such action is necessary to ensure the Plan’s compliance with applicable law or regulation or the listing requirements of an applicable securities exchange, including, without limitation, Code Sections 162(m) or 409A.   Section 11.                                    No Right to Award, Employment or Service.  No Employee, Consultant or Non-Employee Director shall have any claim to be granted any Award under the Plan, and there is no obligation that the terms of Awards be uniform or consistent among Participants.  Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Company or any Subsidiary.  For purposes of this Plan, a transfer of employment or service between the Company and its Subsidiaries shall not be deemed a termination of employment or service; provided, however, that individuals employed by, or otherwise providing services to, an entity that ceases to be a Subsidiary shall be deemed to have incurred a termination of employment or service, as the case may be, as of the date such entity ceases to be a Subsidiary unless such individual becomes an employee of, or service provider to, the Company or another Subsidiary as of the date of such cessation.   Section 12.                                    Taxes.  Each Participant must make appropriate arrangement for the payment of any taxes relating to an Award granted hereunder.  The Company or any Subsidiary is authorized to withhold from any payment relating to an Award under the Plan, including from a distribution of Shares or any payroll or other payment to a Participant, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This authority shall include the ability to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations and to require the Participant to enter into elections in respect of taxes.  Withholding of taxes in the form of Shares with respect to   --------------------------------------------------------------------------------   an Award shall not occur at a rate that exceeds the minimum required statutory federal and state withholding rates.  Participants who are subject to the reporting requirements of Section 16 of the Exchange Act shall have the right to pay all or a portion of any withholding or other taxes due in connection with an Award by directing the Company to withhold Shares that would otherwise be received in connection with such Award up to the minimum required withholding amount.   Section 13.                                    Limits on Transferability; Beneficiaries.  No Award or other right or interest of a Participant under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company or any Subsidiary, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, except as provided in Section 6.1(f)(v), the Committee may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only partners.  The Committee may attach to such transferability feature such terms and conditions as it deems advisable.  In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a natural person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant.  A beneficiary, guardian, legal representative or other Person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.   Section 14.                                    Securities Law Requirements.   14.1.                     No Shares may be issued hereunder if the Company shall at any time determine that to do so would (i) violate the listing requirements of an applicable securities exchange, or adversely affect the registration or qualification of the Company’s Shares under any state or federal law or regulation, or (ii) require the consent or approval of any regulatory body or the satisfaction of withholding tax or other withholding liabilities. In any of the events referred to in clause (i) or clause (ii) above, the issuance of such Shares shall be suspended and shall not be effective unless and until such withholding, listing, registration, qualifications or approval shall have been effected or obtained free of any conditions not acceptable to the Company in its sole discretion, notwithstanding any termination of any Award or any portion of any Award during the period when issuance has been suspended.   14.2.                     The Committee may require, as a condition to the issuance of Shares hereunder, representations, warranties and agreements to the effect that such Shares are being purchased or acquired by the Participant for investment only and without any present intention to sell or otherwise distribute such Shares and that the Participant will not dispose of such Shares in transactions which, in the opinion of counsel to the Company, would violate the registration provisions of the Securities Act and the rules and regulations thereunder.   --------------------------------------------------------------------------------   Section 15.                                    Code Section 409A.  The Plan and all Awards are intended to comply with, or be exempt from, Code Section 409A and all regulations, guidance, compliance programs and other interpretative authority thereunder, and all provisions of the Plan, including, without limitation, Sections 6, 8 and 9, and any Award Agreement shall be applied and interpreted in a manner consistent therewith.  Notwithstanding anything contained herein to the contrary, in the event any Award is subject to Code Section 409A, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions as deemed appropriate by the Committee to (i) exempt the Plan and/or any Award from the application of Code Section 409A, (ii) preserve the intended tax treatment of any such Award or (iii) comply with the requirements of Code Section 409A.  In the event that a Participant is a “specified employee” within the meaning of Code Section 409A, and a payment or benefit provided for under the Plan would be subject to additional tax under Code Section 409A if such payment or benefit is paid within six (6) months after such Participant’s separation from service (within the meaning of Code Section 409A), then such payment or benefit shall not be paid (or commence) during the six (6) month period immediately following such Participant’s separation from service except as provided in the immediately following sentence.  In such an event, any payments or benefits that would otherwise have been made or provided during such six (6) month period and which would have incurred such additional tax under Code Section 409A shall instead be paid to the Participant in a lump-sum payment, without interest, on the earlier of (i) the first business day of the seventh month following such Participant’s separation from service or (ii) the tenth business day following such Participant’s death.  Notwithstanding the foregoing, none of the Company, its Affiliates or their respective directors, officers, employees or advisors will be held liable for any taxes, interest or other amounts owed by any Participant as a result of the application of Code Section 409A.   Section 16.                                    Recoupment.  Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Participant to the Company pursuant to the terms of any Company “clawback” or recoupment policy.   Section 17.                                    Foreign Participants.  In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals, or who are employed by or perform services for the Company or any Subsidiary outside of the United States of America, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan as in effect for any other purpose, provided that no such supplements, amendments, restatements or alternative versions shall include any provisions that are inconsistent with the terms of this Plan, as then in effect, unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company.   Section 18.                                    Termination.  Unless earlier terminated, the Plan shall terminate on April 7, 2025, and no Awards under the Plan shall thereafter be granted; provided that no such termination shall impact Awards that were granted prior to such termination.   --------------------------------------------------------------------------------   Section 19.                                    Fractional Shares.  The Company will not be required to issue any fractional Shares pursuant to the Plan.  The Committee may provide for the elimination of fractions and settlement of such fractional Shares in cash.   Section 20.                                    Non-Exclusivity of Plan.  Nothing in the Plan shall be construed in any way as limiting the authority of the Committee, the Board, the Company or any Subsidiary or Affiliate to establish any other cash or equity annual or incentive compensation plan or as limiting the authority of any of the foregoing to issue Shares or pay cash bonuses or other supplemental or additional cash or equity incentive compensation to any service provider to the Company, its Subsidiaries or Affiliates, whether or not such person is a Participant in this Plan and regardless of how the number of Shares or the amount of such bonuses or other cash or equity compensation is determined.   Section 21.                                    Discretion.  In exercising, or declining to exercise, any grant of authority or discretion hereunder, the Committee may consider or ignore such factors or circumstances and may accord such weight to such factors and circumstances as the Committee alone and in its sole judgment deems appropriate and without regard to the effect such exercise, or declining to exercise such grant of authority or discretion, would have upon the affected Participant, any other Participant, any Employee, Consultant or Non-Employee Director, the Company, any Subsidiary, any Affiliate of the Company, any stockholder or any other Person.   Section 22.                                    Governing Law.  To the extent that Federal laws do not otherwise control, the validity and construction of the Plan and any Award Agreement entered into thereunder shall be construed and enforced in accordance with the laws of the State of Delaware, but without giving effect to the choice of law principles thereof.   Section 23.                                    Effective Date.  The Plan shall become effective upon the Effective Date.   *          *          *          *           *   --------------------------------------------------------------------------------
QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.16 RESTRICTED STOCK AGREEMENT         THIS AGREEMENT (this "Agreement"), between KBW, Inc., a Delaware corporation (the "Company"), and the employee executing this agreement (the "Employee"), dated as of the Date of Grant (the "Grant Date") in the notice dated February 29, 2012 (the "February 9 Notice") (which notice insofar as it specifies the Date of Grant, Share Price on Grant Date, Number of Shares and Market Value of Grant Date is expressly made a part hereof). W I T N E S S E T H         In consideration of the mutual promises and covenants made herein and the mutual benefits to be derived herefrom, the parties hereto agree as follows: 1.    Grant, Vesting and Forfeiture of Restricted Stock.             (a)    Grant.    Subject to the provisions of this Agreement (including the Period of Restriction set forth herein) and to the provisions of the KBW, Inc. 2009 Incentive Compensation Plan (the "Plan"), the Company hereby grants to the Employee on the Grant Date such number (the "Number of Shares") of restricted shares (the "Restricted Stock") of common stock (the "Common Stock") of the Company, par value $0.01 per share as shall be set forth in the February 29 Notice and as shown in the account records of the Employee ("Employee Account Records") as being granted hereby. The Employee Account Records shall be held by the Bank of New York Mellon (the "Transfer Agent"). Employee may view such Employee Account Records at the Internet URL address of the Transfer Agent maintained for that purpose at https://m1.melloninvestor.com/mellonone/index.jsp. The Employee Account Records relating to the Restricted Stock are expressly made a part hereof, subject to correction for errors by the Corporation, for purposes of establishing the Number of Shares, Grant Date and vesting schedule relating to the Restricted Stock. In the event of any discrepancy between the February 29 Notice and the Employee Account Records, the Employee Account Records shall be used to determine correct information. All capitalized terms used herein, to the extent not defined herein, shall have the meaning set forth in the Plan.         (b)    Vesting during the Period of Restriction.    Subject to the terms and conditions of this Agreement and those of the Plan, the Restricted Stock shall vest and no longer be subject to any restriction on the Vest Dates and in the respective amounts vesting on such dates set forth in the Employee Account Records (such period during which restrictions apply is the "Period of Restriction").         (c)    Forfeiture upon Termination of Employment; Accelerated Vesting upon Termination Due to Death or Disability.    Upon the Employee's Termination for any reason (other than due to the Employee's Retirement (as defined below), death or Disability) during the Period of Restriction, all Shares of Restricted Stock subject to the Period of Restriction and not theretofore vested in accordance herewith shall be forfeited. Upon the Employee's Termination during the Period of Restriction due to the Employee's death or Disability, the Period of Restriction applicable to the Shares of Restricted Stock, not theretofore forfeited in accordance herewith, shall lapse, and such Shares of Restricted Stock shall become free of all restrictions and become fully vested. Upon the Employee's Termination during the Period of Restriction upon Retirement (as defined below), the Period of Restriction applicable to the Restricted Stock shall continue, and such Restricted Stock shall continue to potentially vest according to the original vesting schedule specified in the Employee Account Records, unless the Company, in its sole discretion elects to accelerate such vesting schedule. Nothing in this Agreement or the Plan shall confer upon the Employee any right to continue in the employ of the Company or any Subsidiary or Affiliate or interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the Employee's employment at any time.         As used herein, "Retirement" shall mean the termination of employment with the Company or any Subsidiary or Affiliate of the Company, provided that the Employee has (a) reached the age of 60 or older, or (b) (i) served as an employee for a sufficient number of years that the sum of such Employee's age and the number of years served by such Employee as an employee is equal to or -------------------------------------------------------------------------------- greater than 65, and (ii) entered into the two-year Non-competition/Non-solicitation agreement with the Corporation in the form set forth on Exhibit B to the Stockholders' Agreement, dated as of October 30, 2006 between the Corporation and the Stockholders set forth therein or in such other form having terms as the Corporation shall, in its sole discretion, deem acceptable.         (d)    Vesting upon Change in Control.    In the event of a Change in Control before the Period of Restriction has lapsed on any shares of the Restricted Stock, the restrictions applicable to the Restricted Stock during such Period of Restriction shall lapse and such Restricted Stock shall become free of all restrictions and become fully vested and transferable in full, in the manner set forth in Section 15.2 of the Plan. 2.    Issuance of Shares.             During the Period of Restriction, the Restricted Stock may be evidenced by a stock certificate or certificates as set forth in Section 4 below or by a book-entry in the records of the Transfer Agent in the Employee's name, which shall be subject to a stop transfer order consistent with this Agreement and the Plan and the legend set forth in Section 4 hereof. Subject to Section 8 hereof (pertaining to the withholding of taxes), as soon as practicable after the applicable portion of the Period of Restriction lapses (provided there has been no prior forfeiture of the Restricted Stock pursuant to the terms of this Agreement and the Plan), the Company shall issue (or cause to be delivered) the Shares of Restricted Stock becoming vested upon such lapse to the Employee or to Employee's personal representative, in book-entry or certificate form. Such Shares shall be free of restrictions or restrictive legends making reference to this Agreement, except that such Shares shall be subject to any restrictions required under the federal securities laws or as otherwise provided by Section 7 hereof. Notwithstanding the foregoing, the Company shall be entitled to hold the Shares of Restricted Stock that have vested until the Company or the Transfer Agent shall have received from the Employee a duly executed Form W-9 or W-8, as applicable. 3.    Non-transferability of the Restricted Stock.             During the Period of Restriction, the Shares of Restricted Stock shall not be transferable by the Employee by means of sale, assignment, exchange, encumbrance, pledge or otherwise. Any purported or attempted transfer of such Shares or such rights shall be null and void. 4.    Rights as a Stockholder.             Except as otherwise specifically provided in this Agreement, during the Period of Restriction the Employee shall have all the rights of a stockholder with respect to the Restricted Stock, including without limitation the right to vote the Restricted Stock and the right to receive any dividends with respect thereto. If the Company declares and pays cash dividends on the Shares during the Period of Restriction, the Employee shall be paid such dividends with respect to such Shares at such time as such dividends are paid to holders of Shares generally. 5.    Certificates.             Any certificates representing the Shares of Restricted Stock as originally issued or from time to time issued during the Period of Restriction shall bear the following legend: The Shares represented by this stock certificate have been granted as restricted stock under a Restricted Stock Agreement between the registered holder of these Shares and KBW, Inc. (the "Company"). The Shares represented by this stock certificate may not be sold, exchanged, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of until the restrictions set forth in the Restricted Stock Agreement between the registered holder of these Shares and the Company shall have lapsed. 2 -------------------------------------------------------------------------------- 6.    Payment of Transfer Taxes, Fees and Other Expenses.             The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of Shares received by an Employee in connection with the Restricted Stock, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith. 7.    Other Restrictions.             (a)   The Restricted Stock shall be subject to the requirement that, if at any time the Company shall determine that (i) the listing, registration or qualification of the Shares subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the Employee with respect to the disposition of Shares is necessary or desirable as a condition of, or in connection with, the delivery or purchase of Shares pursuant thereto, then in any such event, the grant of Restricted Stock shall not be effective unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Company.         (b)   The Employee acknowledges that the Employee is subject to the Company's policies regarding compliance with securities laws, including but not limited to its Insider Trading Policy (as in effect from time to time and any successor policies), and, pursuant to these policies, the Employee shall be required to obtain pre-clearance prior to purchasing or selling any of the Company's securities, including any Shares issued upon vesting of the Restricted Stock, and may be prohibited from selling such Shares other than during an open trading window. The Employee further acknowledges that, in its discretion, the Company may prohibit the Employee from selling such Shares even during an open trading window if the Company has concerns over the potential for insider trading. 8.    Taxes and Withholding.             No later than the date as of which an amount first becomes includible in the gross income of the Employee for federal, state, local or foreign income or employment or other tax purposes with respect to any Restricted Stock, the Employee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld with respect to such amount. The obligations of the Company under this Agreement shall be conditioned on compliance by the Employee with this Section 8, and the Company shall, to the extent permitted by law, have the right to deduct or cause to be deducted by the Transfer Agent any such taxes from any payment otherwise due to the Employee, including the delivery of the Restricted Stock that gives rise to the withholding requirement. 9.    Notices.             All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by facsimile, overnight courier, or registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Employee: At the most recent address on file at the Company. 3 -------------------------------------------------------------------------------- If to the Company: KBW, Inc. 787 Seventh Avenue New York, New York 10019 Attention: Mitchell B. Kleinman, Esq. Executive Vice President and General Counsel Facsimile: (212) 541-6668 or to such other address or facsimile number as any party shall have furnished to the other in writing in accordance with this Section 9. Notices and communications shall be effective when actually received by the addressee. Notwithstanding the foregoing, the Employee consents to electronic delivery of documents required to be delivered by the Company under the securities laws. 10.    Effect of Agreement.             Except as otherwise provided hereunder, this Agreement shall be binding upon and shall inure to the benefit of any successor or successors of the Company. 11.    Consent to Jurisdiction.             Any and all disputes, controversies or claims arising under or out of this Agreement, including without limitation any issues involving the enforcement or interpretation of any of the provisions of this Agreement and/or relating to or concerning the Restricted Stock awarded under this Agreement, shall be finally settled by arbitration in New York City before, and in accordance with the rules then obtaining of, the New York Stock Exchange, Inc. (the "NYSE") or, if the NYSE declines to arbitrate the matter, the American Arbitration Association (the "AAA") in accordance with the commercial arbitration rules of the AAA. 12.    Severability.             The invalidity or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 13.    Conflicts and Interpretation.             In the event of any conflict between this Agreement and the Plan, the Plan shall control. In the event of any ambiguity in this Agreement, or any matters as to which this Agreement is silent, the Plan shall govern including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (a) interpret the Plan, (b) establish, adopt, amend, waive and/or rescind rules and regulations relating to the Plan, and (c) exercise all such other authorities, take all such other actions and make all such other determinations as it deems necessary or advisable for the proper operation and/or administration of the Plan. 14.    Amendment.             The Committee may modify, amend or waive the terms of this Restricted Stock award, including this Agreement, prospectively or retroactively, subject to the terms and conditions of the Plan. The waiver by either party of compliance with any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement. 15.    Headings.             The headings of paragraphs herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Agreement. 4 -------------------------------------------------------------------------------- 16.    Counterparts.             This Agreement may be executed in counterparts, which together shall constitute one and the same original.         IN WITNESS WHEREOF, as of the Grant Date above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Employee has hereunto set the Employee's hand.     KBW, INC.     By:      -------------------------------------------------------------------------------- Mitchell Kleinman Executive Vice President and General Counsel         AGREED AND ACCEPTED, as of the Grant Date By:      -------------------------------------------------------------------------------- Name of Employee:     5 -------------------------------------------------------------------------------- QuickLinks Exhibit 10.16 RESTRICTED STOCK AGREEMENT
EXHIBIT 10.03 WARRANT NO: ___________ FORM OF WARRANT CERTIFICATE __________ Shares PALATIN TECHNOLOGIES, INC. COMMON STOCK PURCHASE WARRANT CERTIFICATE THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE NOT EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME, ON APRIL __, 2011 THIS CERTIFIES THAT: ______________________________________ or registered assigns is the registered holder (the “Registered Holder”) of the number of Warrants set forth above, each of which represents the right to purchase from Palatin Technologies, Inc., a Delaware corporation (the “Company”), one fully paid and nonassessable shares of Common Stock, par value $0.01 per share (the “Common Stock”), of the Company, at the initial exercise price of $2.88 per Warrant (the “Exercise Price”) at any time on or after October __, 2006 (the next business day six months after the date of issuance of the Warrants) and prior to the Expiration Date (as hereinafter defined), by surrendering this Warrant Certificate, with the Form of Election to Purchase duly executed at the principal office of the Company and by paying in full the Exercise Price. The term “Warrant” as used herein shall include this Warrant, and any warrants delivered in substitution or exchange therefore as provided herein. Payment of the Exercise Price shall be made in United States currency, by certified check, wire transfer or money order payable to the order of the Company or through the cashless exercise provisions herein.         The Warrants and shares of Common Stock obtainable upon exercise of the Warrants have been registered on a Form S-3, File No. 333-132369 (the “Registration Statement”), which registration statement has been declared effective by the Securities and Exchange Commission (the “Commission”) on March 31, 2006.         This Warrant Certificate is issued under and in accordance with the Securities Purchase Agreement dated as of April __, 2006, (the “Securities Purchase Agreement”) between the Company and the Registered Holder, as amended and is subject to the terms and provisions contained in the Securities Purchase Agreement. Unless otherwise defined herein, the capitalized terms used herein shall have the meaning assigned to such terms in the Securities Purchase Agreement. --------------------------------------------------------------------------------         As soon as practicable after the date of exercise of any Warrants, the Company shall issue, or cause the transfer agent for the Common Stock, if any, to issue a certificate or certificates for the number of full shares of Common Stock to which such Registered Holder is entitled, registered in accordance with the instructions set forth in the Form of Election to Purchase. Such certificates shall be delivered or electronically transferred within three (3) business days of the Company’s receipt of the Form of Election to Purchase. All shares of Common Stock issued upon the exercise of any Warrants shall be validly authorized and issued, fully paid and nonassessable, and free from all taxes, liens and charges created by the Company in respect of the issue thereof. All shares of Common Stock issuable upon exercise of this Warrant shall not carry any restrictive legends and be immediately saleable by its Registered Holder without restriction under the Securities Act provided that there is either an effective registration statement for the issuance of such shares of Common Stock or that the issuance is pursuant to Rule 144(k) of the Securities Act. Each person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of the Common Stock represented thereby on the date of exercise of the Warrants resulting in the issuance of such shares, irrespective of the date of issuance or delivery of such certificate for shares of Common Stock.         In the event that less than all of the Warrants represented by a Warrant Certificate are exercised, the Company shall execute and mail, by first-class mail, within 30 days of the date of exercise, to the Registered Holder of such Warrant Certificate, or such other person as shall be designated in the Form of Election to Purchase, a new Warrant Certificate representing the number of full Warrants not exercised. In no event shall a fraction of a Warrant be exercised, and the Company shall distribute no Warrant Certificates representing fractions of Warrants. Final fractions of shares shall be treated as provided for herein.         The Company shall at all times reserve and keep available for issuance upon the exercise of Warrants a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants.         Subject to the provisions hereof, the Exercise Price in effect from time to time shall be subject to adjustment, as follows:         (a)    In case the Company shall at any time after the date hereof (i) declare a dividend on the outstanding Common Stock payable in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares, or (iv) make a distribution on its Common Stock, then, in each case, the Exercise Price, and the number of shares of Common Stock issuable upon exercise of the Warrants in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or distribution, shall be proportionately adjusted so that the Holders of the Warrants after such time shall be entitled to receive the aggregate number and kind of shares which, if such Warrants had been exercised immediately prior to such time, such Registered Holders would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or distribution. Such adjustment shall be made successively whenever any event listed above shall occur. 2 --------------------------------------------------------------------------------         (b)    If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Registered Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the amount of Common Stock then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be 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 securities, cash or property to be received in a Fundamental Transaction, then the Registered Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Registered Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Registered Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Registered Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. A “Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another person, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.         (c)    No adjustment in the Exercise Price shall be required if such adjustment is less than $0.01; provided, however, that any adjustments which by reason of this Warrant are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Warrant shall be made to the nearest cent or to the nearest one thousandth of a share, as the case may be.         In any case in which this Warrant shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer, until the occurrence of such event, issuing to the Registered Holders of the Warrants, if any Registered Holder has exercised a Warrant after such record date, the shares of Common Stock, if any, issuable upon such exercise over and above the shares of Common Stock, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such exercising Registered Holder a due bill or other appropriate instrument evidencing such Registered Holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment. 3 --------------------------------------------------------------------------------         Whenever the Exercise Price is adjusted as provided in this Warrant, the Company will promptly obtain a certificate of the chief financial officer of the Company setting forth the Exercise Price as so adjusted and a brief statement of the facts accounting for such adjustment. Whenever any adjustment is made pursuant to this Warrant, the Company shall cause notice of such adjustment to be mailed to each Registered Holder of a Warrant Certificate within fifteen (15) days thereafter, such notice to include in reasonable detail (i) the events precipitating the adjustment, (ii) the computation of any adjustments, and (iii) the Exercise Price, the number of shares or the securities or other property purchasable upon exercise of each Warrant after giving effect to such adjustment.         In no event shall the Exercise Price be adjusted below the par value per share of the Common Stock.         In case at any time the Company shall propose:           (a)     to pay any dividend or make any distribution on shares of Common Stock in shares of Common Stock or make any other distribution (other than regularly scheduled cash dividends which are not in a greater amount per share than the most recent such cash dividend) to all holders of Common Stock; or             (b)     to issue any rights, warrants, or other securities to all holders of Common Stock entitling them to purchase any additional shares of Common Stock or any other rights, warrants, or other securities; or             (c)     to effect any reclassification or change of outstanding shares of Common Stock, or any consolidation, merger, sale, lease, or conveyance of property, described above; or             (d)     to effect any liquidation, dissolution, or winding-up of the Company; then, in each such case, the Company shall cause notice of such proposed action to be mailed to each Registered Holder of a Warrant Certificate. Such notice shall be mailed, at least ten (10) days prior to the record date for determining holders of the Common Stock for purposes of receiving such payment or offer or at least ten (10) days prior to the earlier of the date upon which such action is to take place or any record date to determine holders of Common Stock entitled to receive such securities or other property, as the case may be.         The Company shall not be required upon the exercise of any Warrant to issue fractional shares of Common Stock which may result from adjustments in accordance with this Warrant to the Exercise Price or number of shares of Common Stock purchasable under each Warrant. If more than one Warrant is exercised at one time by the same Registered Holder, the number of full shares of Common Stock which shall be deliverable shall be computed based on the number of shares deliverable in exchange for the aggregate number of Warrants exercised. With respect to any final fraction of a share called for upon the exercise of any Warrant or Warrants, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the current market price of a share of Common Stock calculated in accordance with this Warrant. 4 --------------------------------------------------------------------------------         The Registered Holder may elect to receive, without the payment by the Registered Holder of the aggregate Warrant Price in respect of the shares of Common Stock to be acquired, shares of Common Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant (or such portion of this Warrant being so exercised) together with the Election to Purchase duly executed, at the office of the Company. Thereupon, the Company shall issue to the Registered Holder such number of fully paid, validly issued and nonassessable shares of Common Stock as is computed using the following formula: X = Y (A – B)          A where X =     the number of shares of Common Stock which the Registered Holder has then requested be issued to the Registered Holder; Y =     the total number of shares of Common Stock covered by this Warrant which the Registered Holder has surrendered at such time for cash-less exercise (including both shares to be issued to the Registered Holder and shares to be canceled as payment therefor); A =     the "Market Price" of one share of Common Stock as at the time the cash-less exercise election is made; and B =     the Warrant Price in effect under this Warrant at the time the cash-less exercise election is made.         No Warrant may be exercised prior to October __, 2006, being the next business day falling six months after the date of issuance of the Warrants.         No Warrant may be exercised after 5:00 P.M., New York City time, on the expiration date (the “Expiration Date”) which will be April __, 2011. All Warrants evidenced hereby shall thereafter become void.         No Warrant Certificate shall entitle the registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company.         If any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company in its discretion may execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Warrant Certificate, or in lieu of or in substitution for a lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate for the number of Warrants represented by the Warrant Certificate so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Warrant Certificate, and of the ownership thereof, and indemnity, if requested, all satisfactory to the Company. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other 5 -------------------------------------------------------------------------------- reasonable charges incidental thereto as the Company may prescribe. Any such new Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time enforceable by anyone.         Prior to the latest time at which the Warrants may be exercised, subject to any applicable laws, rules or regulations restricting transferability, Warrant Certificates, subject to the provisions hereof, may be split up, combined or exchanged for other Warrant Certificates representing a like aggregate number of Warrants or may be transferred in whole or in part. Any holder desiring to split up, combine or exchange a Warrant Certificate or Warrant Certificates shall make such request in writing delivered to the Company at its principal office and shall surrender the Warrant Certificate or Warrant Certificates so to be split up, combined or exchanged at said office with the Form of Assignment. Upon any such surrender for split up, combination, exchange or transfer, the Company shall execute and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested in the Form of Assignment.         The Company will pay any documentary stamp taxes attributable to the initial issuance of Common Stock issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Common Stock in a name other than that of the Registered Holder in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Common Stock or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The Registered Holder shall be responsible for income taxes due under federal, state or other law, if any such tax is due.         Any Warrant Certificate surrendered upon the exercise of Warrants or for split up, combination, exchange or transfer, or purchased or otherwise acquired by the Company, shall be canceled and shall not be reissued by the Company; and, except as otherwise provided herein in case of the exercise of less than all of the Warrants evidenced by a Warrant Certificate or in case of a split up, combination, exchange or transfer, no Warrant Certificate shall be issued hereunder in lieu of such canceled Warrant Certificate. Any Warrant Certificate so canceled shall be destroyed by the Company.         Every holder of a Warrant Certificate by accepting the same consents and agrees with the Company and with every other holder of a Warrant Certificate that:           (a)     transfer of the Warrant Certificates shall be registered on the books of the Company only if surrendered at the principal office of the Company, duly endorsed or accompanied by a proper instrument of transfer; and             (b)    prior to due presentment for registration of transfer, the Company may deem and treat the person in whose name the Warrant Certificate is registered as the absolute owner thereof and of the Warrants evidenced thereby (notwithstanding any notations of ownership or writing on the Warrant Certificates made by anyone other than 6 --------------------------------------------------------------------------------   the Company) for all purposes whatsoever, and the Company shall not be affected by any notice to the contrary.         The laws of the State of New York shall govern this Warrant Certificate.         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed.   PALATIN TECHNOLOGIES, INC.       By: _______________________________________________   Stephen T. Wills, Vice President and   Chief Financial Officer     Dated: _______________________________________________ 7 -------------------------------------------------------------------------------- FORM OF ELECTION TO PURCHASE         The undersigned hereby irrevocably elects to exercise of the Warrants represented by this Warrant Certificate and to purchase the shares of Common Stock issuable upon the exercise of said Warrants, and requests that certificates for such shares be issued and delivered as follows: ISSUE TO: -------------------------------------------------------------------------------- (NAME)   at -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE)     -------------------------------------------------------------------------------- (SOCIAL SECURITY OR OTHER TAX IDENTIFYING NUMBER)   DELIVER TO: -------------------------------------------------------------------------------- (NAME)   at -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE)           If the number of Warrants hereby exercised is less than all the Warrants represented by this Warrant Certificate, the undersigned requests that a new Warrant Certificate representing the number of full Warrants not exercised be issued and delivered as set forth below. --------------------------------------------------------------------------------   Complete if the shares are to be delivered electronically:       Broker Name         Phone Number         Fax Number         DTC Participant Number         Broker Account Number       8 --------------------------------------------------------------------------------         In full payment of the purchase price with respect to the Warrants exercised and transfer taxes, if any, the undersigned hereby tenders payment of $ ______________ by certified check or money order payable in United States currency to the order of the Company.         Dated: _________________       (Insert Social Security or other identifying number of holder)   (Signature of registered holder)           (Signature of registered holder, if co-owned) NOTE: Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate. [Complete the following for Cashless Exercise only]         The undersigned hereby requests the issuance of _________ shares of Common Stock by surrender of the right to purchase ___________ shares of Common Stock pursuant to this Warrant. The certificate(s) for the shares issuable upon such election shall be issued in the name of the undersigned or as otherwise indicated below.   __________________________________   Signature     __________________________________   Name for Registration     __________________________________   Mailing Address 9 -------------------------------------------------------------------------------- FORM OF ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned represented by the within Warrant Certificate, with respect to the number of Warrants set forth below: Name of Assignee Address No. of Warrants       and does hereby irrevocably constitute and appoint ______________________________________ Attorney to make such transfer on the books of Palatin Technologies, Inc. maintained for that purpose, with full power of substitution in the premises. Dated:_______________, 20__.       (Insert Social Security or other identifying number of holder)   Signature     (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) 10 --------------------------------------------------------------------------------
AMENDMENT NO. 1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AMENDMENT NO. 1 to the Amended and Restated Employment Agreement is made and entered into, effective as of December 28, 2010, by and between Herbalife International of America, Inc. (“Employer”) and Richard P. Goudis (“Executive”). R E C I T A L S WHEREAS, the Company and Executive are parties to that certain Amended and Restated Employment Agreement dated as of January 1, 2010 (the “Employment Agreement”) pursuant to which Executive is employed as Employer’s Chief Operating Officer; and WHEREAS, Employer and Executive desire to amend the terms of the Employment Agreement as set forth herein. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby agree as follows:   1.   Section 5 of the Employment Agreement is hereby deleted in its entirety and replaced with the following: “5. Excise Tax. If any payment or benefit due under this Agreement, together with all other payments and benefits (including, without limitation, the acceleration of vesting of stock options and/or other equity-based compensation awards) to which Executive is entitled from the Company, or any affiliate thereof, would (if paid or provided) constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision), the amounts otherwise payable and benefits otherwise due under this Agreement will either (i) be delivered in full, or (ii) be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to the Company by reason of Section 280G of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state or local income and employment taxes and the excise tax imposed under Section 4999 of the Code, results in Executive’s receipt, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject to the excise tax imposed under Section 4999 of the Code. In the event that the payments and/or benefits are to be reduced pursuant to this Section 5, such payments and benefits shall be reduced such that the reduction of compensation to be provided to Executive as a result of this Section 5 is minimized. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.”   2.   Change in Control. Notwithstanding anything to the contrary in an award agreement between Executive and the Company, with respect to all stock option, stock appreciation right and stock unit awards granted to Executive prior to or after the date of this Amendment No. 1 (the “Equity Awards”), upon the occurrence of a Change of Control (as defined in the Company’s 2005 Stock Incentive Plan, as amended) each Equity Award shall become immediately and fully vested and, to the extent applicable, exercisable as of immediately prior to such Change of Control.   3.   Except as modified hereby, the Employment Agreement, shall remain in full force and effect and unmodified. [Signature Page Follows] IN WITNESS WHEREOF, the parties have duly executed this Amendment No.1 as of the date first written above. HERBALIFE INTERNATIONAL OF AMERICA, INC.       By: /s/ Michael O. Johnson Name: Title:   Michael O. Johnson Chief Executive Officer     EXECUTIVE /s/ Richard P. Goudis     Richard P. Goudis
Exhibit 10.3   AMERIPRISE FINANCIAL   DEFERRED COMPENSATION PLAN     As Amended and Restated Effective January 1, 2009   --------------------------------------------------------------------------------   AMERIPRISE FINANCIAL DEFERRED COMPENSATION PLAN   As Amended and Restated Effective January 1, 2009   Purpose   The purpose of the Plan is to provide specified benefits to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of Ameriprise Financial, Inc. and its subsidiaries.  The Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.   ARTICLE 1 DEFINITIONS   For purposes of the Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the meanings indicated in this Article 1:   1.01.      “AGGREGATE VESTED BALANCE” SHALL MEAN, WITH RESPECT TO THE PLAN ACCOUNTS OF ANY PARTICIPANT AS OF A GIVEN DATE, THE SUM OF THE AMOUNTS THAT HAVE BECOME VESTED UNDER ALL OF THE PARTICIPANT’S PLAN ACCOUNTS, AS ADJUSTED TO REFLECT ALL APPLICABLE INVESTMENT ADJUSTMENTS AND ALL PRIOR WITHDRAWALS AND DISTRIBUTIONS, IN ACCORDANCE WITH ARTICLE 6 OF THE PLAN AND THE PROVISIONS OF THE APPLICABLE ANNUAL ENROLLMENT MATERIALS.   1.02.      “AMENDED DISTRIBUTION ELECTION FORM” SHALL MEAN THE WRITTEN FORM REQUIRED BY THE COMMITTEE TO BE SIGNED AND SUBMITTED BY A PARTICIPANT TO EFFECT A PERMITTED CHANGE IN THE DISTRIBUTION ELECTION PREVIOUSLY MADE BY THE PARTICIPANT UNDER ANY DISTRIBUTION ELECTION FORM.   1.03.      “ANNUAL DEFERRAL ACCOUNT” SHALL MEAN A PARTICIPANT’S ANNUAL PARTICIPANT DEFERRAL FOR A PLAN YEAR, AS ADJUSTED TO REFLECT ALL APPLICABLE INVESTMENT ADJUSTMENTS AND ALL PRIOR WITHDRAWALS AND DISTRIBUTIONS IN ACCORDANCE WITH ARTICLE 6 AND THE PROVISIONS OF THE APPLICABLE ANNUAL ENROLLMENT MATERIALS.   1.04.      “ANNUAL DISCRETIONARY ALLOCATION” SHALL MEAN THE AGGREGATE AMOUNT CREDITED BY A PARTICIPANT’S EMPLOYER TO A PARTICIPANT IN RESPECT OF A PARTICULAR PLAN YEAR UNDER ARTICLE 5.   1.05.      “ANNUAL DISCRETIONARY ALLOCATION ACCOUNT” SHALL MEAN A PARTICIPANT’S ANNUAL DISCRETIONARY ALLOCATION FOR A PLAN YEAR, AS ADJUSTED TO REFLECT ALL APPLICABLE INVESTMENT ADJUSTMENTS AND ALL PRIOR WITHDRAWALS AND DISTRIBUTIONS IN ACCORDANCE WITH ARTICLE 6 AND THE PROVISIONS OF THE APPLICABLE ANNUAL ENROLLMENT MATERIALS.   1.06.      “ANNUAL ELECTION FORM” SHALL MEAN THE WRITTEN FORM REQUIRED BY THE COMMITTEE TO BE SIGNED AND SUBMITTED BY A PARTICIPANT IN CONNECTION WITH THE PARTICIPANT’S DEFERRAL ELECTION WITH RESPECT TO A GIVEN PLAN YEAR.   1.07.      “ANNUAL ENROLLMENT FORMS” SHALL MEAN, FOR ANY PLAN YEAR, THE ANNUAL ELECTION FORM, THE DISTRIBUTION ELECTION FORM AND ANY OTHER FORMS OR DOCUMENTS WHICH MAY BE REQUIRED OF A PARTICIPANT BY THE COMMITTEE, IN ITS SOLE DISCRETION.   1 --------------------------------------------------------------------------------   1.08.      “ANNUAL ENROLLMENT MATERIALS” SHALL MEAN, FOR ANY PLAN YEAR, THE ANNUAL ENROLLMENT FORMS AND ANY OTHER FORMS, DOCUMENTS OR MATERIALS CONCERNING THE TERMS OF ANY ANNUAL PARTICIPANT DEFERRAL, ANNUAL MATCH OR ANNUAL DISCRETIONARY ALLOCATION FOR SUCH PLAN YEAR.   1.09.      “ANNUAL MATCH” SHALL MEAN THE AGGREGATE AMOUNT CREDITED BY A PARTICIPANT’S EMPLOYER TO A PARTICIPANT IN RESPECT OF A PARTICULAR PLAN YEAR UNDER ARTICLE 4.   1.10.      “ANNUAL MATCH ACCOUNT” SHALL MEAN A PARTICIPANT’S ANNUAL MATCH FOR A PLAN YEAR, AS ADJUSTED TO REFLECT ALL APPLICABLE INVESTMENT ADJUSTMENTS AND ALL PRIOR WITHDRAWALS AND DISTRIBUTIONS IN ACCORDANCE WITH ARTICLE 6 AND THE PROVISIONS OF THE APPLICABLE ANNUAL ENROLLMENT MATERIALS.   1.11.      “ANNUAL PARTICIPANT DEFERRAL” SHALL MEAN THE AGGREGATE AMOUNT DEFERRED BY A PARTICIPANT IN RESPECT OF A PARTICULAR PLAN YEAR UNDER ARTICLE 3.   1.12.      “BOARD” SHALL MEAN THE BOARD OF DIRECTORS OF THE COMPANY.   1.13.      “CHANGE IN CONTROL” SHALL MEAN ANY TRANSACTION OR SERIES OF TRANSACTIONS THAT CONSTITUTES A CHANGE IN THE OWNERSHIP OR EFFECTIVE CONTROL OF THE COMPANY OR A CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY, IN EACH CASE WITHIN THE MEANING OF SECTION 409A.   1.14.      “CLAIMANT” SHALL HAVE THE MEANING SET FORTH IN ARTICLE 12.01.   1.15.      “CODE” SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS IT MAY BE AMENDED FROM TIME TO TIME, AND ALL REGULATIONS, INTERPRETATIONS AND ADMINISTRATIVE GUIDANCE ISSUED THEREUNDER.   1.16.      “COMMITTEE” SHALL MEAN THE COMPENSATION AND BENEFITS COMMITTEE OF THE COMPANY OR SUCH OTHER COMMITTEE DESIGNATED BY THE BOARD TO ADMINISTER THE PLAN.  ANY REFERENCE HEREIN TO THE COMMITTEE SHALL BE DEEMED TO INCLUDE ANY PERSON TO WHOM ANY DUTY OF THE COMMITTEE HAS BEEN DELEGATED PURSUANT TO ARTICLE 11.02.   1.17.      “COMPANY” SHALL MEAN AMERIPRISE FINANCIAL, INC., A DELAWARE CORPORATION, AND ANY SUCCESSOR TO ALL OR SUBSTANTIALLY ALL OF ITS ASSETS OR BUSINESS.   1.18.      “COMPANY STOCK” SHALL MEAN THE COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE COMPANY.   1.19.      “COMPANY STOCK FUND” SHALL MEAN THE INVESTMENT OPTION THAT RELATES TO THE PERFORMANCE OF COMPANY STOCK.   1.20.      “DESIGNATION DATE” SHALL MEAN THE DATE OR DATES AS OF WHICH A DESIGNATION OF INVESTMENT DIRECTIONS BY A PARTICIPANT PURSUANT TO ARTICLE 6, OR ANY CHANGE IN A PRIOR DESIGNATION OF INVESTMENT DIRECTIONS BY A PARTICIPANT PURSUANT TO ARTICLE 6, SHALL BECOME EFFECTIVE.  THE DESIGNATION DATE IN ANY PLAN YEAR SHALL BE DETERMINED BY THE COMMITTEE; PROVIDED, HOWEVER,   2 --------------------------------------------------------------------------------   THAT EACH TRADING DAY OF THE NEW YORK STOCK EXCHANGE SHALL BE AVAILABLE AS A DESIGNATION DATE UNLESS THE COMMITTEE SELECTS DIFFERENT DESIGNATION DATES.   1.21.      “DISABILITY” SHALL MEAN, WITH RESPECT TO A PARTICIPANT, THE PARTICIPANT (A) IS UNABLE TO ENGAGE IN ANY SUBSTANTIAL GAINFUL ACTIVITY BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS, OR (B) IS, BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS, RECEIVING INCOME REPLACEMENT BENEFITS FOR A PERIOD OF NOT LESS THAN THREE MONTHS UNDER AN ACCIDENT AND HEALTH PLAN COVERING EMPLOYEES OF THE PARTICIPANT’S EMPLOYER.  IN MAKING ITS DETERMINATION, THE COMMITTEE SHALL BE GUIDED BY THE PREVAILING AUTHORITIES APPLICABLE UNDER SECTION 409A.   1.22.      “DISTRIBUTION ELECTION” SHALL MEAN AN ELECTION MADE IN ACCORDANCE WITH ARTICLE 7.01.   1.23.      “DISTRIBUTION ELECTION FORM” SHALL MEAN THE WRITTEN FORM REQUIRED BY THE COMMITTEE TO BE SIGNED AND SUBMITTED BY A PARTICIPANT WITH RESPECT TO A DISTRIBUTION ELECTION FOR A GIVEN PLAN YEAR.   1.24.      “ELECTIVE DEDUCTIONS” SHALL MEAN THE DEDUCTIONS MADE FROM A PARTICIPANT’S ELIGIBLE COMPENSATION FOR AMOUNTS VOLUNTARILY DEFERRED OR CONTRIBUTED BY THE PARTICIPANT PURSUANT TO ALL QUALIFIED AND NON-QUALIFIED COMPENSATION DEFERRAL PLANS, INCLUDING, WITHOUT LIMITATION, AMOUNTS NOT INCLUDED IN THE PARTICIPANT’S GROSS INCOME UNDER SECTIONS 125, 132(F)(4), 402(E)(3) OR 402(H) OF THE CODE; PROVIDED, HOWEVER, THAT ALL SUCH AMOUNTS WOULD HAVE BEEN PAYABLE IN CASH TO THE EMPLOYEE HAD THERE BEEN NO SUCH PLAN.   1.25.      “Eligible Compensation” shall mean, for any Plan Year, the base salary, bonus or other items of compensation, including any Elective Deductions, designated by the Committee in the applicable Annual Enrollment Materials as eligible for deferral under the Plan for such Plan Year.   1.26.      “Employee” shall mean a person who is an employee of any Employer, as determined by the Committee in its sole discretion.   1.27.      “Employer” shall mean, as applicable, the Company or any of its subsidiaries listed on Schedule A attached hereto, as such Schedule A may be amended by the Committee, in its sole discretion, from time to time.   1.28.      “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and all regulations, interpretations and administrative guidance issued thereunder.   1.29.      “Investment Adjustment” shall mean an adjustment made to the balance of any Plan Account in accordance with Article 6.02 to reflect the performance of an Investment Option pursuant to which the value of the Plan Account or portion thereof is measured.   3 --------------------------------------------------------------------------------   1.30.      “Investment Agent” shall mean the person appointed by the Committee or the Trustee to invest the Plan Accounts of Participants, or if no person is so designated, the Committee.   1.31.      “Investment Option” shall mean a hypothetical investment made available under the Plan from time to time by the Committee for purposes of valuing Plan Accounts.  In the event that an Investment Option ceases to exist or is no longer to be an Investment Option, the Committee may designate a substitute Investment Option for the discontinued hypothetical investment.   1.32.      “Newly Eligible Employee” shall mean an Employee who becomes eligible to participate in the Plan during a Plan Year and who has not previously participated in the Plan or an elective or non-elective account-balance deferred compensation arrangement (as defined for purposes of Section 409A) of the Company, an Employer or any entity other than the Company with whom the Company would be considered a single employer under Sections 414(b) or 414(c) of the Code, as determined by the Committee and to the extent permissible under Section 409A.   1.33.      “Participant” shall mean any eligible Employee (a) who is in a classification of Employees designated by the Committee to participate in the Plan or who is otherwise selected by the Committee to participate in the Plan, (b) who elects to participate in the Plan and signs the applicable Annual Election Forms or is credited with an Annual Discretionary Allocation under Article 5, (c) who commences participation in the Plan, and (d) whose participation in the Plan has not terminated.  A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an account balance under the Plan, even if he or she has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.   1.34.      “Plan” shall mean the Ameriprise Financial Deferred Compensation Plan, which shall be evidenced by this instrument and by the Annual Enrollment Materials, as they may be amended from time to time.   1.35.      “Plan Accounts” shall mean the Annual Deferral Accounts, Annual Match Accounts and Annual Discretionary Allocation Accounts established under the Plan.   1.36.      “Plan Year” shall mean the 12-month period beginning on January 1 of each calendar year and ending on December 31 of such calendar year.   1.37.      “Reporting Person” shall mean an Employee who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended.   1.38.      “Retirement” shall mean, with respect to a Participant, the Participant’s Termination of Employment on or after the date that such Participant becomes Retirement Eligible.   1.39.      “Retirement Eligible” shall mean, with respect to a Participant, that the Participant has attained age 55 and has completed ten or more Years of Service with the Company or its affiliates.   4 --------------------------------------------------------------------------------   1.40.      “Section 409A” means Section 409A of the Code, and the Treasury Regulations promulgated and other official guidance issued thereunder.   1.41.      “Termination of Employment” shall mean a “separation from service” as defined under Section 409A, as determined in accordance with the Company’s Policy Regarding Section 409A Compliance.   1.42.      “Trust” shall mean a trust established in accordance with Article 13.   1.43.      “Trustee” shall mean the trustee of the Trust.   1.44.      “Unforeseeable Emergency” shall mean, with respect to a Participant, a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  In making its determination, the Committee shall be guided by the prevailing authorities applicable under Section 409A.   1.45.      “Years of Service” shall mean the total number of actual or deemed full Plan Years during which a Participant has been continuously employed by one or more Employers.  For purposes of determining a Participant’s Years of Service, such Participant’s service with American Express Company will be taken into account if and to the extent, and in accordance with, the provisions of the Employee Benefits Agreement by and between American Express Company and the Company, dated as of September 30, 2005.  Any partial Plan Year during which a Participant has been employed by an Employer shall not be counted.   ARTICLE 2 TRANSITION RULE   2.01.      Opening Plan Account Balances and Participation.  Unless otherwise expressly set forth herein, the Plan Account balance as of the closing date of the Stock Purchase Agreement, dated as of August 12, 2008, by and between Block Financial LLC, Ameriprise Financial, Inc. and H&R Block, Inc. (the “Stock Purchase Agreement”), of any individual who had accumulated benefits under the H&R Block Financial Advisors, Inc. Deferred Compensation Plan (the “HRBFA Plan”), the responsibility for which was transferred to the Company pursuant to the Stock Purchase Agreement, shall be the account balance such Participant had in the HRBFA Plan on October 31, 2008 (the “Closing Date”).   2.02.      PLAN ELECTIONS AND DESIGNATIONS.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY AND IN ACCORDANCE WITH THE REQUIREMENTS OF THE STOCK PURCHASE AGREEMENT, ALL BENEFICIARY DESIGNATIONS, DEFERRAL ELECTION FORMS, DISTRIBUTION ELECTION FORMS, AND QUALIFIED DOMESTIC RELATIONS ORDERS CREATING RIGHTS FOR ALTERNATE PAYEES IN EFFECT UNDER THE HRBFA PLAN AS OF THE CLOSING DATE SHALL BE DEEMED TO BE EFFECTIVE WITH RESPECT TO THE PLAN.   5 --------------------------------------------------------------------------------   ARTICLE 3 ANNUAL PARTICIPANT DEFERRALS   3.01.      SELECTION BY COMMITTEE.  PARTICIPATION IN THE PLAN WITH RESPECT TO ANNUAL PARTICIPANT DEFERRALS SHALL BE LIMITED TO A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES OF THE EMPLOYERS WHO ARE IN A CLASSIFICATION OF EMPLOYEES DESIGNATED BY THE COMMITTEE IN ITS SOLE DISCRETION.  FOR EACH PLAN YEAR, THE COMMITTEE MAY SELECT FROM THAT GROUP, IN ITS SOLE DISCRETION, THE EMPLOYEES WHO SHALL BE ELIGIBLE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL IN RESPECT OF THAT PLAN YEAR.  THE COMMITTEE’S SELECTION OF AN EMPLOYEE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL IN RESPECT OF A PARTICULAR PLAN YEAR WILL NOT ENTITLE THAT EMPLOYEE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL FOR ANY SUBSEQUENT PLAN YEAR, UNLESS THE EMPLOYEE IS AGAIN SELECTED BY THE COMMITTEE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL FOR SUCH SUBSEQUENT PLAN YEAR.   3.02.      ENROLLMENT REQUIREMENTS FOR ANNUAL PARTICIPANT DEFERRALS.  AS A CONDITION TO BEING ELIGIBLE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL FOR ANY PLAN YEAR, EACH SELECTED EMPLOYEE SHALL COMPLETE, EXECUTE AND RETURN TO THE COMMITTEE EACH OF THE REQUIRED ANNUAL ENROLLMENT FORMS NO LATER THAN THE LAST DAY OF THE IMMEDIATELY PRECEDING PLAN YEAR OR SUCH EARLIER DATE AS THE COMMITTEE MAY ESTABLISH FROM TIME TO TIME, AND IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 409A.  THE COMMITTEE MAY IN ITS DISCRETION PERMIT A NEWLY ELIGIBLE EMPLOYEE TO COMPLETE, EXECUTE AND RETURN TO THE COMMITTEE EACH OF THE REQUIRED ANNUAL ENROLLMENT FORMS NO LATER THAN 30 DAYS FOLLOWING THE DATE ON WHICH SUCH EMPLOYEE FIRST BECOMES ELIGIBLE TO PARTICIPATE IN THE PLAN OR SUCH EARLIER DATE AS THE COMMITTEE MAY ESTABLISH FROM TIME TO TIME.  AN EMPLOYEE’S ANNUAL ELECTION FORM SHALL BE IRREVOCABLE ONCE FILED WITH THE COMMITTEE, AND MAY ONLY BE SUSPENDED PURSUANT TO ARTICLE 3.07.   3.03.      PARTICIPANT DEFERRALS.   (A)         DEFERRAL ELECTION.  THE COMMITTEE SHALL HAVE SOLE DISCRETION TO DETERMINE IN RESPECT OF EACH PLAN YEAR:  (I) WHETHER A PARTICIPANT SHALL BE ELIGIBLE TO MAKE AN ANNUAL PARTICIPANT DEFERRAL; (II) THE ITEMS OF ELIGIBLE COMPENSATION WHICH MAY BE THE SUBJECT OF ANY ANNUAL PARTICIPANT DEFERRAL FOR THAT PLAN YEAR; AND (III) ANY OTHER TERMS AND CONDITIONS APPLICABLE TO THE ANNUAL PARTICIPANT DEFERRAL.  THE PARTICIPANT’S ELECTION SHALL BE EVIDENCED BY AN ANNUAL ELECTION FORM COMPLETED AND SUBMITTED TO THE COMMITTEE IN ACCORDANCE WITH THE PROCEDURES ESTABLISHED BY THE COMMITTEE, IN ITS SOLE DISCRETION.  THE AMOUNTS DEFERRED BY A PARTICIPANT IN RESPECT OF SERVICES RENDERED DURING A PLAN YEAR SHALL BE REFERRED TO COLLECTIVELY AS AN ANNUAL PARTICIPANT DEFERRAL AND SHALL BE CREDITED TO AN ANNUAL DEFERRAL ACCOUNT ESTABLISHED IN THE NAME OF THE PARTICIPANT.  A SEPARATE ANNUAL DEFERRAL ACCOUNT SHALL BE ESTABLISHED AND MAINTAINED FOR EACH ANNUAL PARTICIPANT DEFERRAL.   (B)         MINIMUM AND MAXIMUM DEFERRALS.  THE COMMITTEE MAY FROM TIME TO TIME DESIGNATE IN THE ANNUAL ENROLLMENT MATERIALS FOR A GIVEN PLAN YEAR A MINIMUM OR MAXIMUM AMOUNT OR PERCENTAGE OF ELIGIBLE COMPENSATION THAT A PARTICIPANT MAY ELECT TO DEFER UNDER THE PLAN WITH RESPECT TO THAT PLAN YEAR.   (C)         DEFERRAL DESIGNATIONS.  A PARTICIPANT MAY DESIGNATE THE AMOUNT OF THE ANNUAL PARTICIPANT DEFERRAL TO BE DEDUCTED FROM HIS OR HER ELIGIBLE COMPENSATION AS SPECIFIED   6 --------------------------------------------------------------------------------   IN THE APPLICABLE ANNUAL ENROLLMENT MATERIALS FOR A GIVEN PLAN YEAR, WHICH MAY PROVIDE FOR DEFERRALS TO BE EXPRESSED AS EITHER A PERCENTAGE OR A FIXED DOLLAR AMOUNT OF A SPECIFIED ITEM OF ELIGIBLE COMPENSATION EXPECTED BY THE PARTICIPANT, AS DETERMINED BY THE COMMITTEE.  IF A PARTICIPANT DESIGNATES THE ANNUAL PARTICIPANT DEFERRAL TO BE DEDUCTED FROM ANY ITEM OF ELIGIBLE COMPENSATION AS A FIXED DOLLAR AMOUNT AND SUCH FIXED DOLLAR AMOUNT EXCEEDS THE AMOUNT OF SUCH ITEM OF ELIGIBLE COMPENSATION ACTUALLY PAYABLE TO THE PARTICIPANT, THE ENTIRE AMOUNT OF SUCH ITEM OF ELIGIBLE COMPENSATION SHALL BE WITHHELD.   (D)         DEFERRAL DEDUCTIONS.  ANNUAL PARTICIPANT DEFERRAL SHALL BE DEDUCTED FROM THE ITEMS OF ELIGIBLE COMPENSATION AS FOLLOWS:  (I) FOR PERIODIC PAYMENTS (E.G., SALARY), IN SUBSTANTIALLY EQUIVALENT AMOUNTS FROM EACH PERIODIC PAYMENT DURING THE PLAN YEAR; AND (II) FOR ONE-TIME PAYMENTS (E.G., BONUSES), AT THE TIME THE COMPENSATION WOULD OTHERWISE HAVE BEEN PAID TO THE PARTICIPANT.   3.04.      COMMENCEMENT OF PARTICIPATION.  PROVIDED AN EMPLOYEE HAS MET ALL ENROLLMENT REQUIREMENTS SET FORTH IN THE PLAN IN RESPECT OF A PARTICULAR PLAN YEAR AND ANY OTHER REQUIREMENTS IMPOSED BY THE COMMITTEE, INCLUDING SIGNING AND SUBMITTING ALL ANNUAL ENROLLMENT FORMS TO THE COMMITTEE WITHIN THE SPECIFIED TIME PERIOD, THE EMPLOYEE’S DESIGNATED DEFERRALS SHALL COMMENCE AS OF THE FIRST DAY OF THE PARTICULAR PLAN YEAR.  IN THE CASE OF A NEWLY ELIGIBLE EMPLOYEE, DESIGNATED DEFERRALS SHALL COMMENCE AS OF THE DATE SUCH EMPLOYEE’S ANNUAL ENROLLMENT FORMS ARE RECEIVED BY THE COMMITTEE, WHICH SHALL BE NO LATER THAN 30 DAYS FOLLOWING THE DATE ON WHICH SUCH EMPLOYEE FIRST BECAME ELIGIBLE TO PARTICIPATE IN THE PLAN, AND SUCH ANNUAL ELECTION FORM SHALL APPLY ONLY WITH RESPECT TO COMPENSATION EARNED FOR SERVICES PERFORMED SUBSEQUENT TO THE TIME SUCH ANNUAL ELECTION FORM IS RECEIVED BY THE COMMITTEE.  IF AN EMPLOYEE FAILS TO MEET ALL SUCH REQUIREMENTS WITHIN THE SPECIFIED TIME PERIOD WITH RESPECT TO ANY PLAN YEAR, THE EMPLOYEE SHALL NOT BE ELIGIBLE TO MAKE ANY DEFERRALS FOR THAT PLAN YEAR.   3.05.      SUBSEQUENT PLAN YEAR PARTICIPANT DEFERRALS.  THE ANNUAL ENROLLMENT FORMS SUBMITTED BY A PARTICIPANT IN RESPECT OF A PARTICULAR PLAN YEAR WILL NOT BE EFFECTIVE WITH RESPECT TO ANY SUBSEQUENT PLAN YEAR.  IF AN EMPLOYEE IS SELECTED TO PARTICIPATE IN THE PLAN FOR A SUBSEQUENT PLAN YEAR AND THE REQUIRED ANNUAL ENROLLMENT FORMS ARE NOT TIMELY DELIVERED FOR THE SUBSEQUENT PLAN YEAR, THE PARTICIPANT SHALL NOT BE ELIGIBLE TO MAKE ANY DEFERRALS WITH RESPECT TO SUCH SUBSEQUENT PLAN YEAR.   3.06.      VESTING.  A PARTICIPANT SHALL BE VESTED IN ALL AMOUNTS CREDITED TO HIS OR HER ANNUAL DEFERRAL ACCOUNT AS OF THE DATE SUCH AMOUNTS ARE CREDITED TO SUCH PARTICIPANT’S ANNUAL DEFERRAL ACCOUNT.   3.07.      SUSPENSION OF DEFERRALS.   (A)         UNFORESEEABLE EMERGENCIES.  IF A PARTICIPANT EXPERIENCES AN UNFORESEEABLE EMERGENCY, THE PARTICIPANT MAY PETITION THE COMMITTEE TO SUSPEND ANY DEFERRALS REQUIRED TO BE MADE BY THE PARTICIPANT.  A PETITION SHALL BE MADE ON THE FORM REQUIRED BY THE COMMITTEE TO BE USED FOR SUCH REQUEST AND SHALL INCLUDE ALL FINANCIAL INFORMATION REQUESTED BY THE COMMITTEE IN ORDER TO MAKE A DETERMINATION ON SUCH PETITION, AS DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION.  SUBJECT TO THE REQUIREMENTS OF SECTION 409A, THE COMMITTEE   7 --------------------------------------------------------------------------------   SHALL DETERMINE, IN ITS SOLE DISCRETION, WHETHER TO APPROVE THE PARTICIPANT’S PETITION.  IF THE PETITION FOR A SUSPENSION IS APPROVED, SUSPENSION SHALL TAKE EFFECT UPON THE DATE OF APPROVAL.  NOTWITHSTANDING THE FOREGOING, THE COMMITTEE SHALL NOT HAVE ANY RIGHT TO APPROVE A REQUEST FOR SUSPENSION OF DEFERRALS IF SUCH APPROVAL (OR RIGHT TO APPROVE) WOULD CAUSE THE PLAN TO FAIL TO COMPLY WITH, OR CAUSE A PARTICIPANT TO BE SUBJECT TO A TAX UNDER THE PROVISIONS OF SECTION 409A.   (B)         DISABILITY.  FROM AND AFTER THE DATE THAT A PARTICIPANT IS DEEMED TO HAVE SUFFERED A DISABILITY, ANY STANDING DEFERRAL ELECTION OF THE PARTICIPANT SHALL AUTOMATICALLY BE SUSPENDED AND NO FURTHER DEFERRALS SHALL BE MADE WITH RESPECT TO THE PARTICIPANT.   (C)         RESUMPTION OF DEFERRALS.  IF DEFERRALS BY A PARTICIPANT HAVE BEEN SUSPENDED DURING A PLAN YEAR DUE TO AN UNFORESEEABLE EMERGENCY OR A DISABILITY, THE PARTICIPANT WILL NOT BE ELIGIBLE TO MAKE ANY FURTHER DEFERRALS IN RESPECT OF THAT PLAN YEAR.  THE PARTICIPANT MAY BE ELIGIBLE TO MAKE DEFERRALS FOR SUBSEQUENT PLAN YEARS PROVIDED THE PARTICIPANT IS SELECTED TO MAKE DEFERRALS FOR SUCH SUBSEQUENT PLAN YEARS AND THE PARTICIPANT COMPLIES WITH THE ELECTION REQUIREMENTS UNDER THE PLAN.   ARTICLE 4 ANNUAL MATCH   4.01.      SELECTION BY COMMITTEE.  PARTICIPATION IN THE PLAN WITH RESPECT TO AN ANNUAL MATCH SHALL BE LIMITED TO A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES OF THE EMPLOYERS WHO ARE IN A CLASSIFICATION OF EMPLOYEES DESIGNATED BY THE COMMITTEE IN ITS SOLE DISCRETION.  FOR EACH PLAN YEAR, THE COMMITTEE MAY SELECT FROM THAT GROUP, IN ITS SOLE DISCRETION, THE EMPLOYEES WHO SHALL BE ELIGIBLE TO RECEIVE AN ANNUAL MATCH IN RESPECT OF THAT PLAN YEAR.  THE COMMITTEE’S SELECTION OF AN EMPLOYEE TO RECEIVE AN ANNUAL MATCH IN RESPECT OF A PARTICULAR PLAN YEAR WILL NOT ENTITLE THAT EMPLOYEE TO RECEIVE AN ANNUAL MATCH FOR ANY SUBSEQUENT PLAN YEAR, UNLESS THE EMPLOYEE IS AGAIN SELECTED BY THE COMMITTEE TO RECEIVE AN ANNUAL MATCH FOR SUCH SUBSEQUENT PLAN YEAR.   4.02.      ANNUAL MATCH.  A PARTICIPANT MAY BE CREDITED WITH A DISCRETIONARY MATCHING ALLOCATION IN RESPECT OF ANY PLAN YEAR, PURSUANT TO AND AS DESCRIBED IN THE ANNUAL ENROLLMENT MATERIALS FOR SUCH PLAN YEAR.  SUCH DISCRETIONARY MATCHING ALLOCATION CREDITED TO A PARTICIPANT IN RESPECT OF A PLAN YEAR SHALL BE REFERRED TO AS THE ANNUAL MATCH FOR THAT PLAN YEAR AND SHALL BE CREDITED TO AN ANNUAL MATCH ACCOUNT IN THE NAME OF THE PARTICIPANT.  A SEPARATE ANNUAL MATCH ACCOUNT SHALL BE ESTABLISHED AND MAINTAINED FOR EACH ANNUAL MATCH.  THE COMMITTEE SHALL HAVE SOLE DISCRETION TO DETERMINE IN RESPECT OF EACH PLAN YEAR AND EACH PARTICIPANT:  (A) WHETHER ANY ANNUAL MATCH SHALL BE MADE; (B) THE PARTICIPANT(S) WHO SHALL BE ENTITLED TO SUCH ANNUAL MATCH; (C) THE AMOUNT OF SUCH ANNUAL MATCH; (D) THE DATE(S) ON WHICH ANY PORTION OF SUCH ANNUAL MATCH SHALL BE CREDITED TO EACH PARTICIPANT’S ANNUAL MATCH ACCOUNT; (E) THE VESTING TERMS APPLICABLE TO SUCH ANNUAL MATCH; (F) THE INVESTMENT OPTION(S) THAT SHALL APPLY TO SUCH ANNUAL MATCH; AND (G) ANY OTHER TERMS AND CONDITIONS APPLICABLE TO SUCH ANNUAL MATCH.   4.03.      VESTING.  A PARTICIPANT SHALL BE VESTED IN HIS OR HER ANNUAL MATCH ACCOUNT IN RESPECT OF EACH GIVEN PLAN YEAR AS SET FORTH IN THE ANNUAL ENROLLMENT MATERIALS FOR SUCH PLAN YEAR.  THE VESTING TERMS OF ANNUAL MATCH ACCOUNTS SET FORTH IN THE ANNUAL ENROLLMENT MATERIALS SHALL BE ESTABLISHED BY THE COMMITTEE IN ITS SOLE DISCRETION AND MAY VARY FOR EACH   8 --------------------------------------------------------------------------------   PARTICIPANT AND EACH PLAN YEAR.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PLAN OR ANY OF THE ANNUAL ENROLLMENT MATERIALS, THE COMMITTEE SHALL HAVE THE AUTHORITY, EXERCISABLE IN ITS SOLE DISCRETION, TO ACCELERATE THE VESTING OF ANY AMOUNTS CREDITED TO ANY PLAN ACCOUNT OF ANY PARTICIPANT.   ARTICLE 5 ANNUAL DISCRETIONARY ALLOCATION   5.01.      SELECTION BY COMMITTEE.  PARTICIPATION IN THE PLAN WITH RESPECT TO AN ANNUAL DISCRETIONARY ALLOCATION SHALL BE LIMITED TO A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES OF THE EMPLOYERS WHO ARE IN A CLASSIFICATION OF EMPLOYEES DESIGNATED BY THE COMMITTEE IN ITS SOLE DISCRETION.  FOR EACH PLAN YEAR, THE COMMITTEE MAY SELECT FROM THAT GROUP, IN ITS SOLE DISCRETION, THE EMPLOYEES WHO SHALL BE ELIGIBLE TO RECEIVE AN ANNUAL DISCRETIONARY ALLOCATION IN RESPECT OF THAT PLAN YEAR.  THE COMMITTEE’S SELECTION OF AN EMPLOYEE TO RECEIVE AN ANNUAL DISCRETIONARY ALLOCATION IN RESPECT OF A PARTICULAR PLAN YEAR WILL NOT ENTITLE THAT EMPLOYEE TO RECEIVE AN ANNUAL DISCRETIONARY ALLOCATION FOR ANY SUBSEQUENT PLAN YEAR, UNLESS THE EMPLOYEE IS AGAIN SELECTED BY THE COMMITTEE TO RECEIVE AN ANNUAL DISCRETIONARY ALLOCATION FOR SUCH SUBSEQUENT PLAN YEAR.   5.02.      ANNUAL DISCRETIONARY ALLOCATION.  A PARTICIPANT MAY BE CREDITED WITH ONE OR MORE OTHER DISCRETIONARY ALLOCATIONS IN RESPECT OF ANY PLAN YEAR, EXPRESSED AS EITHER A FLAT DOLLAR AMOUNT OR AS A PERCENTAGE OF ONE OR MORE ITEMS OF THE PARTICIPANT’S ELIGIBLE COMPENSATION FOR THE PLAN YEAR, OR ANY COMBINATION OF THE FOREGOING.  SUCH DISCRETIONARY ALLOCATIONS CREDITED TO A PARTICIPANT IN RESPECT OF A PLAN YEAR SHALL BE REFERRED TO COLLECTIVELY AS THE ANNUAL DISCRETIONARY ALLOCATION FOR THAT PLAN YEAR AND SHALL BE CREDITED TO AN ANNUAL DISCRETIONARY ALLOCATION ACCOUNT IN THE NAME OF THE PARTICIPANT.  A SEPARATE ANNUAL DISCRETIONARY ALLOCATION ACCOUNT SHALL BE ESTABLISHED AND MAINTAINED FOR EACH ANNUAL DISCRETIONARY ALLOCATION.  THE COMMITTEE SHALL HAVE SOLE DISCRETION TO DETERMINE IN RESPECT OF EACH PLAN YEAR AND EACH PARTICIPANT:  (A) WHETHER ANY ANNUAL DISCRETIONARY ALLOCATION SHALL BE MADE; (B) THE PARTICIPANT(S) WHO SHALL BE ENTITLED TO SUCH ANNUAL DISCRETIONARY ALLOCATION; (C) THE AMOUNT OF SUCH ANNUAL DISCRETIONARY ALLOCATION; (D) THE DATE(S) ON WHICH ANY PORTION OF SUCH ANNUAL DISCRETIONARY ALLOCATION SHALL BE CREDITED TO EACH PARTICIPANT’S ANNUAL DISCRETIONARY ALLOCATION ACCOUNT; (E) THE INVESTMENT OPTION(S) THAT SHALL APPLY TO SUCH ANNUAL DISCRETIONARY ALLOCATION; AND (F) ANY OTHER TERMS AND CONDITIONS APPLICABLE TO SUCH ANNUAL DISCRETIONARY ALLOCATION.   5.03.      VESTING.  A PARTICIPANT SHALL BE VESTED IN HIS OR HER ANNUAL DISCRETIONARY ALLOCATION ACCOUNT IN RESPECT OF EACH GIVEN PLAN YEAR AS SET FORTH IN THE ANNUAL ENROLLMENT MATERIALS FOR SUCH PLAN YEAR.  THE VESTING TERMS OF ANNUAL DISCRETIONARY ALLOCATION ACCOUNTS SET FORTH IN THE ANNUAL ENROLLMENT MATERIALS SHALL BE ESTABLISHED BY THE COMMITTEE IN ITS SOLE DISCRETION AND MAY VARY FOR EACH PARTICIPANT AND EACH PLAN YEAR.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PLAN OR ANY OF THE ANNUAL ENROLLMENT MATERIALS, THE COMMITTEE SHALL HAVE THE AUTHORITY, EXERCISABLE IN ITS SOLE DISCRETION, TO ACCELERATE THE VESTING OF ANY AMOUNTS CREDITED TO ANY PLAN ACCOUNT OF ANY PARTICIPANT.   9 --------------------------------------------------------------------------------   ARTICLE 6 INVESTMENT OPTIONS, INVESTMENT ADJUSTMENTS AND TAXES   6.01.      INVESTMENT OPTIONS.   (A)         THE COMMITTEE SHALL ESTABLISH FROM TIME TO TIME THE INVESTMENT OPTION(S) THAT WILL BE AVAILABLE UNDER THE PLAN.  AT ANY TIME, THE COMMITTEE MAY, IN ITS DISCRETION, ADD ONE OR MORE ADDITIONAL INVESTMENT OPTIONS UNDER THE PLAN, AND IN CONNECTION WITH ANY SUCH ADDITION, MAY PERMIT PARTICIPANTS TO SELECT FROM AMONG THE THEN-AVAILABLE INVESTMENT OPTIONS UNDER THE PLAN TO MEASURE THE VALUE OF SUCH PARTICIPANTS’ PLAN ACCOUNTS.  IN ADDITION, THE COMMITTEE, IN ITS SOLE DISCRETION, MAY DISCONTINUE ANY INVESTMENT OPTION AT ANY TIME, AND PROVIDE FOR THE PORTIONS OF PARTICIPANTS’ PLAN ACCOUNTS AND FUTURE DEFERRALS DESIGNATED TO THE DISCONTINUED INVESTMENT OPTION TO BE REALLOCATED TO ANOTHER INVESTMENT OPTION(S).   (B)         SUBJECT TO SUCH LIMITATIONS, OPERATING RULES AND PROCEDURES AS MAY FROM TIME TO TIME BE REQUIRED BY LAW; IMPOSED BY THE COMMITTEE, THE TRUSTEE OR THEIR DESIGNATED AGENTS; CONTAINED ELSEWHERE IN THE PLAN; OR SET FORTH IN ANY ANNUAL ENROLLMENT MATERIALS, EACH PARTICIPANT MAY COMMUNICATE TO THE INVESTMENT AGENT A DIRECTION (IN ACCORDANCE WITH THIS ARTICLE 6) AS TO HOW HIS OR HER PLAN ACCOUNTS SHOULD BE DEEMED TO BE INVESTED AMONG THE INVESTMENT OPTIONS MADE AVAILABLE BY THE COMMITTEE; PROVIDED, HOWEVER, THAT A PARTICIPANT’S ABILITY TO SELECT INVESTMENT OPTIONS WITH RESPECT TO HIS OR HER ANNUAL MATCH ACCOUNT AND ANNUAL DISCRETIONARY ALLOCATION ACCOUNT IS SUBJECT TO, AND MAY BE LIMITED BY, THE COMMITTEE’S DISCRETION UNDER ARTICLE 4.02 AND ARTICLE 5.02 TO DESIGNATE THE INVESTMENT OPTIONS THAT SHALL APPLY TO ALL OR A PORTION OF SUCH ANNUAL MATCH ACCOUNT OR ANNUAL DISCRETIONARY ALLOCATION ACCOUNT.  THE PARTICIPANT’S INVESTMENT DIRECTIONS SHALL DESIGNATE THE PERCENTAGE (IN ANY WHOLE PERCENT MULTIPLES, WHICH MUST TOTAL 100 PERCENT) OF THE PORTION OF THE SUBSEQUENT CONTRIBUTIONS TO THE PARTICIPANT’S PLAN ACCOUNTS WHICH IS REQUESTED TO BE DEEMED TO BE INVESTED IN SUCH INVESTMENT OPTIONS, AND SHALL BE SUBJECT TO THE RULES SET FORTH BELOW.  THE INVESTMENT AGENT SHALL INVEST THE ASSETS OF THE PARTICIPANT’S PLAN ACCOUNTS IN ACCORDANCE WITH THE DIRECTIONS OF THE PARTICIPANT EXCEPT TO THE EXTENT THAT THE COMMITTEE DIRECTS IT TO THE CONTRARY.  THE COMMITTEE HAS THE AUTHORITY, BUT NOT THE REQUIREMENT, IN ITS SOLE AND ABSOLUTE DISCRETION, TO DIRECT THAT A PARTICIPANT’S PLAN ACCOUNTS BE INVESTED AMONG SUCH INVESTMENTS AS IT DEEMS APPROPRIATE AND ADVISABLE, WHICH INVESTMENTS NEED NOT BE THE SAME FOR EACH PARTICIPANT.   (C)         ANY INITIAL OR SUBSEQUENT INVESTMENT DIRECTION SHALL BE IN WRITING TO THE INVESTMENT AGENT ON A FORM SUPPLIED BY THE COMPANY, OR, AS PERMITTED BY THE INVESTMENT AGENT, MAY BE BY ORAL DESIGNATION OR ELECTRONIC TRANSMISSION DESIGNATION TO THE INVESTMENT AGENT.  A DESIGNATION SHALL BE EFFECTIVE AS OF THE DESIGNATION DATE NEXT FOLLOWING THE DATE THE DIRECTION IS RECEIVED AND ACCEPTED BY THE INVESTMENT AGENT OR AS SOON THEREAFTER AS ADMINISTRATIVELY PRACTICABLE, SUBJECT TO THE COMMITTEE’S RIGHT TO OVERRIDE SUCH DIRECTION.  THE PARTICIPANT MAY, IF PERMITTED BY THE COMMITTEE, MAKE AN INVESTMENT DIRECTION TO THE INVESTMENT AGENT FOR HIS OR HER EXISTING PLAN ACCOUNTS AS OF A DESIGNATION DATE AND A SEPARATE INVESTMENT DIRECTION TO THE INVESTMENT AGENT FOR CONTRIBUTION CREDITS TO HIS OR HER PLAN ACCOUNTS OCCURRING AFTER THE DESIGNATION DATE.   (D)         ALL AMOUNTS CREDITED TO A PARTICIPANT’S PLAN ACCOUNTS SHALL BE INVESTED IN ACCORDANCE WITH THE THEN EFFECTIVE INVESTMENT DIRECTION, UNLESS THE COMMITTEE DIRECTS   10 --------------------------------------------------------------------------------   OTHERWISE.  UNLESS OTHERWISE CHANGED BY THE COMMITTEE, AN INVESTMENT DIRECTION SHALL REMAIN IN EFFECT UNTIL THE PARTICIPANT’S PLAN ACCOUNTS ARE DISTRIBUTED OR FORFEITED IN THEIR ENTIRETY, OR UNTIL A SUBSEQUENT INVESTMENT DIRECTION IS RECEIVED AND ACCEPTED BY THE INVESTMENT AGENT.   (E)         IF A PARTICIPANT FILES AN INVESTMENT DIRECTION WITH THE INVESTMENT AGENT FOR HIS OR HER EXISTING PLAN ACCOUNTS AS OF A DESIGNATION DATE WHICH IS RECEIVED AND ACCEPTED BY THE INVESTMENT AGENT AND NOT OVERRIDDEN BY THE COMMITTEE, THEN THE PARTICIPANT’S EXISTING PLAN ACCOUNTS SHALL BE DEEMED TO BE REALLOCATED AS OF THE NEXT DESIGNATION DATE (OR AS SOON THEREAFTER AS ADMINISTRATIVELY PRACTICABLE) AMONG THE DESIGNATED INVESTMENT OPTIONS ACCORDING TO THE PERCENTAGES SPECIFIED IN SUCH INVESTMENT DIRECTION; PROVIDED, HOWEVER, THAT A PARTICIPANT’S ABILITY TO CHANGE THE INVESTMENT OPTIONS APPLICABLE TO HIS OR HER ANNUAL MATCH ACCOUNT AND ANNUAL DISCRETIONARY ALLOCATION ACCOUNT ARE SUBJECT TO, AND MAY BE LIMITED BY, THE COMMITTEE’S DISCRETION UNDER ARTICLE 4.02 AND ARTICLE 5.02 TO DESIGNATE THE INVESTMENT OPTIONS THAT SHALL APPLY TO ALL OR A PORTION OF SUCH ANNUAL MATCH ACCOUNT OR ANNUAL DISCRETIONARY ALLOCATION ACCOUNT.  UNLESS OTHERWISE CHANGED BY THE COMMITTEE, AN INVESTMENT DIRECTION SHALL REMAIN IN EFFECT UNTIL THE PARTICIPANT’S PLAN ACCOUNTS ARE DISTRIBUTED OR FORFEITED IN THEIR ENTIRETY, OR UNTIL A SUBSEQUENT INVESTMENT DIRECTION IS RECEIVED AND ACCEPTED BY THE INVESTMENT AGENT.   (F)          THE COMMITTEE, IN ITS SOLE DISCRETION, MAY PLACE LIMITS ON A PARTICIPANT’S ABILITY TO MAKE CHANGES WITH RESPECT TO ANY INVESTMENT OPTIONS.  IN ADDITION, IN NO EVENT SHALL A PARTICIPANT WHO IS A REPORTING PERSON BE PERMITTED TO ALLOCATE ANY PORTION OF HIS OR HER PLAN ACCOUNTS TO THE COMPANY STOCK FUND MORE FREQUENTLY THAN QUARTERLY.   (G)         IF THE INVESTMENT AGENT RECEIVES AN INITIAL OR SUBSEQUENT INVESTMENT DIRECTION WITH RESPECT TO PLAN ACCOUNTS WHICH IT DEEMS TO BE INCOMPLETE, UNCLEAR OR IMPROPER, OR WHICH IS UNACCEPTABLE FOR SOME OTHER REASON (DETERMINED IN THE SOLE AND ABSOLUTE DISCRETION OF THE INVESTMENT AGENT), THE PARTICIPANT’S INVESTMENT DIRECTION FOR SUCH PLAN ACCOUNTS THEN IN EFFECT SHALL REMAIN IN EFFECT (OR, IN THE CASE OF A DEFICIENCY IN AN INITIAL INVESTMENT DIRECTION, THE PARTICIPANT SHALL BE DEEMED TO HAVE FILED NO INVESTMENT DIRECTION) UNTIL THE PARTICIPANT FILES AN INVESTMENT DIRECTION FOR SUCH PLAN ACCOUNTS ACCEPTABLE TO THE INVESTMENT AGENT.   (H)         IF THE INVESTMENT AGENT DOES NOT POSSESS VALID INVESTMENT DIRECTIONS COVERING THE FULL BALANCE OF A PARTICIPANT’S PLAN ACCOUNTS OR SUBSEQUENT CONTRIBUTIONS THERETO (INCLUDING, WITHOUT LIMITATION, SITUATIONS IN WHICH NO INVESTMENT DIRECTION HAS BEEN FILED, SITUATIONS IN WHICH THE INVESTMENT DIRECTION IS NOT ACCEPTABLE TO THE INVESTMENT AGENT UNDER  ARTICLE 6.01(G), OR SITUATIONS IN WHICH SOME OR ALL OF THE PARTICIPANT’S DESIGNATED INVESTMENTS ARE NO LONGER PERMISSIBLE INVESTMENT OPTIONS), THE PARTICIPANT SHALL BE DEEMED TO HAVE DIRECTED THAT THE UNDESIGNATED PORTION OF THE PLAN ACCOUNTS BE INVESTED IN A MONEY-MARKET FUND OR SIMILAR SHORT-TERM INVESTMENT FUND; PROVIDED, HOWEVER, THE COMMITTEE MAY PROVIDE FOR THE UNDESIGNATED PORTION TO BE ALLOCATED TO OR AMONG THE INVESTMENT OPTION(S) THAT THE PARTICIPANT DID DESIGNATE IN THE SAME PROPORTION AS THE DESIGNATED PORTION, OR MAY PROVIDE FOR ANY OTHER ALLOCATION METHOD IT DEEMS APPROPRIATE, IN ITS DISCRETION.   (I)          NONE OF THE COMPANY, ITS DIRECTORS AND EMPLOYEES (INCLUDING, WITHOUT LIMITATION, EACH MEMBER OF THE COMMITTEE), AND THE TRUSTEE, AND THEIR DESIGNATED AGENTS AND REPRESENTATIVES, SHALL HAVE ANY LIABILITY WHATSOEVER FOR THE INVESTMENT OF A PARTICIPANT’S PLAN   11 --------------------------------------------------------------------------------   ACCOUNTS, OR FOR THE INVESTMENT PERFORMANCE OF A PARTICIPANT’S PLAN ACCOUNTS.  EACH PARTICIPANT HEREUNDER, AS A CONDITION TO HIS OR HER PARTICIPATION HEREUNDER, AGREES TO INDEMNIFY AND HOLD HARMLESS THE COMPANY, ITS DIRECTORS AND EMPLOYEES (INCLUDING, WITHOUT LIMITATION, EACH MEMBER OF THE COMMITTEE), AND THE TRUSTEE, AND THEIR DESIGNATED AGENTS AND REPRESENTATIVES, FROM ANY LOSSES OR DAMAGES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, LOST OPPORTUNITY COSTS) RELATING TO THE INVESTMENT OF A PARTICIPANT’S PLAN ACCOUNTS.  THE INVESTMENT AGENT SHALL HAVE NO LIABILITY WHATSOEVER FOR THE INVESTMENT OF A PARTICIPANT’S PLAN ACCOUNTS, OR FOR THE INVESTMENT PERFORMANCE OF A PARTICIPANT’S PLAN ACCOUNTS, OTHER THAN AS A RESULT OF THE FAILURE TO FOLLOW A VALID AND EFFECTIVE INVESTMENT DIRECTION.  EACH PARTICIPANT HEREUNDER, AS A CONDITION TO HIS OR HER PARTICIPATION HEREUNDER, AGREES TO INDEMNIFY AND HOLD HARMLESS THE INVESTMENT AGENT, AND ITS AGENTS AND REPRESENTATIVES, FROM ANY LOSSES OR DAMAGES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, LOST OPPORTUNITY COSTS) RELATING TO THE INVESTMENT OF A PARTICIPANT’S PLAN ACCOUNTS, OTHER THAN AS A RESULT OF THE FAILURE TO FOLLOW A VALID AND EFFECTIVE INVESTMENT DIRECTION.   (J)          THE PARTICIPANT’S ANNUAL MATCH ACCOUNTS AND ANNUAL DISCRETIONARY ALLOCATION ACCOUNTS FOR EACH PLAN YEAR SHALL BE TREATED FOR PURPOSES OF THIS ARTICLE 6 AS SEPARATE FROM THE ANNUAL DEFERRAL ACCOUNTS FOR THAT PLAN YEAR.  UNLESS OTHERWISE PROVIDED IN THE APPLICABLE ANNUAL ENROLLMENT MATERIALS, A PARTICIPANT MAY ONLY PROVIDE INVESTMENT DIRECTIONS WITH RESPECT TO ALL OF HIS OR HER ANNUAL DEFERRAL ACCOUNTS.   6.02.      ADJUSTMENT OF PLAN ACCOUNTS.  WHILE A PARTICIPANT’S PLAN ACCOUNTS DO NOT REPRESENT THE PARTICIPANT’S OWNERSHIP OF, OR ANY OWNERSHIP INTEREST IN, ANY PARTICULAR ASSETS, THE PARTICIPANT’S PLAN ACCOUNTS SHALL BE ADJUSTED IN ACCORDANCE WITH THE INVESTMENT OPTION(S), SUBJECT TO THE CONDITIONS AND PROCEDURES SET FORTH HEREIN OR ESTABLISHED BY THE COMMITTEE FROM TIME TO TIME.  ANY NOTIONAL CASH EARNINGS GENERATED UNDER AN INVESTMENT OPTION (SUCH AS INTEREST AND CASH DIVIDENDS AND DISTRIBUTIONS) SHALL, AT THE COMMITTEE’S SOLE DISCRETION, EITHER BE DEEMED TO BE REINVESTED IN THAT INVESTMENT OPTION OR REINVESTED IN ONE OR MORE OTHER INVESTMENT OPTION(S) DESIGNATED BY THE COMMITTEE.  ALL NOTIONAL ACQUISITIONS AND DISPOSITIONS OF INVESTMENT OPTIONS UNDER A PARTICIPANT’S PLAN ACCOUNTS SHALL BE DEEMED TO OCCUR AT SUCH TIMES AS THE COMMITTEE SHALL DETERMINE TO BE ADMINISTRATIVELY FEASIBLE IN ITS SOLE DISCRETION AND THE PARTICIPANT’S PLAN ACCOUNTS SHALL BE ADJUSTED ACCORDINGLY.  IN ADDITION, A PARTICIPANT’S PLAN ACCOUNTS MAY BE ADJUSTED FROM TIME TO TIME, IN ACCORDANCE WITH PROCEDURES AND PRACTICES ESTABLISHED BY THE COMMITTEE, IN ITS SOLE DISCRETION, TO REFLECT ANY NOTIONAL TRANSACTIONAL COSTS AND OTHER FEES AND EXPENSES RELATING TO THE DEEMED INVESTMENT, DISPOSITION OR CARRYING OF ANY INVESTMENT OPTION FOR THE PARTICIPANT’S PLAN ACCOUNTS.   6.03.      FICA AND OTHER TAXES.   (A)         WITHHOLDING.  FOR EACH PLAN YEAR IN WHICH AN ANNUAL PARTICIPANT DEFERRAL IS BEING WITHHELD FROM A PARTICIPANT OR IN WHICH AN ANNUAL MATCH OR ANNUAL DISCRETIONARY ALLOCATION CREDITED ON BEHALF OF A PARTICIPANT VESTS, THE PARTICIPANT’S EMPLOYER(S) SHALL WITHHOLD FROM THE PARTICIPANT’S OTHER COMPENSATION PAYABLE BY THE EMPLOYER(S) TO THE PARTICIPANT, IN A MANNER DETERMINED BY THE EMPLOYER(S), THE PARTICIPANT’S SHARE OF FICA AND OTHER EMPLOYMENT TAXES.  IF THE COMMITTEE DETERMINES THAT SUCH PORTION MAY NOT BE SUFFICIENT TO COVER THE AMOUNT OF THE APPLICABLE WITHHOLDING, THEN TO THE EXTENT PERMISSIBLE UNDER SECTION 409A, THE COMMITTEE MAY REDUCE THE ANNUAL PARTICIPANT DEFERRAL TO THE EXTENT NECESSARY, AS DETERMINED   12 --------------------------------------------------------------------------------   BY THE COMMITTEE IN ITS SOLE DISCRETION, FOR THE PARTICIPANT’S EMPLOYER TO COMPLY WITH APPLICABLE WITHHOLDING REQUIREMENTS.   (B)         DISTRIBUTIONS.  THE PARTICIPANT’S EMPLOYER(S), OR THE TRUSTEE, SHALL WITHHOLD FROM ANY PAYMENTS MADE TO A PARTICIPANT UNDER THE PLAN ALL FEDERAL, STATE AND LOCAL INCOME, EMPLOYMENT AND OTHER TAXES REQUIRED TO BE WITHHELD BY THE EMPLOYER(S), OR THE TRUSTEE, IN CONNECTION WITH SUCH PAYMENTS, IN AMOUNTS AND IN A MANNER TO BE DETERMINED IN THE SOLE DISCRETION OF THE EMPLOYER(S) AND THE TRUSTEE.   ARTICLE 7 DISTRIBUTION OF PLAN ACCOUNTS   7.01.      DISTRIBUTION ELECTIONS.   (A)         INITIAL ELECTIONS.  THE PARTICIPANT SHALL MAKE A DISTRIBUTION ELECTION BY FILING A DISTRIBUTION ELECTION FORM AT THE TIME HE OR SHE MAKES AN ANNUAL PARTICIPANT DEFERRAL WITH RESPECT TO A GIVEN PLAN YEAR TO HAVE THE PARTICIPANT’S RESPECTIVE PLAN ACCOUNTS FOR THAT PLAN YEAR DISTRIBUTED IN EITHER A LUMP SUM, OR TWO TO TEN SUBSTANTIALLY EQUIVALENT ANNUAL INSTALLMENTS, IN EACH CASE COMMENCING, IN ACCORDANCE WITH ADMINISTRATIVE GUIDELINES DETERMINED BY THE COMMITTEE, ON JUNE 30TH OF (I) A SPECIFIED YEAR FOLLOWING THE YEAR THAT THE COMPENSATION DEFERRED WOULD OTHERWISE HAVE BEEN PAID; OR (II) THE YEAR FOLLOWING THE YEAR OF THE PARTICIPANT’S TERMINATION OF EMPLOYMENT.  THE AMOUNT OF EACH INSTALLMENT PAYMENT SHALL BE EQUAL TO THE VALUE OF THE PARTICIPANT’S RESPECTIVE PLAN ACCOUNTS FOR THAT PLAN YEAR DIVIDED BY THE NUMBER OF INSTALLMENTS REMAINING TO BE PAID.   (B)         SUBSEQUENT ELECTIONS.  SUBJECT TO ANY RESTRICTIONS THAT MAY BE IMPOSED BY THE COMMITTEE, A PARTICIPANT MAY AMEND HIS OR HER DISTRIBUTION ELECTION WITH RESPECT TO ANY PLAN ACCOUNT BY COMPLETING AND SUBMITTING TO THE COMMITTEE WITHIN SUCH TIME FRAME AS THE COMMITTEE MAY DESIGNATE, AN AMENDED DISTRIBUTION ELECTION FORM; PROVIDED, HOWEVER, THAT SUCH AMENDED DISTRIBUTION ELECTION FORM (I) IS SUBMITTED NO LATER THAN A DATE SPECIFIED BY THE COMMITTEE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 409A, (II) SHALL NOT TAKE EFFECT UNTIL 12 MONTHS AFTER THE DATE ON WHICH SUCH AMENDED DISTRIBUTION ELECTION FORM BECOMES EFFECTIVE, AND (III) SPECIFIES A NEW DISTRIBUTION DATE (OR A NEW INITIAL DISTRIBUTION DATE IN THE CASE OF INSTALLMENT DISTRIBUTIONS) THAT IS NO SOONER THAN FIVE YEARS AFTER THE ORIGINAL DISTRIBUTION DATE (OR THE ORIGINAL INITIAL DISTRIBUTION DATE IN THE CASE OF INSTALLMENT DISTRIBUTIONS), OR SUCH LATER DATE SPECIFIED BY THE COMMITTEE.   7.02.      VALUATION OF PLAN ACCOUNTS PENDING DISTRIBUTION.  TO THE EXTENT THAT THE DISTRIBUTION OF ANY PORTION OF ANY PLAN ACCOUNT IS DEFERRED, ANY AMOUNTS REMAINING TO THE CREDIT OF THE PLAN ACCOUNT SHALL CONTINUE TO BE ADJUSTED BY THE APPLICABLE INVESTMENT ADJUSTMENTS IN ACCORDANCE WITH ARTICLE 6.   7.03.      FORM OF PAYMENT.  DISTRIBUTIONS UNDER THE PLAN SHALL BE PAID IN CASH; PROVIDED, HOWEVER, THAT THE COMMITTEE MAY PROVIDE, IN ITS DISCRETION, THAT ANY DISTRIBUTION ATTRIBUTABLE TO THE PORTION OF A PLAN ACCOUNT THAT IS DEEMED INVESTED IN THE COMPANY STOCK FUND SHALL BE PAID IN SHARES OF COMPANY STOCK; PROVIDED, FURTHER, THAT ANY SHARES OF COMPANY STOCK PAID OUT UNDER THE PLAN WILL BE DEEMED TO HAVE BEEN DISTRIBUTED UNDER THE AMERIPRISE FINANCIAL   13 --------------------------------------------------------------------------------   2005 INCENTIVE COMPENSATION PLAN, AS AMENDED FROM TIME TO TIME, OR ANY SUCCESSOR THERETO, AND WILL COUNT AGAINST THE LIMIT ON THE NUMBER OF SHARES OF COMPANY STOCK AVAILABLE FOR DISTRIBUTION THEREUNDER.   7.04.      EFFECT OF PAYMENT.  THE FULL PAYMENT OF THE APPLICABLE BENEFIT UNDER THE PROVISIONS OF THE PLAN SHALL COMPLETELY DISCHARGE ALL OBLIGATIONS TO A PARTICIPANT AND HIS OR HER ESTATE UNDER THE PLAN.   ARTICLE 8 LEAVE OF ABSENCE   8.01.      PAID LEAVE OF ABSENCE.  IF A PARTICIPANT IS AUTHORIZED BY THE PARTICIPANT’S EMPLOYER FOR ANY REASON TO TAKE A PAID LEAVE OF ABSENCE FROM THE EMPLOYMENT OF THE EMPLOYER, THE PARTICIPANT SHALL CONTINUE TO BE CONSIDERED EMPLOYED BY THE EMPLOYER AND THE APPROPRIATE AMOUNTS SHALL CONTINUE TO BE WITHHELD FROM THE PARTICIPANT’S COMPENSATION PURSUANT TO THE PARTICIPANT’S THEN CURRENT ANNUAL ELECTION FORM.   8.02.      UNPAID LEAVE OF ABSENCE.  IF A PARTICIPANT IS AUTHORIZED BY THE PARTICIPANT’S EMPLOYER FOR ANY REASON TO TAKE AN UNPAID LEAVE OF ABSENCE FROM THE EMPLOYMENT OF THE EMPLOYER, THE PARTICIPANT SHALL CONTINUE TO BE CONSIDERED EMPLOYED BY THE EMPLOYER AND, TO THE EXTENT PERMISSIBLE UNDER SECTION 409A, THE PARTICIPANT SHALL BE EXCUSED FROM MAKING DEFERRALS UNTIL THE EARLIER OF THE DATE THE LEAVE OF ABSENCE EXPIRES OR THE PARTICIPANT RETURNS TO A PAID EMPLOYMENT STATUS.  UPON SUCH EXPIRATION OR RETURN, DEFERRALS SHALL RESUME FOR THE REMAINING PORTION OF THE PLAN YEAR IN WHICH THE EXPIRATION OR RETURN OCCURS, BASED ON THE DEFERRAL ELECTION, IF ANY, MADE FOR THAT PLAN YEAR.  IF NO ELECTION WAS MADE FOR THAT PLAN YEAR, NO DEFERRAL SHALL BE WITHHELD.   ARTICLE 9 Effects of Certain Events   9.01.      DEATH.  IN THE CASE OF A PARTICIPANT’S DEATH, ALL AMOUNTS CREDITED TO THE PLAN ACCOUNTS OF THE AFFECTED PARTICIPANT SHALL BE 100 PERCENT VESTED.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN A PARTICIPANT’S DISTRIBUTION ELECTION OR OTHERWISE, IF A PARTICIPANT DIES BEFORE HE OR SHE HAS RECEIVED A COMPLETE DISTRIBUTION OF HIS OR HER PLAN ACCOUNTS, THE PARTICIPANT’S ESTATE SHALL RECEIVE THE BALANCE OF THE PARTICIPANT’S PLAN ACCOUNTS, WHICH SHALL BE PAYABLE TO THE EXECUTOR OR PERSONAL REPRESENTATIVE OF THE PARTICIPANT’S ESTATE IN A LUMP SUM WITHIN 90 DAYS OF THE DATE OF THE PARTICIPANT’S DEATH, OR SUCH LATER DATE PERMISSIBLE UNDER SECTION 409A.   9.02.      DISABILITY.  IN THE CASE OF A PARTICIPANT’S DISABILITY, ALL AMOUNTS CREDITED TO THE PARTICIPANT’S PLAN ACCOUNTS SHALL BE 100 PERCENT VESTED.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN A PARTICIPANT’S DISTRIBUTION ELECTION OR OTHERWISE, A PARTICIPANT SUFFERING A DISABILITY SHALL RECEIVE THE BALANCE OF HIS OR HER PLAN ACCOUNTS, WHICH SHALL BE PAID IN A LUMP SUM WITHIN 90 DAYS OF THE DATE THAT THE PARTICIPANT BECAME DISABLED.   9.03.      RETIREMENT.  IN THE CASE OF A PARTICIPANT BECOMING RETIREMENT ELIGIBLE, ALL AMOUNTS CREDITED TO THE PLAN ACCOUNTS OF SUCH PARTICIPANT SHALL BECOME IMMEDIATELY 100 PERCENT VESTED.  IN THE EVENT OF A PARTICIPANT’S RETIREMENT, THE BALANCE OF THE PARTICIPANT’S   14 --------------------------------------------------------------------------------   PLAN ACCOUNTS WILL BE PAID OUT IN EITHER A LUMP SUM, OR TWO TO TEN SUBSTANTIALLY EQUIVALENT ANNUAL INSTALLMENTS, AS SPECIFIED BY THE PARTICIPANT IN HIS OR HER DISTRIBUTION ELECTION, IN EACH CASE COMMENCING, IN ACCORDANCE WITH ADMINISTRATIVE GUIDELINES DETERMINED BY THE COMMITTEE, ON JUNE 30TH OF THE YEAR FOLLOWING THE YEAR OF THE PARTICIPANT’S RETIREMENT.   9.04.      OTHER TERMINATION OF EMPLOYMENT.  AS OF THE DATE OF A PARTICIPANT’S TERMINATION OF EMPLOYMENT FOR ANY REASON OTHER THAN RETIREMENT, DISABILITY OR DEATH, THE AMOUNTS CREDITED TO EACH OF THE PARTICIPANT’S PLAN ACCOUNTS SHALL BE REDUCED BY THE AMOUNT WHICH HAS NOT BECOME VESTED IN ACCORDANCE WITH THE VESTING PROVISIONS SET FORTH HEREIN AND IN THE ANNUAL ENROLLMENT MATERIALS APPLICABLE TO SUCH PLAN ACCOUNT, AND SUCH UNVESTED AMOUNTS SHALL BE FORFEITED BY THE PARTICIPANT.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN A PARTICIPANT’S DISTRIBUTION ELECTION OR OTHERWISE, IN THE EVENT OF A PARTICIPANT’S TERMINATION OF EMPLOYMENT FOR ANY REASON OTHER THAN RETIREMENT, DISABILITY OR DEATH, THE PORTION OF THE PARTICIPANT’S AGGREGATE VESTED BALANCE WILL BE PAID OUT IN EITHER A LUMP SUM, OR TWO TO FIVE SUBSTANTIALLY EQUIVALENT ANNUAL INSTALLMENTS, AS SPECIFIED BY THE PARTICIPANT IN HIS OR HER DISTRIBUTION ELECTION, IN EACH CASE COMMENCING, IN ACCORDANCE WITH ADMINISTRATIVE GUIDELINES DETERMINED BY THE COMMITTEE, ON JUNE 30TH OF THE YEAR FOLLOWING THE YEAR OF THE PARTICIPANT’S TERMINATION OF EMPLOYMENT.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN A PARTICIPANT’S DISTRIBUTION ELECTION OR OTHERWISE, IN THE EVENT THAT THE PARTICIPANT SPECIFIED IN HIS OR HER DISTRIBUTION ELECTION FOR A PLAN ACCOUNT TO BE PAID OUT IN MORE THAN FIVE INSTALLMENTS, SUCH PARTICIPANT’S DISTRIBUTION ELECTION FOR SUCH PLAN ACCOUNT SHALL BE DEEMED TO SPECIFY FIVE ANNUAL INSTALLMENTS FOR PURPOSES OF THIS ARTICLE 9.04.   9.05.      CHANGE IN CONTROL.  UPON THE OCCURRENCE OF A CHANGE IN CONTROL OF THE COMPANY, ALL AMOUNTS CREDITED TO ANY AND ALL PLAN ACCOUNTS OF EACH PARTICIPANT AS OF THE EFFECTIVE DATE OF SUCH CHANGE IN CONTROL SHALL BECOME IMMEDIATELY 100 PERCENT VESTED.  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN A PARTICIPANT’S ANNUAL DISTRIBUTION ELECTION FORM OR THE PLAN, UPON THE OCCURRENCE OF A CHANGE IN CONTROL, THE COMPANY WILL DISTRIBUTE ALL PREVIOUSLY UNDISTRIBUTED PLAN ACCOUNTS TO PARTICIPANTS AS SOON AS ADMINISTRATIVELY PRACTICABLE FOLLOWING THE EFFECTIVE DATE OF SUCH CHANGE IN CONTROL, BUT IN NO EVENT LATER THAN 90 DAYS THEREAFTER.   9.06.      UNFORESEEABLE EMERGENCY.  IN THE EVENT THAT A PARTICIPANT EXPERIENCES AN UNFORESEEABLE EMERGENCY, THE PARTICIPANT MAY PETITION THE COMMITTEE TO RECEIVE A PARTIAL OR FULL PAYOUT OF AMOUNTS CREDITED TO ONE OR MORE OF THE PARTICIPANT’S PLAN ACCOUNTS.  THE COMMITTEE SHALL DETERMINE, IN ITS SOLE DISCRETION, WHETHER THE REQUESTED PAYOUT SHALL BE MADE, THE AMOUNT OF THE PAYOUT AND THE PLAN ACCOUNTS FROM WHICH THE PAYOUT WILL BE MADE; PROVIDED, HOWEVER, THAT THE PAYOUT SHALL NOT EXCEED THE LESSER OF THE PARTICIPANT’S AGGREGATE VESTED BALANCE OR THE AMOUNT REASONABLY NEEDED TO SATISFY THE UNFORESEEABLE EMERGENCY PLUS AMOUNTS NECESSARY TO PAY TAXES REASONABLY ANTICIPATED AS A RESULT OF THE DISTRIBUTION.  IN MAKING ITS DETERMINATION UNDER THIS ARTICLE 9.06, THE COMMITTEE SHALL BE GUIDED BY THE REQUIREMENTS OF SECTION 409A AND ANY OTHER RELATED PREVAILING LEGAL AUTHORITIES, AND THE COMMITTEE SHALL TAKE INTO ACCOUNT THE EXTENT TO WHICH A PARTICIPANT’S UNFORESEEABLE EMERGENCY IS OR MAY BE RELIEVED THROUGH REIMBURSEMENT OR COMPENSATION BY INSURANCE OR OTHERWISE OR BY THE LIQUIDATION BY THE PARTICIPANT OF HIS OR HER ASSETS (TO THE EXTENT THE LIQUIDATION OF SUCH ASSETS WOULD NOT ITSELF CAUSE SEVERE FINANCIAL HARDSHIP).  IF, SUBJECT TO THE SOLE DISCRETION OF THE COMMITTEE, THE PETITION FOR A PAYOUT IS APPROVED, THE PAYOUT SHALL BE MADE WITHIN 90 DAYS OF THE DATE OF THE UNFORESEEABLE EMERGENCY.   15 --------------------------------------------------------------------------------   9.07.      EVENT OF TAXATION.  IF, FOR ANY REASON, ALL OR ANY PORTION OF A PARTICIPANT’S BENEFIT UNDER THE PLAN BECOMES TAXABLE TO THE PARTICIPANT PRIOR TO RECEIPT, A PARTICIPANT MAY PETITION THE COMMITTEE BEFORE A CHANGE IN CONTROL, OR THE TRUSTEE AFTER A CHANGE IN CONTROL, FOR A DISTRIBUTION OF THE STATE, LOCAL OR FOREIGN TAXES OWED ON THAT PORTION OF HIS OR HER BENEFIT THAT HAS BECOME TAXABLE.  UPON THE GRANT OF SUCH A PETITION, WHICH GRANT SHALL NOT BE UNREASONABLY WITHHELD, A PARTICIPANT’S EMPLOYER SHALL, TO THE EXTENT PERMISSIBLE UNDER SECTION 409A, DISTRIBUTE TO THE PARTICIPANT IMMEDIATELY AVAILABLE FUNDS IN AN AMOUNT EQUAL TO THE STATE, LOCAL AND FOREIGN TAXES OWED ON THE PORTION OF THE PARTICIPANT’S BENEFIT THAT HAS BECOME TAXABLE (WHICH AMOUNT SHALL NOT EXCEED A PARTICIPANT’S UNPAID AGGREGATE VESTED BALANCE UNDER THE PLAN).  IF THE PETITION IS GRANTED, THE TAX LIABILITY DISTRIBUTION SHALL BE MADE WITHIN 90 DAYS OF THE DATE THAT THE PARTICIPANT’S BENEFITS UNDER THE PLAN BECAME TAXABLE.  SUCH A DISTRIBUTION SHALL AFFECT AND REDUCE THE BENEFITS TO BE PAID TO THE PARTICIPANT UNDER THE PLAN.   9.08.      PLAN TERMINATION.  IN THE EVENT OF A TERMINATION OF THE PLAN PURSUANT TO ARTICLE 10.02 AS IT RELATES TO ANY PARTICIPANT, THEN SUBJECT TO ARTICLE 7.02, ALL AMOUNTS CREDITED TO EACH OF THE PLAN ACCOUNTS OF EACH AFFECTED PARTICIPANT SHALL BE 100 PERCENT VESTED AND SHALL BE PAID IN A LUMP SUM TO THE PARTICIPANT OR, IN THE CASE OF THE PARTICIPANT’S DEATH, TO THE EXECUTOR OR PERSONAL REPRESENTATIVE OF THE PARTICIPANT’S ESTATE.  SUCH LUMP-SUM PAYMENT SHALL BE MADE 13 MONTHS AFTER SUCH TERMINATION (OR SUCH EARLIER OR LATER DATE PERMITTED UNDER SECTION 409A), NOTWITHSTANDING ANY ELECTIONS MADE BY THE PARTICIPANT, AND THE ANNUAL ELECTION FORMS RELATING TO EACH OF THE PARTICIPANT’S PLAN ACCOUNTS SHALL TERMINATE UPON FULL PAYMENT OF SUCH AGGREGATE VESTED BALANCE, EXCEPT THAT NEITHER THE COMPANY NOR ANY EMPLOYER SHALL HAVE ANY RIGHT TO SO ACCELERATE THE PAYMENT OF ANY AMOUNT TO THE EXTENT SUCH RIGHT WOULD CAUSE THE PLAN TO FAIL TO COMPLY WITH, OR CAUSE A PARTICIPANT TO BE SUBJECT TO A TAX UNDER, THE PROVISIONS OF SECTION 409A.   ARTICLE 10 AMENDMENT AND TERMINATION   10.01.    AMENDMENT.  THE COMPANY MAY, AT ANY TIME, AMEND OR MODIFY THE PLAN IN WHOLE OR IN PART WITH RESPECT TO ANY OR ALL EMPLOYERS BY THE ACTIONS OF THE COMMITTEE; PROVIDED, HOWEVER, THAT (A) NO AMENDMENT OR MODIFICATION SHALL BE EFFECTIVE TO DECREASE OR RESTRICT THE VALUE OF A PARTICIPANT’S AGGREGATED VESTED BALANCE IN EXISTENCE AT THE TIME THE AMENDMENT OR MODIFICATION IS MADE, CALCULATED AS IF THE PARTICIPANT HAD EXPERIENCED A TERMINATION OF EMPLOYMENT AS OF THE EFFECTIVE DATE OF THE AMENDMENT OR MODIFICATION; (B) NO AMENDMENT OR MODIFICATION MAY BE MADE IF SUCH AMENDMENT OR MODIFICATION WOULD CAUSE THE PLAN TO FAIL TO COMPLY WITH, OR CAUSE A PARTICIPANT TO BE SUBJECT TO TAX UNDER THE PROVISIONS OF SECTION 409A; AND (C) EXCEPT AS SPECIFICALLY PROVIDED IN ARTICLE 10.02, NO AMENDMENT OR MODIFICATION SHALL BE MADE AFTER A CHANGE IN CONTROL WHICH ADVERSELY AFFECTS THE VESTING, CALCULATION OR PAYMENT OF BENEFITS HEREUNDER OR DIMINISHES ANY OTHER RIGHTS OR PROTECTIONS ANY PARTICIPANT WOULD HAVE HAD BUT FOR SUCH AMENDMENT OR MODIFICATION, UNLESS EACH AFFECTED PARTICIPANT CONSENTS IN WRITING TO SUCH AMENDMENT.   10.02.    TERMINATION.  ALTHOUGH AN EMPLOYER MAY ANTICIPATE THAT IT WILL CONTINUE THE PLAN FOR AN INDEFINITE PERIOD OF TIME, THERE IS NO GUARANTEE THAT ANY EMPLOYER WILL CONTINUE THE PLAN OR WILL NOT TERMINATE THE PLAN AT ANY TIME IN THE FUTURE.  ACCORDINGLY, EACH EMPLOYER RESERVES THE RIGHT TO DISCONTINUE ITS SPONSORSHIP OF THE PLAN AND TO TERMINATE THE PLAN, AT ANY TIME, WITH RESPECT TO ITS PARTICIPATING EMPLOYEES BY ACTION OF ITS BOARD OF DIRECTORS, AND THE COMPANY MAY   16 --------------------------------------------------------------------------------   AT ANY TIME TERMINATE AN EMPLOYER’S PARTICIPATION IN THE PLAN; PROVIDED, HOWEVER, THAT (A) ALL PLANS THAT ARE AGGREGATED WITH THE PLAN FOR PURPOSES OF SECTION 409A ARE ALSO TERMINATED, AND (B) THE PLAN IS NOT TERMINATED PROXIMATE TO A DOWNTURN IN THE FINANCIAL HEALTH OF THE EMPLOYER, OR ANY ENTITY OTHER THAN THE EMPLOYER WITH WHOM THE EMPLOYER WOULD BE CONSIDERED A SINGLE EMPLOYER UNDER SECTIONS 414(B) OR 414(C) OF THE CODE.  IN THE EVENT OF A TERMINATION DESCRIBED IN THIS ARTICLE 10.02, NO NEW DEFERRED COMPENSATION PLANS MAY BE ESTABLISHED BY THE EMPLOYER FOR A MINIMUM PERIOD OF THREE YEARS FOLLOWING THE TERMINATION AND LIQUIDATION OF THE PLAN IF SUCH NEW PLAN WOULD BE AGGREGATED WITH THE PLAN UNDER SECTION 409A.   ARTICLE 11 ADMINISTRATION   11.01.    COMMITTEE DUTIES.  THIS PLAN SHALL BE ADMINISTERED BY THE COMMITTEE.  MEMBERS OF THE COMMITTEE MAY BE PARTICIPANTS UNDER THE PLAN.  THE COMMITTEE SHALL ALSO HAVE THE DISCRETION AND AUTHORITY TO (A) MAKE, AMEND, INTERPRET, AND ENFORCE ALL APPROPRIATE RULES AND REGULATIONS FOR THE ADMINISTRATION OF THE PLAN, AND (B) DECIDE OR RESOLVE ANY AND ALL QUESTIONS INCLUDING INTERPRETATIONS OF THE PLAN, AS MAY ARISE IN CONNECTION WITH THE PLAN.  ANY INDIVIDUAL SERVING ON THE COMMITTEE WHO IS A PARTICIPANT SHALL NOT VOTE OR ACT ON ANY MATTER RELATING SOLELY TO HIMSELF OR HERSELF.  WHEN MAKING A DETERMINATION OR CALCULATION, THE COMMITTEE SHALL BE ENTITLED TO RELY ON INFORMATION FURNISHED BY A PARTICIPANT OR THE COMPANY.   11.02.    AGENTS.  IN THE ADMINISTRATION OF THE PLAN, THE COMMITTEE MAY, FROM TIME TO TIME, EMPLOY AGENTS AND DELEGATE TO THEM SUCH ADMINISTRATIVE DUTIES AS IT SEES FIT (INCLUDING ACTING THROUGH A DULY APPOINTED REPRESENTATIVE) AND MAY FROM TIME TO TIME CONSULT WITH COUNSEL WHO MAY BE COUNSEL TO ANY EMPLOYER.   11.03.    BINDING EFFECT OF DECISIONS.  THE DECISION OR ACTION OF THE COMMITTEE WITH RESPECT TO ANY QUESTION ARISING OUT OF OR IN CONNECTION WITH THE ADMINISTRATION, INTERPRETATION AND APPLICATION OF THE PLAN AND THE RULES AND REGULATIONS PROMULGATED HEREUNDER SHALL BE FINAL AND CONCLUSIVE AND BINDING UPON ALL PERSONS HAVING ANY INTEREST IN THE PLAN.   11.04.    INDEMNITY OF COMMITTEE.  ALL EMPLOYERS SHALL INDEMNIFY AND HOLD HARMLESS THE MEMBERS OF THE COMMITTEE, AND ANY AGENT TO WHOM DUTIES OF THE COMMITTEE MAY BE DELEGATED, AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, EXPENSES OR LIABILITIES ARISING FROM ANY ACTION OR FAILURE TO ACT WITH RESPECT TO THE PLAN, EXCEPT IN THE CASE OF WILLFUL MISCONDUCT BY THE COMMITTEE OR ANY OF ITS MEMBERS OR ANY SUCH AGENT.   11.05.    EMPLOYER INFORMATION.  TO ENABLE THE COMMITTEE TO PERFORM ITS FUNCTIONS, EACH EMPLOYER SHALL SUPPLY FULL AND TIMELY INFORMATION TO THE COMMITTEE ON ALL MATTERS RELATING TO THE COMPENSATION OF ITS PARTICIPANTS, THE DATE AND CIRCUMSTANCES OF THE RETIREMENT, DISABILITY, DEATH OR TERMINATION OF EMPLOYMENT OF ITS PARTICIPANTS, AND SUCH OTHER PERTINENT INFORMATION AS THE COMMITTEE MAY REASONABLY REQUIRE.   ARTICLE 12 CLAIMS PROCEDURES   12.01.    PRESENTATION OF CLAIM.  ANY PARTICIPANT OR THE ESTATE OF A DECEASED PARTICIPANT (SUCH PARTICIPANT OR ESTATE BEING REFERRED TO BELOW AS A “CLAIMANT”) MAY DELIVER TO THE   17 --------------------------------------------------------------------------------   COMMITTEE A WRITTEN CLAIM FOR A DETERMINATION WITH RESPECT TO THE AMOUNTS DISTRIBUTABLE TO SUCH CLAIMANT FROM THE PLAN.  IF SUCH A CLAIM RELATES TO THE CONTENTS OF A NOTICE RECEIVED BY THE CLAIMANT, THE CLAIM MUST BE MADE WITHIN 60 DAYS AFTER SUCH NOTICE WAS RECEIVED BY THE CLAIMANT.  THE CLAIM MUST STATE WITH PARTICULARITY THE DETERMINATION DESIRED BY THE CLAIMANT.  ALL OTHER CLAIMS MUST BE MADE WITHIN 180 DAYS OF THE DATE ON WHICH THE EVENT THAT CAUSED THE CLAIM TO ARISE OCCURRED.  THE CLAIM MUST STATE WITH PARTICULARITY THE DETERMINATION DESIRED BY THE CLAIMANT.   12.02.    NOTIFICATION OF DECISION.  THE COMMITTEE SHALL CONSIDER A CLAIMANT’S CLAIM WITHIN A REASONABLE TIME, AND SHALL NOTIFY THE CLAIMANT IN WRITING:  (A) THAT THE CLAIMANT’S REQUESTED DETERMINATION HAS BEEN MADE, AND THAT THE CLAIM HAS BEEN ALLOWED IN FULL; OR (B) THAT THE COMMITTEE HAS REACHED A CONCLUSION CONTRARY, IN WHOLE OR IN PART, TO THE CLAIMANT’S REQUESTED DETERMINATION, AND SUCH NOTICE MUST SET FORTH IN A MANNER CALCULATED TO BE UNDERSTOOD BY THE CLAIMANT:  (I)          THE SPECIFIC REASON(S) FOR THE DENIAL OF THE CLAIM, OR ANY PART OF IT; (II) SPECIFIC REFERENCE(S) TO PERTINENT PROVISIONS OF THE PLAN UPON WHICH SUCH DENIAL WAS BASED; (III) A DESCRIPTION OF ANY ADDITIONAL MATERIAL OR INFORMATION NECESSARY FOR THE CLAIMANT TO PERFECT THE CLAIM, AND AN EXPLANATION OF WHY SUCH MATERIAL OR INFORMATION IS NECESSARY; AND (IV) AN EXPLANATION OF THE CLAIM REVIEW PROCEDURE SET FORTH IN ARTICLE 12.03.   12.03.    REVIEW OF A DENIED CLAIM.  WITHIN 60 DAYS AFTER RECEIVING A NOTICE FROM THE COMMITTEE THAT A CLAIM HAS BEEN DENIED, IN WHOLE OR IN PART, A CLAIMANT (OR THE CLAIMANT’S DULY AUTHORIZED REPRESENTATIVE) MAY FILE WITH THE COMMITTEE A WRITTEN REQUEST FOR A REVIEW OF THE DENIAL OF THE CLAIM.  THEREAFTER, BUT NOT LATER THAN 30 DAYS AFTER THE REVIEW PROCEDURE BEGAN, THE CLAIMANT (OR THE CLAIMANT’S DULY AUTHORIZED REPRESENTATIVE):  (A) MAY REVIEW PERTINENT DOCUMENTS; (B) MAY SUBMIT WRITTEN COMMENTS OR OTHER DOCUMENTS; AND/OR (C) MAY REQUEST A HEARING, WHICH THE COMMITTEE, IN ITS SOLE DISCRETION, MAY GRANT.   12.04.    DECISION ON REVIEW.  THE COMMITTEE SHALL RENDER ITS DECISION ON REVIEW PROMPTLY, AND NOT LATER THAN 60 DAYS AFTER THE FILING OF A WRITTEN REQUEST FOR REVIEW OF THE DENIAL, UNLESS A HEARING IS HELD OR OTHER SPECIAL CIRCUMSTANCES REQUIRE ADDITIONAL TIME, IN WHICH CASE THE COMMITTEE’S DECISION MUST BE RENDERED WITHIN 120 DAYS AFTER SUCH DATE.  SUCH DECISION MUST BE WRITTEN IN A MANNER CALCULATED TO BE UNDERSTOOD BY THE CLAIMANT, AND IT MUST CONTAIN: (A) SPECIFIC REASONS FOR THE DECISION; (B) SPECIFIC REFERENCE(S) TO THE PERTINENT PLAN PROVISIONS UPON WHICH THE DECISION WAS BASED; AND (C) SUCH OTHER MATTERS AS THE COMMITTEE DEEMS RELEVANT.   12.05.    ARBITRATION.  A CLAIMANT’S COMPLIANCE WITH THE FOREGOING PROVISIONS OF THIS ARTICLE 12 IS A MANDATORY PREREQUISITE TO A CLAIMANT’S RIGHT TO COMMENCE ANY ARBITRATION WITH RESPECT TO ANY CLAIM FOR BENEFITS UNDER THE PLAN.  ANY DISPUTE, CLAIM OR CONTROVERSY THAT MAY ARISE BETWEEN A PARTICIPANT AND THE COMPANY OR ANY OTHER PERSON (THE “CLAIMS”) UNDER THE PLAN IS SUBJECT TO ARBITRATION, UNLESS OTHERWISE AGREED TO IN WRITING BY THE PARTICIPANT AND THE COMPANY.  THE CLAIMS SHALL BE FINALLY DECIDED BY ARBITRATION CONDUCTED PURSUANT TO THE COMMERCIAL DISPUTE RESOLUTION PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION (THE “AAA”), AND ITS SUPPLEMENTARY RULES FOR SECURITIES ARBITRATION, OR OTHER APPLICABLE RULES PROMULGATED BY THE AAA.  IN ADDITION, ALL CLAIMS, STATUTORY OR OTHERWISE, WHICH ALLEGE DISCRIMINATION OR OTHER VIOLATION OF EMPLOYMENT LAWS, INCLUDING BUT NOT LIMITED TO CLAIMS OF SEXUAL HARASSMENT, SHALL BE FINALLY DECIDED BY ARBITRATION PURSUANT TO THE AAA UNLESS OTHERWISE   18 --------------------------------------------------------------------------------   AGREED TO IN WRITING BY A PARTICIPANT AND THE COMPANY.  BY AGREEMENT OF A PARTICIPANT AND THE COMPANY IN WRITING, DISPUTES MAY BE RESOLVED IN ARBITRATION BY A MUTUALLY AGREED-UPON ORGANIZATION OTHER THAN THE AAA.  IN CONSIDERATION OF THE PROMISES AND THE COMPENSATION PROVIDED IN THIS PLAN, NEITHER A PARTICIPANT NOR THE COMPANY SHALL HAVE A RIGHT: (A) TO ARBITRATE A CLAIM ON A CLASS ACTION BASIS OR IN A PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF ANY PARTICIPANTS, EMPLOYEES, APPLICANTS OR OTHER PERSONS SIMILARLY SITUATED; (B) TO JOIN OR TO CONSOLIDATE IN AN ARBITRATION CLAIMS BROUGHT BY OR AGAINST ANOTHER PARTICIPANT, EMPLOYEE, APPLICANT OR THE PARTICIPANT, UNLESS OTHERWISE AGREED TO IN WRITING BY THE PARTICIPANT AND THE COMPANY; (C) TO LITIGATE ANY CLAIMS IN COURT OR TO HAVE A JURY TRIAL ON ANY CLAIMS; AND (D) TO PARTICIPATE IN A REPRESENTATIVE CAPACITY OR AS A MEMBER OF ANY CLASS OF CLAIMANTS IN AN ACTION IN A COURT OF LAW PERTAINING TO ANY CLAIMS.  NOTHING IN THIS PLAN RELIEVES A PARTICIPANT OR THE COMPANY FROM ANY OBLIGATION THE PARTICIPANT OR THE COMPANY MAY HAVE TO EXHAUST CERTAIN ADMINISTRATIVE REMEDIES BEFORE ARBITRATING ANY CLAIMS OR DISPUTES UNDER THIS ARTICLE 12.05.  EITHER A PARTICIPANT OR THE COMPANY MAY COMPEL ARBITRATION OF ANY CLAIMS FILED IN A COURT OF LAW.  IN ADDITION, EITHER A PARTICIPANT OR THE COMPANY MAY APPLY TO A COURT OF LAW FOR AN INJUNCTION TO ENFORCE THE TERMS OF THE PLAN PENDING A FINAL DECISION ON THE MERITS BY AN ARBITRATION PANEL PURSUANT TO THIS PROVISION.  THE COMPANY SHALL PAY ALL FEES, COSTS OR OTHER CHARGES CHARGED BY THE AAA OR ANY OTHER ORGANIZATION ADMINISTERING ARBITRATION PROCEEDING AGREED UPON PURSUANT TO THIS ARTICLE 12 THAT ARE ABOVE AND BEYOND THE FILING FEES OF THE FEDERAL OR STATE COURT IN THE JURISDICTION IN WHICH THE DISPUTE ARISES, WHICHEVER IS LESS.  A PARTICIPANT OR THE COMPANY SHALL EACH BE RESPONSIBLE FOR THEIR OWN COSTS OF LEGAL REPRESENTATION, IF ANY, EXCEPT WHERE SUCH COSTS OF LEGAL REPRESENTATION MAY BE AWARDED AS A STATUTORY REMEDY BY THE ARBITRATOR.  ANY AWARD BY AN ARBITRATION PANEL SHALL BE FINAL AND BINDING UPON A PARTICIPANT OR THE COMPANY.  JUDGMENT UPON THE AWARD MAY BE ENTERED BY ANY COURT HAVING JURISDICTION THEREOF OR HAVING JURISDICTION OVER THE RELEVANT PARTY OR ITS ASSETS.  THIS PROVISION IS COVERED AND ENFORCEABLE UNDER THE TERMS OF THE FEDERAL ARBITRATION ACT.   ARTICLE 13 TRUST   13.01.    ESTABLISHMENT OF THE TRUST.  THE COMPANY MAY ESTABLISH ONE OR MORE TRUSTS TO WHICH THE EMPLOYERS MAY TRANSFER SUCH ASSETS AS THE EMPLOYERS DETERMINE IN THEIR SOLE DISCRETION TO ASSIST IN MEETING THEIR OBLIGATIONS UNDER THE PLAN.   13.02.    INTERRELATIONSHIP OF THE PLAN AND THE TRUST.  THE PROVISIONS OF THE PLAN AND THE RELEVANT ANNUAL ENROLLMENT MATERIALS SHALL GOVERN THE RIGHTS OF A PARTICIPANT TO RECEIVE DISTRIBUTIONS PURSUANT TO THE PLAN.  THE PROVISIONS OF THE TRUST SHALL GOVERN THE RIGHTS OF THE EMPLOYERS, PARTICIPANTS AND THE CREDITORS OF THE EMPLOYERS TO THE ASSETS TRANSFERRED TO THE TRUST.   13.03.    DISTRIBUTIONS FROM THE TRUST.  EACH EMPLOYER’S OBLIGATIONS UNDER THE PLAN MAY BE SATISFIED WITH TRUST ASSETS DISTRIBUTED PURSUANT TO THE TERMS OF THE TRUST, AND ANY SUCH DISTRIBUTION SHALL REDUCE THE EMPLOYER’S OBLIGATIONS UNDER THE PLAN.   19 --------------------------------------------------------------------------------   ARTICLE 14 MISCELLANEOUS   14.01.    STATUS OF PLAN.  THE PLAN IS INTENDED TO BE (A) A PLAN THAT IS NOT QUALIFIED WITHIN THE MEANING OF SECTION 401(A) OF THE CODE AND (B) A PLAN THAT “IS UNFUNDED AND IS MAINTAINED BY AN EMPLOYER PRIMARILY FOR THE PURPOSE OF PROVIDING DEFERRED COMPENSATION FOR A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES” WITHIN THE MEANING OF SECTIONS 201(2), 301(A)(3) AND 401(A)(1) OF ERISA.  THE PLAN SHALL BE ADMINISTERED AND INTERPRETED TO THE EXTENT POSSIBLE IN A MANNER CONSISTENT WITH THAT INTENT.  ALL PLAN ACCOUNTS AND ALL CREDITS AND OTHER ADJUSTMENTS TO SUCH PLAN ACCOUNTS SHALL BE BOOKKEEPING ENTRIES ONLY AND SHALL BE UTILIZED SOLELY AS A DEVICE FOR THE MEASUREMENT AND DETERMINATION OF AMOUNTS TO BE PAID UNDER THE PLAN.  NO PLAN ACCOUNTS, CREDITS OR OTHER ADJUSTMENTS UNDER THE PLAN SHALL BE INTERPRETED AS AN INDICATION THAT ANY BENEFITS UNDER THE PLAN ARE IN ANY WAY FUNDED.   14.02.    SECTION 409A.  IT IS INTENDED THAT THE PLAN (INCLUDING ALL AMENDMENTS THERETO) COMPLY WITH PROVISIONS OF SECTION 409A, SO AS TO PREVENT THE INCLUSION IN GROSS INCOME OF ANY BENEFITS ACCRUED HEREUNDER IN A TAXABLE YEAR PRIOR TO THE TAXABLE YEAR OR YEARS IN WHICH SUCH AMOUNT WOULD OTHERWISE BE ACTUALLY DISTRIBUTED OR MADE AVAILABLE TO THE PARTICIPANTS.  THE PLAN SHALL BE ADMINISTERED AND INTERPRETED TO THE EXTENT POSSIBLE IN A MANNER CONSISTENT WITH THAT INTENT AND THE COMPANY’S POLICY REGARDING SECTION 409A COMPLIANCE.  NOTWITHSTANDING THE TERMS OF ARTICLE 7, TO THE EXTENT THAT A DISTRIBUTION TO A PARTICIPANT WHO IS A SPECIFIED EMPLOYEE AT THE TIME OF HIS OR HER TERMINATION OF EMPLOYMENT IS REQUIRED TO BE DELAYED BY SIX MONTHS PURSUANT TO SECTION 409A, SUCH DISTRIBUTION SHALL BE MADE NO EARLIER THAN THE FIRST DAY OF THE SEVENTH MONTH FOLLOWING THE PARTICIPANT’S TERMINATION OF EMPLOYMENT.  THE AMOUNT OF SUCH PAYMENT WILL EQUAL THE SUM OF THE PAYMENTS THAT WOULD HAVE BEEN PAID TO THE SPECIFIED EMPLOYEE DURING THE SIX-MONTH PERIOD IMMEDIATELY FOLLOWING THE SPECIFIED EMPLOYEE’S TERMINATION OF EMPLOYMENT HAD THE PAYMENT COMMENCED AS OF SUCH DATE.  IF THE SPECIFIED EMPLOYEE ELECTED TO RECEIVE INSTALLMENT PAYMENTS, THE REMAINING BALANCE OF THE SPECIFIED EMPLOYEE’S PLAN ACCOUNTS SHALL BE PAID IN SUBSTANTIALLY EQUIVALENT INSTALLMENTS.  FOR PURPOSES OF THIS PARAGRAPH, “SPECIFIED EMPLOYEE” SHALL MEAN A KEY EMPLOYEE AS DEFINED UNDER SECTION 409A, AS DETERMINED IN ACCORDANCE WITH THE COMPANY’S POLICY REGARDING SECTION 409A COMPLIANCE.   14.03.    UNSECURED GENERAL CREDITOR.  PARTICIPANTS AND THEIR BENEFICIARIES, HEIRS, SUCCESSORS AND ASSIGNS SHALL HAVE NO LEGAL OR EQUITABLE RIGHTS, INTERESTS OR CLAIMS IN ANY PROPERTY OR ASSETS OF AN EMPLOYER.  FOR PURPOSES OF THE PAYMENT OF BENEFITS UNDER THE PLAN, ANY AND ALL OF AN EMPLOYER’S, ASSETS, SHALL BE, AND REMAIN, THE GENERAL, UNPLEDGED UNRESTRICTED ASSETS OF THE EMPLOYER.  AN EMPLOYER’S OBLIGATION UNDER THE PLAN SHALL BE MERELY THAT OF AN UNFUNDED AND UNSECURED PROMISE TO PAY MONEY IN THE FUTURE.   14.04.    OTHER BENEFITS AND AGREEMENTS.  THE BENEFITS PROVIDED FOR A PARTICIPANT UNDER THE PLAN ARE IN ADDITION TO ANY OTHER BENEFITS AVAILABLE TO SUCH PARTICIPANT UNDER ANY OTHER PLAN OR PROGRAM FOR EMPLOYEES OF THE PARTICIPANT’S EMPLOYER.  THE PLAN SHALL SUPPLEMENT AND SHALL NOT SUPERSEDE, MODIFY OR AMEND ANY OTHER SUCH PLAN OR PROGRAM EXCEPT AS MAY OTHERWISE BE EXPRESSLY PROVIDED.   20 --------------------------------------------------------------------------------   14.05.    EMPLOYER’S LIABILITY.  AN EMPLOYER’S LIABILITY FOR THE PAYMENT OF BENEFITS SHALL BE DEFINED ONLY BY THE PLAN AND THE ANNUAL ENROLLMENT FORMS, AS ENTERED INTO BETWEEN THE EMPLOYER AND A PARTICIPANT.  AN EMPLOYER SHALL HAVE NO OBLIGATION TO A PARTICIPANT UNDER THE PLAN EXCEPT AS EXPRESSLY PROVIDED IN THE PLAN AND HIS OR HER ANNUAL ENROLLMENT FORMS.   14.06.    NONASSIGNABILITY.  NEITHER A PARTICIPANT NOR ANY OTHER PERSON SHALL HAVE ANY RIGHT TO COMMUTE, SELL, ASSIGN, TRANSFER, PLEDGE, ANTICIPATE, MORTGAGE OR OTHERWISE ENCUMBER, TRANSFER, HYPOTHECATE, ALIENATE OR CONVEY IN ADVANCE OF ACTUAL RECEIPT, THE AMOUNTS, IF ANY, PAYABLE HEREUNDER, OR ANY PART THEREOF, WHICH ARE, AND ALL RIGHTS TO WHICH ARE EXPRESSLY DECLARED TO BE, UNASSIGNABLE AND NON-TRANSFERABLE.  NO PART OF THE AMOUNTS PAYABLE SHALL, PRIOR TO ACTUAL PAYMENT, BE SUBJECT TO SEIZURE, ATTACHMENT, GARNISHMENT OR SEQUESTRATION FOR THE PAYMENT OF ANY DEBTS, JUDGMENTS, ALIMONY OR SEPARATE MAINTENANCE OWED BY A PARTICIPANT OR ANY OTHER PERSON, BE TRANSFERABLE BY OPERATION OF LAW IN THE EVENT OF A PARTICIPANT’S OR ANY OTHER PERSON’S BANKRUPTCY OR INSOLVENCY OR BE TRANSFERABLE TO A SPOUSE AS A RESULT OF A PROPERTY SETTLEMENT OR OTHERWISE.   14.07.    PRIOR BENEFICIARY DESIGNATIONS VOID.  ANY BENEFICIARY DESIGNATIONS MADE UNDER THE PLAN OR ANY PREDECESSOR ARRANGEMENT THERETO SHALL BE NULL AND VOID, AND OF NO EFFECT AS OF JANUARY 1, 2007.  FOLLOWING THE DEATH OF A PARTICIPANT, ANY PAYMENTS TO BE MADE TO THE PARTICIPANT SHALL BE MADE TO THE EXECUTOR OR PERSONAL REPRESENTATIVE OF THE PARTICIPANT’S ESTATE.   14.08.    NOT A CONTRACT OF EMPLOYMENT.  THE TERMS AND CONDITIONS OF THE PLAN AND THE ANNUAL ELECTION FORM UNDER THE PLAN SHALL NOT BE DEEMED TO CONSTITUTE A CONTRACT OF EMPLOYMENT BETWEEN ANY EMPLOYER AND THE PARTICIPANT.  SUCH EMPLOYMENT IS HEREBY ACKNOWLEDGED TO BE AN “AT WILL” EMPLOYMENT RELATIONSHIP THAT CAN BE TERMINATED AT ANY TIME FOR ANY REASON, OR NO REASON, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE, EXCEPT AS OTHERWISE PROVIDED IN A WRITTEN EMPLOYMENT AGREEMENT.  NOTHING IN THE PLAN OR ANY ANNUAL ELECTION FORM SHALL BE DEEMED TO GIVE A PARTICIPANT THE RIGHT TO BE RETAINED IN THE SERVICE OF ANY EMPLOYER AS AN EMPLOYEE OR TO INTERFERE WITH THE RIGHT OF ANY EMPLOYER TO DISCIPLINE OR DISCHARGE THE PARTICIPANT AT ANY TIME.   14.09.    FURNISHING INFORMATION.  A PARTICIPANT WILL COOPERATE WITH THE COMMITTEE BY FURNISHING ANY AND ALL INFORMATION REQUESTED BY THE COMMITTEE AND TAKE SUCH OTHER ACTIONS AS MAY BE REQUESTED IN ORDER TO FACILITATE THE ADMINISTRATION OF THE PLAN AND THE PAYMENTS OF BENEFITS HEREUNDER, INCLUDING BUT NOT LIMITED TO TAKING SUCH PHYSICAL EXAMINATIONS AS THE COMMITTEE MAY DEEM NECESSARY.   14.10.    TERMS.  WHENEVER ANY WORDS ARE USED HEREIN IN THE MASCULINE, THEY SHALL BE CONSTRUED AS THOUGH THEY WERE IN THE FEMININE IN ALL CASES WHERE THEY WOULD SO APPLY; AND WHENEVER ANY WORDS ARE USED HEREIN IN THE SINGULAR OR IN THE PLURAL, THEY SHALL BE CONSTRUED AS THOUGH THEY WERE USED IN THE PLURAL OR THE SINGULAR, AS THE CASE MAY BE, IN ALL CASES WHERE THEY WOULD SO APPLY.   14.11.    CAPTIONS.  THE CAPTIONS OF THE ARTICLES AND PARAGRAPHS OF THE PLAN ARE FOR CONVENIENCE ONLY AND SHALL NOT CONTROL OR AFFECT THE MEANING OR CONSTRUCTION OF ANY OF ITS PROVISIONS.   21 --------------------------------------------------------------------------------   14.12.    GOVERNING LAW.  THE PLAN AND ALL DETERMINATIONS MADE AND ACTIONS TAKEN THEREUNDER, TO THE EXTENT NOT OTHERWISE GOVERNED BY FEDERAL LAW, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS, AND CONSTRUED ACCORDINGLY.   14.13.    NOTICE.  ANY NOTICE OR FILING REQUIRED OR PERMITTED TO BE GIVEN TO THE COMMITTEE UNDER THE PLAN SHALL BE SUFFICIENT IF IN WRITING AND HAND-DELIVERED, OR SENT BY REGISTERED OR CERTIFIED MAIL, TO THE ADDRESS BELOW:   Ameriprise Financial, Inc. 360 Ameriprise Financial Center Minneapolis, Minnesota 55474 Attn:  Vice President, Benefits   with a copy to:   General Counsel’s Office   Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification.   Any notice or filing required or permitted to be given to a Participant under the Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.   14.14.    SUCCESSORS.  THE PROVISIONS OF THE PLAN SHALL BIND AND INURE TO THE BENEFIT OF THE PARTICIPANT’S EMPLOYER AND ITS SUCCESSORS AND ASSIGNS AND THE PARTICIPANT AND THE PARTICIPANT’S ESTATE, HEIRS AND ASSIGNS.   14.15.    SPOUSE’S INTEREST.  THE INTEREST IN THE BENEFITS HEREUNDER OF A SPOUSE OF A PARTICIPANT WHO HAS PREDECEASED THE PARTICIPANT SHALL AUTOMATICALLY PASS TO THE PARTICIPANT AND SHALL NOT BE TRANSFERABLE BY SUCH SPOUSE IN ANY MANNER, INCLUDING BUT NOT LIMITED TO SUCH SPOUSE’S WILL, NOR SHALL SUCH INTEREST PASS UNDER THE LAWS OF INTESTATE SUCCESSION.   14.16.    VALIDITY.  IN CASE ANY PROVISION OF THE PLAN SHALL BE ILLEGAL OR INVALID FOR ANY REASON, SAID ILLEGALITY OR INVALIDITY SHALL NOT AFFECT THE REMAINING PARTS HEREOF, BUT THE PLAN SHALL BE CONSTRUED AND ENFORCED AS IF SUCH ILLEGAL OR INVALID PROVISION HAD NEVER BEEN INSERTED HEREIN.   14.17.    INCOMPETENT.  IF THE COMMITTEE DETERMINES IN ITS DISCRETION THAT A BENEFIT UNDER THE PLAN IS TO BE PAID TO A MINOR, A PERSON DECLARED INCOMPETENT OR TO A PERSON INCAPABLE OF HANDLING THE DISPOSITION OF THAT PERSON’S PROPERTY, THE COMMITTEE MAY DIRECT PAYMENT OF SUCH BENEFIT TO THE GUARDIAN, LEGAL REPRESENTATIVE OR PERSON HAVING THE CARE AND CUSTODY OF SUCH MINOR, INCOMPETENT OR INCAPABLE PERSON.  THE COMMITTEE MAY REQUIRE PROOF OF MINORITY, INCOMPETENCE, INCAPACITY OR GUARDIANSHIP, AS IT MAY DEEM APPROPRIATE PRIOR TO DISTRIBUTION OF THE BENEFIT.  ANY PAYMENT OF A BENEFIT SHALL BE A PAYMENT FOR THE ACCOUNT OF THE PARTICIPANT AND THE PARTICIPANT’S ESTATE, AS THE CASE MAY BE, AND SHALL BE A COMPLETE DISCHARGE OF ANY COMPANY LIABILITY UNDER THE PLAN FOR SUCH PAYMENT AMOUNT.   22 --------------------------------------------------------------------------------   14.18.    INSURANCE.  THE EMPLOYERS, ON THEIR OWN BEHALF OR ON BEHALF OF THE TRUSTEE, AND, IN THEIR SOLE DISCRETION, MAY APPLY FOR AND PROCURE INSURANCE ON THE LIFE OF THE PARTICIPANT, IN SUCH AMOUNTS AND IN SUCH FORMS AS THE TRUST MAY CHOOSE.  THE EMPLOYERS OR THE TRUSTEE, AS THE CASE MAY BE, SHALL BE THE SOLE OWNER AND BENEFICIARY OF ANY SUCH INSURANCE.  THE PARTICIPANT SHALL HAVE NO INTEREST WHATSOEVER IN ANY SUCH POLICY OR POLICIES, AND AT THE REQUEST OF THE EMPLOYERS SHALL SUBMIT TO MEDICAL EXAMINATIONS AND SUPPLY SUCH INFORMATION AND EXECUTE SUCH DOCUMENTS AS MAY BE REQUIRED BY THE INSURANCE COMPANY OR COMPANIES TO WHOM THE EMPLOYERS HAVE APPLIED FOR INSURANCE.   14.19.    LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL.  THE COMPANY AND EACH EMPLOYER IS AWARE THAT UPON THE OCCURRENCE OF A CHANGE IN CONTROL, THE BOARD OR THE BOARD OF DIRECTORS OF THE PARTICIPANT’S EMPLOYER (WHICH MIGHT THEN BE COMPOSED OF NEW MEMBERS) OR A STOCKHOLDER OF THE COMPANY OR THE PARTICIPANT’S EMPLOYER, OR OF ANY SUCCESSOR CORPORATION MIGHT THEN CAUSE OR ATTEMPT TO CAUSE THE COMPANY OR THE PARTICIPANT’S EMPLOYER OR SUCH SUCCESSOR TO REFUSE TO COMPLY WITH ITS OBLIGATIONS UNDER THE PLAN AND MIGHT CAUSE OR ATTEMPT TO CAUSE THE COMPANY OR THE PARTICIPANT’S EMPLOYER TO INSTITUTE, OR MAY INSTITUTE, ARBITRATION OR LITIGATION SEEKING TO DENY PARTICIPANTS THE BENEFITS INTENDED UNDER THE PLAN.  IN THESE CIRCUMSTANCES, THE PURPOSE OF THE PLAN COULD BE FRUSTRATED.  ACCORDINGLY, IF, FOLLOWING A CHANGE IN CONTROL, IT SHOULD APPEAR TO ANY PARTICIPANT THAT THE COMPANY, THE PARTICIPANT’S EMPLOYER OR ANY SUCCESSOR CORPORATION HAS FAILED TO COMPLY WITH ANY OF ITS OBLIGATIONS UNDER THE PLAN OR ANY AGREEMENT THEREUNDER, OR IF THE COMPANY, SUCH EMPLOYER OR ANY OTHER PERSON TAKES ANY ACTION TO DECLARE THE PLAN VOID OR UNENFORCEABLE OR INSTITUTES ANY ARBITRATION, LITIGATION OR OTHER LEGAL ACTION DESIGNED TO DENY, DIMINISH OR TO RECOVER FROM ANY PARTICIPANT THE BENEFITS INTENDED TO BE PROVIDED, THEN THE COMPANY AND THE PARTICIPANT’S EMPLOYER IRREVOCABLY AUTHORIZE SUCH PARTICIPANT TO RETAIN COUNSEL OF HIS OR HER CHOICE AT THE EXPENSE OF THE COMPANY AND THE EMPLOYER (WHO SHALL BE JOINTLY AND SEVERALLY LIABLE) TO REPRESENT SUCH PARTICIPANT IN CONNECTION WITH THE INITIATION OR DEFENSE OF ANY ARBITRATION, LITIGATION OR OTHER LEGAL ACTION, WHETHER BY OR AGAINST THE COMPANY, THE PARTICIPANT’S EMPLOYER OR ANY DIRECTOR, OFFICER, STOCKHOLDER OR OTHER PERSON AFFILIATED WITH THE COMPANY, THE PARTICIPANT’S EMPLOYER OR ANY SUCCESSOR THERETO IN ANY JURISDICTION; PROVIDED, HOWEVER, THAT IN THE EVENT THAT THE TRIER IN ANY SUCH LEGAL ACTION DETERMINES THAT THE PARTICIPANT’S CLAIM WAS NOT MADE IN GOOD FAITH OR WAS WHOLLY WITHOUT MERIT, THE PARTICIPANT SHALL RETURN TO THE COMPANY ANY AMOUNT RECEIVED PURSUANT TO THIS ARTICLE 14.19.  ANY REIMBURSEMENTS SHALL BE PAID IN ACCORDANCE WITH THE COMPANY’S POLICY REGARDING SECTION 409A COMPLIANCE.   14.20.      ELECTRONIC DOCUMENTS PERMITTED.  SUBJECT TO APPLICABLE LAW, ANNUAL ELECTION FORMS, ANNUAL ENROLLMENT MATERIALS, AND OTHER FORMS OR DOCUMENTS MAY BE IN ELECTRONIC FORMAT OR MADE AVAILABLE THROUGH MEANS OF ONLINE ENROLLMENT OR OTHER ELECTRONIC TRANSMISSION.   *  *  *  *  *   23 --------------------------------------------------------------------------------   Ameriprise Financial Deferred Compensation Plan   Schedule A January 1, 2009   Employers   ·                  Ameriprise Bank, FSB ·                  Ameriprise Enterprise Investment Services, Inc. ·                  Ameriprise Financial Services Inc. ·                  RiverSource Distributors, Inc. ·                  RiverSource Investments, LLC ·                  RiverSource Service Corporation ·                  RiverSource Life Insurance Company ·                  RiverSource Life Insurance Co. of New York ·                  IDS Property Casualty Insurance Company ·                  Ameriprise Trust Company ·                  Ameriprise Advisor Services, Inc. ·                  J.& W. Seligman & Co. Incorporated ·                  Seligman Services, Inc. ·                  Seligman Advisors, Inc.   24 --------------------------------------------------------------------------------
Exhibit 10.1 LOGO [g351658g22x11.jpg]   -------------------------------------------------------------------------------- PLAN DOCUMENT Fiscal Year 2013 Management Incentive Program   1.0 Summary The Exar Corporation (the “Company”) Fiscal Year 2013 Management Incentive Program (the “Program”) is a stock based incentive program designed to motivate participants to achieve the Company’s financial, operational and strategic goals and to reward them for performance against those goals. Incentives granted under the Program are denominated in shares of the Company’s common stock and are subject to the attainment of the Company’s performance goals as established by the Compensation Committee of the Board of Directors (the “Board”) for the fiscal year.   2.0 Eligibility Participants are approved solely at the discretion of the Compensation Committee when acting on behalf of the full Board. All executive officers are eligible to be considered for participation. The President/CEO may recommend that additional employees of the Company and its subsidiaries participate in the Program, subject to the approval of the Compensation Committee.   3.0 Change in Status Participants who give notice of termination or who terminate employment, voluntarily or involuntarily, prior to the date of payout are not eligible for payment. Employees who are on a Leave of Absence in excess of 60 calendar days during the Program year shall have their target award prorated by the amount of time actually worked plus 60 days.   4.0 Administration The Compensation Committee is ultimately responsible for administering the Program, and has designated the Management Committee, consisting of the President/CEO, the Vice President/CFO, and the Vice President of Human Resources to administer the Program, provided that the Compensation Committee shall make all determinations with respect to incentives granted to executive officers under the Program. The Compensation Committee, in its sole discretion, may amend or terminate the Program, or any part thereof, at any time and for any reason without prior notice.   5.0 Definitions     5.1 The Salary This is the annual base salary, as established at the start of the fiscal year, or at the time of Program entry, exclusive of bonuses, incentive payments or awards, auto allowance, or any such extras or perquisites over base pay.     5.2 The Target Share Award A participant’s “Target Share Award” is expressed as the total number of shares the participant is eligible to receive at 100% payout. The Target Share Award is calculated by multiplying the   COMPANY CONFIDENTIAL -------------------------------------------------------------------------------- participant’s Salary by a pre-approved target incentive percentage and dividing the result by the closing value of the Company’s stock price as of the first trade date of the Program fiscal year. Each participant’s Target Share Award is subject to adjustment by the Compensation Committee upon the occurrence of a stock split, reorganization or other similar event affecting the Company’s common stock in accordance with the principles set forth in the terms of the Company’s 2006 Equity Incentive Plan.     5.3 Maximum Award No participant may receive an award greater than 138% of the “Target Share Award”.     5.4 Target Pool Earned At the end of the fiscal year, the Compensation Committee will determine the percentage of the “Target Pool Earned” for all participants by assessing the Company’s financial performance against financial goals for AOP Revenue and AOP Non-GAAP Operating Income (EBIT), before cash profit sharing, as established by the Board of Directors. Funding of the Target Pool will occur only if 80% of the AOP Revenue and 80% of the AOP Non-GAAP Operating Income (EBIT), before cash profit sharing, are achieved.     5.5 Individual Target Payout The Individual Target Payout is calculated by multiplying the Target Share Award by the Target Pool Earned.     5.6 Final Share Award The number of shares to be awarded to a participant shall be determined by the Compensation Committee following the end of the fiscal year by adding the Company and Individual Performance Modifiers (as defined below).     5.6.1 Company Modifier The Final Share Award is weighted 70% on Company Performance. This amount is calculated by multiplying the Individual Target Payout by 70%.     5.6.2 Individual Performance Modifier The Final Share Award is weighted 30% on Individual Performance. The President/CEO will assess the performance of each individual participant in the Program at the conclusion of the fiscal year based upon specific contributions and achievement of pre-established individual objectives, as approved by the Compensation Committee. Based on individual performance, a performance factor will be assigned to the final calculation. The Individual Performance Modifier is calculated by multiplying the Individual Target Payout by 30% and the result by the individual performance factor.   6.0 Other Program Provisions     6.1 Tax Withholding Shares issued in respect of an award hereunder are subject to applicable taxes at the time of payment, and payment of such taxes is the responsibility of the participant. Subject to the terms of the Plans, upon any distribution of shares of the Company’s common stock in payment of an award hereunder, the Company may reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market   COMPANY CONFIDENTIAL -------------------------------------------------------------------------------- value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plans, to satisfy any withholding obligations of the Company or its subsidiaries with respect to such distribution of shares at the minimum applicable withholding rates). In the event that the Company cannot legally satisfy such withholding obligations by such reduction of shares, or in the event of a cash payment or any other withholding event in respect of an award hereunder, the Company (or a subsidiary) shall be entitled to require a cash payment by or on behalf of the participant and/or to deduct from other compensation payable to the participant any sums required by federal, state or local tax law to be withheld with respect to such distribution or payment.     6.2 Restrictions on Transfer Neither the participant’s award hereunder, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily.     6.3 Termination of Employment Notwithstanding any other provision herein, a participant must be employed with the Company or one of its subsidiaries on the date on which shares are issued in payment of awards under the Program to be eligible to receive payment with respect to his or her award. If a participant’s employment with the Company or a subsidiary terminates for any reason (whether voluntarily or involuntarily, due to his death or disability, or otherwise) prior to the payment date, the participant’s award under the Program will terminate and the participant will have no further rights with respect thereto or in respect thereof.     6.4 No Right to Continued Employment Participation in the Program does not constitute a guarantee of employment or interfere in any way with the right of the Company (or any subsidiary) to terminate a participant’s employment or to change the participant’s compensation or other terms of employment at any time. There is no commitment or obligation on the part of the Company (or any subsidiary) to continue any incentive program (similar to the Program or otherwise) in any future fiscal year.     6.5 No Stockholder Rights The participant shall have no rights as a stockholder of the Company, no dividend rights and no voting rights, with respect to his or her award hereunder and any shares underlying or issuable in respect of such award until such shares are actually issued to and held of record by the participant. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.     6.6 Adjustments The Compensation Committee may, in its sole discretion, adjust performance measures, performance goals, relative weights of the measures, and other provisions of the Plan to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect (1) any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Company, (2) any change in accounting policies or practices, or (3) the effects of any special charges to the Company’s earnings, or (4) any other similar special circumstances.   COMPANY CONFIDENTIAL
SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. THE LOCATION OF REDACTED MATERIAL IS MARKED AT THE APPROPRIATE PLACE WITH BRACKETS AND ASTERISKS ([***]). EXHIBIT 10.42 AMENDMENT TO GAS GATHERING AGREEMENT (Cervi Ranch) This AMENDMENT (“Amendment”), dated effective as of January 1, 2020 (the “Amendment Effective Date”) to that certain Gas Gathering Agreement between Kerr-McGee Gathering LLC (“Gatherer”) and Kerr-McGee Oil & Gas Onshore LP (“Shipper”) dated July 1, 2010 (as amended, the “Agreement”). Gatherer and Shipper may each be referred to individually as a “Party” and collectively as the “Parties.” RECITALS: WHEREAS, Gatherer currently provides gathering services to Gas produced by Shipper in the Denver-Julesburg basin in Colorado pursuant to the Agreement; WHEREAS, Shipper plans to develop and operate approximately 21,000 acres in Weld County, Colorado hereafter referred to as the “Cervi Ranch” with leaseholds and overall boundary descriptions more fully described on Exhibit A-3 attached hereto; WHEREAS, Shipper has previously requested that Gatherer provide a proposal to supply Gas gathering services to its Cervi Ranch position to assist with the development of the Cervi Ranch; and WHEREAS, Shipper desires to engage Gatherer to provide, and Gatherer agrees to provide, the Gas gathering services contemplated in this Amendment with respect to Cervi Ranch, subject to the terms and conditions of this Agreement. NOW, THEREFORE, for the mutual promises and covenants set forth herein, and good additional consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree to amend the Agreement as follows: 1.Capitalized terms not defined in this Amendment have the same meaning as set forth in the Agreement. 2.Conditions Precedent. The effectiveness of this Amendment is contingent upon (a) [***] and (b) confirmatory due diligence by Shipper that there are no material Pre-Existing Dedications existing within the Cervi Ranch Dedicated Area (the “Dedication Condition Precedent”, and together with the [***], the “Conditions Precedent”). If the [***] is not satisfied on or before [***] (or any later date as mutually agreed in writing by the Parties), then this Amendment shall automatically terminate without further action of the Parties. If the Dedication Condition Precedent is not satisfied on or before [***] (or any later date as mutually agreed in writing by the Parties), then Gatherer may, at its discretion, waive the Dedication Condition Precedent or terminate this Amendment upon the delivery of written notice to Shipper, in each case, on or before [***]; provided, that, if Gatherer does not either waive the Dedication Condition Precedent or provide a termination notice on or before [***], Gatherer shall be deemed to have waived the Dedication Condition Precedent. Notwithstanding anything to the contrary in this Section 2, this Amendment shall only be considered a “Definitive Agreement” pursuant to that certain Reimbursement Agreement dated effective [***], as amended, by and between Shipper and Gatherer to the extent the [***] is satisfied or waived. 3. A new Section 3(F) is added to the Commercial Terms as follows: -1- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 3(F). Cervi Ranch. 3(F)(1). Project Scope and Timeline. (a)Gatherer shall, at its sole expense, construct, own, and operate (i) Receipt Points at [***] production facilities, (ii) approximately [***] miles of [***]-inch low-pressure Gas gathering trunklines from such production facilities and Receipt Points, (iii) adequate compression capabilities to meet the pressure and volume requirements identified herein (currently estimated at [***] HP and [***] HP electric centralized compressor station), and (iv) approximately [***] miles of [***]-inch high pressure Gas gathering lines connecting the compression described in clause (iii) above to Gatherer’s high pressure Gas lines or other facilities for delivery to the processing complex located in the Denver-Julesburg Basin and utilized under that certain Base Contract for Gas Processing between Shipper, Gatherer, and WGR Asset Holding Company LLC dated effective August 1, 2017, as amended from time to time (the “Processing Agreement”) (such facilities described in this Section 3(F)(1)(a) upstream of the processing complex, collectively, the “Cervi Ranch System”). (b)Gatherer shall utilize commercially reasonable efforts to complete the Cervi Ranch System and connect the Cervi Ranch System to the System within [***] of the date of satisfaction of the [***] in accordance with the following milestones: (i) acquisition of all necessary rights-of-way on or before the date that is [***] after the date of satisfaction of the [***]; (ii) completion of all special use permitting on or before the date that is [***] after the date of satisfaction of the [***]; (iii) completion of construction of the Cervi Ranch System in order to meet Shipper’s initial requirements consistent with Shipper’s Cervi Ranch Production Forecast on or before the date that is [***] after the date of satisfaction of the [***]; and (iv) continue to take such actions as may be necessary to build out the Cervi Ranch System in order to meet Shipper’s Cervi Ranch Production Forecast during the term of this Amendment. Gatherer shall, at its sole cost, construct, own, and operate the measurement facilities, pipelines, and associated facilities downstream of the Cervi Ranch Receipt Points. 3(F)(2). Dedication. (a)Shipper expressly dedicates all Gas [***] that is produced from Shipper-operated Wells within the Cervi Ranch Dedicated Area (such Gas, the “Cervi Ranch Dedicated Gas”, and such dedication, the “Cervi Ranch Dedication”). Shipper shall deliver or cause to be delivered to the Cervi Ranch Receipt Points all Cervi Ranch Dedicated Gas. (b)Shipper’s Cervi Ranch Dedication obligations herein shall not apply to Gas which is subject to an existing third party dedication prior to the Amendment Effective Date (a “Pre-Existing Dedication”). Upon the expiration or termination -2- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 of any such Pre-Existing Dedication, such Gas shall be subject to the Cervi Ranch Dedication. (c)Subject to Pre-Existing Dedications, the Shipper’s Cervi Ranch Dedication obligations herein shall apply equally to current and future volumes of Gas [***] produced from Wells operated by Shipper or its Affiliates within the Cervi Ranch Dedicated Area. Shipper shall cause its Affiliates to dedicate and deliver such Gas to the Cervi Ranch Receipt Points in accordance with the provisions herein. 3(F)(3). Shipper Reservations. Notwithstanding anything herein to the contrary, the Cervi Ranch Dedication is subject to, and Shipper reserves the following rights under, this Agreement and Shipper shall be permitted to do any of the following without the consent or approval of Gatherer with such uses not deemed to violate the Shipper obligations set forth in this Agreement: (a)the right to operate Shipper’s oil and Gas Interests free from control by Gatherer as Shipper deems advisable, including the right, but never the obligation, to drill new Wells, to repair and rework old Wells, renew or extend, in whole or in part, any oil and Gas lease covering any of the oil and Gas Interests, and to abandon any Well or surrender any oil and Gas lease, in whole or in part, when no longer deemed by Shipper to be capable of producing Gas in paying quantities under normal methods of operation or for any other reason, with any such surrendered leases unencumbered by the obligations of this Agreement; (b)the right to use Gas in developing and operating Shipper’s oil and Gas Interests and to fulfill obligations to Shipper’s lessors or fellow working interest owners; (c)the right to pool, combine, and unitize any of Shipper’s oil and Gas Interests with other properties in the same field, and to alter pooling, combinations, or units; (d)the right to introduce Gas or any other extraneous substances, excluding air, into the Well or Wells covered hereby or into the formation or formations from which said Well or Wells are producing, when in the judgment of Shipper, the introduction of such substances is desirable in the operation of such Well or Wells, even though Gas production from such Well or Wells may be diminished or caused to cease entirely (provided, that Shipper shall ensure that Gas produced shall meet the Gas Quality Specifications set forth in Section 3(F)(13)); (e)the right to reinject and/or recycle any Gas produced from the Interests back into Shipper-operated Wells located within the Cervi Ranch Dedicated Area in lieu of delivering said Gas to Gatherer; and (f)the right to (i) retain all liquid hydrocarbons separated from the Gas prior to the delivery to Gatherer by the use of conventional mechanical separation facilities, if any, with such retention not deemed to violate the obligations set forth in this Agreement; and (ii) treat the Gas at the wellhead for the removal of hydrogen -3- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 sulfide and other contaminants as necessary to meet the Gas Quality Requirements set forth in Exhibit B of the Commercial Terms. Notwithstanding anything to the contrary, if Gatherer has curtailed receipt of Gas at a Cervi Ranch Receipt Point solely due to such Gas not complying with the Gas Quality Requirements set forth in item 9 of Exhibit B of the Commercial Terms (as such Exhibit B is amended by this Amendment), Shipper may, at Shipper’s option, install upstream of such Cervi Ranch Receipt Point and operate throughout the term of this Agreement, at Shipper’s sole cost and expense, a facility employing refrigeration or other means to separate a volume of the butane and natural gasoline components (and incidental volumes of ethane and propane) from Gas prior to its delivery to Gatherer for the purposes of meeting the Gas Quality Specification set forth in Section 3(F)(13), provided that Shipper will use reasonable efforts not to reduce the Btu content of such Gas below [***] Btu per cubic foot. Further, notwithstanding anything to the contrary, all Gas produced from the Cervi Ranch Dedicated Area that is taken in-kind by a third party shall not be subject to the Cervi Ranch Dedication. 3(F)(4). Cervi Ranch In-Service Date. For purposes of Section 3(F), following the completion of the Cervi Ranch System in order to meet Shipper’s initial requirements consistent with Shipper’s Cervi Ranch Production Forecast, the first Day of the Month following the date of first flow at a Cervi Ranch Receipt Point for the Cervi Ranch Dedicated Area or such later date as established by the Parties shall be the “Cervi Ranch In-Service Date”. 3(F)(5). Service Level. For purposes of Section 3(F), Gatherer shall provide Shipper with its Cervi Ranch Dedicated Service Level for all Cervi Ranch Dedicated Gas, up to the Cervi Ranch Production Forecast for such Month. All volumes in excess of the Cervi Ranch Production Forecast for such Month shall be subject to the Cervi Ranch Interruptible Service Level. Gatherer shall have no obligation to accept, on a ratable basis or otherwise, or to provide priority for, any volumes of Gas subject to the Cervi Ranch Interruptible Service Level, provided, however, that Gatherer shall use its commercially reasonable efforts to gather volumes subject to the Cervi Ranch Interruptible Service Level. 3(F)(6). System Pressure. Gatherer shall use its best efforts to maintain Cervi Ranch Receipt Point inlet pressures at or below a monthly weighted average of [***] psig at each Cervi Ranch Receipt Point. For avoidance of doubt, Gatherer’s obligation to maintain the aforementioned system pressure shall require Gatherer’s expenditure of funds. 3(F)(7). Gathering Fee. Shipper shall pay Gatherer a monthly gathering fee (“Cervi Ranch Gathering Fee”) of $[***] per MMBtu for Cervi Ranch Receipt Point Volumes. The Cervi Ranch Gathering Fee shall be adjusted annually based on the change in the CPI Index. In no event shall the annual adjustment herein result in a reduction of the then-current Cervi Ranch Gathering Fee in effect or result in an increase greater than [***]% of the then-current Cervi Ranch Gathering Fee in effect. The gathering and deficiency fees described in this Section 3(F) are applicable -4- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 only to Cervi Ranch Receipt Point Volumes, and Shipper shall not pay any other gathering or deficiency fees under this Agreement other than the Cervi Ranch Gathering Fees set forth in this Section 3(F)(7) with respect to such Cervi Ranch Receipt Point Volumes or deficiency payments pursuant to Section 3(F)(8). 3(F)(8). Minimum Volume Deficiency. If the Cervi Ranch Receipt Point Volume for a particular Month is less than the applicable Cervi Ranch Minimum Volume for such Month (“Cervi Ranch Volumetric Deficiency”), then, subject to any reduction in the applicable deficiency fees for such Month pursuant to Section 3(F)(10), Shipper shall pay Gatherer a deficiency fee computed as the product of: (a) the MMBtu equivalent of the Cervi Ranch Volumetric Deficiency for such Month (based on the average MMBtu equivalent of the Gas actually delivered during such Month, or if no Gas is delivered during such Month, during the most recent Month during which Gas was delivered) multiplied by (b) the applicable gathering rates set forth in Section 3(F)(7) of the Commercial Terms. The Cervi Ranch Minimum Volume Deficiency shall be administered on a monthly basis with the first Month beginning the earlier of (i) the first full Month following the Cervi Ranch In-Service Date or (ii) [***]. This Section 3(F)(8) shall not be applicable after the last Day of the Month during which the sum of (a) Shipper’s aggregate Cervi Ranch Receipt Point Volumes plus (b) Shipper’s aggregate Cervi Ranch Volumetric Deficiency volumes for which deficiency fees have been remitted, exceeds [***] Mcf. 3(F)(9). Volume Banking. If the Cervi Ranch Receipt Point Volume for a particular Month exceeds the applicable Cervi Ranch Minimum Volume for such Month (“Cervi Ranch Volumetric Excess”), then Gatherer shall carry forward and apply such Cervi Ranch Volumetric Excess to reduce Cervi Ranch Volumetric Deficiencies occurring in subsequent Months. For purposes of the carry forward and application set forth herein, each Cervi Ranch Volumetric Excess: (a) will be carried forward and applied on a volumetric basis, in part or in full until fully eliminated, on a first-in first-out basis by reference to and in priority of the Month of its occurrence; (b) will expire, and will no longer be carried forward, refunded, offset, recouped, or utilized in any manner, after the last Day of the [***] Month following its occurrence; and (c) as applied, either singularly or in the aggregate with the application of other Cervi Ranch Volumetric Excesses, may not exceed [***]% of the applicable Cervi Ranch Minimum Monthly Volume for such Month. 3(F)(10). Payment Obligations. Shipper’s payment obligations herein that are determined by reference to the Cervi Ranch Minimum Volume shall be adjusted downward for any Gatherer Force Majeure events, maintenance events, unplanned outages or curtailments or for any reason Gatherer fails to take the produced Gas volume other than Shipper’s non-compliance with this Agreement. However, the Cervi Ranch Minimum Volume shall not be subject to downward adjustment due to shut in or abandonment of a Shipper-operated Well within the Cervi Ranch Dedicated Area, cessation of production from a Shipper-operated Well within the Cervi Ranch Dedicated Area resulting from future rules, orders or laws of governmental, judicial, or regulatory authorities (federal, state or local) or the actions or omissions of such governmental, judicial, or regulatory authorities, or any event or condition of Shipper’s Force Majeure. -5- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 3(F)(11). Early Termination. (a)    Notwithstanding anything to the contrary in this Agreement, (i) if Shipper is unable, in whole or in part, to develop the Cervi Ranch Dedicated Area; or (ii) if Gatherer is unable, in whole or in part, to gather Shipper’s production within the Cervi Ranch Dedicated Area, in either case as a result of future rules, orders and laws of governmental, judicial, or regulatory authorities (federal, state or local) or the actions or omissions of such governmental, judicial, or regulatory authorities, then Shipper may deliver written notice (“Cervi Ranch Termination Notice”) to Gatherer. (b)    If such Cervi Ranch Termination Notice is delivered after [***] and prior to the earlier of (i) the Cervi Ranch In-Service Date, or (ii) [***], this Amendment will terminate as to the Cervi Ranch Dedicated Area and Shipper shall have no further obligation to deliver the Cervi Ranch Minimum Volume or to make any payments pursuant to Section 3(F)(7) or Section 3(F)(8), and Shipper shall reimburse Gatherer for [***]% of all non-recoverable capital costs actually incurred or committed to prior to the date of such termination in connection with Gatherer’s construction and installation of facilities to gather Shipper’s production within the Cervi Ranch Dedicated Area, provided that in no event shall such reimbursement obligations of Shipper under this Section 3(F)(11)(b) exceed [***] Dollars ($[***]). Gatherer shall deliver an invoice and supporting documentation to Shipper for all reimbursements pursuant to this Section 3(F)(11)(b), and Shipper shall remit payment of such undisputed reimbursements on or before the 30th Day following receipt of such invoice. If Shipper has a reasonable basis to dispute any reimbursements in such invoice, Shipper shall provide written notice of such dispute to Gatherer and the Parties shall use good faith efforts to resolve such dispute as promptly as reasonably practicable. (c)    If such Cervi Ranch Termination Notice is delivered after the earlier of (i) the Cervi Ranch In-Service Date, or (ii) [***], then Section 3(F)(11)(b) above shall not apply, this Amendment will terminate as to the Cervi Ranch Dedicated Area, provided, that following such termination Shipper shall be obligated to pay to Gatherer on a monthly basis (without duplication) an amount equal to the then-applicable Minimum Volume Commitment obligations for each such subsequent Month set forth on Exhibit B-3 from the date of termination through [***] multiplied by the Cervi Ranch Gathering Fee in effect as of the date of the delivery of such Cervi Ranch Termination Notice and as subsequently adjusted on an annual basis according to the CPI Index as would have been adjusted in accordance with the terms of the Agreement and such payment obligation shall survive the termination of this Amendment until fully performed. 3(F)(12). Fuel. Shipper shall pay Gatherer its proportionate allocated share of all applicable electric and Gas fuel costs incurred in the operation of Gatherer’s System. 3(F)(13). Quality Specifications. Gas delivered by Shipper at the Cervi Ranch Receipt Points shall: (i) meet the Gas Quality Specifications set forth in Exhibit B -6- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 of the Commercial Terms to enable the applicable processor of such Gas to meet the most stringent applicable downstream pipeline and processing facility specifications at the applicable Cervi Ranch Delivery Points; and (ii) have a total or gross Heating Value of not less than [***] Btu per cubic foot and not more than [***] Btu per cubic foot. 3(F)(14). Release Rights. (a)    Cervi Ranch Receipt Point Volumes that Shipper is ready, willing and able to deliver but that Gatherer is unable to accept (whether due to system outage, Force Majeure, maintenance or otherwise) shall be “Temporary Release Volumes”. (b)    If Gatherer, at any time during the Term, is able to gather, but not deliver, Shipper’s Cervi Ranch Receipt Point Volumes (whether due to system outage, Force Majeure, maintenance or otherwise), then to the extent that (i) Gatherer or its Affiliate has an existing physical connection to a third-party system capable of receiving such volumes, (ii) Gatherer or its Affiliate is capable of making a physical connection to a third-party system capable of receiving such volumes and Shipper agrees to reimburse Gatherer or its Affiliate for all reasonable Gatherer costs actually incurred, then Gatherer shall make such physical connections as requested by Shipper (all such volumes diverted to a third party system being the “Offloaded Gas”).  Shipper shall have the right to cause Gatherer and its Affiliates to transport and deliver from the System to a third-party system such Offloaded Gas.  If Gatherer becomes able to again gather the applicable Offloaded Gas, then Gatherer shall give written notice to Shipper that it is so able to gather such Offloaded Gas. (c)    Shipper may immediately transport any Temporary Release Volumes on, or sell such Temporary Release Volumes to, other gatherers or pipelines until such time as Gatherer notifies Shipper, in writing, that Gatherer can receive the applicable Temporary Release Volumes and upon receipt of such notice, Shipper shall resume delivering the applicable Temporary Release Volumes to Gatherer as soon as reasonably practicable in accordance with the terms of this Section 3(F).  In the event (i) Gatherer notifies Shipper that it will not be able to receive Shipper’s volumes for a period in excess of [***], or (ii) Gatherer fails to receive Shipper’s volumes for more than [***] and Shipper utilizes an agreement with an unaffiliated third party for gathering and processing services with respect to any of such Temporary Release Volumes, Shipper shall not be required to resume delivering the applicable Temporary Release Volumes for Gas gathering services hereunder, and such affected volumes shall continue to be temporarily released from this Agreement, until the earlier of (A) the first day that is the first day of a calendar Month and is at least [***] Days after the date Gatherer notifies Shipper that Gatherer can accept the applicable Temporary Release Volumes or (B) the earliest date on which Shipper can terminate a replacement agreement with an unaffiliated third party or cease delivering such Temporary Release Volumes pursuant to such agreement, in either case, at no additional cost to Shipper; provided, however, for the avoidance of doubt, Shipper is not required to terminate the replacement agreement so long as Shipper tenders all of the Cervi Ranch Dedicated Gas to Gatherer.  Shipper shall use commercially reasonable efforts to obtain the shortest term possible for any such replacement agreement.  -7- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 (d)    For the avoidance of doubt, all such volumes shall be temporarily released from dedication under this Agreement and the Processing Agreement in such instances, provided that Shipper shall pay the processing fees for such Temporary Release Volumes that would have been paid under the Processing Agreement had such volumes been delivered thereunder for processing (without duplication) to the extent Shipper has not delivered any replacement volumes for processing. Shipper shall have the right to provide third party or undedicated equity volumes or other volumes in substitution of such Temporary Release Volumes. (e)    If Gatherer, at any time during the term of this Amendment, for any reason fails to or is unable to accept any of Shipper’s Gas for a period of any [***] or more Days out of any [***] consecutive-Day period, then upon Shipper’s written notice to Gatherer, Shipper shall have the right to a permanent release of the affected Gas volumes along with a proportional reduction to the Cervi Ranch Minimum Volume for the remainder of the term of this Amendment. 3(F)(15). Gatherer covenants that it will have sufficient capacity on its System to perform its obligations as required pursuant to this Section 3(F) throughout the term of this Amendment. 3(F)(16). The primary term of this Amendment commences on the Effective Date and shall expire on [***]. Following the expiration of the primary term of this Amendment, this Amendment shall then automatically renew on a year-to-year basis until terminated by either Party with no less than two years’ advance written notice prior to the end of the primary term or prior to the end of any subsequent renewal term. 3(F)(17). The Parties covenant and agree that they will work together to agree upon and finalize Exhibit A-4 (which, for the avoidance of doubt, shall illustrate both Shipper’s and Gatherer’s facilities relating to the Cervi Ranch System) in connection with the satisfaction of the Conditions Precedent. Once such Exhibit A-4 is finalized, it shall be attached to this Amendment and be incorporated as a part hereof in all respects. 3(F)(18). The following defined terms are applicable for purposes of Section 3(F): “Agreement” has the meaning set forth in the preamble. “Amendment” has the meaning set forth in the preamble. “Amendment Effective Date” has the meaning set forth in the preamble. “Cervi Ranch” has the meaning set forth in the Recitals. “Cervi Ranch Dedicated Area” means, as of the Amendment Effective Date, the lands outlined in bold described in Exhibit A-3 attached hereto. “Cervi Ranch Dedicated Gas” has the meaning set forth in Section 3(F)(2)(a). -8- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 “Cervi Ranch Dedicated Service Level” means gathering facilities capacity allocation priority that is superior to any Interruptible Service Level and which is the highest level of service provided by Gatherer on the System. “Cervi Ranch Dedication” has the meaning set forth in Section 3(F)(2)(a). “Cervi Ranch Delivery Points” means the Delivery Points described in the Agreement and the “Delivery Points” (as defined in the Processing Agreement) described in the Processing Agreement. “Cervi Ranch Gathering Fee” has the meaning set forth in Section 3(F)(7). “Cervi Ranch In-Service Date” has the meaning set forth in Section 3(F)(4). “Cervi Ranch Interruptible Service Level” means gathering facilities capacity allocation priority that is subordinate to the Cervi Ranch Dedicated Service Level. “Cervi Ranch Minimum Volume” means the volume in Mcf set forth on Exhibit B-4 attached hereto for the applicable Month beginning on the first to occur of (i) the first full Month following the Cervi Ranch In-Service Date or (ii) [***] (assuming that Gatherer has completed the Cervi Ranch System and is able to commence the provision of Gas gathering services for Cervi Ranch Receipt Point Volumes as of such date). “Cervi Ranch Production Forecast” means Shipper’s projected monthly volumes of Cervi Ranch Dedicated Gas to be produced from the Cervi Ranch Dedicated Area, as set forth on Exhibit B-3 attached hereto. “Cervi Ranch Receipt Points” means the inlet flange of Gatherer’s measurement facilities at a Receipt Point or a “Facilities Receipt Point” (as defined in the Processing Agreement), in each case, receiving Cervi Ranch Dedicated Gas produced from the Cervi Ranch Dedicated Area in effect as updated pursuant to the Agreement and/or the Processing Agreement. “Cervi Ranch Receipt Point Volume” means the volume in MMBtu of Cervi Ranch Dedicated Gas that is delivered and accepted at the Cervi Ranch Receipt Points. “Cervi Ranch System” has the meaning set forth in Section 3(F)(1)(a). “Cervi Ranch Termination Notice” has the meaning set forth in Section 3(F)(11)(b). “Cervi Ranch Volumetric Deficiency” has the meaning set forth in Section 3(F)(8). “Cervi Ranch Volumetric Excess” has the meaning set forth in Section 3(F)(9). “Conditions Precedent” has the meaning set forth in Section 2. -9- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 “Dedication Condition Precedent” has the meaning set forth in Section 2. “Gatherer” has the meaning set forth in the preamble. “Interest” means any right, title, or interest in lands, whether arising from fee ownership of minerals, working interest ownership, leasehold ownership, royalty, or any pooling, unitization, or communitization of any such rights. “Offloaded Gas” has the meaning set forth in Section 3(F)(14)(b). “Party” and “Parties” has the meaning set forth in the preamble. “Pre-Existing Dedication” has the meaning set forth in Section 3(F)(2)(b). “Processing Agreement” has the meaning set forth in Section 3(F)(1)(a). “Shipper” has the meaning set forth in the preamble. “SUA” has the meaning set forth in Section 2. “[***]” has the meaning set forth in Section 2. “Surface Owner” has the meaning set forth in Section 2. “Temporary Release Volumes” has the meaning set forth in Section 3(F)(14)(a). 4.    The defined term “Dedicated Production” in the General Terms and Conditions is stricken in its entirety and replaced with the following: “Dedicated Production” means (i) all Gas [***] produced by Shipper: (a) from all Dedicated Wells located within the Dedicated Area; (b) from all [***] Dedicated Wells located within the [***] Dedicated Area; and (c) from all [***] Dedicated Wells located within the [***] Dedicated Area; with the exception of Gas required for operations on the leasehold, pressure maintenance, and the fulfillment of Shipper’s obligations to Shipper’s lessor, and (ii) all Cervi Ranch Dedicated Gas. 5.    Item 9 of Exhibit B of the Commercial Terms is deleted in its entirety and replaced as follows: 9) have a total or gross Heating Value of not less than [***] Btu per cubic foot and not more than [***] Btu per cubic foot. 6.    Exhibit A-3 “Cervi Ranch Dedicated Area”, Exhibit A-4 “Development Plan and Cervi Ranch Receipt Points”, Exhibit B-3 “Cervi Ranch Production Forecast”, and Exhibit B-4 “Cervi Ranch Minimum Volume” are attached hereto and incorporated into the Agreement. 7.    The notice information for Shipper in Section 5 of the Commercial Terms is deleted in its entirety and replaced with the below: -10- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 SHIPPER:       Notices: Kerr-McGee Oil and Gas Onshore LP   5 Greenway Plaza, Suite 110   Houston, Texas 77046-0521   Attn: OMSD Midstream Commercial Operations   Facsimile: 713-985-1440   Email: contract-notices@oxy.com     With a copy to: Kerr-McGee Oil and Gas Onshore LP   5 Greenway Plaza, Suite 110   Houston, Texas 77046-0521   Attn: Assistant General Counsel, Oxy Energy Services, LLC   Facsimile: 713-985-1440 8.    Except as amended herein, all other provisions of the Agreement remain in full effect as originally written or previously amended. 9.    This Amendment is construed, enforced, and interpreted according to the laws of the State of Texas, without regard to the conflicts of law rules thereof. 10.    This Amendment constitutes the entire agreement between and among the Parties regarding the subject matter herein. To the extent any terms of this Amendment conflict with the terms of the Agreement with respect to the Cervi Ranch Dedicated Area or the Cervi Ranch Dedication, in any such case, the terms of this Amendment shall prevail. 11.    The Parties may execute and deliver this Amendment in any number of counterparts, including facsimile and *.pdf format counterparts, each of which is deemed an original, but all of which constitute one and the same instrument. [Execution Page Follows] -11- -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 The Parties have executed this AMENDMENT to be effective on the Amendment Effective Date. GATHERER   SHIPPER         KERR-MCGEE GATHERING LLC   KERR-MCGEE OIL & GAS ONSHORE LP                 By: Oxy Midstream Strategic Development, LLC, its Agent           By: /s/ Craig W. Collins   By: /s/ Frederick A. Forthuber Name: Craig W. Collins   Name: Frederick A. Forthuber Title: Senior Vice President & Chief Operating Officer   Title: Authorized Representative Signature Page to Cervi Ranch Amendment Contract #8840 -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 EXHIBIT A-3 Cervi Ranch Dedicated Area [***] -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 EXHIBIT A-4 Development Plan and Cervi Ranch Receipt Points [***] -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 EXHIBIT B-3 Cervi Ranch Production Forecast (Mcf)1 2    Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Month 1 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 2 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 3 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 4 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 5 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 6 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 7 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 8 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 9 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 10 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 11 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 12 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]                                                      1 Cervi Ranch Dedicated Gas volumes up to the volumes set forth on this Exhibit B-3 shall be entitled to Cervi Ranch Dedicated Service Level for gathering. Volumes of Cervi Ranch Dedicated Gas in excess of those set forth on this Exhibit B-3 are entitled to Cervi Ranch Interruptible Service Level for gathering. 2 For purposes of the Cervi Ranch Dedicated Service Level in Section 3(F)(5), the volumes depicted on this Exhibit B-3 shall be applied on a daily basis. -------------------------------------------------------------------------------- Cervi Ranch Amendment Contract #8840 EXHIBIT B-4 Cervi Ranch Minimum Volume (Mcf)3    Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Month 1 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 2 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 3 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 4 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 5 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 6 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 7 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 8 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 9 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 10 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 11 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] Month 12 [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [End of Exhibit B]                                                      3 [***].
-------------------------------------------------------------------------------- Exhibit 10.5   AMENDMENT TO EMPLOYMENT AGREEMENT   This AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”), is made and entered into effective as of [__________________], 2008 (the “Effective Date”), by and between Waste Connections, Inc., a Delaware corporation (the “Company”), and [_________________] (the “Employee”).   WHEREAS, the Company and the Employee desire to amend that certain Employment Agreement by and between the Company and the Employee, dated as of [_________________] (the “Agreement”), in order to ensure that the benefits to be provided by the Agreement comply with, or are exempt from, the provisions of Section 409A of the United States Internal Revenue Code (the “Code”).   NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions herein, the Company and the Employee hereby agree as follows effective as of the Effective Date.  Except as otherwise defined herein, capitalized terms shall have the meanings assigned to them in the Agreement.   1.           Amendment.  The Agreement shall be deemed amended to the extent necessary to provide the following:   (a)           Separation from Service.  No benefits payable upon Employee’s termination of employment that are deemed deferred compensation subject to Section 409A of the Code, shall be payable upon Employee’s termination of employment pursuant to the Agreement unless such termination of employment constitutes a “separation from service” with the Company within the meaning of Section 409A of the Code and the Department of Treasury regulations and other guidance promulgated thereunder (a “Separation from Service”).   (b)           Change in Control.  No benefits deemed deferred compensation subject to Section 409A of the Code shall be payable upon a Change in Control pursuant to the Agreement unless such Change in Control constitutes a “change in control event” with respect to the Company within the meaning of Section 409A of the Code and the Department of Treasury regulations and other guidance promulgated thereunder.   (c)           Waiver.  Employee shall not waive any provision of the Agreement if the effect of such waiver would be to delay the payment of an amount that is, or as a result of such waiver becomes, subject to Section 409A of the Code, and any attempt to waive such provision shall be deemed void ab initio.   (d)           Specified Employee.  If Employee is deemed by the Company at the time of Employee’s Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Employee is entitled under the Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Employee’s benefits shall not be provided to Employee prior to the earlier of (i) the expiration of the six-month period measured from the date of the Employee’s Separation from Service or (ii) the date of Employee’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section shall be paid in a lump sum to Employee, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.     Amendment To Employment Agreement Page 1       --------------------------------------------------------------------------------     (e)           Expense Reimbursements.  To the extent that any reimbursements payable pursuant to the Agreement are subject to the provisions of Section 409A of the Code, any such reimbursements payable to Employee pursuant to the Agreement shall be paid to Employee no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Employee’s right to reimbursement under the Agreement will not be subject to liquidation or exchange for another benefit.   (f)           Installments.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Employee’s right to receive any installment payments under the Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment.   (g)           Extensions.  To the extent the exercisability or term of any option, warrant or other right relating to the capital stock of the Company is extended pursuant to the terms of the Agreement, the exercisability or term of such option, warrant or other right shall in no event extend to a date later than the date such option, warrant or other right would have expired under any circumstances pursuant to its original terms.   (h)           Bonus.  Any Bonus payable pursuant to the Agreement shall be paid no later than the fifteenth (15th) day of the third (3rd) month following the end of the fiscal year to which such Bonus relates.   (i)           Date of Termination.  For the purposes of the Agreement, “Date of Termination” shall mean, for Disability, thirty (30) days after Notice of Termination is given to the Employee (provided the Employee has not returned to duty on a full-time basis during such 30-day period), if the Employee’s employment is terminated by the Company for any reason other than Disability, the date specified in the Notice of Termination, or if the Employee’s employment is terminated by the Employee for any reason, the date specified in the Notice of Termination which shall be within thirty (30) days of the date of such Notice of Termination.   (j)           Exchange of Benefits.  No benefits payable under the Agreement that are deemed deferred compensation subject to Section 409A of the Code shall be subject to forfeiture in exchange for another benefit under the Agreement.   2.           Counterparts.  This Amendment may be executed in one or more facsimile or original counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.   3.           Ratification.  All terms and provisions of the Agreement not amended hereby, either expressly or by necessary implication, shall remain in full force and effect.  From and after the date of this Amendment, all references to the term “Agreement” in this Amendment and in the original Agreement shall include the terms contained in this Amendment.   4.           Conflicting Provisions.  In the event of any conflict between the original terms of the Agreement and this Amendment, the terms of this Amendment shall prevail.   5.           Authorization.  Each party executing this Amendment represents and warrants that it is duly authorized to cause this Amendment to be executed and delivered.     Amendment To Employment Agreement Page 2       --------------------------------------------------------------------------------     IN WITNESS WHEREOF, this Amendment to Employment Agreement has been duly executed by or on behalf of the parties hereto as of the date first above written.       WASTE CONNECTIONS, INC.                                     By:           Ronald J. Mittelstaedt         Chief Executive Officer       Amendment To Employment Agreement Page 3
EXHIBIT 10.7 (NORTHWEST BIOTHERAPEUTICS GRAPHIC) [v31294v3129401.gif]                                       Northwest     t (425) 608-3008     www.nwbio.com   Biotherapeutics, Inc.         (800) 519-0755     OTCBB: NWBT         f (425) 608-3009         18701 120th Avenue NE               Suite 101               Bothell, WA 98011             June 18, 2007 Dr. Jim Johnston 18701 120th Avenue NE, Suite 101 Bothell, WA 98011 Dear Mr. Johnston: Your service to Northwest Biotherapeutics has been valuable and much appreciated over the past year. The Board of Directors proposes to enter into an employment agreement with you for up to one year of service in the senior management of the Company, with the following key terms, conditional upon the Admission to trading of the Company’s AIM Placing shares:   •   Title: CFO and Chief General Counsel     •   Term: Up to 1 year     •   Annual Salary: $180,000 for devotion of 60% of your time to Company business (a full-time rate of $300,000).     •   Equity: 66,667 options to purchase Common Stock of the Company to be granted as promptly as practicable after Admission of the AIM Placing Shares for trading. Vesting shall occur over the 1-year employment term as defined in the Stock Option Grant Notice.     •   Termination: Employment will be at will. You may resign and at time with the notice required below or without such notice (in which case certain consequences will apply as described below). The Company may terminate your employment “For Cause” or “Without Cause.” “Cause” is defined as, but not limited to, malfeasance, material non-performance or materially inadequate performance of your duties following written notice or other communication from the Board of such inadequate performance and a reasonable period of time to cure it one time.     •   Effect of termination or resignation on options: Vesting of your stock options will cease upon the termination of your employment or resignation.   •   If your employment is terminated For Cause, options which are already vested as of the date of termination shall expire 24 hours after such termination.   --------------------------------------------------------------------------------     •   If your employment is terminated Without Cause, options will be exercisable for up to their full exercise period, so long as you execute a separation and release agreement reasonably acceptable to the Company, and you do not work for or with a Competing Company (as defined below) in any capacity (employee, director, adviser, collaborator, etc.) for one year following the termination of your employment. The term “Competing Company” means a business that is developing immunotherapies for cancer.     •   If you resign, the vesting of your options will cease. If your resignation complies with the notice, best efforts and good faith requirements below, your options will be exercisable for 45 days following the last day of your employment. If your resignation does not comply with the notice, best efforts and good faith requirements below, your options will only be exercisable for 15 days following the last day of your employment.   •   Outside activities: During the term of this Agreement, you shall not engage in any outside business activities except with express prior approval of the Board.     •   Non-competition: You agree not to work for or with any Competing Company (as defined above) for 1 year after resignation, termination or expiration of your employment with the Company. You must execute a non-competition agreement with the Company providing for this arrangement.     •   Assignment of inventions; confidentiality: All inventions conceived or developed by you during your employment by the Company must be assigned to the Company. You must also execute the Company’s standard invention assignment agreement and a limited power of attorney enabling the Company to make filings and take actions necessary to implement your assignments of inventions. You must also execute the standard confidentiality agreement.     •   Vacation and sick leave: 12 business days of vacation (based upon a full-time rate of 4 weeks of vacation, pro rated to your employment by the Company for 60% of your time), no carryover (use it or lose it) except in special circumstances with prior Board approval and then only up to 2 weeks; 6 business days of sick leave (based upon a full-time rate of 2 weeks of sick leave, pro rated to your employment by the Company for 60% of your time), to be used only for sickness and medical appointments for yourself or family members.     •   Notice of resignation: If you resign, you will give at least 45 days advance notice, and during those 45 days will devote best efforts, in good faith, to the Company’s business and any personnel transition. Failure to give 45 days notice will result in clawback of any bonuses paid to you and option vesting that occurred in the 135 days prior to the resignation announcement.   --------------------------------------------------------------------------------   The Board hopes that you will find these terms agreeable. If so, please indicate your acceptance by countersigning below. We look forward to your continued important role in the Company for the next several years. Sincerely,               NWBT BOARD OF DIRECTORS   I have read and accept this employment offer: By:       By:                                               Name:       Name:     Title:             Date:       Date:
QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.37 OFFER FOR PURCHASE OF RECEIVABLES This offer for the purchase of receivables (the "Offer") is made the December 30, 2004 jointly by: 1.FONTANA BETEILIGUNGS AG, a stock corporation organised and existing under the laws of Austria, with its registered seat in Magna Strasse 1, A-2522 Oberwaltersdorf, registered at Oberwaltersdorf under number 186272f, (the "Seller") and 2.MAGNA INTERNATIONAL EUROPE AG, a stock corporation organised and existing under the laws of Austria, with its registered seat in Magna Strasse 1, A-2522 Oberwaltersdorf, registered at Oberwaltersdorf under number 230189p, (the "Obligor") to BANK AUSTRIA CREDITANSTALT AG, a bank organised and existing under the laws of Austria, with its registered seat in Austria, 1030 Vienna, Vordere, Zollamtsstraße 13, registered at the register of entrepreneurs maintained by Firmenbuchgericht Wien at the Handelsgericht Wien under number FN 150714p, (the "Bank"). Whereas A.The Seller and the Obligor have entered into the Preferred Access Agreement dated 1st November 2004 (the "Contract"), by which the Obligor shall pay to the Seller, for the right of access to use the sport facilities owned by the Seller, an annual amount of EUR 2,500,000. B.The Seller intends to sell to the Bank certain of its receivables under the Contract subject to the terms and conditions of this Offer. -------------------------------------------------------------------------------- Now, the Seller and the Obligor hereby declare as follows: 1.The Seller and the Obligor offer herewith to the Bank to purchase from the Seller the receivables in connection with the Contract together with all ancillary rights and securities, if any, under the terms and conditions as set out in Annex 1 to this Offer (the "Terms and Conditions"), no term or condition of this Offer (including the Terms and Conditions) shall be deemed to amend, supplement, modify or otherwise affect the rights of first refusal of Obligor contained in article 7 of the Contract. 2.The Terms and Conditions shall be deemed to be incorporated into this Offer and form a part thereof. Terms defined in the Terms and Conditions shall, subject to any contrary indication, have the same meanings herein. 3.The Seller hereby undertakes to provide the Bank together with this Offer with an executed power of attorney empowering Dr. Erhard Perl and Dr. Hans Zak, public notaries, to complete a mortgage deed (Pfandbestellungsurkunde) and to register a mortgage (Höchstbetragshypothek) if (i)the Seller has failed to meet its obligations under the Contract and consequently the Obligor has withheld payment under the Contract; (ii)the economic viability of the Seller has deteriorated in a reasonable opinion of the Bank, in particular, but not limited to, if the equity ratio of the Seller has severely deteriorated; The Seller undertakes to execute a power of attorney empowering an other notary in case neither Dr. Erhard Perl nor Dr. Hans Zak are available to complete such a mortgage deed. 4.This Offer is irrevocable and valid until January 15, 2005 5.Acceptance of this Offer may be made by the Bank in its sole discretion only by crediting the account of the Seller at Raiffeisen Zentralbank Osterreich AG, Am Stadtpark 9, A-1030 Vienna, Austria, Account no. 1-00.585.141 (bankcode 31.000, IBAN AT 98 31000 00 100585141, BIC RZBA AT WW with the Purchase Price (definitions see Terms and Conditions) minus the management fee provided in Clause 9 of the Terms and Conditions.         -------------------------------------------------------------------------------- FONTANA BETEILIGUNGS AG           -------------------------------------------------------------------------------- MAGNA INTERNATIONAL EUROPE AG   2 -------------------------------------------------------------------------------- ANNEX 1 Terms and Conditions 1.     SCOPE OF THE TERMS AND CONDITIONS These terms and conditions (the "Terms and Conditions") shall apply to the Offer for Purchase of Receivables (the "Offer") made the December 30, 2004 by the Seller and the Obligor to the Bank for the purchase of Receivables resulting from the Contract and shall be deemed to be incorporated into the Offer and form a part thereof. 2.     DEFINITIONS AND INTERPRETATIONS 2.1   Definitions Terms defined in the Offer shall, subject to any contrary indication, have the same meanings herein. In addition, in these Terms and Conditions and in the Offer, unless the context otherwise requires, the following expressions shall have the meanings given to them in this Clause 2:   "Business Day"   means a day on which banks are open for business in Vienna;               "Clause"   means a clause under these Terms and Conditions;               "Contract"   means the Preferred Access Agreement between Obligor and Seller dated 1st November 2004 as may be amended from time to time;               "Effective Date"   means December 30, 2004 (but not later than January 15, 2005), provided that on such date:                   a)   the Bank has received each of the documents listed in Clause 5.1 of these Terms and Conditions (Documentary Conditions Precedent) in a form and substance satisfactory to it, and                   b)   all further conditions precedent listed in Clause 5.2 of these Terms and Conditions (Further Conditions Precedent) have been fulfilled in a manner satisfactory to the Bank provided that it is the sole discretion of the Bank (who shall not be obliged to do so) to waive any such conditions;           3 --------------------------------------------------------------------------------   "Earlier Expiry of the Contract   has the meaning given to it in Clause 8.3 (Earlier Expiry of the Contract);               "EUR"   means the single currency of those member states of the European Union that adopt the Euro as their currency in accordance with legislation of the European Community relating to European Economic and Monetary Union;               "Facilities"   means the sport facilities owned by the Seller as defined and described in article 1 (a) of the Contract;               "Payment Account"   means the Bank's account No. 0304 000 8900 or any other account as the Bank may designate from time to time;               "Payment Date"   means December 30, 2004;               "Purchase Documents"   means the Offer (including the Terms and Conditions), and any other document which is necessary for the completion of the purchase of Receivables;               "Purchase Price"   has the meaning given to it in Clause 6.1 (Purchase Price);               "Receivables"   has the meaning given to it in Clause 3 (Object of The Purchase);               "Reduction of Annual Fee"   has the meaning given to it in Clause 8.4 (Reduction of Annual Fee);               "Right of Access"   means the rights of access to use the Facilities in the way and described in the Contract; 2.2   Interpretations         In these Terms and Conditions, unless the context otherwise requires: (a)words importing the singular shall be construed so as to include the plural and vice versa; (b)a reference to a specified Clause shall be construed as a reference to that specified Clause of these Terms and Conditions; 4 -------------------------------------------------------------------------------- (c)the clause headings are for ease only and shall not affect the interpretation of these Terms and Conditions; (d)a term used in any other document or in any notice given under or in connection with these Terms and Conditions has the same meaning in that document or notice as in these Terms and Conditions; and (e)words denoting persons include corporations, partnerships and other legal persons and references to a person includes its successors and permitted assigns. 3.     OBJECT OF THE PURCHASE 3.1   Receivables The object of the purchase shall be the following Seller's receivables under the Contract (hereinafter "Receivables"): Payment claims of the Seller against the Obligor arising under the Contract as compensation for the Rights of Access as specified in article 3 (a) of the Contract consisting of the 9 (nine) equal annual fees of EUR 2,500,000 each, charged for the period from 1st January 2006 to 31st December 2014, payable by the Obligor annually in advance on the first Business Day in every calendar year. The aggregate nominal amount of the purchased Receivables is EUR 22,500,000 (twenty two million five hundred thousand). 3.2   Exclusion For further clarification it is hereby stated that the following payment obligations of the Obligor shall not be qualified as purchased Receivables and therefore such payment obligations do not constitute the object of the purchase under these Terms and Conditions: (a)any applicable taxes on the annual fees, as provided in article 3 (a) of the Contract; (b)any expenses as provided in article 3 (b) of the Contract; (c)any taxes, licence, fees, rates, duties, assessments and other fees as provided in article 3 (c) of the Contract; and nothing in these Terms and Conditions is intended to limit the Obligor's obligations to pay such taxes on the annual fees, expenses, other taxes, licence, fees, rates, duties, assessments and other fees to the Seller and/or to the respective tax authorities. 5 -------------------------------------------------------------------------------- 4.     PURCHASE PROCEDURE 4.1   Legal Form of the Purchase The purchase of the Receivables shall be: a)effected on the Effective Date; b)subject to the terms and restrictions specified in Clause 8.1 (Scope of the Seller's Liability) of these Terms and Conditions, made without any right of recourse in case of the insolvency by the Obligor; c)made together with the assignment of all securities and ancillary rights (if any), which shall be automatically transferred to Bank; d)made in the legal form of an assignment in accordance with § 1392 ff. ABGB i.e. Austrian Civil Code. 4.2   Acknowledgement of the Obligor (a)The Obligor confirms that: (i)it knows and accepts the purchase of the Receivables under the Offer; and (ii)it has not been notified of any other assignment with respect to the Receivables. (b)The Obligor undertakes that starting from the Effective Date it will make payments with respect to the Receivables to the Payment Account in accordance with Clause 7.1 (Payments by the Obligor) of the Terms and Conditions of this Offer and Seller hereby irrevocably directs Obligor to make such payments in accordance therewith. 4.3   Recording of Assignment On and after the Effective Date the Seller shall indicate in its accounting books that it has assigned the receivables under the Contract to the Bank. Such indication shall show the date of the assignment. The Bank is entitled to inspect the accounting books of the Seller in order to check Seller's compliance with its obligation under this Clause 4.3. Such inspection may be done by an auditing expert named by the Bank. 5.     CONDITIONS PRECEDENT 5.1   Documentary Conditions Precedent a)a copy of the Contract and the security documents (if any); and 6 -------------------------------------------------------------------------------- b)a copy, certified as a true copy by or on behalf of the Seller, of each such law, decree, consent, license, approval, registration, permission or other necessary document, as is in the reasonable opinion of the Bank necessary to render the Contract legally valid, binding and enforceable and to enable the Seller to perform its respective obligations thereunder; c)any other documents which in a reasonable opinion of the Bank are necessary for the completion of the purchase of Receivables. 5.2   Further Conditions Precedent a)the representations and warranties set out in Clause 11 (Representations and Warranties) are correct and will be correct immediately after the Effective Date. 6.     PURCHASE PRICE AND ITS PAYMENT 6.1   Purchase Price The purchase price for the Receivables is EUR 17.633.800, — (the "Purchase Price"). 6.2   Payment of the Purchase Price On the Payment Date the Bank shall pay to the Seller the Purchase Price. The payment shall be made to the Seller's account at Raiffeisen Zentralbank Osterreich AG, Am Stadpark 9, A-1030 Vienna, Austria, Account no. 1-00.585.141 (bankcode 31.000, IBAN AT 98 31000 00 100585141, BIC RZBA AT WW). The obligation of the Bank hereunder to pay to the Seller the Purchase Price is subject to the conditions that at the Payment Date: a)the assignment of the Receivables (together with the securities and the ancillary rights, if any) has been effected and the Bank has received a copy of the Seller's accounting books evidencing such assignment; and b)all representations and warranties set out in Clause 11 (Representations and Warranties) are true and correct in all material respects; and 6.3   Set-off by Bank The Bank may, after providing written notice to the Seller, (but shall not be obliged to) set-off its obligation to pay the Purchase Price against any obligation of the Seller due and payable at any office of the Bank anywhere and in any currency. The Bank may effect such currency exchanges as are appropriate to implement such set-off. 7 -------------------------------------------------------------------------------- 7.     PAYMENTS AND ACCOUNTS 7.1   Payments by the Obligor Starting from the Effective Date all payments with respect to the Receivables to be made by the Obligor under the Contract shall be made in EUR, in full, without any set-off or counterclaim whatsoever and free and clear of any deductions or withholdings by not later than 11 a.m. (local time in the place of payment) on the due date on the Payment Account or such account as the Bank may have notified to the Obligor; provided however, that Obligor shall be entitled to set-off, counterclaim for, retain, restrict, reserve, withhold and/or deduct any amounts attributable to the non-performance, improper performance or default by Seller under the terms of the Contract. 7.2   Transfer to the Payment Account If the Obligor makes any payments with respect to the Receivables under the Contract/this Agreement not to the Payment Account but to any account of the Seller then: a)the Seller hereby irrevocably and unconditionally guarantees to the Bank to transfer promptly (on the first written demand of the Bank) without any compensation and retention to the Payment Account any payments with respect to the Receivables (including without limitation the payments in form of bills of exchange, cheques, rights and claims having the character of payment and claims against banks resulting from crediting any account). b)until a transfer as provided in a) above is effective, the Seller shall hold the purchased Receivables together with all securities and ancillary rights (if any) and any payments in respect to the Receivables as a trustee of the Bank, so that the Bank is the only beneficial owner and person entitled under such Receivables, securities and ancillary rights and payments. The Seller shall administrate and collect such assets for the Bank in accordance with Bank's instructions. The Seller shall act as a trustee without any costs for the Bank. 7.3   Funds and Place Notwithstanding Clause 7.1 (Payments by the Obligor) above, all payments to be made to the Bank under the Purchase Documents shall be made in EUR on such account as notified by the Bank, provided however that amounts payable in respect of costs, expenses and taxes and the like shall be made in the currency in which they are incurred. 7.4   No Set-off, Counterclaim or Retention Subject to Clause 7.1 (Payments by the Obligor) payments to the Bank under the Purchase Documents shall be made in full without any set-off, counterclaim, retention, restriction, reservation, withholdings, deductions or other condition. 8 -------------------------------------------------------------------------------- 7.5   Non Business Day When any payment would otherwise be due on a day which is not a Business Day, the due date for payment shall be extended to the next following Business Day unless such Business Day falls in the next calendar month in which case payment shall be made on the immediately preceding Business Day. 7.6   Taxes If at any time any applicable law, regulation or regulatory requirement or any governmental authority, monetary agency or central bank requires the Seller or the Obligor (as the case may be) to make any deduction or withholding in respect of taxes from any payment due hereunder, the Bank shall notify the Seller in writing of the shortfall in the payment made to it and it shall be the Sellers obligation to make an additional payment to the Bank to ensure that the Bank receives a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Seller shall indemnify the Bank against any losses or costs incurred by it by reason of any failure to make any such deduction or withholding. The Seller or the Obligor (as the case may be) shall promptly deliver to the Bank any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 7.7   Currency Indemnity If any amount payable by the Seller or the Obligor (as the case may be) under the Purchased Documents has been received by the Bank in other currency than EUR and the amount produced by converting such currency into EUR is less than the relevant EUR amount, then respectively the Seller or the Obligor (as the case may be) shall as an independent obligation indemnify the Bank for any deficiency and loss sustained as a result of such conversion. Any conversion shall be made at such prevailing rate of exchange, on such date and in such market as is determined by the Bank. 7.7   Partial Payment In the case of a partial payment, the Bank may appropriate such payment towards such obligation of the Seller or the Obligor (as the case may be) under this transaction as the Bank may decide. Any such appropriation shall override any appropriation made by the Seller or Obligor (as the case may be). 8.     LIABILITY 8.1   Scope of the Seller's Liability The Seller irrevocably and unconditionally undertakes to the Bank that it shall be liable to the Bank in any case if: 9 -------------------------------------------------------------------------------- a)any of the Receivables (together with the ancillary rights and the security, if any) purchased by the Bank is not a legally valid, binding and enforceable claim against the Obligor or is not validly assigned to the Bank; and/or b)any of the Receivables (together with the ancillary rights and the security, if any) purchased by the Bank is not, subject to Clause 7.1 (Payments by Obligor) free of all objections, set-off, counterclaims and deductions whatsoever; and/or c)the total amount of the purchased Receivables is lower than EUR 22,500,000; and/or d)any of the documents given to Bank in accordance with Clause 5.1 (Documentary Conditions Precedent) of these Terms and Conditions is not authentic and correct; and/or e)any of the representations and warranties specified in Clause 11 (Representations and Warranties) of these Terms and Conditions is not accurate in all material respects on the date of the Offer; and/or f)any of the representations and warranties specified in Clause 11 (Representations and Warranties) of these Terms and Conditions will not remain accurate in all material respects until the Bank has received full payment of the Receivables; and/or g)any payment by the Obligor is not made in the way as provided in Clause 7.1 (Payments by the Obligor) and/or is not transferred to the Payment Account and as provided in Clause 7.2 (Transfer to the Payment Account). 8.2   Limitation and Exclusion of the Seller's Liability The liability of the Seller arising under the Clause 8.1 (Scope of the Seller's Liability) above, shall be limited to the aggregate amount of the Receivables purchased by the Bank plus all accrued fees, costs and expenses (if any). 8.3   Early Expiry of the Contract In the event of an Earlier Expiry of the Contract, the Bank shall provide the Seller with information on the amount of payments received from the Obligor before the date of the Earlier Expiry of the Contract (the "Payments Received"). Within 14 days from the receipt of such information, but not later than on the date of Earlier Expiry of the Contract, the Seller shall reimburse the Bank with: (i)a difference between the Purchase Price and the Payments Received (the "Difference"); and 10 -------------------------------------------------------------------------------- (ii)the interest which accrues on the Difference calculated at the interest rate which the Bank could earn by placing the Difference (separately for each annual fee originally payable under the Contract) on deposit with a leading bank in the relevant Interbank Market for the period starting on the date of the actual payment of such Difference up to the date on which the respective annual fee would have been payable had the Earlier Expiry of the Contract not occurred. For the purpose of these Terms and Conditions the "Earlier Expiry of the Contract" means any expiry of the Contract before its term as provided in clause 2 of the Contract, including without limitation an expiry of the Contract as a result of: (i)the withdrawal from the Contract of any of its parties; or (ii)any termination of the Contract (other than termination caused by insolvency of the Obligor) but including without limitation termination caused by the damage of the Facilities, the sale of the Facilities by the Seller to the Obligor (in which case the Seller shall be required to make the appropriate payment to Bank prior to the completion of such transaction) or any other party or non-performance or improper performance of the Contract by the Seller (including without limitation the breach of the provision of clause 5 (b) (i) of the Contract). 8.4   Reduction of Annual Fee In the event of the Reduction of Annual Fee, the Obligor shall pay to the Bank the resulting reduced Annual Fee, as defined and provided in the article 3(a) of the Contract and the Bank shall provide the Seller with information on the amount of payments received from the Obligor before the date of the Reduction of the Annual Fee (the "Pre-Reduced Payments Received"). Within 14 days from the receipt of such information, but not later than on the first date of the implementation of the Reduction of Annual Fee, the Seller shall reimburse the Bank with: (i)the difference between the Purchase Price, less the Pre-Reduced Payments Received and less the amounts of the resulting reduced Annual Fee to be paid by the Obligor (the "Reduced Difference"); and (ii)the interest which accrues on the Reduced Difference calculated at the interest rate which the Bank could earn by placing the Reduced Difference (separately for each annual fee originally payable under the Contract) on deposit with a leading bank in the relevant Interbank Market for the period starting on the date of the actual payment of such Reduced Difference up to the date on which the respective annual fee would have been payable had the Reduction of Annual Fee not occurred. For the purpose of these Terms and Conditions the "Reduction of Annual Fee" means any reduction of the Annual Fee (as defined in Clause 3 (a) of the Contract) to be paid by the Obligor under the Contract including without limitation: 11 -------------------------------------------------------------------------------- (i)the reduction made by the Obligor as a result of non-performance or improper performance of the Contract by the Seller (including without limitation the breach of the provision of Clause 5 (b) (i) of the Contract), (ii)the reduction as a result of any set-off the Obligor's receivable towards to the Seller against the Receivables made by any reason by the Obligor. 8.5   Optional Prepayment by the Seller The Seller may at any time (acting in its free discretion), by giving not less than 5 Business Days prior notice to the Bank, inform the Bank, that it wishes to prepay the total amount of the outstanding Receivables at that time or a part thereof (thereafter the "Prepaid Amount") before due date of such Receivable and propose the new date of such prepayment. If the proposed prepayment has been agreed by the Bank, the Bank will retransfer the Receivables to the Seller after the Seller (or the Obligor, as the case may be) has paid the Prepaid Amount (and any reimbursement for stamp duty, if any, see below) to the Payment Account. The Prepaid Amount shall be discounted by the interest rate which the Bank could earn by placing the Prepaid Amount on deposit with a leading bank in the relevant Interbank Market for a period starting on the Business Day following of the actual date the Prepaid Amount is credited to the Payment Account and ending on the date on which the discounted Prepaid Amount would have been payable had a prepayment not occurred. The Seller and the Obligor are aware that assignments trigger Austrian Stamp Duty if the assignment is contained in a written agreement and the original or a certified copy of thereof is brought into Austria or, (if all parties of the assignment have their seat, head quarter or a place of business in Austria) if other formalities specified in the Austrian Stamp Duty Act are fulfilled. In order to avoid triggering such stamp duty the Seller shall — if it intends to prepay in accordance with Clause 8.5. hereof — first inform the Bank orally of its intention in order to find a way to effect the optional prepayment and the retransfer the Receivables thereafter without triggering stamp duty. The Seller and the Obligor shall reimburse and hold harmless the Bank for any stamp duty incurred as a consequence of any act done in accordance with this Clause 8.5. 9.     MANAGEMENT FEE The Seller shall pay to the Bank a management fee of 0,15% of the aggregate nominal amount of the purchased Receivables according to Clause 3.1. 10.   COSTS AND EXPENSES The Seller shall: 12 -------------------------------------------------------------------------------- (a)indemnify the Bank for all costs, charges and expenses incurred by the Bank in or in connection with the negotiation, preparation and execution of this transaction (including value added taxes thereon); and (b)reimburse the Bank on demand for such legal costs or expenses (including value added tax thereon) reasonably incurred by the Bank in the enforcement of, or preservation of any rights under, this transaction; and (c)pay any and all taxes, stamp and other duties to which the transactions hereunder may be subject or give rise and indemnify the Bank against any and all liabilities with respect to or resulting from any delay or omission on the part of the Seller to pay any such taxes or duties. The Bank is herewith irrevocably and unconditionally entitled to debit the Seller's account no. 506 62 858 651 held with the Bank with all costs and fees, which have to be borne by the Seller as set forth in this Clause 10 (Costs and Expenses). 11.   REPRESENTATIONS AND WARRANTIES         The Seller represents and warrants to the Bank that: General (a)the Seller has the power to execute, deliver and perform its obligations under the Purchase Documents and under any other documents connected with the performance of the Purchase Documents; all necessary action has been taken by Seller to authorise the execution, delivery and performance of the Purchase Documents and any other documents connected with the performance of the Purchase Documents; no limitation on the Seller's powers will be exceeded as a result of transactions under the Purchase Documents or any other documents connected with the performance of the Purchase Documents; (b)if the Offer has been accepted by the Bank, the Purchase Documents constitute Seller's valid and legally binding obligations, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganisation, moratorium, and similar laws affecting legal entities' rights generally, and to general equitable principles; (c)the execution, delivery and performance of the Purchase Documents and any other documents connected with the performance of the Purchase Documents by each of Seller will not (i) contravene any existing law, regulation or authorisation to which it is subject, (ii) result in any material breach of, or default under, any agreement or other instrument to which it is a party or is subject, or (iii) contravene any provision of Seller's Memorandum and Articles of Association, By-laws or other constituent documents; 13 -------------------------------------------------------------------------------- (d)every material consent for, authorisation of or registration with governmental or public bodies or courts required by Seller in connection with the execution, delivery performance, validity, enforceability or admissibility in evidence of the Purchase Documents and any other documents connected with the performance of the Purchase Documents has been obtained or made and is in full force and effect and there has been no default by Seller in the observance of any conditions imposed in connection therewith; and (e)there are no actions, proceedings or claims pending or to the best of Seller's knowledge threatened, the adverse determination of which might have a materially adverse effect on Seller's ability to perform their obligations under, or affect the validity or enforceability of the Purchase Documents; Contract and Receivables f)the Contract and all related documents thereto are in full force and effect and constitute legally binding, valid and enforceable obligation of the Seller and the Obligor; (g)the execution, delivery and performance of the Contract and any other documents connected with the performance of the Contract by Seller will not (i) contravene any existing law, regulation or authorisation to which it is subject, (ii) result in any breach of, or default under, any agreement or other instrument to which it is a party or is subject, or (iii) contravene any provision of its Memorandum and Articles of Association, By-laws or other constituent documents; h)all consents, licenses, permissions and registrations, if any, which are necessary for and/or in connection with the execution, delivery, performance, validity and enforceability of the Contract by Seller have been obtained and are in full force and effect; i)the Seller has properly made its Facilities accessible to the Obligor in the way which allows the Obligor to exercise the Right of Access in accordance with the Contract; j)the Seller has legal title to the Facilities and, other than the Contract which the Obligor may record on the title of the Facilities or obtain a court decree under Austrian law so recording, there are no security interest, mortgage, pledge, nor any other agreement or arrangement having the effect of conferring security, over or in respect of the whole or any part of the Facilities; j)the assignment of the Receivables is not prohibited or restricted under the Contract; and k)Seller has no actual knowledge of any circumstances which make the ability of the Obligor to pay questionable or which impair the enforceability of the Receivables; The Obligor represents and warrants to the Bank that: (a)Obligor has the power to execute, deliver and perform its obligations under the Purchase Documents and under any other documents connected with the performance of the Purchase Documents; all necessary action has been taken by Obligor to authorise the execution, delivery and performance of the Purchase Documents and any other documents connected with the performance of the Purchase Documents; no limitation on Obligor's powers will be exceeded as a result of transactions under the Purchase Documents or any other documents connected with the performance of the Purchase Documents; 14 -------------------------------------------------------------------------------- (b)if the Offer has been accepted by the Bank, the Purchase Documents constitute Obligor's valid and legally binding obligations, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganisation, moratorium, and similar laws affecting legal entities' rights generally, and to general equitable principles; (c)the execution, delivery and performance of the Purchase Documents and any other documents connected with the performance of the Purchase Documents by Obligor will not (i) contravene any existing law, regulation or authorisation to which it is subject, (ii) result in any breach of, or default under, any agreement or other instrument to which it is a party or is subject, or (iii) contravene any provision of Obligor's Memorandum and Articles of Association, By-laws or other constituent documents; (d)every consent for, authorisation of or registration with governmental or public bodies or courts required by Obligor in connection with the execution, delivery performance, validity, enforceability or admissibility in evidence of the Purchase Documents and any other documents connected with the performance of the Purchase Documents has been obtained or made and is in full force and effect and there has been no default by Obligor in the observance of any conditions imposed in connection therewith; and (e)there are no actions, proceedings or claims pending or to the best of Obligor's knowledge threatened, the adverse determination of which might have a materially adverse effect on Obligor's ability to perform its obligations under, or affect the validity or enforceability of the Purchase Documents. The warranties and representations of this Clause 11 (Representations and Warranties) are made on the date of the Offer and shall remain true in all material respects until the Bank has received full payment of the Receivables by reference to the facts and circumstances existing on the respective date they are made. 12.   UNDERTAKINGS Each of the Seller and the Obligor irrevocably agree and undertake, on their own behalf and not on behalf of one another, to the Bank as follows: a)(Seller only) not to assign the Receivables to any other person than Bank, not to burden them with any right of pledge, and not to transfer them or burden them in any other manner; b)to execute, sign and deliver all documents for the fulfilment of the terms and conditions of the Purchase Documents and take each and every action reasonably needed for the Bank to obtain the exclusive rights on the Receivables under the Contract and to hand over to the Bank without any delay all necessary documents and to give all necessary information concerning the Receivables under the Contract requested by the Bank; 15 -------------------------------------------------------------------------------- c)not to breach any provision of the Contract materially affecting the rights of the Bank under the assignment of Receivables; d)(Seller only) unless the Seller has paid to the Bank the full amount stipulated in Section 8.3 (Early Expiry of the Contract), Seller shall not agree on a Earlier Expiry of the Contract without the explicit prior written consent of the Bank; e)(Seller only) unless the Seller has paid to the Bank the full amount stipulated in Section 8.4 (Reduction of Annual Fee), Seller shall not agree on a Reduction of the Annual Fee without the explicit prior written consent of the Bank; f)(Seller only) unless Seller has paid to the Bank the full amount stipulated in Section 8.3 (Early Expiry of the Contract), Seller shall not sell, transfer or otherwise dispose of the Facilities without the explicit prior written consent of the Bank; g)(Seller only) without the explicit prior written consent of the Bank, other than the Contract which the Obligor may record on the title of the Facilities or obtain a court decree under Austrian law so recording, not to create, extend or permit to arise or subsist any security interest, mortgage, pledge, or any other agreement or arrangement having the effect of conferring security over or in respect of the whole or any part of the Facilities;] h)(Seller only) without the explicit prior written consent of the Bank not to agree to any changes of the Contract materially affecting the right of the Bank under the assignment of Receivables in particular not to agree to any amendment of the Contract concerning the payment of the Annual Fee as defined and provided in clause 3 (a) of the Contract.; i)to assist the Bank (without receiving any fees or cost reimbursement therefore) at Bank's request in any judicial or other action for the enforcement of, or the preservation of any rights in respect of, any of the assigned/transferred Receivables and the security and ancillary rights thereto, if any; j)(Seller only) to accept upon Bank's request any reassignment/retransfer of the Receivables to the Seller in order to enforce the Receivables for the Bank in Seller's own name but on Bank's account as trustee. k)(Seller only) to deliver to the Bank as soon as the same become available, but in any event within 120 days after the end of each of its financial years its audited financial statements for such financial year and such other financial information which the Bank reasonably requests from time to time. 16 -------------------------------------------------------------------------------- 13.   ASSIGNMENT 13.1 Successors The Offer (including the Terms and Conditions) shall be binding upon and inure to the benefit of the Seller, Obligor and the Bank and their respective successors and assignees, if any. 13.2 No Assignment by Seller or Obligor Neither the Seller nor the Obligor may assign its rights or transfer its obligations under the Purchase Documents without the prior written consent of the Bank. Notwithstanding the foregoing, either the Seller or the Obligor may assign its rights under the Purchase Documents to on affiliate. 13.3 Assignment by Bank The Bank shall be entitled to assign its rights or obligations under the Purchase Documents to another bank or financial institution. Such an assignment may be made without the prior written consent of the Seller and Obligor, however the Bank shall provide notice of any such assignment to both the Seller and the Obligor. 14.   PARTIAL INVALIDITY If at any time any provision of any Purchase Document is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 15.   DISCLOSURE After providing notice to the Seller and the Obligor, the Bank may disclose to a prospective assignee, transferee in accordance with Clause 13.3 (Assignment by Bank) who may propose entering into contractual relations with the Bank in relation to this transaction such information about the Seller and the Obligor as the Bank shall consider appropriate. 16.   LAW AND JURISDICTION 16.1 Applicable Law The Purchase Documents and all legal relations based thereon are subject to Austrian Law. 17 -------------------------------------------------------------------------------- 16.2 General Business Conditions Unless otherwise agreed herein, the General Terms and Conditions of Bank Austria Creditanstalt AG May 2003 version, ("GTC BACA") and set forth in Annex 2 to the Offer, are an integral part of these Terms and Conditions. 16.3 Jurisdiction The competent courts for the first district of Vienna (especially the "Handelsgericht Wien" and any court which may replace such court by law) shall have the non-exclusive jurisdiction for any disputes arising in connection with the Purchase Documents and the purchases of Receivables based thereon. 18 -------------------------------------------------------------------------------- ANNEX 2         General Terms and Conditions of Bank Austria Creditanstalt AG 19 -------------------------------------------------------------------------------- QuickLinks Exhibit 10.39 ANNEX 1 ANNEX 2
Exhibit 10.3   AMENDED AND RESTATED EMPLOYMENT AGREEMENT (Edward Murphy)   THIS EMPLOYMENT AGREEMENT (“Agreement”), originally made as of June 29, 2006, is hereby amended and restated dated December 30, 2008 and effective January 1, 2009 by and between Edward Murphy (“Officer”), and National Mentor Holdings, Inc., a Delaware corporation (“Employer”).   WHEREAS, an Agreement and Plan of Merger dated March 22, 2006 (the “Merger Agreement”) was entered into by and among NMH Holdings, LLC, a Delaware limited liability company (“Parent”), NMH Mergersub, Inc. a Delaware Corporation wholly owned by Parent, and National Mentor Holdings Inc., a Delaware corporation, pursuant to which the Employer became a wholly owned subsidiary of Parent (the “Transaction”);   WHEREAS, Officer continued to be employed by the Employer following the Closing (as defined in the Merger Agreement) and Officer and Employer entered into this Agreement embodying the terms of Officer’s employment;   WHEREAS, the parties hereto have agreed that it is mutually beneficial to amend and restate the Agreement effective January 1, 2009 to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);   NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:   STATEMENT OF AGREEMENT   1.             EMPLOYMENT.  EMPLOYER AGREES TO EMPLOY OFFICER, AND OFFICER ACCEPTS SUCH EMPLOYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, FOR AN INITIAL TERM OF THREE YEARS COMMENCING ON THE CLOSING AND, UNLESS TERMINATED EARLIER IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, ENDING ON THE THIRD ANNIVERSARY OF THE CLOSING.  AFTER THE INITIAL TERM HAS EXPIRED, THIS AGREEMENT WILL RENEW AUTOMATICALLY ON THE ANNIVERSARY DATE OF EACH YEAR FOR A ONE YEAR TERM.  IF EITHER PARTY DESIRES NOT TO RENEW THE AGREEMENT, THEY MUST PROVIDE THE OTHER PARTY WITH WRITTEN NOTICE OF THEIR INTENT NOT TO RENEW THE AGREEMENT AT LEAST SIXTY (60) DAYS PRIOR TO THE NEXT ANNIVERSARY DATE.   2.             POSITION AND DUTIES OF OFFICER.  OFFICER WILL SERVE AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF EMPLOYER.  OFFICER AGREES TO SERVE IN SUCH POSITION, OR IN SUCH OTHER POSITIONS OF A SIMILAR STATUS OR LEVEL AS EMPLOYER DETERMINES FROM TIME TO TIME, AND TO PERFORM THE COMMENSURATE DUTIES THAT EMPLOYER MAY ASSIGN FROM TIME TO TIME TO OFFICER UNTIL THE EXPIRATION OF THE TERM OR SUCH TIME AS OFFICER’S EMPLOYMENT WITH EMPLOYER IS TERMINATED PURSUANT TO THIS AGREEMENT.   --------------------------------------------------------------------------------   3.                                       TIME DEVOTED AND LOCATION OF OFFICER.   (A)           SUBJECT TO SECTION 3(C), OFFICER WILL DEVOTE HIS FULL BUSINESS TIME AND ENERGY TO THE BUSINESS AFFAIRS AND INTERESTS OF EMPLOYER, AND WILL USE HIS REASONABLE BEST EFFORTS AND ABILITIES TO PROMOTE EMPLOYER’S INTERESTS.  OFFICER AGREES THAT HE WILL DILIGENTLY ENDEAVOR TO PERFORM SERVICES CONTEMPLATED BY THIS AGREEMENT IN A MANNER CONSISTENT WITH HIS POSITION AND IN ACCORDANCE WITH THE POLICIES ESTABLISHED BY THE EMPLOYER AND PROVIDED TO OFFICER FROM TIME TO TIME.   (B)           OFFICER’S PRIMARY BUSINESS OFFICE AND NORMAL PLACE OF WORK WILL BE LOCATED IN BOSTON, MASSACHUSETTS.   (C)           OFFICER MAY SERVE AS AN OFFICER, DIRECTOR, AGENT OR EMPLOYEE OF ANY DIRECT OR INDIRECT SUBSIDIARY OR OTHER AFFILIATE OF EMPLOYER, BUT MAY NOT SERVE AS AN OFFICER, DIRECTOR, AGENT OR EMPLOYEE OF ANY OTHER BUSINESS ENTERPRISE WITHOUT THE WRITTEN APPROVAL OF EMPLOYER’S BOARD OF DIRECTORS (THE “BOARD”); PROVIDED, THAT OFFICER MAY SERVE IN ANY CAPACITY WITH ANY CIVIC, EDUCATIONAL OR CHARITABLE ORGANIZATION, OR ANY GOVERNMENTAL ENTITY OR TRADE ASSOCIATION, WITHOUT SEEKING OR OBTAINING SUCH WRITTEN APPROVAL OF THE BOARD, IF SUCH ACTIVITIES AND SERVICES DO NOT MATERIALLY INTERFERE OR CONFLICT WITH THE PERFORMANCE OF OFFICER’S DUTIES UNDER THIS AGREEMENT.  NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED HEREIN SHALL PROHIBIT OFFICER FROM CONTINUING AS TRUSTEE OF THE MASSACHUSETTS HEALTH AND WELFARE TRUST.   4.                                       COMPENSATION.   (A)           BASE SALARY.  EMPLOYER WILL PAY OFFICER A BASE SALARY IN THE AMOUNT OF $350,000 PER YEAR (THE “BASE SALARY”), WHICH AMOUNT WILL BE PAID IN ACCORDANCE WITH EMPLOYER’S NORMAL PAYROLL SCHEDULE LESS APPROPRIATE WITHHOLDINGS FOR FEDERAL AND STATE TAXES AND OTHER DEDUCTIONS AUTHORIZED BY OFFICER.  SUCH SALARY WILL BE SUBJECT TO REVIEW AND ADJUSTMENT BY EMPLOYER FROM TIME TO TIME.   (B)           BONUSES.  EMPLOYER SHALL ESTABLISH A BONUS PLAN FOR EACH FISCAL YEAR (THE “PLAN”) PURSUANT TO WHICH OFFICER WILL BE ELIGIBLE TO RECEIVE AN ANNUAL BONUS (THE “BONUS”).  THE BOARD OR THE COMPENSATION COMMITTEE OF THE BOARD WILL ADMINISTER THE PLAN AND ESTABLISH PERFORMANCE OBJECTIVES FOR EACH YEAR IN CONSULTATION WITH OFFICER.  IN THE EVENT THAT EMPLOYER ACHIEVES TARGET BASED ON ACTUAL PERFORMANCE, OFFICER SHALL BE ENTITLED TO RECEIVE A BONUS IN AN AMOUNT EQUAL TO NO LESS THAN OFFICER’S BASE SALARY.  THE BONUS SHALL BE PAID TO THE OFFICER IN A SINGLE LUMP SUM ON OR BEFORE THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE APPLICABLE FISCAL YEAR OF THE EMPLOYER IN WHICH THE BONUS IS EARNED.   (C)           BENEFITS.  OFFICER WILL BE ELIGIBLE TO PARTICIPATE IN ALL BENEFIT PLANS TO THE SAME EXTENT AS THEY ARE MADE AVAILABLE TO OTHER SENIOR OFFICERS OF EMPLOYER.  OFFICER WILL RECEIVE SEPARATE INFORMATION DETAILING THE TERMS OF THE BENEFIT PLANS AND THE TERMS OF SUCH PLANS WILL CONTROL.  OFFICER ALSO WILL BE ELIGIBLE TO PARTICIPATE IN ANY ANNUAL INCENTIVE PLAN APPLICABLE TO OFFICER BY ITS TERMS.   5.                                       EXPENSES.  DURING THE TERM OF THIS AGREEMENT, EMPLOYER WILL REIMBURSE OFFICER PROMPTLY FOR ALL REASONABLE TRAVEL, ENTERTAINMENT, PARKING, BUSINESS MEETINGS AND SIMILAR EXPENDITURES IN PURSUANCE AND FURTHERANCE OF EMPLOYER’S BUSINESS UPON RECEIPT OF REASONABLY   2 --------------------------------------------------------------------------------   SUPPORTING DOCUMENTATION AS REQUIRED BY EMPLOYER’S POLICIES APPLICABLE TO ITS OFFICERS AND EMPLOYEES GENERALLY.  FOR ALL PURPOSES OF THIS AGREEMENT, (INCLUDING WITHOUT LIMITATION UNDER THIS SECTION 5, SECTION 6(B)(III) OR SECTION 6(C)(III)), ANY EXPENSE REIMBURSEMENTS MADE (OR ANY IN-KIND BENEFITS PROVIDED) TO OFFICER IN ANY ONE CALENDAR YEAR SHALL NOT AFFECT THE AMOUNT THAT MAY BE REIMBURSED IN ANY OTHER CALENDAR YEAR AND A REIMBURSEMENT OR IN-KIND BENEFIT (OR RIGHT THERETO) MAY NOT BE EXCHANGED OR LIQUIDATED FOR ANOTHER BENEFIT OR PAYMENT.  ANY REIMBURSEMENT SUBJECT TO SECTION 409A OF THE CODE AND THE RULES AND REGULATIONS THEREUNDER, SHALL BE MADE NO LATER THAN THE END OF THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH OFFICER INCURS SUCH EXPENSE.   6.                                       TERMINATION.   (A)           TERMINATION DUE TO RESIGNATION WITHOUT GOOD REASON, TERMINATION WITH CAUSE, OR NON-RENEWAL OF AGREEMENT BY OFFICER.  EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, THIS AGREEMENT, OFFICER’S EMPLOYMENT, AND OFFICER’S RIGHTS TO RECEIVE COMPENSATION AND BENEFITS FROM EMPLOYER, WILL TERMINATE UPON THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS: (I) THE EFFECTIVE DATE OF OFFICER’S RESIGNATION WITHOUT “GOOD REASON” (AS DEFINED IN SECTION 6(C) BELOW); (II) TERMINATION FOR “CAUSE” AT THE DISCRETION OF EMPLOYER UNDER ANY OF THE FOLLOWING CIRCUMSTANCES: (A) THE COMMISSION BY THE OFFICER OF AN ACT OF FRAUD OR EMBEZZLEMENT, (B) THE INDICTMENT OR CONVICTION OF THE OFFICER FOR (X) A FELONY OR (Y) A CRIME INVOLVING MORAL TURPITUDE OR A PLEA BY OFFICER OF GUILTY OR NOLO CONTENDERE INVOLVING SUCH A CRIME (TO THE EXTENT SUCH CRIME RESULTS IN AN ADVERSE EFFECT ON THE BUSINESS OR REPUTATION OF EMPLOYER), (C) THE WILLFUL MISCONDUCT BY THE OFFICER IN THE PERFORMANCE OF OFFICER’S DUTIES, INCLUDING ANY WILLFUL MISREPRESENTATION OR WILLFUL CONCEALMENT BY OFFICER ON ANY REPORT SUBMITTED TO EMPLOYER (OR ANY OF ITS SECURITYHOLDERS OR SUBSIDIARIES) THAT IS OTHER THAN DE MINIMIS, (D) THE VIOLATION BY OFFICER OF A WRITTEN EMPLOYER POLICY REGARDING SUBSTANCE ABUSE, SEXUAL HARASSMENT, DISCRIMINATION OR ANY OTHER MATERIAL WRITTEN POLICY OF EMPLOYER REGARDING EMPLOYMENT, (E) THE WILLFUL FAILURE OF THE OFFICER TO RENDER SERVICES TO EMPLOYER OR ANY OF ITS SUBSIDIARIES IN ACCORDANCE WITH OFFICER’S EMPLOYMENT WHICH FAILURE AMOUNTS TO A MATERIAL NEGLECT OF THE OFFICER’S DUTIES TO EMPLOYER OR ANY OF ITS SUBSIDIARIES, (F) THE FAILURE OF THE OFFICER TO COMPLY WITH REASONABLE DIRECTIVES OF THE BOARD CONSISTENT WITH THE OFFICER’S DUTIES OR (G) THE MATERIAL BREACH BY OFFICER OF ANY OF THE PROVISIONS OF ANY AGREEMENT BETWEEN OFFICER, ON THE ONE HAND, AND EMPLOYER OR A SECURITYHOLDER OR AN AFFILIATE OF EMPLOYER, ON THE OTHER HAND. NOTWITHSTANDING THE FOREGOING, WITH RESPECT TO CLAUSES (C), (D), (E), (F) AND (G) ABOVE, OFFICER’S TERMINATION OF EMPLOYMENT WITH EMPLOYER SHALL NOT BE DEEMED TO HAVE BEEN TERMINATED FOR CAUSE UNLESS AND UNTIL (X) OFFICER HAS BEEN PROVIDED WRITTEN NOTICE OF EMPLOYER’S INTENTION TO TERMINATE HIS EMPLOYMENT FOR CAUSE AND THE SPECIFIC FACTS RELIED ON, (Y) OFFICER HAS BEEN PROVIDED TEN (10) BUSINESS DAYS FROM THE RECEIPT OF SUCH NOTICE TO CURE ANY SUCH CONDUCT OR OMISSION GIVING RISE TO A TERMINATION FOR CAUSE, AND (Z) OFFICER DOES NOT CURE ANY SUCH CONDUCT OR OMISSION WITHIN SUCH TEN-DAY PERIOD; OR (III) THE EXPIRATION OF THE TERM OF THE AGREEMENT, IF OFFICER NOTIFIES EMPLOYER OF HIS NON-RENEWAL OF THE TERM OF THE AGREEMENT (OR AN EXTENSION THEREOF) PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 1 HEREOF.   Officer may resign his employment without “good reason” at any time by giving thirty (30) days written notice of resignation to Employer.   3 --------------------------------------------------------------------------------   If Officer is terminated pursuant to this Section 6(a), Employer’s only remaining financial obligation to Officer under this Agreement will be to pay any earned but unpaid base salary, any earned but unpaid bonus for any completed full year prior to the year of such termination and accrued but unpaid vacation and reimbursable travel and entertainment expenses through the date of Officer’s termination (collectively, “Accrued Obligations”).  Any Accrued Obligations attributable to earned but unpaid bonus shall be paid to the Officer in a single lump sum no later than the 15th day of the third month following the end of the fiscal year in which the bonus is earned, and any other Accrued Obligations under this Section 6(a) shall be paid to the Officer no later than 90 days following his Separation from Service from the Employer.   (B)           TERMINATION WITHOUT CAUSE OR NON-RENEWAL OF AGREEMENT BY EMPLOYER.  EMPLOYER MAY TERMINATE THIS AGREEMENT WITHOUT “CAUSE” (AS DEFINED IN SECTION 6(A)(II) ABOVE) AT ANY TIME BY GIVING THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO OFFICER.  IF EMPLOYER TERMINATES THIS AGREEMENT WITHOUT “CAUSE”, EMPLOYER MAY DIRECT OFFICER TO CEASE PROVIDING SERVICES IMMEDIATELY.  IN ADDITION, EMPLOYER MAY NOTIFY OFFICER OF EMPLOYER’S NON-RENEWAL OF THE TERM OF THE AGREEMENT (OR AN EXTENSION THEREOF) PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 1 HEREOF, IN WHICH CASE THE AGREEMENT AND OFFICER’S EMPLOYMENT HEREUNDER WILL CEASE AS OF THE EXPIRATION OF THE TERM OF THE AGREEMENT.  IF EMPLOYER TERMINATES THIS AGREEMENT WITHOUT “CAUSE”, OR NOTIFIES OFFICER OF NON-RENEWAL PURSUANT TO SECTION 1 HEREOF, EMPLOYER SHALL:   4 --------------------------------------------------------------------------------   (I)            WITH RESPECT TO THE ACCRUED OBLIGATIONS, PAY ANY EARNED BUT UNPAID BONUS TO THE OFFICER IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH SUCH BONUS IS EARNED, AND PAY ALL OTHER ACCRUED OBLIGATIONS TO THE OFFICER NO LATER THAN  90 DAYS FOLLOWING HIS SEPARATION FROM SERVICE FROM THE EMPLOYER;   (II)           CONTINUE TO PAY OFFICER THE BASE SALARY IN EFFECT AT THE TIME OF HIS SEPARATION FROM SERVICE, IN ACCORDANCE WITH THE EMPLOYER’S CUSTOMARY PAYROLL PRACTICES, FOR A PERIOD OF TWO YEARS.  SUCH PAYMENTS SHALL BEGIN ON THE PAYROLL DATE NEXT FOLLOWING THE OFFICER’S SEPARATION FROM SERVICE;   (III)          FOR THE TWO-YEAR PERIOD IMMEDIATELY FOLLOWING OFFICER’S SEPARATION FROM SERVICE, PERMIT THE OFFICER TO ELECT TO PARTICIPATE, SUBJECT TO OFFICER’S CONTINUED PAYMENT TO THE EMPLOYER OF THE “ACTIVE EMPLOYEE” PORTION OF THE PLAN PREMIUMS DURING SUCH PERIOD, IN ANY EMPLOYEE BENEFIT PLANS(S) (OTHER THAN ANY INCENTIVE OR BONUS PLANS) MAINTAINED BY THE EMPLOYER FROM TIME TO TIME FOR THE EMPLOYER’S SIMILARLY SITUATED ACTIVE EMPLOYEES, PROVIDED THAT (A) OFFICER WAS PARTICIPATING IN SUCH PLANS AT THE TIME OF HIS SEPARATION FROM SERVICE, (B) SUCH PLAN(S) PERMIT CONTINUED PARTICIPATION BY TERMINATED EMPLOYEES AND (C) WITH RESPECT TO ANY SUCH PLAN SUBJECT TO THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1986 (“COBRA”), SUCH COVERAGE IS CO-EXTENSIVE WITH COBRA AND OFFICER MAKES A VALID ELECTION OF CONTINUATION COVERAGE UNDER COBRA.   (IV)          ON OR BEFORE THE LAST DAY OF EACH OF THE TWO FULL CALENDAR YEARS FOLLOWING THE DATE OF THE OFFICER’S SEPARATION FROM SERVICE, PAY OFFICER AN AMOUNT EQUAL TO OFFICER’S TARGET ANNUAL BONUS FOR THE YEAR IN WHICH SUCH TERMINATION OCCURS; AND   (V)           PAY OFFICER A PRO RATA BONUS FOR THE YEAR IN WHICH SUCH TERMINATION OCCURS BASED ON EMPLOYER’S ACTUAL PERFORMANCE AS OF THE DATE OF TERMINATION, SUCH BONUS TO BE PAID IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH THE OFFICER’S SEPARATION FROM SERVICE OCCURS, PROVIDED, HOWEVER THAT NO SUCH PRO RATA BONUS WILL BE PAID IF THE OFFICER’S TERMINATION OCCURS IN THE FIRST SIX MONTHS OF SUCH FISCAL YEAR.   NO OTHER BENEFITS OR COMPENSATION WILL BE PAID OR PROVIDED TO OFFICER IF HE IS TERMINATED PURSUANT TO THIS SECTION 6(B) UNLESS OTHERWISE PROVIDED FOR IN THE TERMS OF THE APPLICABLE PLAN OR AGREEMENT.   (C)                                  TERMINATION BY OFFICER FOR GOOD REASON.  OFFICER MAY TERMINATE THIS AGREEMENT, AND HIS EMPLOYMENT WITH EMPLOYER, FOR “GOOD REASON” UPON THE OCCURRENCE OF ANY OF THE FOLLOWING: (I) A CHANGE BY EMPLOYER IN OFFICER’S TITLE, DUTIES AND RESPONSIBILITIES WHICH IS MATERIALLY INCONSISTENT WITH OFFICER’S POSITION IN EMPLOYER, (II) A MATERIAL REDUCTION IN OFFICER’S ANNUAL BASE SALARY OR ANNUAL BONUS OPPORTUNITY, PROVIDED THAT ANY REDUCTION OF UP TO TEN PERCENT (10%) OF OFFICER’S SALARY OR BONUS OPPORTUNITY (IN EFFECT ON JUNE 29, 2006) THAT IS PART OF A PLAN TO REDUCE COMPENSATION OF COMPARABLY SITUATED EMPLOYEES OF EMPLOYER GENERALLY SHALL NOT BE CONSIDERED A “MATERIAL REDUCTION IN OFFICER’S ANNUAL BASE SALARY OR ANNUAL BONUS OPPORTUNITY” HEREUNDER, (III) A MATERIAL BREACH BY EMPLOYER OF THIS AGREEMENT, OR (IV) THE RELOCATION OF THE   5 --------------------------------------------------------------------------------   OFFICER’S PRINCIPAL PLACE OF WORK FROM ITS CURRENT LOCATION TO A LOCATION THAT IS BEYOND A 50-MILE RADIUS OF SUCH CURRENT LOCATION.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, OFFICER SHALL ONLY HAVE “GOOD REASON” TO TERMINATE EMPLOYMENT IF OFFICER GIVES NOTICE, IN WRITING, TO THE EMPLOYER OF THE ACT OR OMISSION WHICH IS ALLEGED TO CONSTITUTE “GOOD REASON” WITHIN 90 DAYS OF THE INITIAL OCCURRENCE THEREOF, AND EMPLOYER FAILS TO REMEDY SUCH ACT OR OMISSION WITHIN THIRTY (30) DAYS FOLLOWING EMPLOYER’S RECEIPT OF WRITTEN NOTICE FROM OFFICER SPECIFYING SUCH ACT OR OMISSION.   IF OFFICER TERMINATES THIS AGREEMENT FOR “GOOD REASON”, EMPLOYER SHALL   6 --------------------------------------------------------------------------------   (I)            WITH RESPECT TO THE ACCRUED OBLIGATIONS, PAY ANY EARNED BUT UNPAID BONUS TO THE OFFICER IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH SUCH BONUS IS EARNED, AND PAY ALL OTHER ACCRUED OBLIGATIONS TO THE OFFICER NO LATER THAN  90 DAYS FOLLOWING HIS SEPARATION FROM SERVICE FROM THE EMPLOYER;   (II)           CONTINUE TO PAY OFFICER THE BASE SALARY IN EFFECT AT THE TIME OF HIS SEPARATION FROM SERVICE, IN ACCORDANCE WITH THE EMPLOYER’S CUSTOMARY PAYROLL PRACTICES, FOR A PERIOD OF TWO YEARS.  SUCH PAYMENTS SHALL BEGIN ON THE PAYROLL DATE NEXT FOLLOWING THE OFFICER’S SEPARATION FROM SERVICE;   (III)          FOR THE TWO-YEAR PERIOD IMMEDIATELY FOLLOWING OFFICER’S SEPARATION FROM SERVICE, PERMIT THE OFFICER TO ELECT TO PARTICIPATE, SUBJECT TO OFFICER’S CONTINUED PAYMENT TO THE EMPLOYER OF THE “ACTIVE EMPLOYEE” PORTION OF THE PLAN PREMIUMS DURING SUCH PERIOD, IN ANY EMPLOYEE BENEFIT PLANS(S) (OTHER THAN ANY INCENTIVE OR BONUS PLANS) MAINTAINED BY THE EMPLOYER FROM TIME TO TIME FOR THE EMPLOYER’S SIMILARLY SITUATED ACTIVE EMPLOYEES, PROVIDED THAT (A) OFFICER WAS PARTICIPATING IN SUCH PLANS AT THE TIME OF HIS SEPARATION FROM SERVICE, (B) SUCH PLAN(S) PERMIT CONTINUED PARTICIPATION BY TERMINATED EMPLOYEES AND (C) WITH RESPECT TO ANY SUCH PLAN SUBJECT TO THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1986 (“COBRA”), SUCH COVERAGE IS CO-EXTENSIVE WITH COBRA AND OFFICER MAKES A VALID ELECTION OF CONTINUATION COVERAGE UNDER COBRA.   (IV)          ON OR BEFORE THE LAST DAY OF EACH OF THE TWO FULL CALENDAR YEARS FOLLOWING THE DATE OF THE OFFICER’S SEPARATION FROM SERVICE, PAY OFFICER AN AMOUNT EQUAL TO OFFICER’S TARGET ANNUAL BONUS FOR THE YEAR IN WHICH SUCH TERMINATION OCCURS; AND   (V)           PAY OFFICER A PRO RATA BONUS FOR THE YEAR IN WHICH SUCH TERMINATION OCCURS BASED ON EMPLOYER’S ACTUAL PERFORMANCE AS OF THE DATE OF TERMINATION, SUCH BONUS TO BE PAID IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH THE OFFICER’S SEPARATION FROM SERVICE OCCURS, PROVIDED, HOWEVER THAT NO SUCH PRO RATA BONUS WILL BE PAID IF THE OFFICER’S TERMINATION OCCURS IN THE FIRST SIX MONTHS OF SUCH FISCAL YEAR.   NO OTHER BENEFITS OR COMPENSATION WILL BE PAID OR PROVIDED TO OFFICER IF HE IS TERMINATED PURSUANT TO THIS SECTION 6(C) UNLESS OTHERWISE PROVIDED FOR IN THE TERMS OF THE APPLICABLE PLAN OR AGREEMENT.   (D)           AUTOMATIC TERMINATION.  THIS AGREEMENT WILL TERMINATE AUTOMATICALLY UPON THE DEATH OR PERMANENT DISABILITY OF OFFICER. OFFICER WILL BE DEEMED TO BE “DISABLED” OR TO SUFFER FROM A “DISABILITY” WITHIN THE MEANING OF THIS AGREEMENT IF (I) THE OFFICER IS UNABLE TO ENGAGE IN ANY SUBSTANTIAL GAINFUL ACTIVITY BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT THAT CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS,  (II) THE OFFICER IS, BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT THAT CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS, RECEIVING INCOME REPLACEMENT BENEFITS FOR A PERIOD OF NOT LESS THAN THREE MONTHS UNDER AN ACCIDENT AND HEALTH PLAN   7 --------------------------------------------------------------------------------   COVERING EMPLOYEES OF THE EMPLOYER, OR (III) THE OFFICER IS DETERMINED TO BE TOTALLY DISABLED BY THE SOCIAL SECURITY ADMINISTRATION. SUBJECT TO CONTINUING COVERAGE UNDER APPLICABLE BENEFIT PLANS, AND EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT OR AS MAY BE REQUIRED BY LAW, IF OFFICER IS TERMINATED PURSUANT TO THIS SECTION 6(D), EMPLOYER’S ONLY REMAINING FINANCIAL OBLIGATION TO OFFICER UNDER THIS AGREEMENT WILL BE TO PAY OFFICER (OR HIS BENEFICIARY, AS THE CASE MAY BE) (X) THE ACCRUED OBLIGATIONS AND (Y) A PRO RATA BONUS FOR THE YEAR IN WHICH SUCH TERMINATION OCCURS BASED ON EMPLOYER’S ACTUAL PERFORMANCE, SUCH BONUS TO BE PAID IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH HIS SEPARATION FROM SERVICE FROM THE EMPLOYER BY REASON OF DISABILITY OR DEATH OCCURS.   WITH RESPECT TO THE ACCRUED OBLIGATIONS, EMPLOYER SHALL PAY ANY EARNED BUT UNPAID BONUS TO THE OFFICER (OR HIS BENEFICIARY, AS THE CASE MAY BE) IN A SINGLE LUMP SUM NO LATER THAN THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE FISCAL YEAR IN WHICH SUCH BONUS IS EARNED, AND PAY ALL OTHER ACCRUED OBLIGATIONS TO THE OFFICER NO LATER THAN  90 DAYS FOLLOWING HIS SEPARATION FROM SERVICE FROM THE EMPLOYER BY REASON OF DEATH OR DISABILITY;   (E)           EFFECT OF TERMINATION.  EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT, UPON TERMINATION OF THIS AGREEMENT, ALL RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT WILL CEASE EXCEPT FOR THE RIGHTS AND OBLIGATIONS UNDER SECTIONS 4 AND 5 TO THE EXTENT OFFICER HAS NOT BEEN COMPENSATED OR REIMBURSED FOR SERVICES PERFORMED PRIOR TO TERMINATION OR HAS NOT BEEN PAID VACATION AND REIMBURSABLE TRAVEL AND ENTERTAINMENT EXPENSES ACCRUED THROUGH THE TERMINATION DATE (THE AMOUNT OF COMPENSATION TO BE PRORATED FOR THE PORTION OF THE PAY PERIOD PRIOR TO TERMINATION); THE RIGHTS AND OBLIGATIONS UNDER SECTIONS 8, 9 AND 10; AND ALL PROCEDURAL AND REMEDIAL PROVISIONS OF THIS AGREEMENT.  A TERMINATION OF THIS AGREEMENT WILL CONSTITUTE A TERMINATION OF OFFICER’S EMPLOYMENT WITH EMPLOYER.   (F)            SEPARATION FROM SERVICE.  ANY TERMINATION OF EMPLOYMENT TRIGGERING PAYMENT OF BENEFITS UNDER THIS SECTION 6 MUST CONSTITUTE A SEPARATION FROM SERVICE WITHIN THE MEANING OF TREAS. REG. § 1.409A-1(H) (A “SEPARATION FROM SERVICE”) BEFORE DISTRIBUTION OF SUCH BENEFITS CAN COMMENCE.  FOR PURPOSES OF CLARIFICATION, THIS PARAGRAPH SHALL NOT CAUSE ANY FORFEITURE OF BENEFITS ON THE PART OF THE OFFICER, BUT SHALL ONLY ACT AS A DELAY UNTIL SUCH TIME AS A SEPARATION FROM SERVICE OCCURS.   (G)           CERTAIN DELAYED PAYMENTS.  IF ANY AMOUNT TO BE PAID TO OFFICER PURSUANT TO THIS SECTION 6 AS A RESULT OF OFFICER’S TERMINATION OF EMPLOYMENT IS “DEFERRED COMPENSATION” SUBJECT TO SECTION 409A OF THE CODE AND THE RULES AND REGULATIONS THEREUNDER AND IF THE OFFICER IS A “SPECIFIED EMPLOYEE” (AS DEFINED UNDER SECTION 409A) AS OF THE DATE OF OFFICER’S TERMINATION OF EMPLOYMENT HEREUNDER, THEN, TO THE EXTENT NECESSARY TO AVOID THE IMPOSITION OF EXCISE TAXES OR OTHER PENALTIES UNDER SECTION 409A OF THE CODE, THE PAYMENT OF BENEFITS, IF ANY, SCHEDULED TO BE PAID BY THE EMPLOYER TO OFFICER HEREUNDER DURING THE FIRST SIX (6) MONTH PERIOD FOLLOWING THE DATE OF A TERMINATION OF EMPLOYMENT HEREUNDER SHALL NOT BE PAID UNTIL THE DATE WHICH IS THE FIRST BUSINESS DAY FOLLOWING THE SIX-MONTH ANNIVERSARY OF OFFICER’S TERMINATION OF EMPLOYMENT FOR ANY REASON OTHER THAN DEATH.  ANY DEFERRED COMPENSATION PAYMENTS DELAYED IN ACCORDANCE WITH THE TERMS OF THIS PARAGRAPH SHALL BE PAID IN A LUMP SUM WHEN PAID.   7.                                       NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY OTHER AGREEMENT, PLAN, PROGRAM OR POLICY TO WHICH OFFICER AND THE EMPLOYER ARE PARTIES OR BY WHICH THEY ARE BOUND, TO THE EXTENT THAT ANY PAYMENTS HEREUNDER (WHEN AGGREGATED WITH ANY OTHER PAYMENTS, BENEFITS OR   8 --------------------------------------------------------------------------------   OTHER CONSIDERATION TO BE RECEIVED BY OFFICER IN CONNECTION WITH THE CHANGE IN CONTROL OCCURRING AS A RESULT OF THE TRANSACTION CONTEMPLATED IN THE MERGER AGREEMENT) COULD REASONABLY BE EXPECTED TO RESULT IN ANY AMOUNT OR PAYMENT WHICH WOULD BE NON-DEDUCTIBLE UNDER SECTION 280G OF THE CODE, ANY PAYMENTS THAT WOULD OTHERWISE BE PAYABLE HEREUNDER SHALL BE REDUCED (TO THE EXTENT POSSIBLE, THE SPECIFIC PAYMENT TO BE SO REDUCED WILL BE MADE AT THE ELECTION OF OFFICER), BUT NOT BELOW ZERO, SUCH THAT THE TOTAL AMOUNT CONSIDERED TO HAVE BEEN RECEIVED BY OFFICER WILL BE ONE DOLLAR LESS THAN THE AMOUNT WHICH WOULD RESULT IN THE LOSS OF ANY DEDUCTION UNDER SUCH SECTION 280G WITH RESPECT TO THE AMOUNTS.  THE PARTIES INTEND FOR THE PAYMENTS UNDER SECTIONS 4 AND 6 OF THIS AGREEMENT TO REASONABLY COMPENSATE OFFICER FOR HIS SERVICES TO BE PERFORMED AFTER THE CLOSING, OR IN THE EVENT OF HIS TERMINATION OF EMPLOYMENT, TO COMPENSATE HIM FOR THE RESTRICTIVE COVENANTS BY WHICH HE IS BOUND, THE RELEASE OF HIS CLAIMS, AND, IN CERTAIN CIRCUMSTANCES, THE INTERRUPTION OF HIS EMPLOYMENT.  THE PROVISIONS OF THIS SECTION 7 SHALL NOT BE APPLIED TO REDUCE AMOUNTS PAYABLE TO THE OFFICER TO THE EXTENT SUCH AMOUNTS ARE TREATED AS A “PARACHUTE PAYMENT” IN CONNECTION WITH ANY TRANSACTION OTHER THAN THE TRANSACTIONS CONTEMPLATED IN THE MERGER AGREEMENT.   8.                                       PROTECTION OF CONFIDENTIAL INFORMATION/NON-COMPETITION/NON-SOLICITATION.   Officer covenants and agrees as follows:   (A)           OFFICER WILL NOT AT ANY TIME (WHETHER DURING OR AFTER OFFICER’S EMPLOYMENT WITH EMPLOYER), OTHER THAN IN THE ORDINARY COURSE OF PERFORMING SERVICES FOR EMPLOYER, (X) RETAIN OR USE FOR THE BENEFIT, PURPOSES OR ACCOUNT OF OFFICER OR ANY OTHER PERSON, FIRM, PARTNERSHIP, JOINT VENTURE, ASSOCIATION, CORPORATION OR OTHER BUSINESS ORGANIZATION, ENTITY OR ENTERPRISE WHATSOEVER (“PERSON”); OR (Y) DISCLOSE, DIVULGE, REVEAL, COMMUNICATE, SHARE, TRANSFER OR PROVIDE ACCESS TO ANY PERSON OUTSIDE EMPLOYER (OTHER THAN ITS PROFESSIONAL ADVISERS WHO ARE BOUND BY CONFIDENTIALITY OBLIGATIONS), ANY NON-PUBLIC, PROPRIETARY OR CONFIDENTIAL INFORMATION OBTAINED BY OFFICER IN CONNECTION WITH THE COMMENCEMENT OF OFFICER’S EMPLOYMENT WITH EMPLOYER OR AT ANY TIME THEREAFTER DURING THE COURSE OF OFFICER’S EMPLOYMENT WITH EMPLOYER — INCLUDING WITHOUT LIMITATION TRADE SECRETS, KNOW-HOW, RESEARCH AND DEVELOPMENT, SOFTWARE, DATABASES, INVENTIONS, PROCESSES, FORMULAE, TECHNOLOGY, DESIGNS AND OTHER INTELLECTUAL PROPERTY, INFORMATION CONCERNING FINANCES, INVESTMENTS, PROFITS, PRICING, COSTS, PRODUCTS, SERVICES, VENDORS, CUSTOMERS, CLIENTS, PARTNERS, INVESTORS, PERSONNEL, COMPENSATION, RECRUITING, TRAINING, ADVERTISING, SALES, MARKETING, PROMOTIONS, GOVERNMENT AND REGULATORY ACTIVITIES AND APPROVALS — CONCERNING THE PAST, CURRENT OR FUTURE BUSINESS, ACTIVITIES AND OPERATIONS OF EMPLOYER AND/OR ANY THIRD PARTY THAT HAS DISCLOSED OR PROVIDED ANY OF THE SAME TO EMPLOYER ON A CONFIDENTIAL BASIS (PROVIDED THAT WITH RESPECT TO SUCH THIRD PARTY OFFICER KNOWS OR REASONABLY SHOULD HAVE KNOWN THAT THE THIRD PARTY PROVIDED IT TO EMPLOYER ON A CONFIDENTIAL BASIS) (“CONFIDENTIAL INFORMATION”) WITHOUT THE PRIOR WRITTEN AUTHORIZATION OF THE BOARD OF DIRECTORS OF EMPLOYER; PROVIDED, HOWEVER, THAT IN ANY EVENT OFFICER SHALL BE PERMITTED TO DISCLOSE ANY CONFIDENTIAL INFORMATION REASONABLY NECESSARY (I) TO PERFORM OFFICER’S DUTIES WHILE EMPLOYED WITH EMPLOYER OR (II) IN CONNECTION WITH ANY LITIGATION OR ARBITRATION INVOLVING THIS OR ANY OTHER AGREEMENT ENTERED INTO BETWEEN OFFICER AND EMPLOYER BEFORE, ON OR AFTER THE DATE OF THIS AGREEMENT IN CONNECTION WITH ANY ACTION OR PROCEEDING IN RESPECT THEREOF.   (B)           “CONFIDENTIAL INFORMATION” SHALL NOT INCLUDE ANY INFORMATION THAT IS (A) GENERALLY KNOWN TO THE INDUSTRY OR THE PUBLIC OTHER THAN AS A RESULT OF OFFICER’S BREACH OF THIS   9 --------------------------------------------------------------------------------   COVENANT OR ANY BREACH OF OTHER CONFIDENTIALITY OBLIGATIONS BY THIRD PARTIES TO THE EXTENT THE OFFICER KNOWS OR REASONABLY SHOULD HAVE KNOWN OF SUCH BREACH BY SUCH THIRD PARTIES; (B) MADE LEGITIMATELY AVAILABLE TO OFFICER BY A THIRD PARTY (UNLESS OFFICER KNOWS OR REASONABLY SHOULD HAVE KNOWN THAT SUCH THIRD PARTY HAS BREACHED ANY CONFIDENTIALITY OBLIGATION); OR (C) REQUIRED BY LAW OR BY ANY COURT, ARBITRATOR, MEDIATOR OR ADMINISTRATIVE OR LEGISLATIVE BODY (INCLUDING ANY COMMITTEE THEREOF) WITH ACTUAL OR APPARENT JURISDICTION TO ORDER OFFICER TO DISCLOSE OR MAKE ACCESSIBLE ANY INFORMATION; PROVIDED THAT, WITH RESPECT TO CLAUSE (C) OFFICER, EXCEPT AS OTHERWISE PROHIBITED BY LAW OR REGULATION, SHALL GIVE PROMPT WRITTEN NOTICE TO EMPLOYER OF SUCH REQUIREMENT, DISCLOSE NO MORE INFORMATION THAN IS SO REQUIRED, AND SHALL REASONABLY COOPERATE WITH ANY ATTEMPTS BY EMPLOYER, AT ITS SOLE COST, TO OBTAIN A PROTECTIVE ORDER OR SIMILAR TREATMENT PRIOR TO MAKING SUCH DISCLOSURE.   (C)           EXCEPT AS REQUIRED BY LAW OR OTHERWISE SET FORTH IN SECTION 8(B) ABOVE, OR UNLESS OR UNTIL PUBLICLY DISCLOSED BY EMPLOYER, OFFICER WILL NOT DISCLOSE TO ANYONE, OTHER THAN OFFICER’S IMMEDIATE FAMILY AND LEGAL, TAX OR FINANCIAL ADVISORS, THE MATERIAL PROVISIONS OF THIS AGREEMENT; PROVIDED THAT OFFICER MAY DISCLOSE THE PROVISIONS OF THIS AGREEMENT (A) TO ANY PROSPECTIVE FUTURE EMPLOYER PROVIDED THEY AGREE TO MAINTAIN THE CONFIDENTIALITY OF SUCH TERMS OR (B) IN CONNECTION WITH ANY LITIGATION OR ARBITRATION INVOLVING THIS AGREEMENT.   (D)           UPON TERMINATION OF OFFICER’S EMPLOYMENT WITH EMPLOYER FOR ANY REASON, OFFICER SHALL (A) CEASE AND NOT THEREAFTER COMMENCE USE OF ANY CONFIDENTIAL INFORMATION OR INTELLECTUAL PROPERTY (INCLUDING WITHOUT LIMITATION, ANY PATENT, INVENTION, COPYRIGHT, TRADE SECRET, TRADEMARK, TRADE NAME, LOGO, DOMAIN NAME OR OTHER SOURCE INDICATOR) IF SUCH PROPERTY IS OWNED OR USED BY EMPLOYER; (B) IMMEDIATELY DESTROY, DELETE, OR RETURN TO EMPLOYER, AT EMPLOYER’S OPTION, ALL ORIGINALS AND COPIES IN ANY FORM OR ‘MEDIUM (INCLUDING MEMORANDA, BOOKS, PAPERS, PLANS, COMPUTER FILES, LETTERS AND OTHER DATA) IN OFFICER’S POSSESSION OR CONTROL (INCLUDING ANY OF THE FOREGOING STORED OR LOCATED IN OFFICER’S OFFICE, HOME, LAPTOP OR OTHER COMPUTER, WHETHER OR NOT EMPLOYER PROPERTY) THAT CONTAIN CONFIDENTIAL INFORMATION OR OTHERWISE RELATE TO THE BUSINESS OF EMPLOYER, EXCEPT THAT OFFICER MAY RETAIN ONLY THOSE PORTIONS OF ANY PERSONAL NOTES, NOTEBOOKS AND DIARIES THAT DO NOT CONTAIN CONFIDENTIAL INFORMATION; AND (C) NOTIFY AND FULLY COOPERATE WITH EMPLOYER REGARDING THE DELIVERY OR DESTRUCTION OF ANY OTHER CONFIDENTIAL INFORMATION OF WHICH OFFICER IS OR BECOMES AWARE TO THE EXTENT SUCH INFORMATION IS IN OFFICER’S POSSESSION OR CONTROL. NOTWITHSTANDING ANYTHING ELSEWHERE TO THE CONTRARY, OFFICER SHALL BE ENTITLED TO RETAIN (AND NOT DESTROY) INFORMATION SHOWING OFFICER’S COMPENSATION OR RELATING TO REIMBURSEMENT OF EXPENSES THAT OFFICER REASONABLY BELIEVES IS NECESSARY FOR TAX PURPOSES AND COPIES OF PLANS, PROGRAMS, POLICIES AND ARRANGEMENTS OF, OR OTHER AGREEMENTS WITH, EMPLOYER ADDRESSING OFFICER’S COMPENSATION OR EMPLOYMENT OR TERMINATION THEREOF.   (E)           DURING THE TERM OF OFFICER’S EMPLOYMENT AND DURING THE TWO (2) YEARS IMMEDIATELY FOLLOWING (X) THE DATE OF ANY TERMINATION OF OFFICER’S EMPLOYMENT WITH EMPLOYER BY EMPLOYER WITH OR WITHOUT CAUSE AND (Y) IF EARLIER THAN THE DATE REFERENCED IN CLAUSE (X) HEREOF, THE DATE THAT NOTICE IS GIVEN BY OFFICER TO EMPLOYER OF OFFICER’S RESIGNATION FROM EMPLOYER FOR ANY REASON (OTHER THAN DUE TO OFFICER’S DEATH) (SUCH PERIOD, THE “RESTRICTED PERIOD”), OFFICER WILL NOT, DIRECTLY OR INDIRECTLY:   (A)          engage in any business that competes, wholly or in part, as of the Relevant Date (as defined below), in the provision or sale of acquired brain injury services,   10 --------------------------------------------------------------------------------   therapeutic foster care, other foster care or other home or community-based healthcare, therapy, counseling or other educational or human services to people with special needs, or any other business that Employer is actively conducting or is actively considering conducting at the time of Officer’s termination of employment (so long as Officer knows or reasonably should have known about such plan(s)), in each case anywhere in the United States (a “Competitive Business”);   (B)           enter the employ of, or render any services to, any Person (or any division or controlled or controlling affiliate of any Person) who or which is a Competitive Business as of the date Officer enters such employment or renders such services; or   (C)           acquire a financial interest in, or otherwise become actively involved with, any Competitive Business which is a Competitive Business as of the date of such acquisition or involvement, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or officer.   (F)            NOTWITHSTANDING THE PROVISIONS OF SECTION 8(E)(A), (B) OR (C) ABOVE, NOTHING CONTAINED IN SECTION 8(E) SHALL PROHIBIT OFFICER FROM (A) INVESTING, AS A PASSIVE INVESTOR, IN ANY PUBLICLY HELD COMPANY PROVIDED THAT OFFICER’S BENEFICIAL OWNERSHIP OF ANY CLASS OF SUCH PUBLICLY HELD COMPANY’S SECURITIES DOES NOT EXCEED ONE PERCENT (1%) OF THE OUTSTANDING SECURITIES OF SUCH CLASS, (B) ENTERING THE EMPLOY OF ANY ACADEMIC INSTITUTION OR GOVERNMENTAL OR REGULATORY INSTRUMENTALITY OF ANY COUNTRY OR ANY DOMESTIC OR FOREIGN STATE, COUNTY, CITY OR POLITICAL SUBDIVISION, OR (C) PROVIDING SERVICES TO A SUBSIDIARY OR AFFILIATE OF AN ENTITY THAT CONTROLS A SEPARATE SUBSIDIARY OR AFFILIATE THAT IS A COMPETITIVE BUSINESS, SO LONG AS THE SUBSIDIARY OR AFFILIATE FOR WHICH OFFICER MAY BE PROVIDING SERVICES IS NOT ITSELF A COMPETITIVE BUSINESS AND OFFICER IS NOT, AS AN OFFICER OF SUCH SUBSIDIARY OR AFFILIATE, ENGAGING IN ACTIVITIES THAT WOULD OTHERWISE CAUSE SUCH SUBSIDIARY OR AFFILIATE TO BE DEEMED A COMPETITIVE BUSINESS.   (G)           DURING THE RESTRICTED PERIOD, OFFICER WILL NOT, WHETHER ON OFFICER’S OWN BEHALF OR ON BEHALF OF OR IN CONJUNCTION WITH ANY PERSON, DIRECTLY OR INDIRECTLY SOLICIT OR ASSIST IN SOLICITING THE BUSINESS OF, IN ALL SUCH CASES DETERMINED AS OF THE RELEVANT DATE (COLLECTIVELY, THE “CLIENTS”):   (A)          with whom Officer had personal contact or dealings on behalf of Employer during the one-year period immediately preceding Officer’s termination of employment;   (B)           with whom employees of Employer reporting to Officer have had personal contact on behalf of Employer and about such contacts the Officer was aware during the one-year period immediately preceding the Officer’s termination of employment; or   (C)           with whom Officer had direct or indirect responsibility during the one-year period immediately preceding Officer’s termination of employment.   For purposes of this Section 8, the term “Relevant Date” shall mean, during the term of Officer’s employment, any date falling during such time, and, for the period of time during the Restricted Period that falls after the date of any termination of Officer’s employment with Employer, the effective date of termination of Officer’s employment with Employer.   11 --------------------------------------------------------------------------------   (H)           NON-INTERFERENCE WITH BUSINESS RELATIONSHIPS.  DURING THE RESTRICTED PERIOD, OFFICER WILL NOT INTERFERE WITH, OR ATTEMPT TO INTERFERE WITH, BUSINESS RELATIONSHIPS (WHETHER FORMED BEFORE, ON OR AFTER THE DATE OF THIS AGREEMENT) BETWEEN EMPLOYER, ON THE ONE HAND, AND ANY CLIENT, CUSTOMERS, SUPPLIERS, PARTNERS, OF EMPLOYER, ON THE OTHER HAND, IN ANY SUCH CASE DETERMINED AS OF THE RELEVANT DATE.   (I)            DURING THE TERM OF OFFICER’S EMPLOYMENT AND DURING THE RESTRICTED PERIOD, OFFICER WILL NOT, WHETHER ON OFFICER’S OWN BEHALF OR ON BEHALF OF OR IN CONJUNCTION WITH ANY PERSON, DIRECTLY OR INDIRECTLY (OTHER THAN IN THE ORDINARY COURSE OF OFFICER’S EMPLOYMENT WITH EMPLOYER ON EMPLOYER’S BEHALF):   (A)          solicit or encourage any employee of Employer to leave the employment of Employer; or   (B)           hire any such employee who was employed by Employer as of the date of Officer’s termination of employment with Employer or who left the employment of Employer coincident with, or within one year prior to or after, the termination of Officer’s employment with Employer; or   (C)           solicit or encourage to cease to work with Employer any Officer that Officer knows, or reasonably should have known, is then under contract with Employer.   (J)            EMPLOYER MAY, WITH THE PRIOR WRITTEN CONSENT OF NATIONAL MENTOR HOLDINGS, INC., WAIVE COMPLIANCE WITH ONE OR MORE OF THE COVENANTS OF OFFICER SET FORTH IN THIS SECTION 8 FOR THE PURPOSE OF FACILITATING THE NEGOTIATION OF THE ACQUISITION OF EMPLOYER BY A THIRD PARTY.  SUCH A WAIVER MUST BE MADE IN WRITING AND EXECUTED BY EMPLOYER AND NATIONAL MENTOR HOLDINGS, INC., AND SHALL BE EFFECTIVE ONLY WITH RESPECT TO THE ACTS SPECIFICALLY DESCRIBED THEREIN.   It is expressly understood and agreed that although Officer and Employer consider the restrictions contained in this Section 8 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Officer, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable (provided that in no event shall any such amendment broaden the time period or scope of any restriction herein).  Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.   9.                                       INTELLECTUAL PROPERTY.   (A)           IF OFFICER HAS CREATED, INVENTED, DESIGNED, DEVELOPED, CONTRIBUTED TO OR IMPROVED ANY INVENTIONS, INTELLECTUAL PROPERTY, DISCOVERIES, COPYRIGHTABLE SUBJECT MATTERS OR OTHER SIMILAR WORK OF INTELLECTUAL PROPERTY (INCLUDING WITHOUT LIMITATION, RESEARCH, REPORTS, SOFTWARE, DATABASES, SYSTEMS OR APPLICATIONS, PRESENTATIONS, TEXTUAL WORKS, CONTENT, OR AUDIOVISUAL MATERIALS) (“WORKS”), EITHER ALONE OR WITH THIRD PARTIES, PRIOR TO OR DURING OFFICER’S PRIOR AND CURRENT EMPLOYMENT WITH EMPLOYER, THAT ARE IN CONNECTION WITH SUCH EMPLOYMENT (“PRIOR   12 --------------------------------------------------------------------------------   WORKS”), TO THE EXTENT OFFICER HAS RETAINED OR DOES RETAIN ANY RIGHT IN SUCH PRIOR WORK, OFFICER HEREBY GRANTS EMPLOYER A PERPETUAL, NON-EXCLUSIVE, ROYALTY-FREE, WORLDWIDE, ASSIGNABLE, SUBLICENSABLE LICENSE UNDER ALL RIGHTS AND INTELLECTUAL PROPERTY RIGHTS (INCLUDING RIGHTS UNDER PATENT, INDUSTRIAL PROPERTY, COPYRIGHT, TRADEMARK, TRADE SECRET, UNFAIR COMPETITION AND RELATED LAWS) THEREIN TO THE EXTENT OF OFFICER’S RIGHTS IN SUCH PRIOR WORK FOR ALL PURPOSES IN CONNECTION WITH EMPLOYER’S CURRENT AND FUTURE BUSINESS.   (B)           IF OFFICER CREATES, INVENTS, DESIGNS, DEVELOPS, CONTRIBUTES TO OR IMPROVES ANY WORKS, EITHER ALONE OR WITH THIRD PARTIES, AT ANY TIME DURING OFFICER’S EMPLOYMENT BY EMPLOYER AND WITHIN THE SCOPE OF SUCH EMPLOYMENT AND/OR WITH THE USE OF ANY EMPLOYER RESOURCES (“COMPANY WORKS”), OFFICER SHALL PROMPTLY AND FULLY DISCLOSE SAME TO EMPLOYER AND HEREBY IRREVOCABLY ASSIGNS, TRANSFERS AND CONVEYS, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND AT EMPLOYER’S SOLE EXPENSE, ALL RIGHTS AND INTELLECTUAL PROPERTY RIGHTS THEREIN (INCLUDING RIGHTS UNDER PATENT, INDUSTRIAL PROPERTY, COPYRIGHT, TRADEMARK, TRADE SECRET, UNFAIR COMPETITION AND RELATED LAWS) TO EMPLOYER TO THE EXTENT OWNERSHIP OF ANY SUCH RIGHTS DOES NOT VEST ORIGINALLY IN EMPLOYER.   (C)           OFFICER AGREES TO KEEP AND MAINTAIN ADEQUATE AND CURRENT WRITTEN RECORDS (IN THE FORM OF NOTES, SKETCHES, DRAWINGS, AND ANY OTHER FORM OR MEDIA REQUESTED BY EMPLOYER) OF ALL COMPANY WORKS. THE RECORDS WILL BE AVAILABLE TO AND REMAIN THE SOLE PROPERTY AND INTELLECTUAL PROPERTY OF EMPLOYER AT ALL TIMES.   (D)           OFFICER SHALL TAKE ALL REQUESTED ACTIONS AND EXECUTE ALL REQUESTED DOCUMENTS (INCLUDING ANY LICENSES OR ASSIGNMENTS REQUIRED BY A GOVERNMENT CONTRACT) AT EMPLOYER’S EXPENSE (BUT WITHOUT FURTHER REMUNERATION) TO ASSIST EMPLOYER IN VALIDATING, MAINTAINING, PROTECTING, ENFORCING, PERFECTING, RECORDING, PATENTING OR REGISTERING ANY OF EMPLOYER’S RIGHTS IN THE PRIOR WORKS AND COMPANY WORKS AS SET FORTH IN THIS SECTION 9.  IF EMPLOYER IS UNABLE FOR ANY OTHER REASON TO SECURE OFFICER’S SIGNATURE ON ANY DOCUMENT FOR THIS PURPOSE, THEN OFFICER HEREBY IRREVOCABLY DESIGNATES AND APPOINTS EMPLOYER AND ITS DULY AUTHORIZED OFFICERS AND AGENTS AS OFFICER’S AGENT AND ATTORNEY IN FACT, TO ACT FOR AND IN OFFICER’S BEHALF AND STEAD TO EXECUTE ANY DOCUMENTS AND TO DO ALL OTHER LAWFULLY PERMITTED ACTS IN CONNECTION WITH THE FOREGOING.   (E)           EXCEPT AS MAY OTHERWISE BE REQUIRED UNDER SECTION 4(A) ABOVE, OFFICER SHALL NOT IMPROPERLY USE FOR THE BENEFIT OF, BRING TO ANY PREMISES OF, DIVULGE, DISCLOSE, COMMUNICATE, REVEAL, TRANSFER OR PROVIDE ACCESS TO, OR SHARE WITH EMPLOYER ANY CONFIDENTIAL, PROPRIETARY OR NON-PUBLIC INFORMATION OR INTELLECTUAL PROPERTY RELATING TO A FORMER EMPLOYER OR OTHER THIRD PARTY WHICH OFFICER KNOWS OR REASONABLY SHOULD HAVE KNOWN IS CONFIDENTIAL, PROPRIETARY OR NON-PUBLIC INFORMATION OR INTELLECTUAL PROPERTY OF SUCH THIRD PARTY WITHOUT THE PRIOR WRITTEN PERMISSION OF SUCH THIRD PARTY.  OFFICER HEREBY INDEMNIFIES, HOLDS HARMLESS AND AGREES TO DEFEND EMPLOYER AND ITS OFFICERS, DIRECTORS, PARTNERS, OFFICERS, AGENTS AND REPRESENTATIVES FROM ANY BREACH OF THE FOREGOING COVENANT. OFFICER SHALL COMPLY WITH ALL RELEVANT POLICIES AND GUIDELINES OF EMPLOYER, INCLUDING REGARDING THE PROTECTION OF CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY AND POTENTIAL CONFLICTS OF INTEREST.  OFFICER ACKNOWLEDGES THAT EMPLOYER MAY AMEND ANY SUCH POLICIES AND GUIDELINES FROM TIME TO TIME, AND THAT OFFICER REMAINS AT ALL TIMES BOUND BY THEIR MOST CURRENT VERSION.   13 --------------------------------------------------------------------------------   10.           PROPERTY OF EMPLOYER.  OFFICER AGREES THAT, UPON THE TERMINATION OF OFFICER’S EMPLOYMENT WITH EMPLOYER, OFFICER WILL IMMEDIATELY SURRENDER TO EMPLOYER ALL PROPERTY, EQUIPMENT, FUNDS, LISTS, BOOKS, RECORDS AND OTHER MATERIALS OF EMPLOYER OR ITS CONTROLLED SUBSIDIARIES OR AFFILIATES IN THE POSSESSION OF OR PROVIDED TO OFFICER, PROVIDED, HOWEVER, OFFICER SHALL BE ENTITLED TO RETAIN INDIVIDUALIZED BOUND VOLUMES OF TRANSACTION DOCUMENTS IN WHICH OFFICER PROVIDED SERVICES.   11.           GOVERNING LAW.  THIS AGREEMENT AND ALL ISSUES RELATING TO THE VALIDITY, INTERPRETATION AND PERFORMANCE WILL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.   12.           REMEDIES.  OFFICER ACKNOWLEDGES AND AGREES THAT IN THE COURSE OF OFFICER’S EMPLOYMENT WITH EMPLOYER, OFFICER WILL BE PROVIDED WITH ACCESS TO CONFIDENTIAL INFORMATION, AND WILL BE PROVIDED WITH THE OPPORTUNITY TO DEVELOP RELATIONSHIPS WITH CLIENTS, PROSPECTIVE CLIENTS, EMPLOYEES AND OTHER AGENTS OF EMPLOYER, AND OFFICER FURTHER ACKNOWLEDGES THAT SUCH CONFIDENTIAL INFORMATION AND RELATIONSHIPS ARE EXTREMELY VALUABLE ASSETS OF EMPLOYER IN WHICH EMPLOYER HAS INVESTED AND WILL CONTINUE TO INVEST SUBSTANTIAL TIME, EFFORT AND EXPENSE. ACCORDINGLY, OFFICER ACKNOWLEDGES AND AGREES THAT EMPLOYER’S REMEDIES AT LAW FOR A BREACH OR THREATENED BREACH OF ANY OF THE PROVISIONS OF SECTION 8, 9 OR 10 WOULD BE INADEQUATE AND, IN RECOGNITION OF THIS FACT, OFFICER AGREES THAT, IN THE EVENT OF SUCH A BREACH OR THREATENED BREACH, IN ADDITION TO ANY REMEDIES AT LAW, EMPLOYER, WITHOUT POSTING ANY BOND, SHALL BE ENTITLED TO CEASE MAKING ANY PAYMENTS OR PROVIDING ANY BENEFIT OTHERWISE REQUIRED TO BE PAID OR PROVIDED BY EMPLOYER (OTHER THAN ANY VESTED BENEFITS UNDER ANY RETIREMENT PLAN OR AS MAY OTHERWISE BE REQUIRED BY APPLICABLE LAW TO BE PROVIDED) AND SEEK EQUITABLE RELIEF IN THE FORM OF SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, TEMPORARY OR PERMANENT INJUNCTION OR ANY OTHER EQUITABLE REMEDY WHICH MAY THEN BE AVAILABLE; PROVIDED, HOWEVER, THAT IF IT IS SUBSEQUENTLY DETERMINED IN A FINAL AND BINDING ARBITRATION OR LITIGATION THAT OFFICER DID NOT BREACH ANY SUCH PROVISION, EMPLOYER WILL PROMPTLY PAY ANY PAYMENTS OR PROVIDE ANY BENEFITS, WHICH EMPLOYER MAY HAVE CEASED TO PAY WHEN ORIGINALLY DUE AND PAYABLE, PLUS AN ADDITIONAL AMOUNT EQUAL TO INTEREST (CALCULATED BASED ON THE APPLICABLE FEDERAL RATE FOR THE MONTH IN WHICH SUCH FINAL DETERMINATION IS MADE) ACCRUED ON THE APPLICABLE PAYMENT OR THE AMOUNT OF THE BENEFIT, AS APPLICABLE, BEGINNING FROM THE DATE SUCH PAYMENT OR BENEFIT WAS ORIGINALLY DUE AND PAYABLE THROUGH THE DAY PRECEDING THE DATE ON WHICH SUCH PAYMENT OR BENEFIT IS ULTIMATELY PAID HEREUNDER.   13.           ARBITRATION.  EXCEPT FOR AN ACTION FOR INJUNCTIVE RELIEF AS DESCRIBED IN SECTION 12, ANY DISPUTES OR CONTROVERSIES ARISING UNDER THIS AGREEMENT WILL BE SETTLED BY ARBITRATION IN BOSTON, MASSACHUSETTS IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION RELATING TO THE ARBITRATION OF EMPLOYMENT DISPUTES.  THE DETERMINATION AND FINDING OF SUCH ARBITRATORS WILL BE FINAL AND BINDING ON ALL PARTIES AND MAY BE ENFORCED, IF NECESSARY, IN ANY COURT OF COMPETENT JURISDICTION.   14.           INDEMNIFICATION.  EMPLOYER AGREES TO MAINTAIN A DIRECTORS AND OFFICERS LIABILITY POLICY COVERING OFFICER TO THE FULLEST EXTENT PERMITTED BY DELAWARE LAW UNLESS SUCH POLICY INCREASES IN COST TO AN AMOUNT THAT IS MORE THAN THREE TIMES THE AMOUNT THAT EMPLOYER PAYS AS OF THE DATE OF THIS AGREEMENT.   14 --------------------------------------------------------------------------------   15.           NOTICES.  ANY NOTICE OR REQUEST REQUIRED OR PERMITTED TO BE GIVEN TO ANY PARTY WILL BE GIVEN IN WRITING AND, EXCEPTING PERSONAL DELIVERY, WILL BE GIVEN AT THE ADDRESS SET FORTH BELOW OR AT SUCH OTHER ADDRESS AS SUCH PARTY MAY DESIGNATE BY WRITTEN NOTICE TO THE OTHER PARTY TO THIS AGREEMENT:   If to Employer:   National Mentor Holdings, Inc. Vestar Capital Partners 245 Park Avenue, 41st Floor New York, NY 10167 Attn: General Counsel Telecopy: (212) 808-4922   with a copy to:   National Mentor Holdings, Inc. 313 Congress Street Boston, MA 02210 Attn:  General Counsel Telecopy:  (617) 790-4271   If to the Officer:   To the most recent address on file with Employer for the Officer.   Each notice given in accordance with this Section will be deemed to have been given, if personally delivered, on the date personally delivered; if delivered by facsimile transmission, when sent and confirmation of receipt is received; or, if mailed, on the third day following the day on which it is deposited in the United States mail, certified or registered mail, return receipt requested, with postage prepaid, to the address last given in accordance with this Section.   16.           HEADINGS.  THE HEADINGS OF THE SECTIONS OF THIS AGREEMENT HAVE BEEN INSERTED FOR CONVENIENCE OF REFERENCE ONLY AND SHOULD NOT BE CONSTRUED OR INTERPRETED TO RESTRICT OR MODIFY ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT.   17.           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT IS HELD TO BE ILLEGAL, INVALID, OR UNENFORCEABLE UNDER PRESENT OR FUTURE LAWS EFFECTIVE DURING THE TERM OF THIS AGREEMENT, SUCH PROVISION WILL BE FULLY SEVERABLE AND THIS AGREEMENT AND EACH SEPARATE PROVISION WILL BE CONSTRUED AND ENFORCED AS IF SUCH ILLEGAL, INVALID OR UNENFORCEABLE PROVISION HAD NEVER COMPRISED A PART OF THIS AGREEMENT, AND THE REMAINING PROVISIONS OF THIS AGREEMENT WILL REMAIN IN FULL FORCE AND EFFECT AND WILL NOT BE AFFECTED BY THE ILLEGAL, INVALID OR UNENFORCEABLE PROVISION OR BY ITS SEVERANCE FROM THIS AGREEMENT.  IN ADDITION, IN LIEU OF SUCH ILLEGAL, INVALID OR UNENFORCEABLE PROVISION, THERE WILL BE ADDED AUTOMATICALLY, AS A PART OF THIS AGREEMENT, A PROVISION AS SIMILAR IN TERMS TO SUCH ILLEGAL, INVALID OR UNENFORCEABLE PROVISION AS MAY BE POSSIBLE AND LEGAL, VALID AND ENFORCEABLE.   15 --------------------------------------------------------------------------------   18.           BINDING EFFECT.  THIS AGREEMENT WILL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF EACH PARTY AND EACH PARTY’S RESPECTIVE SUCCESSORS, HEIRS AND LEGAL REPRESENTATIVES.  THIS AGREEMENT MAY NOT BE ASSIGNED BY OFFICER TO ANY OTHER PERSON OR ENTITY BUT MAY BE ASSIGNED BY EMPLOYER TO ANY WHOLLY-OWNED SUBSIDIARY OR AFFILIATE OF EMPLOYER OR TO ANY SUCCESSOR TO OR TRANSFEREE OF ALL, OR ANY PART, OF THE STOCK OR ASSETS OF EMPLOYER.   19.           EMPLOYER POLICIES REGULATIONS AND GUIDELINES FOR OFFICERS.  EMPLOYER MAY ISSUE POLICIES, RULES, REGULATIONS, GUIDELINES, PROCEDURES OR OTHER MATERIAL, WHETHER IN THE FORM OF HANDBOOKS, MEMORANDA, OR OTHERWISE, RELATING TO ITS OFFICERS.  THESE MATERIALS ARE GENERAL GUIDELINES FOR OFFICER’S INFORMATION AND WILL NOT BE CONSTRUED TO ALTER, MODIFY OR AMEND THIS AGREEMENT FOR ANY PURPOSE WHATSOEVER.   20.           ENTIRE AGREEMENT.  THIS AGREEMENT, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER CONTAINED HEREIN AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THEIR SUBJECT MATTER, UNLESS EXPRESSLY PROVIDED OTHERWISE WITHIN SUCH AGREEMENTS, INCLUDING BUT NOT LIMITED TO (A) THAT CERTAIN EMPLOYMENT AGREEMENT ENTERED INTO BETWEEN OFFICER AND NATIONAL MENTOR, INC. DATED SEPTEMBER 7, 2004, AND (B) THE ORIGINAL VERSION OF THIS AGREEMENT, DATED JUNE 29, 2006 BY AND AMONG THE OFFICER AND THE EMPLOYER.  NO AMENDMENT OR MODIFICATION OF THIS AGREEMENT WILL BE VALID UNLESS MADE IN WRITING AND SIGNED BY EACH OF THE PARTIES AND COUNTERSIGNED BY VESTAR CAPITAL PARTNERS V, L.P. NO REPRESENTATIONS, INDUCEMENTS OR AGREEMENTS HAVE BEEN MADE TO INDUCE EITHER OFFICER OR EMPLOYER TO ENTER INTO THIS AGREEMENT WHICH ARE NOT EXPRESSLY SET FORTH WITHIN THIS AGREEMENT.  OFFICER AND EMPLOYER ACKNOWLEDGE AND AGREE THAT EMPLOYER’S WHOLLY-OWNED SUBSIDIARIES AND AFFILIATES ARE EXPRESS THIRD PARTY BENEFICIARIES OF THIS AGREEMENT.   21.           INTERPRETATION.  THE EMPLOYER WILL INTERPRET, CONSTRUE, AND ADMINISTER THE AGREEMENT IN A MANNER THAT SATISFIES THE REQUIREMENTS OF (A) CODE § 409A(A)(2), (3) AND (4), (B) TREAS. REG. § 1.409A-1 ET SEQ., AND (C)  OTHER APPLICABLE AUTHORITY ISSUED BY THE INTERNAL REVENUE SERVICE AND THE U.S. DEPARTMENT OF THE TREASURY.  IN ADDITION, THE PARTIES SHALL COOPERATE FULLY WITH ONE ANOTHER TO ENSURE COMPLIANCE WITH SECTION 409A OF THE CODE, INCLUDING, WITHOUT LIMITATION, ADOPTING AMENDMENTS TO ARRANGEMENTS SUBJECT TO SECTION 409A.   22.           NO GUARANTEE OF TAX CONSEQUENCES.  NO PERSON CONNECTED WITH THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO THE EMPLOYER, OR ITS OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES, MAKES ANY REPRESENTATION, COMMITMENT OR GUARANTEE WITH RESPECT TO THE FEDERAL, STATE OR LOCAL INCOME, ESTATE AND/OR GIFT TAX TREATMENT OF ANY BENEFIT PAID HEREUNDER INCLUDING, WITHOUT LIMITATION, UNDER SECTION 409A OF THE CODE.   23.           Counterparts.  This Agreement may be executed (including by facsimile transmission) in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.   [Signatures on next page.]   16 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 31st day of December, 2008.   EDWARD MURPHY   NATIONAL MENTOR HOLDINGS, INC.       “Officer”   “Employer”             /s/ Edward Murphy   By: /s/ Denis M. Holler     Name: Denis M. Holler     Title: Executive Vice President,       Chief Financial Officer and Treasurer   17 --------------------------------------------------------------------------------
Exhibit 10.33   Roosevelt Avenue Corp   to   Wilshire State Bank   --------------------------------------------------------------------------------   Agreement of Lease   --------------------------------------------------------------------------------   Premises:   150-24 Northern Blvd., Flushing, New York   --------------------------------------------------------------------------------   THIS LEASE AGREEMENT (“Lease”) made as of this 2nd day of September, 2008 between Roosevelt Avenue Corp., a New York corporation having its address at 30-50 Whitestone Expressway, Suite 201, Flushing, New York (“Landlord”) and Wilshire State Bank, a California banking corporation having its office at 3200 Wilshire Blvd., Los Angeles, California 90010 (“Tenant”).   WITNESSETH:   1.     Premises: Landlord hereby Leases to Tenant and Tenant hereby Leases from Landlord, the Premises known as 150-24 Northern Blvd., Unit G4, Flushing, New York (the “Premises”), shown as Exhibit “A” attached hereto. In addition, Landlord grants to Tenant the right to use, on a non-exclusive basis and in common with other tenants, the Common Areas.   2.     Term: This Lease is for a term of TEN (10) years (or until such term shall otherwise cease or expire as hereinafter provided). Landlord and Tenant expressly covenant that the term of this Lease shall commence on the Commencement Date and, unless sooner terminated or extended as hereinafter provided, shall end on the Expiration Date. If Landlord does not tender possession on the Premises to Tenant on or before any specified date, for any reason whatsoever, Landlord shall not be liable for any damage thereby, this Lease shall not be void or voidable thereby, and the Term shall not commence until Landlord tenders possession of the Premises to tenant. Landlord shall be deemed to have tendered possession of the Premises to Tenant upon the giving of notice by Landlord to Tenant stating that the Premises are vacant, in the condition required by this Lease and available for Tenant’s occupancy. No failure to tender possession of the Premises to Tenant on or before specified date shall affect any other obligations of Tenant hereunder. There shall be no postponement of the Commencement Date (or the Rent Commencement Date) for (i) any delay in the delivery of possession of the Premises which results from any Tenant Delay or (ii) any delay by Landlord in the performance of any Punch List Items relating to Landlord’s Work. Once the Commencement Date is determined, Landlord and Tenant shall execute an agreement stating the Commencement Date, Rent Commencement Date and Expiration Date, but the failure to do so will not affect the determination of such dates. For purposes of determining whether Tenant has accepted possession of the Premises, Tenant is deemed to have possession if (i) Tenant receives the “lock and key” to the premises; (ii) Tenant has an access and has the control over the premises; (iii) Tenant moves Tenant’s property into the premises; or (iv) any of Tenant’s agents, personnel or contractor begins work within the premises.   3.     Use: The Premises shall be solely used for the operation of bank and banking related business and for no other purposes unless approved in writing by Landlord. Tenant shall have a right to install ATM machines within the demised Premises with Landlord’s prior approval for the location, provided that such use is in accordance with the Certificate of Occupancy for the Premises and for no other purpose.   The permitted use stated herein authorized by the Landlord shall not be construed to be a waiver of any and all licenses or permits that the Tenant must receive from various government and/or private organizations. Failure by Tenant to receive such licenses or permits shall be considered a default of this Lease and this Lease will be immediately terminated.   2 --------------------------------------------------------------------------------   4.     Rent: During the term hereof Tenant shall pay to Landlord at the office of Landlord, without set off or deduction for any reason whatsoever, monthly, on the first day of each and every month in advance, the following rental rates (“Fixed Rent”), except that the first month’s rent shall be paid on the execution hereof:   Year   Period   Monthly Rent   Annual Rent                   1   12/20/08 – 12/19/09   $ 13,000.00   $ 156,000.00   2   12/20/09 – 12/19/10   $ 13,390.00   $ 160,680.00   3   12/20/10 – 12/19/11   $ 13,791.70   $ 165,500.40   4   12/20/11 – 12/19/12   $ 14,205.45   $ 170,465.40   5   12/20/12 – 12/19/13   $ 14,631.61   $ 175,579.32   6   12/20/13 – 12/19/14   $ 15,070.56   $ 180,846.72   7   12/20/14 – 12/19/15   $ 15,522.68   $ 186,272.16   8   12/20/15 – 12/19/16   $ 15,988.36   $ 191,860.32   9   12/20/16 – 12/19/17   $ 16,468.01   $ 197,616.12   10   12/20/17 – 12/19/18   $ 16,962.05   $ 203,544.60     (a)          The Lease Commences from the date of execution of this Lease and Landlord provides three month fixed rent abatement to Tenant starting from the date of Lease Commencement and thus, the rent is payable on Rent Commencement date; all additional rents including, without limitation, operating expense charges other than the fixed rent are due and payable from the Lease commencement date; furthermore, the Landlord shall give additional rent abatement up to three month if the tenant is unable to obtain necessary permits despite its best efforts to obtain such permits due to existing violations, if any, against to the Premises.   (b)         If the Rent Commencement Date is not the first day of a month, then on the Rent Commencement Date Tenant shall pay proportioned Fixed Rent for the period from the rent Commencement Date through the last day of such month.   (c)          All Fixed Rent and Additional Rent (collectively hereinafter referred to as “rent”) shall be paid in such coin or currency (or, subject to collection, by good check payable in such coin or currency) of the United States of America as at the time shall be legal tender for the payment of public and private debts, at the office of Landlord as set forth above, or at such place and to such person as Landlord from time to time may designate.   5.  Additional Rent   (a)          Taxes: Tenant shall pay to Landlord Five (5%) of any and all real estate taxes assessed to the building located at 150-24 Northern Blvd., Unit G4, Flushing, New York, Block 5032 and Lot 16 within which the Premises is located starting from fiscal year of 2009/2010. The term “real estate taxes” or “taxes” when used in this Article shall also include assessments, Business Improvement District Charges (“Bid”) and any other charge or levy which shall be a   3 --------------------------------------------------------------------------------   4.     Rent: During the term hereof Tenant shall pay to Landlord at the office of Landlord, without set off or deduction for any reason whatsoever, monthly, on the first day of each and every month in advance, the following rental rates (“Fixed Rent”), except that the first month’s rent shall be paid on the execution hereof:   Year   Period   Monthly Rent   Annual Rent                   1   8/1/08 – 7/31/09   $ 13,000.00   $ 156,000.00   2   8/1/09 – 7/31/10   $ 13,390.00   $ 160,680.00   3   8/1/10 – 7/31/11   $ 13,791.70   $ 165,500.40   4   8/1/11 – 7/31/12   $ 14,205.45   $ 170,465.40   5   8/1/12 – 7/31/13   $ 14,631.61   $ 175,579.32   6   8/1/13 – 7/31/14   $ 15,070.56   $ 180,846.72   7   8/1/14 – 7/31/15   $ 15,522.68   $ 186,272.16   8   8/1/15 – 7/31/16   $ 15,988.36   $ 191,860.32   9   8/1/16 – 7/31/17   $ 16,468.01   $ 197,616.12   10   8/1/17 – 7/31/18   $ 16,962.05   $ 203,544.60     (a)          The Lease Commences from the date of execution of this Lease and Landlord provides three month fixed rent abatement to Tenant starting from the date of Lease Commencement and thus, the rent is payable on Rent Commencement date; all additional rents including, without limitation, operating expense charges other than the fixed rent are due and payable from the Lease commencement date; furthermore, the Landlord shall give additional rent abatement up to three month if the tenant is unable to obtain necessary permits despite its best efforts to obtain such permits due to existing violations, if any, against to the Premises.   (b)         If the Rent Commencement Date is not the first day of a month, then on the Rent Commencement Date Tenant shall pay proportioned Fixed Rent for the period from the rent Commencement Date through the last day of such month.   (c)          All Fixed Rent and Additional Rent (collectively hereinafter referred to as “rent”) shall be paid in such coin or currency (or, subject to collection, by good check payable in such coin or currency) of the United States of America as at the time shall be legal tender for the payment of public and private debts, at the office of Landlord as set forth above, or at such place and to such person as Landlord from time to time may designate.   5.  Additional Rent   (a)    Taxes: Tenant shall pay to Landlord Five (5%) of any and all real estate taxes assessed to the building located at 150-24 Northern Blvd, Unit G4. Flushing, New York, Block 5032 and Lot 16 within which the Premises is located starting from fiscal year of 2009/2010. The term “real estate taxes” or ‘“taxes” when used in this Article shall also include assessments, Business Improvement District Charges (“Bid”) and any other charge or levy which shall be a   3 --------------------------------------------------------------------------------   charge upon the realty as such. A copy of real estate tax bill issued form a government and/or government agencies, which has jurisdiction over this property, shall suffice as evidence to prove the real estate tax amount for any given fiscal tax year.   (b)  Operating Expenses: Tenant shall pay to Landlord eleven and a half (11.5%) percent of the monthly Fixed Rent as Operating Expense for the Building which includes, without limitation, common area electricity charges and water and sewer charges, overall building and parking lot maintenance fees and expenses.   (i)            Sprinklers: The sprinkler system in the Premises is part of a sprinkler system in other premises. Tenant shall pay NONE of all costs related to the entire sprinkler system, including but not limited to, the cost of sprinkler alarm and supervisory service, inspections and tests, whenever such tests are required by contract, by an insurance rating or service organization, by the Fire Department or any other governmental authority or by law. Tenant shall also pay NONE of the cost of repairs and replacements to said entire sprinkler system; provided however, that if any such repair or replacement, wherever it occurs, is caused by Tenant’s act or omission, or the act or omission of Tenant’s employees, agents, invitees, licensees or contractors, Tenant shall pay the entire cost of such repair or replacement, irrespective of the cost. All payments to be made pursuant to this Article shall be deemed additional rent and shall be paid to Landlord when Tenant receives a bill therefor.   (ii)           Parking Space: Landlord shall at least reserve three (3) parking spaces during the Tenant’s normal business hours strictly for the use of Tenant’s customers.   (iii)          Utilities and Cleaning:  (a) Tenant shall pay the entire cost to heat, cool and light of the demised Premises as well as for all electricity, gas and other energy used by Tenant. Tenant shall not permit the temperature in the Premises to fall below freezing and shall keep the plumbing and water lines in the Premises, exposed and unexposed, from freezing; (b) Tenant shall, at Tenant’s expense, keep the Premises, including the windows, clean, and in order and free from vermin and if the Premises are situated on the ground floor, Tenant shall keep the adjacent sidewalks clean and free from rubbish, refuse, snow, ice, mud and debris, if applicable. Tenant, at Tenant’s expense shall independently contract for the removal of Tenant’s refuse and rubbish.   (iv)          Tenant shall install a separate sub-meter for water, sewer, gas, electricity or any other utility at Tenant’s own cost and solely responsible to pay such bills in a timely manner and it is deemed Additional Rent.   (c)   Charges for real estate tax increases, assessments, sewer and water charges and other operating expenses shall constitute additional rent. Tenant shall pay such charges promptly after Landlord renders a bill therefor. Whenever any assessment is payable in installments, Tenant shall be responsible to pay for only those installments falling due within the term of this Lease or any extended term.   6.    Security: (a) Tenant has deposited with Landlord the sum of NONE as security in a non-interest bearing account for the faithful performance and observance by Tenant of the terms,   4 --------------------------------------------------------------------------------   provisions and conditions of this Lease; this money is not required to be deposited in a separate bank account but can be deposited in the Landlord’s general bank account and commingled with other monies within the account; it is agreed that in the event Tenant defaults in respect of any of the terms, provisions and conditions of this Lease, including, but not limited to, the payment of rent and additional rent, Landlord may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any rent and additional rent or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of Tenant’s default in respect of any of the terms, covenants and conditions of this Lease, including but not limited to, any damages or deficiencies in the re-letting of the Premises, whether such damages or deficiency accrued before or after summary proceedings or other re-entry by Landlord. In the event that Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Lease, the security shall be returned to Tenant after the date fixed as the end of the Lease and after delivery of entire possession of the Premises to Landlord. In the event of a sale of the land and building or leasing of the building of which the Premises form a part, Landlord shall have the right to transfer the security to the vendee or lessee and Landlord shall thereupon be released by Tenant from all liability for the return of such security, and Tenant agrees to look to the new owner of the building or building lessee solely for the return of said security; and it is agreed that the provisions hereof shall apply to every transfer or assignment made of the security to a new owner of the building or building lessee. Tenant further covenants that it will not assign or encumber the monies deposited herein as security and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.   (b) Additional Security: Intentionally omitted   7.     Repairs: (a) Tenant, at Tenant’s sole cost and expense, shall take good care of the Premises and the equipment, fixtures, systems and appurtenances thereof, and keep, put and maintain the same, and every part thereof, together with any and all alterations, additions and improvements thereto, in good repair and condition and make and do all repairs, alterations, additions or changes of any and every kind and nature that may be necessary or be required to the Premises, including, without limitation, its plumbing (including water meters), heating, cooling and electrical systems and said ‘systems’ pipes and lines and the doors, floors, windows and the equipment, fixtures and appurtenances, therein whether the same be ordinary, extraordinary, foreseen or unforeseen, or of any other nature and Tenant shall, in the event anything is required to be replaced, at Tenant’s sole cost and expense, replace and renew the same with like kind and quality so that at all times the Premises shall be in thoroughly good order and repair. Tenant shall keep the roof and roof drains free from debris.   (b)    Notwithstanding anything to the contrary set forth in paragraph (a) of this Article, Landlord shall repair roof leaks and shall make structural repairs to the exterior walls and load-bearing members of the Premises. Landlord shall not be required to make any repair or replacement under this paragraph (b) unless Tenant has given notice to Landlord of the necessity therefor. Tenant, not Landlord, shall make all roof repairs arising out of the penetration of the roof by Tenant’s improvements including, but not limited to, vents, fans and Tenant’s HVAC systems, anything to the contrary in this paragraph or Lease notwithstanding.   5 --------------------------------------------------------------------------------   (c)    If any repair or replacement required to be made by Landlord under paragraph (b) of this Article is necessitated by the act or omission of Tenant, its agents, employees, invitees, licensees or contractors or by trespassers, Tenant shall be responsible to make and pay for such repair or replacement. Landlord’s sole obligation for repairs and replacements shall be as set forth in paragraph (b) of this Article and in the case of fire or other casualty as set forth in Article 41. All other repairs and replacements shall be made by Tenant.   (d)    Except as specifically set forth in Article 39 or elsewhere in this Lease, there shall be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord’s, Tenant’s or others’ making or failing to make any repairs, alterations, additions or improvements in or to any portion of the building or the Premises or in and to the fixtures, appurtenances or equipment thereof. The provisions of this Article 7 with respect to the making of repairs shall not apply in the case of fire or other casualty with regard to which Article 10 hereof shall apply.   (e)    The Tenant shall promptly replace any and all broken glass with the original style and color on the premises at its own cost and expense. The Tenant may maintain and pay for plate glass insurance on said premises; but in the absence of any such insurance, the Tenant shall remain liable for any damage to the glass occurring in the demised premises during the term of this Lease or any extension or renewal thereof   8.      Alterations: (a) Tenant may, at Tenant’s sole cost and expense, make nonstructural alterations, changes, additions and improvements (collectively, “alterations”) to the building on the Premises provided that the same shall not affect utility services, or plumbing and electrical lines and, in the aggregate, shall not exceed the sum of $2,000 in any twelve (12) month period. In the event the estimated cost for such alterations shall exceed such sum, Tenant shall obtain Landlord’s written consent thereto which may be withheld by Landlord for any reason or no reason.   (b)     Tenant shall, at its expense, before making any alterations obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies and (upon completion) certificates of final approval thereof and shall promptly deliver duplicates of the same to Landlord.   (c)     Tenant shall carry, and will cause its contractors and sub-contractors to carry, such workman’s compensation, general liability, personal and property damage insurance as Landlord may require and landlord shall be an additional insured.   (d)     All alterations, fixtures and all paneling, partitions, railings and like installations, installed at the Premises at any time either by Tenant or by Landlord on Tenant’s behalf, shall, upon installation, become the property of Landlord and shall remain upon and be surrendered with the Premises unless Landlord, by notice to Tenant no later than twenty (20) days prior to the date fixed as the termination of this Lease, elects to relinquish Landlord’s right thereto and to have them removed by Tenant, in which event the same shall be removed from the Premises by Tenant prior to the expiration of the Lease at Tenant’s expense. Nothing in this Article shall be   6 --------------------------------------------------------------------------------   construed to give Landlord title to or to prevent Tenant’s removal of trade fixtures, moveable office furniture and equipment, but upon removal of any such from the Premises or upon removal of other installations as may be required by Landlord, Tenant shall immediately and at its expense, repair and restore the Premises to the condition existing prior to installation and repair any damage to the Premises or the building due to such removal.  All property permitted or required to be removed by Tenant at the end of the term remaining in the Premises after Tenant’s removal shall be deemed abandoned and may, at the election of the Landlord, either be retained as Landlord’s property or sold, stored, destroyed or removed from the Premises by Landlord without any obligation on the part of Landlord to account for same. Tenant shall pay to Landlord the cost incurred by Landlord in removing, selling, storing, destroying or otherwise disposing of any such personal property.   9.   Mechanic’s Liens: If any mechanic’s lien is filed against the Premises or the building of which the same forms a part, for work claimed to have been done for, or materials furnished to, Tenant, whether or not done pursuant to Article 5, the same shall be discharged by Tenant within thirty (30) days thereafter, at Tenant’s expense, by filing the bond required by law or otherwise.   10.   Assignment, Sublease and Mortgage: (a) Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage or encumber this agreement, nor permit the Premises or the building of which the Premises form a part to be encumbered, nor underlet or suffer or permit the Premises or any part thereof to be used by others, without the prior written consent of Landlord in each instance; nor shall Tenant enter into or permit any transaction or series of transactions which, directly or indirectly result in a change of control of Tenant or any person or entity which, directly or indirectly controls Tenant without the prior written consent of Landlord in each instance. For the purposes of this paragraph, the term “control” shall mean, with respect to: (i) a corporation, ownership or voting control, directly or indirectly, of at least fifty (50%) percent of all the voting stock, (ii) a partnership, limited liability company or joint venture, ownership, directly or indirectly, of at least fifty (50%) percent of all the general or other partnership or voting membership interests; and (iii) any other entity, ownership, directly or indirectly of at least fifty (50%) percent of all the equity or other beneficial interests therein, or with respect to a corporation, partnership, limited liability company, joint venture or other entity, the power to direct the management and policies of such entities. If this Lease is assigned, or if the Premises or any part thereof is underlet or occupied by any person or entity other than Tenant, Landlord may, after default by Tenant, collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Landlord to an assignment or underletting shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or underletting.   (b)    During the term of this Lease Tenant shall permit inspections of the Premises by or on behalf of existing or prospective mortgagees or purchasers. During the one year immediately preceding the expiration date of this Lease Tenant shall permit access to the Premises by   7 --------------------------------------------------------------------------------   prospective tenants and shall permit Landlord to post “To Let” or “For Sale” signs. Such inspections shall be at reasonable times during normal business hours and upon reasonable prior notice to Tenant, which may be oral.   11.  Insurance: (a) Tenant, at its sole cost, during the entire term of this Lease, shall keep in force comprehensive general liability insurance, including contractual liability insurance, protecting Landlord, its partners, members, officers, directors, stockholders and employees and Tenant as insured in the minimum amount of FIVE MILLION ($5,000,000.00) Dollars combined single limit for personal injury, death and property damage occurring on, in or about the Premises and any sidewalks, streets, alleyways, passageways and parking areas adjoining or appurtenant to the Premises. A certificate evidencing workers compensation coverage and proper endorsements shall be provided by Tenant in advance of any construction or alteration.   (d)           All insurance policies shall include a full coverage for plate glass, with a total replacement cost including parts and labor.   (e)           All insurance policies shall include Loss of Rent for Landlord.   (f)            All insurance policies mentioned in this Article shall be written by good and solvent insurance companies authorized to do business in New York State. Tenant shall provide Landlord with a certificate of said general liability insurance duly executed by an authorized agent of the insurance company upon the execution and delivery of this Lease to Landlord and a copy of said insurance policy within sixty (60) days after the execution and delivery of this Lease. Said policy shall provide that such insurance shall not be cancelable unless at least thirty (30) days’ notice of cancellation in writing is given to Landlord. The certificate and policy shall contain no language exculpating the carrier from giving the required notice to Landlord.   (g)           If Tenant fails to comply with the provisions of this Article. Landlord may, at its option, and in addition to all other remedies it may have, procure such insurance for its own benefit, in which event the premiums for such insurance shall be chargeable to Tenant as additional rent, payable when Landlord submits a bill therefor   (h)           Tenant shall furnish the Certificate of insurance, with Landlord as an Additional insured, at the execution of this Agreement.   12.    Occupancy: Tenant will not at any time use or occupy the Premises in violation of the certificate of occupancy issued for the building of which the Premises are a part. Tenant has inspected the Premises and accepts them as is, subject to any work required to be done by Landlord. In any event, Landlord makes no representation as to the condition of the Premises or the building and Tenant agrees to accept the Premises subject to violations whether or not of record. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business, Tenant shall be responsible for and shall procure and maintain such license or permit.   13.    Joint & Several Liability:  Intentionally omitted.   8 --------------------------------------------------------------------------------   14.   Landlord’s Consent: (a) Notwithstanding Article 12, Tenant, in connection with a bona fide sale of majority control of Tenant’s issued and outstanding voting stock, or if Tenant is not then a corporation, in connection with the bona fide sale of majority control of Tenant’s entity, or a bona fide sale of the bulk of Tenant’s assets, may assign this Lease to the purchaser of such stock, control or assets, as the case may be, provided that written consent to such assignment is obtained from Landlord, which consent shall not be unreasonably withheld or delayed. Request for such consent shall be in writing, made at least thirty (30) days before the commencement of the proposed assignment and shall be accompanied by a duplicate original of the proposed assignment and an assumption by the proposed assignee of all of the terms and provisions of this Lease.   (b)   The Landlord’s consent shall be conditioned on the following:   (i)                                     In addition to the security then being held by Landlord, two month’s Fixed Rent shall be deposited with Landlord, at the prevailing rental rate at the time request for consent to the assignment is submitted to Landlord. (The security shall be held under the provisions of paragraph 29(a) hereof or if consent to the assignment is refused by Landlord, such sum shall be returned to the assignee.)   (ii)                                  Tenant shall furnish such documents, including financial statements of the proposed assignee, and such information pertaining to the assignee as Landlord shall reasonably require.   (iii)                               The Landlord’s consent to the assignment shall not be deemed consent to any further or other assignment or subletting and each assignment shall so provide.   (iv)                              The Tenant shall not be in default under the Lease at the time of requesting consent or at the time of the commencement of the assignment. In the event Landlord shall refuse consent because of Tenant’s default, Landlord shall notify Tenant of the nature of the default.   (v)                                 The reasonable cost of Landlord’s attorney’s fees and any other costs incurred by Landlord in connection with such assignment shall be paid to Landlord or its attorney, on demand.   (vi)                              The Assignee shall make an additional two (2) month security deposit with Landlord.   (vii)                           If Landlord shall decline to give’ its consent to any proposed assignment, Tenant shall indemnify, defend and hold harmless the Landlord against and from any and all loss, liability, damages, costs and expenses (including reasonable legal fees) resulting from any claims that may be made against Landlord by the proposed assignee, brokers or other persons claiming a commission or similar compensation in connection with the proposed assignment.   9 --------------------------------------------------------------------------------   15.  Signage: Tenant shall not, without Landlord’s prior written consent, place or erect any signs of any nature on the exterior part of the Premises or the building of which it is a part, or the sidewalk adjoining said building or upon the roof except that Tenant’s name may appear on the door of the Premises. Tenant shall install no more than THREE (3) signs on the exterior part of the building and ONE (1) sign infront of the demised Premises within the building. No property of the Tenant shall be placed on the roof of the building which is reserved exclusively for the use of Landlord or Landlord’s designees, anything to the contrary set forth in this Lease notwithstanding. Landlord shall have the right to erect, or cause to be erected, signs on the roof of the building. Access to the roof by Landlord, its agents and contractors shall be permitted by Tenant. All exterior signage shall be in accordance and congruence to the Landlord’s approved design and specification, including color, size and placement. Tenant is solely responsible to obtain permits and licenses prior to installing signs from any and all local government authorities and upon Landlord’s demand such permits and licenses must be provided to Landlord. Any violations or summons issued in connection with the signs are strictly Tenant’s responsibility and if Landlord incurs any costs and expenses including, without limitation, reasonable attorney fees to resolve such matters, then such costs and expenses shall become an Additional Rent and it becomes due and payable upon Landlord’s presentment to Tenant.  In addition, all building directory, window (plate glass signage), and exterior building signage shall be made by the Landlord’s preapproved vendor and shall be bill directly to Tenant, including the parts and labor. Tenant is responsible to remove all signs upon expiration of the lease or renewal of lease.   16.  Heating, Ventilation and Air Conditioning: Tenant shall furnish or cause to be furnished to the Premises the equipment only for heating, ventilation and air-conditioning (“HVAC”). Tenant at tenant’s sole expense, shall be responsible for the installation of the HVAC System. Landlord shall have access to all air-conditioning, fan, ventilating and machine rooms and electrical closets and all other mechanical installations (collectively, “Mechanical Installation”), and Tenant shall not construct partitions or other obstructions which may interfere with Landlord’s access thereto or the moving of Landlord’s equipment to and from the Mechanical Installations. Tenant shall not at any time enter the Mechanical Installations or tamper with, adjust, or otherwise affect such Mechanical Installations. Landlord shall not be responsible if the HVAC System fails to provide cooled or heated air, as the case may be, to the Premises. Tenant shall install, if missing, blinds or shades on all windows, which blinds and shades shall be subject to Landlord’s approval, and shall keep all of the operable windows in the Premises closed, and lower the blinds when necessary because of the sun’s position, whenever the HVAC System is in operation or as and when required by any Requirement. Tenant shall cooperate with Landlord and shall abide by the rules and regulations which Landlord may reasonably prescribe for the proper functioning and protection of the HVAC System. Finally, the HVAC System shall be periodically maintained and serviced by the Landlord’s preapproved vendor at the Tenant’s own cost. Landlord, at its election, may bill directly to Tenant for its proportionate share of the maintenance and operating cost of the HVAC System.   17.  End of Term: Upon the expiration or other termination of the term of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean, in good order and condition, reasonable wear and tear and damage by fire or other casualty excepted and, subject to the provisions of Article 5, Tenant shall remove all its property from the Premises.  Tenant’s   10 --------------------------------------------------------------------------------   obligation to observe and perform this covenant shall survive the expiration or other termination of this Lease.   18.  Bills and Notices: Except as otherwise in this Lease provided, a bill, statement, notice or communication which Landlord may desire or be required to give to Tenant, shall be deemed sufficiently given or rendered if, in writing, delivered to Tenant personally or sent by certified or registered mail addressed to Tenant at the building of which the Premises form a part or at the last known residence address or business address of Tenant or left at any of the aforesaid premises addressed to Tenant, and the time of rendition of such bill or statement and of the giving of such notice or communication shall be deemed to be the time when the same is delivered to Tenant, mailed or left at the Premises as herein provided. Any notice by Tenant to Landlord must be served by certified or registered mail addressed to Landlord at the address first hereinabove given or at such other address as Landlord shall designate by written notice.   19.  Late Payment: If Tenant fails to make payment of Fixed Rent by the tenth (10th) day of the month in which such rent is due or fails to pay any item of Additional Rent within ten (10) days of the due date, Tenant shall pay, as additional rent, a service charge to defray the cost incidental to handling such delinquent payment equal to $250.00 for an administrative fee plus five (5%) percent of the amount of the delinquent payment. Said charge shall be paid when the next succeeding monthly rent shall fall due. The imposition of such charge shall be in addition to all of Landlord’s rights and remedies hereunder in the event of Tenant’s default.   20.  Inability to Perform: This Lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on the part of Tenant to be performed shall not be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease or to supply or is delayed in supplying any service expressly or impliedly to be supplied or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of strike or labor troubles or any cause whatsoever beyond Landlord’s sole control including, but not limited to, government preemption in connection with a national emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the condition of supply and demand which have been or are affected by war or other emergency.   21.  No Waiver: The failure of Landlord to seek redress for violation of, or to insist upon the strict performance of any covenant or condition of this Lease, shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Landlord of rent with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such breach and no provision of this Lease shall be deemed to have been waived by Landlord unless such waiver is in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or   11 --------------------------------------------------------------------------------   payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy in this Lease provided. All checks tendered to Landlord as and for the rent of the Premises shall be deemed payments for the account of Tenant. Acceptance by Landlord of rent from anyone other than Tenant shall not be deemed to operate as an attornment to Landlord by the payor of such rent or as consent by Landlord to an assignment or subletting by Tenant of the Premises to such payor, or as a modification of the provisions of this Lease. No act or thing done by Landlord or Landlord’s agents during the term hereby demised shall be deemed an acceptance of a surrender of said Premises and no agreement to accept such surrender shall be valid unless in writing signed by Landlord. No employer of Landlord or Landlord’s agent shall have any power to accept the keys of said Premises prior to the termination of the Lease and the delivery of keys to any such agent or employee shall not operate as a termination of the Lease or a surrender of the Premises.   22.  Remedies of Landlord and Waiver of Redemption: In case of any such default, re-entry, expiration and/or dispossess by summary proceedings or otherwise, (a) the rent, and additional rent, shall become due thereupon and be paid up to the time of such re-entry, dispossess and/or expiration, (b) Landlord may re-let the Premises or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms, which may at Landlord’s option be less than or exceed the period which would otherwise have constituted the balance of the term of this Lease and may grant concessions or free rent or charge a higher rental than that in this Lease, (c) Tenant or the legal representatives of Tenant shall also pay Landlord as liquidated damages for the failure of Tenant to observe and perform said Tenant’s covenants herein contained, any deficiency between the rent hereby reserved and or covenanted to be paid and the net amount, if any, of the rents collected on account of the subsequent Lease or Leases of the Premises for each month of the period which would otherwise have constituted the balance of the term of this Lease. The failure of Landlord to re-let the Premises or any part thereof shall not release or affect Tenant’s liability for damages. In computing such liquidated damages there shall be added to the said deficiency such expenses as Landlord may incur in connection with re-letting, such as legal expenses, attorneys’ fees, brokerage, advertising and for keeping the Premises in good order or for preparing the same for re-letting. Any such liquidated damages shall be paid in monthly installments by Tenant on the rent day specified in this Lease and any suit brought to collect the amount of the deficiency for any month shall not prejudice in any way the rights of Landlord to collect the deficiency for any subsequent month by a similar proceeding. Landlord, in putting the Premises in good order or preparing the same for re-rental may, at Landlord’s option, make such alterations, repairs, replacements, and/or decorations in the Premises as Landlord, in Landlord’s sole judgment considers advisable and necessary for the purpose of re-letting the Premises, and the making of such alterations, repairs replacements, and/or decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for failure to re-let the Premises, or in the event that the Premises are re-let, for failure to collect the rent thereof under such re-letting, and in no event shall Tenant be entitled to receive any excess, if any, of such net rents collected over the sums payable by Tenant to Landlord hereunder. In the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for. Mention in this Lease of any particular remedy shall not preclude Landlord from any other remedy, in law or in   12 --------------------------------------------------------------------------------   equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws.   23.  Fees and Expenses: If Tenant shall default in the observance or performance of any term or covenant on Tenant’s part to be observed or performed under or by virtue of any of the terms or provisions in any Article of this Lease, then, unless otherwise provided elsewhere in this Lease, Landlord may immediately or at any time thereafter and without notice perform the obligation of Tenant thereunder. If Landlord, in connection with the foregoing or in connection with any default by Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to attorney’s fees, in instituting, prosecuting or defending any action or proceedings, then Tenant will reimburse Landlord for such sums so paid or obligations incurred with interest and costs. The foregoing expenses incurred by reason of Tenant’s default shall be deemed to be additional rent and shall be paid by Tenant to Landlord within five (5) days of rendition of any bill or statement to Tenant therefor. If Tenant’s Lease term shall have expired at the time of the making of such expenditures or incurring such obligations, such sums shall be recoverable by Landlord as damages.   24.  Default: (1) If Tenant defaults in fulfilling any of the covenants of this Lease other than the covenants for the payment of rent or additional rent; or if the Premises become vacant or deserted or if this Lease is rejected under the Bankruptcy Code or if any execution or attachment shall be issued against Tenant or against Tenant’s property whereupon the Premises shall be taken or occupied by someone other than Tenant; or if Tenant shall have failed, after five (5) days’ written notice, to redeposit with Landlord any portion of the security deposited hereunder which Landlord has applied to the payment of any rent or additional rent due and payable hereunder; then in any one or more of such events, upon Landlord’s serving a written five (5) days’ notice upon Tenant specifying the nature of such default and upon the expiration of such five (5) days if Tenant shall have failed to comply with or remedy such default, or if the said default or omission complained of shall be of such a nature that the same cannot be completely cured or remedied within said five (5) day period, and if Tenant shall not have diligently commenced curing such default within such five (5) day period, and shall not thereafter with reasonable diligence and in good faith, proceed to remedy or cure such default, then Landlord may serve a written three (3) days’ notice of cancellation of this Lease upon Tenant, and upon the expiration of said three (3) days, this Lease and the term thereunder shall end and expire as fully and completely as if the expiration of such three (3) day period were the day herein definitely fixed for the end and expiration of this Lease and the term thereof and Tenant shall then quit and surrender the Premises to Landlord but Tenant shall remain liable as hereafter provided.   (2)  If the notice provided for in Section (1) hereof shall have been given, and the term shall expire as aforesaid; or if Tenant shall default in the payment of the rent reserved herein or in any item of additional rent herein mentioned or any part of either or in making any other payment herein required; then and in any of such events, Landlord may, without notice, re-enter the Premises either by force or otherwise, and dispossess Tenant by summary proceedings otherwise, and the legal representative of Tenant or other occupant of the Premises and remove their effects and hold the Premises as if this Lease had not been made, and Tenant hereby waives the service of notice of intention to re-enter or to institute legal proceedings to that end.  If   13 --------------------------------------------------------------------------------   Tenant shall make default hereunder prior to the date fixed as the commencement of any renewal or extension of this Lease, Landlord may cancel and terminate such renewal or extension agreement by written notice.   25.  Transfer After Bankruptcy: (a) If this Lease is assigned to any person or entity pursuant to Title 11 of the U.S. Code (the “Bankruptcy Code”), all consideration payable in connection with such assignment shall belong to Landlord.   (b)  If Tenant assumes this Lease and proposes to assign the same under the provisions of the Bankruptcy Code to a person or: legal entity making a bona fide offer to accept an assignment, Tenant shall give notice to Landlord stating (i) the name and address of the proposed assignee, (ii) the terms and conditions of the offer, (iii) the assurance of future performance of the proposed assignee under this Lease, including the assurance to be provided under §365(b)(3) of the Bankruptcy Code as the same may be amended. Such notice shall be given not earlier than twenty (20) days before Tenant makes application to the court for approval or authority for the making of such assignment and Landlord shall have the right within ten (10) days after receipt of such notice to accept the assignment upon the same terms and conditions but less any brokerage commission payable out of the consideration for the assignment.   26.  Access to Premises: (a) Landlord or Landlord’s agents shall have the right (but shall not be obligated) to enter the Premises in any emergency at any time and at other reasonable times to examine same and to make such repairs, replacements and improvements as Landlord may deem necessary or desirable to any portion of the building or which Landlord may elect to perform in the Premises after Tenant’s failure to make repairs or perform any work which Tenant is obligated to perform under this Lease, or for the purpose of complying with laws, regulations and other directions of governmental authorities. Tenant shall not be entitled to any abatement of rent while such work is in progress nor to any damage by reason of loss or interruption of business or otherwise.   (b)    If at any time entry to the Premises shall be necessary for the inspection or protection of the property or in the event of an apparent abandonment of the property by Tenant, and entry cannot be obtained by Landlord or its agents during reasonable hours, Landlord or its agents shall have the right to enter same by force or otherwise without rendering Landlord liable for damages and without such entry constituting a trespass.   (c)    The provisions of this Article are not to be construed as an increase of Landlord’s obligations under this Lease or to impose any obligation upon the Landlord, nor shall the making of any repairs by Landlord be deemed a waiver of Landlord’s rights arising out of Tenant’s defaults; in the event of such default repairs shall be made for the account and at the expense of Tenant and shall be billed as additional rent to the Tenant.   27.     No Representations by Landlord: Neither Landlord nor Landlord’s agents have made any representation or promises with respect to the physical condition of the building, the land upon which it is erected or the Premises, the rents, Leases, expenses of operation or any other matter or thing affecting or related to the Premises or the building except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or   14 --------------------------------------------------------------------------------   otherwise except as expressly set forth in the provisions of this Lease. Tenant has inspected the building and the Premises and is thoroughly acquainted with their condition and agrees to take same “as is” on the date possession is tendered and acknowledges that the taking of possession of the Premises by Tenant shall be conclusive evidence that the said Premises and the building of which the Premises form a part were in good and satisfactory condition at the time such possession was so taken. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Landlord and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.   28.  Building Alterations and Management: Landlord shall have the right at any time without the same constituting an eviction and without incurring liability to Tenant therefor, to change the arrangement and or location of public entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets or other public parts of the building and to change the name, number or designation by which the building may be known. There shall be no allowance to Tenant for diminution of rental value and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord’s or other Tenant’s making any repairs in the building or any such alterations, additions or improvements. Further-more, Tenant shall not have any claim against Landlord by reason of Landlord’s imposition of any controls of the manner of access to the building by Tenant’s social or business visitors as the Landlord may deem necessary for the security of the building or its occupants.   29.  Quiet Enjoyment: Landlord covenants and agrees with Tenant that upon Tenant’s paying the rent and additional rent and observing and performing all the terms, covenants and conditions on Tenant’s part to be observed and performed Tenant may peaceably and quietly enjoy the Premises hereby demised, subject nevertheless to the terms and conditions of this Lease including but not limited to, Article 39 hereof and to the ground Leases, if any, underlying Leases, if any, and mortgages, if any, hereinbefore mentioned.   30.  Failure to Give Possession: If Landlord is unable to give possession of the Premises on the date of the commencement of the term hereof because of the holding over or retention of possession of any tenant, undertenant or occupants or if the Premises are located in a building being constructed, because such building has not been sufficiently completed to make the Premises ready for occupancy or because of the fact that a certificate of occupancy has not been procured or if Landlord has not completed any work required to be performed by Landlord, or for any other reason. Landlord shall not be subject to any liability for failure to give possession on said date and the validity of the Lease shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of this Lease, but the rent payable hereunder shall be abated (provided Tenant is not responsible for Landlord’s inability to obtain possession or complete any work required) until after Landlord shall have given Tenant notice that the Premises are substantially ready for Tenant’s occupancy. If permission is given to Tenant to enter into the possession of the Premises or to occupy premises other than the Premises prior to the date specified as the commencement of the term of this Lease, Tenant covenants and   15 --------------------------------------------------------------------------------   agrees that such occupancy shall be deemed to be under all the terms, covenants, conditions and provisions of this Lease, except as to the covenant to pay rent. The provisions of this Article are intended to constitute “an express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law.   31.  Brokerage: Tenant represents and warrants that it dealt with no broker, real estate salesperson, finder or the like (collectively, “broker”) in connection with this leasing. Tenant hereby indemnifies and saves harmless the Landlord against any loss from claims for brokerage commissions and expenses arising out of Tenant’s acts involving any other broker. Such expenses shall include, but not be limited to, legal fees incurred by Landlord in defending any such claim. Landlord has dealt only with Vernon Property Inc. in connection with this lease or the negotiation or execution thereof and Landlord is solely responsible for the broker’s commissions and fees according to the separate commission agreement.   32.  Prior Improvements: Tenant acknowledges that the installations and improvements installed by Tenant are the property of the Landlord and shall be maintained by Tenant as provided in Article 7 of this Lease. Tenant shall obtain and keep in force throughout the term of this Lease a contract for the servicing of the HVAC unit installed by Tenant. A copy of the contract shall be furnished to Landlord and, upon Landlord’s request, evidence of payment of the price for the contract.   33.  Excavation and Shoring: If an excavation shall be made upon land adjacent to the Premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation, license to enter upon the Premises for the purpose of doing such work as said person shall deem necessary to preserve the wall or the building of which the Premises form a part from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Landlord, or diminution or abatement of rent.   34.  Property Loss and Damage: Landlord or its agents shall not be liable for any damage to property of Tenant or of others, nor for loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause of whatsoever nature happening on, in or about the Premises. Landlord or its employees will not be liable for any such damage caused by other tenants or persons in, upon or about said building or caused by operations in construction of any private, public or quasi public work. If at any time any windows of the Premises are temporarily or permanently closed, darkened or bricked up for any reason whatsoever, including but not limited to Landlord’s own acts. Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefore nor abatement or diminution of rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction.   35.  Estoppel Certificate: Tenant, at any time, and from time to time, upon at least ten (10) days’ prior notice by Landlord, shall execute, acknowledge and deliver to Landlord, and/or to any other person, firm, corporation or other legal entity specified by Landlord, a statement   16 --------------------------------------------------------------------------------   certifying that this Lease is unmodified, in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates to which the rent and additional rent have been paid, and stating whether or not there exists any default by Landlord under this Lease, and if so, specifying each such default.   36.  No Personal Liability: Tenant shall look solely to the estate and property of Landlord in the Premises or to the land and building of which the Premises form a part, as the case may be, for the enforcement and satisfaction of any and all rights and remedies of Tenant in the event of any default or breach by Landlord of any of its obligations, covenants, representations or warranties in this Lease or of any other liability of Landlord to Tenant. Tenant waives the right to seek any monetary damages or other relief against the Landlord personally, or against any partner, member, principal, shareholder, officer or director of Landlord, or against any assets of Landlord or such persons other than the interest of the Landlord in the Premises or the land and building of which the Premises form a part, such exculpation of personal liability to be absolute and without any exception whatever.   37.   Indemnity: Tenant shall indemnify and save harmless the Landlord and its agents against and from all liabilities, obligations, losses, personal injuries, damages, penalties, judgments, claims (even if such claims be groundless or fraudulent), costs, charges and expenses, including reasonable attorneys’ fees arising from a law suit between Landlord and Tenant or between Landlord and a third party, which may be imposed upon or incurred by or asserted against Landlord by reason of any of the following during the term of this Lease, or during the period of time prior to the term that Tenant may have been given access to the Premises:   (a)   any work or thing done by Tenant or done at Tenant’s instance or any condition created by Tenant in, on or about the Premises or any part thereof;   (b)   any use, non-use, possession, occupation, operation, maintenance or management of the Premises or any street or space adjacent thereto;   (c)   any negligence on the part of Tenant or other wrongful act or omission of Tenant or any of its subtenants, agents, contractors, employees, licensees or invitees;   (d)   any accident, injury or damage to any person or property occurring in, on or about the Premises or any street or space adjacent thereto;   (e)   any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms or conditions contained in this Lease on its part to be performed or complied with; and   (f)    any condition arising from any hazardous materials, defined as any petroleum or petroleum products, lead, asbestos, toxic substance, hazardous waste, substance or related material or any pollutant or contaminant in, on, above, under, about or migrating to or from the Premises, or a violation of environmental law, order or regulation, federal, state or local, which   17 --------------------------------------------------------------------------------   condition or violation arises from the act or omission of Tenant, its subtenants, agents, contractors, employees, licensees or invitees.   The provisions of this Article shall survive the termination of the Lease.   38.  Waiver of Trial By Jury: Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of said Premises, and any emergency statutory or any other statutory remedy. It is further mutually agreed that in the event Landlord commences a summary proceeding for possession of the Premises, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding nor attempt to consolidate any other proceeding with the summary proceeding.   39.  Destruction, Fire and Other Casualty: (a) If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Landlord and this Lease shall continue in full force and effect except as hereinafter set forth.   (b)    If the Premises are partially damaged or rendered partially unusable by fire or other casualty, the damages thereto shall be repaired by and at the expense of Landlord and the rent, until such repair shall be substantially completed, shall be apportioned from the day following the casualty according to the part of the Premises which is usable.   (c)    If the Premises are totally damaged or rendered wholly unusable by fire or other casualty, then the rent shall be proportionately paid up to the time of the casualty and thenceforth shall cease until the date when the Premises shall have been repaired and restored by Landlord, subject to Landlord’s right to elect not to restore the same as hereinafter provided.   (d)    If the Premises are rendered wholly unusable or (whether or not the Premises are damaged in whole or in part) if the building shall be so damaged that Landlord shall decide to demolish it or to rebuild it, then, in any of such events, Landlord may elect to terminate this Lease by written notice to Tenant, given within ninety (90) days after Tenant has notified Landlord of such fire or casualty, specifying a date for the expiration of the Lease, which date shall not be more than sixty (60) days after Landlord has given such notice, and upon the date specified in such notice the term of this Lease shall expire as fully and completely as if such date were the date set forth above for the termination of this Lease and Tenant shall forthwith quit, surrender and vacate the Premises without prejudice however to Landlord’s rights and remedies against Tenant under the Lease provisions in effect prior to such termination, and any rent owing shall be paid up to such date and any payments of rent made by Tenant which were on account of any period subsequent to such date shall be returned to Tenant. Unless Landlord shall serve a termination notice as provided for herein, Landlord shall make the repairs and restorations under the conditions of “b” and “c” hereof, with all reasonable expedition, subject to delays due to adjustment of insurance claims, labor troubles and causes beyond Landlord’s control.   18 --------------------------------------------------------------------------------   (e)      After any such casualty, Tenant shall cooperate with Landlord’s restoration by promptly removing from the Premises Tenant’s inventory, equipment, furniture and its other property and debris and shall give Landlord access to the Premises in default of which, Landlord may remove the same and in addition to all other damages sustained by Landlord, the fixed and additional rent shall not be abated. Subject to the provisions of this paragraph “e”, Tenant’s liability for rent and additional rent shall resume five (5) days after Landlord has given written notice to Tenant that the Premises are substantially ready for Tenant’s occupancy.   (f)       Nothing contained herein shall relieve Tenant from liability that may exist as a result of damage from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty and to the extent that such insurance is in force and collectible and to the extent permitted by law, Landlord and Tenant each releases and waives all right of recovery against the other or anyone claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if both releasors’ insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance. If, and to the extent, that such waiver can be obtained only by the payment of additional premiums, then the party benefiting from the waiver shall pay such premium within ten (10) days after written demand or shall be deemed to have agreed that the party obtaining insurance coverage shall be free of any further obligation under the provisions hereof with respect to waiver of subrogation. Tenant acknowledges that Landlord will not carry insurance on Tenant’s furniture and or furnishings or any fixtures or equipment, improvements, or appurtenances removable by Tenant and agrees that Landlord will not be obligated to repair any damage thereto or replace the same.   (g)     Tenant hereby waives the provisions of Section 227 of the New York State Real Property Law and agrees that the provisions of this Article shall govern and control in lieu thereof.   40.  Eminent Domain: If the whole or any part of the Premises shall be acquired or condemned by Eminent Domain for any public or quasi public use or purpose, then and in that event, the term of this Lease shall cease and terminate from the date of title vesting in such proceeding and Tenant shall neither have claim for the value of any unexpired term of this Lease nor the reimbursements of any form paid in return of eminent domain.   41.  Subordination: This Lease is subject and subordinate to all ground or underlying Leases, if any, and to all mortgages, if any, which may now or hereafter affect such Leases or the real property of which the Premises are a part and to all renewals, modifications, consolidations, replacements and extensions of such underlying Leases and mortgages. This clause shall be self-operative and no further instrument of subordination shall be required by any ground or underlying lessor or by any mortgagee. In confirmation of such subordination, Tenant shall execute promptly any certificate that Landlord may request.   42.  Requirements of Law: Prior to the commencement of the Lease term, if Tenant is then in possession, and at all times thereafter, Tenant shall, at Tenant’s sole cost and expense, promptly comply with all present and future laws, orders and regulations, foreseen or unforeseen,   19 --------------------------------------------------------------------------------   ordinary or extraordinary, of all state, federal municipal and local governments, departments, bureaus and agencies or offices thereof and of all public and quasi-public authorities and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, or the Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Landlord or Tenant with respect to the Premises, whether or not arising out of Tenant’s use or manner of use thereof, or, with respect to the building, if arising out of Tenant’s use or manner of use of the Premises or the building (including the use permitted under the Lease). Tenant shall not do or permit any act or thing to be done in or to the Premises which is contrary to law, or which will invalidate or be in conflict with public liability, fire or other policies of insurance at any time carried by or for the benefit of Landlord. Tenant shall not keep anything in the Premises except as now or hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization and other authority having jurisdiction, and then only in such manner and in such quantity so as not to increase the rate for fire insurance applicable to the building, nor use the Premises in a manner which will increase the insurance rate for the building or any property located therein over that in effect prior to the commencement of Tenant’s occupancy. In the event Landlord’s fire insurance premiums are increased due to Tenant’s use or occupancy, including the use mentioned in Article 12, Tenant shall pay such increases to Landlord as additional rent within ten (10) days after Tenant receives a bill therefor. If the Premises are on the ground floor, Tenant shall make all repairs required by law to the sidewalks and curbs adjacent to the Premises. If Tenant shall receive a notice of violation, a copy of same shall be immediately provided to the Landlord.   43.  Definitions: The term “Landlord” as used in this Lease means only the owner for the time being of the Premises or of the fee of the land and building of which the Premises form a part. In the event of any transfer of the ownership interest in the Premises or such fee, the transferor shall be entirely relieved of all covenants and obligations of Landlord under this Lease and it shall be deemed and construed, without further agreement between the parties or between the parties and the transferee of the Premises or such fee, that such transferee has assumed and agreed to carry out any and all covenants and obligations of Landlord under this Lease subject to the provisions of Article 36 hereof (“No Personal Liability”).   The term “rent” includes the annual rental rate whether so expressed or expressed in monthly installments as described in Article 4 as “Fixed Rent”, and additional rent. “Additional Rent” means all sums which shall be due to Landlord or new owner from Tenant under this Lease, in addition to the annual rental rate.   44.  Construction of Terms: In any construction of the terms of this Lease, none of its terms shall be construed against the Landlord by reason of the fact that the Landlord or its attorney drew the Lease, nor shall any of its terms be construed against the Tenant by reason of the fact that Tenant or its attorney modified or drew provisions of this Lease since the final terms of this Lease are the result of the joint efforts of the attorneys for the Landlord and Tenant.   45.  Invalid Terms: If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent be invalid or unenforceable, the remainder of   20 --------------------------------------------------------------------------------   this Lease or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law.   46.  Captions: The captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Lease or the intent of any provision thereof.   47.  Successors and Assigns: The covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their respective heirs, distributees, executors, administrators, trustees, successors, and except as otherwise provided in this Lease, their assigns.   48.  Option Lease: Tenant has two-time opportunity to exercise their Lease Option to extend their lease for an additional five (5) year period at market rent and additional terms to be negotiated at that time if Tenant has complied with the following conditions:   (a)          Tenant has not been in default in paying their Rent and Additional rent stated herein more than twice during the Lease term;   (b)         Tenant must provide Landlord with written notice of their intent to exercise their Lease Option at least ONE (1) year prior to the Expiration Date of the Lease; and   (c)          Tenant shall be up-to-date in payment of all rent and Additional rent prior to exercising their Lease Option.   [Signatures to Follow]   21 --------------------------------------------------------------------------------   In Witness Whereof, Landlord and Tenant have respectively signed this Lease as of the day and year first above written.       ROOSEVELT AVENUE CORP.           By: /s/ Daniel Lee   DANIEL LEE, PRESIDENT           WILSHIRE STATE BANK           By: /s/ Joanne Kim   President & CEO   Name and Title   22 --------------------------------------------------------------------------------
CONFIDENTIAL EXECUTION VERSION November 6, 2017 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omissions. AMENDMENT #2 TO LICENSE AGREEMENT This Amendment #2 to License Agreement (the “Second Amendment”) is entered into and made effective as of November 6, 2017 (the “Second Amendment Effective Date”) and amends that certain License Agreement dated December 6, 2014 (as previously amended by the First Amendment dated June 9, 2016, the “License Agreement”), by and between Pfizer Inc., a corporation organized and existing under the laws of the State of Delaware with offices at 235 East 42nd Street, New York, New York 10017 (“Pfizer”) and Spark Therapeutics, Inc., a corporation organized and existing under the laws of the State of Delaware with offices at 3737 Market Street, Suite 1300, Philadelphia, Pennsylvania 19104 (“Spark”). Pfizer and Spark are referred to herein individually as a “Party” and collectively as the “Parties”. WHEREAS, the Parties wish to amend the License Agreement to modify the rights, roles and responsibilities of the Parties under the License Agreement; NOW THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties hereby agree as follows. 1.Terms. Capitalized terms used in this Second Amendment (and in the License Agreement, as amended hereby) and not defined herein shall have the respective meanings given to such terms in the License Agreement. 1.1    “Companion Diagnostic Assay” means any in vitro, in vivo or cell based assay that is intended to (i) qualitatively or quantitatively measure neutralizing antibodies to any AAV capsid, or (ii) be used to otherwise assess whether a clinical trial subject or a patient is a candidate for treatment with a Licensed Product. For clarity, any such assay may, but need not necessarily, include as a component thereof any Compound or any component of any Compound or Licensed Product. 1.2     “Companion Diagnostic Assay Improvement” means, as to a Companion Diagnostic Assay that qualitatively or quantitatively measures neutralizing antibodies to any AAV capsid contained in a Licensed Product or can be used to otherwise assess whether a clinical trial subject or a patient is a candidate for treatment with a Licensed Product, any modification made by Pfizer or its Affiliates, or on any of their behalf by a Third Party contractor, to (a) any materials provided by Spark to Pfizer (or to an Affiliate or Third Party contractor designated by Pfizer) under the License Agreement that are incorporated into or otherwise used as part of such Companion Diagnostic Assay, or (b) Spark’s proprietary methods disclosed to Pfizer (or to an Affiliate or Third Party contractor designated by Pfizer), 1 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 which methods are incorporated into or otherwise used to perform such Companion Diagnostic Assay. 1.3    “Joint Companion Diagnostic Assay Know-How” means any Joint Know-How that is necessary or useful for the Development or use of any Companion Diagnostic Assay Developed for use in connection with the Development or Commercialization of any Licensed Product. 1.4    “Joint Companion Diagnostic Patent Rights” means any Joint Patent Right that claims or discloses any invention included in Joint Companion Diagnostic Assay Know-How. 1.5    “Joint Companion Diagnostic Technology” means the Joint Companion Diagnostic Assay Know-How and the Joint Companion Diagnostic Patent Rights. 1.6    “Manufacturing Technology Transfer Plan” shall have the meaning set forth in Section 4.5.3 of the License Agreement, as amended by the Second Amendment. 1.7     “Pfizer Companion Diagnostic Patent Rights” means any Patent Right, other than the Joint Companion Diagnostic Patent Rights, in any form and whether pending or issued, that both (a) is Controlled by Pfizer or any of its Affiliates as of the Second Amendment Effective Date or that comes into the Control of Pfizer or any of its Affiliates following the Second Amendment Effective Date and during the term of the Agreement (other than through the grant of a license by Spark) and (b) claims or discloses (i) any Companion Diagnostic Assay Improvement or (ii) any Companion Diagnostic Assay (including any component thereof) that comprises a Companion Diagnostic Assay Improvement. 1.8    “Second Amendment” is defined in the preamble above. 1.9    “Second Amendment Effective Date” is defined in the preamble above. 1.10    “Spark Companion Diagnostic Assay Know-How” means any Know-How, other than the Joint Companion Diagnostic Assay Know-How, that (a) is Controlled by Spark or, subject to Section 2.5.1, any of its Affiliates as of the Second Amendment Effective Date or that comes into the Control of Spark or any of its Affiliates following the Second Amendment Effective Date and during the Term (in each case, other than through the grant of a license by Pfizer) and (b) is necessary or useful for the Development or use of any Companion Diagnostic Assay that qualitatively or quantitatively measures neutralizing antibodies to any AAV capsid contained in a Licensed Product or can be used to otherwise assess whether a clinical trial subject or a patient is a candidate for treatment with a Licensed Product. 1.11    “Spark Companion Diagnostic Patent Rights” means any Patent Right, other than the Joint Companion Diagnostic Patent Rights, in any form and whether pending or issued, that both (a) is Controlled by Spark or, subject to Section 2.5.1, any of its Affiliates as of 2 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 the Second Amendment Effective Date or comes into the Control of Spark or, subject to Section 2.5.1, any of its Affiliates following the Second Amendment Effective Date and during the Term (other than through the grant of a license by Pfizer) and (b) claims or discloses (i) any Spark Companion Diagnostic Assay Know-How, (ii) any Companion Diagnostic Assay (including any component thereof), or (iii) any method of making, using or otherwise exploiting any Companion Diagnostic Assay (including any component thereof). The Spark Companion Diagnostic Patent Rights as of the Second Amendment Effective Date are listed in Exhibit A attached to this Second Amendment. 1.12    “Spark Companion Diagnostic Technology” means the Spark Companion Diagnostic Assay Know-How and the Spark Companion Diagnostic Patent Rights. 2.    Effects of Second Amendment. This Second Amendment amends the License Agreement solely to the extent expressly provided below as of the Second Amendment Effective Date. As so amended, the License Agreement continues in full force and effect and is ratified in all respects. Any references in the License Agreement to the “Agreement” will be deemed to mean the License Agreement as amended by this Second Amendment. 3.    Amendments. 3.1    Collaboration Period. 3.1.1 The definition of “Collaboration Period” set forth in Section 1.1.30 of the License Agreement is hereby deleted and replaced with: “‘Collaboration Period’ means the date beginning on the Effective Date and ending, subject to the proviso below, [**] after the completion of [**] the Phase I/II Clinical Trial, provided, however, that in the event Pfizer determines and notifies Spark, in writing, that clinical comparability (as compared to patients dosed with Licensed Product containing Compound produced using the “Process 1” manufacturing process) is demonstrated [**] treated with Licensed Product containing Compound produced using the “Process 2” manufacturing process (based on the clinical comparability criteria set forth in Exhibit B attached to the Second Amendment of this License Agreement), the Collaboration Period will end upon the later of (i) such determination and notification if the [**], in which event the [**] or (ii) if the [**] prior to such determination and notification, the date that is [**]. For the avoidance of doubt, the Collaboration Period shall end automatically as set forth above in this Section 1.1.30 and, except as expressly provided above in this Section 1.1.30, shall not require Pfizer’s determination of clinical comparability.” 3.1.2 Both during and following the Collaboration Period, each Party shall conduct the activities assigned to it as and when provided under the Roles and Responsibilities Plan attached to this Second Amendment as Exhibit C (the “Roles and Responsibilities Plan”). Without limiting the generality of the foregoing, Spark shall use Commercially Reasonable Efforts (a) to conduct and complete [**] the Phase I/II Clinical Trial, [**], as soon as practicable 3 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 after the Second Amendment Effective Date, with the goal of completing the same by [**], and (b) if Pfizer has not concluded that the [**] or if Pfizer otherwise requests Spark to [**] in the Phase I/II Clinical Trial, [**], as soon as practicable after the Second Amendment Effective Date, with the goal of completing the same by [**]. Notwithstanding any provision in the License Agreement or this Second Amendment to the contrary, (i) the INDs for the Spark Phase I/II Clinical Trials shall not be transferred to Pfizer until each of the items in the Roles and Responsibilities Plan that are identified as being required prior to the transfer to Pfizer of the INDs have been completed and (ii) Spark shall remain responsible for conducting all activities that are necessary as part of the continuing conduct of the Phase I/II Clinical Trial (as defined below) until the INDs for the Phase I/II Clinical Trial have been transferred to and accepted by Pfizer, in each case, notwithstanding that the Collaboration Period may have ended prior to the time that such INDs are so transferred and accepted. 3.1.3 Following the Collaboration Period and the completion of the transfer to Pfizer of the INDs for the Phase I/II Clinical Trial: (a) Pfizer shall assume responsibility for the conduct and completion of the Phase I/II Clinical Trial (including with respect to short-term and long-term following of patients after initial dosing by Spark), and Pfizer shall have final decision-making authority as to such activities; (b) Pfizer shall become the sponsor for the Phase I/II Clinical Trial; (c) Upon Pfizer’s request, Spark shall assign to Pfizer those applicable vendor agreements (as identified in such request) with respect to the Phase I/II Clinical Trial, including, without limitation, the [**]; (d) notwithstanding Section 4.4.2 of the License Agreement, Pfizer, as sponsor for the Phase I/II Clinical Trial, shall assume (and Spark shall not have) responsibility for the completion of the Phase I/II Clinical Data Package; (e) Spark shall have no further obligation under Section 4.4.1 of the License Agreement, except to the extent that any such responsibilities are required of Spark to be conducted after the Collaboration Period as provided under the Roles and Responsibilities Plan; and (f) in the event that Pfizer, despite having used its Commercially Reasonable Efforts to do so, has not entered into an agreement with a Third Party contractor such that such Third Party contractor can conduct [**], as applicable, beginning on or before [**], then, if requested by Pfizer, Spark and Pfizer shall negotiate, in good faith, a services agreement, under which Spark would continue to perform 4 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 [**] with respect to the Phase I/II Clinical Trial, as applicable, until such time as a Third Party selected by Pfizer is able to conduct [**] and Pfizer would reimburse Spark for the costs incurred by Spark in conducting [**]. 3.2    Phase I/II Clinical Trial. The definition of “Phase I/II Clinical Trial” in Section 1.1.107 of the License Agreement is hereby replaced in its entirety with: “‛Phase I/II Clinical Trial’ means Spark’s first in human clinical trials involving Compounds, currently known as (i) SPK-9001-101 (which involves the dosing of patients with SPK-9001 and following such patients for a period of [**] after the enrollment and dosing of the last patient in the SPK-9001-101 study) and (ii) SPK-9001-LTFU-001 (which involves the continued following of patients dosed with SPK-9001 in the SPK-9001-101 study for a period of [**] after the enrollment of the last patient in the SPK-9001-LTFU-101 study).” 3.3    Non-Exclusive License Grants. Section 2.2 of the License Agreement is hereby amended by replacing Section 2.2 in its entirety with the following: “2.2    Non-Exclusive License Grants. 2.2.1    Compounds and Licensed Products. Without limiting any other license granted under this Agreement, subject to the terms of this Agreement and, as applicable, the terms of the Existing Spark License Agreements and any Third Party Licenses entered into by Spark pursuant to Section 3.4.3(b) applicable to sublicensees thereunder, Spark hereby grants to Pfizer a non-exclusive license under all Patent Rights, Know-How and other Intellectual Property Rights Controlled (as of the Effective Date or at any time during the Term) by Spark or its Affiliates to use, have used, Develop, have Developed, Manufacture, have Manufactured, Commercialize, have Commercialized, and otherwise exploit Compounds and Licensed Products in the Field in the Territory during the Term. 2.2.2    Companion Diagnostic Assays. Without limiting any other license granted under this Agreement, (a)    subject to the terms of this Agreement and, as applicable, the terms of the Existing Spark License Agreements and any Third Party Licenses entered into by Spark pursuant to Section 3.4.3(b) applicable to sublicensees thereunder and (subject to Section 2.2.2(c) below) the terms of any agreement between Spark and a Third Party under which Spark Controls rights to any of the Spark Companion Diagnostic Technology (each, a “Spark Third Party Companion Diagnostic Technology Agreement”), Spark hereby grants to Pfizer a fully paid, royalty-free (subject to Section 2.2.2(d) below), irrevocable, perpetual, worldwide, non-exclusive license, with, subject to Section 2.3, the right to grant sublicenses (through multiple tiers), under all Spark Companion Diagnostic Technology and 5 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Spark’s interest in the Joint Companion Diagnostic Technology to use, have used, Develop, have Developed, make, have made, sell, have sold, offer for sale, import, export, and otherwise exploit Companion Diagnostic Assays that are Developed for purposes of assessing whether a clinical trial subject or a patient is a candidate for treatment with a Licensed Product; (b)    subject to the terms of this Agreement and, as applicable (but subject to Section 2.2.2(c) below), the terms of any agreement between Pfizer and a Third Party under which Pfizer Controls rights to any of the Pfizer Companion Diagnostic Patent Rights (each a “Pfizer Third Party Companion Diagnostic Technology Agreement”), Pfizer hereby grants to Spark a fully paid, royalty-free (subject to Section 2.2.2(d) below), irrevocable, perpetual, worldwide, non-exclusive license, with, subject to Section 2.3, the right to grant sublicenses (through multiple tiers), under all Pfizer Companion Diagnostic Patent Rights and Pfizer’s interest in the Joint Companion Diagnostic Technology to use, have used, Develop, have Developed, Manufacture, have Manufactured, Commercialize, have Commercialized, and otherwise exploit Companion Diagnostic Assays; (c) in the event either Party enters into an agreement with a Third Party under which such Party seeks to gain a license to intellectual property that is necessary or useful for the development, manufacture, use, sale or other exploitation of Companion Diagnostic Assays or Companion Diagnostic Assay Improvements, as applicable, such Party shall use its Commercially Reasonable Efforts to seek to have the ability to grant to the other Party the licenses described in Sections 2.2.2(a) or 2.2.2(b) above, as applicable. In addition, the Parties acknowledge that while, under Spark Third Party Companion Diagnostic Technology Agreements, Spark may not always obtain such rights and, under Pfizer Third Party Companion Diagnostic Technology Agreements, Pfizer may not always obtain such rights, and, if such rights are not obtained by Spark or Pfizer, as applicable, each Party (the “Contracting Party”) hereby represents and warrants that it has not and covenants that it will not agree in any such agreement between it or its Affiliates and any such Third Party to include (i) restrictions or limitations, including payments by such Third Party to such Contracting Party based on the grant to the other Party of such license, that would restrict or limit the other Party’s ability to obtain directly from the applicable Third Party a nonexclusive patent license to Develop, Manufacture, use, offer for sale, sell and import the Companion Diagnostic Assays, each to the extent owned or controlled by such Third Party or (ii) without 6 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 otherwise limiting such Third Party’s obligations with respect to the use of or maintaining the confidentiality of the Contracting Party’s confidential information, a prohibition against such Third Party using, in connection with the development of Companion Diagnostic Assays or Companion Diagnostic Assay Improvements by such Third Party on behalf of the other Party, residual knowledge (defined similarly to the definition of Residual Knowledge in Section 1.1.128 but as applicable to the confidentiality obligations undertaken in the agreement between such Third Party and the Contracting Party) that such Third Party may have as a result of its activities in developing a Companion Diagnostic Assay under the agreement between such Third Party and the Contracting Party; and (d) the licenses granted in Sections 2.2.2(a) and 2.2.2(b) shall be subject to the grantee Party agreeing [**]. Notwithstanding any provision to the contrary in this Agreement, the licenses granted under this Section 2.2.2 shall survive expiration or any termination of this Agreement.” 3.4    Sublicenses. Section 2.3 of the License Agreement is hereby amended by replacing Section 2.3 in its entirety with the following: “2.3    Sublicenses. Pfizer, subject to Section 4.11.1, and Spark each shall have the right to sublicense any of the rights granted to it pursuant to Section 2.1 and Section 2.2 in multiple tiers to Affiliates and Third Parties, provided that: 2.3.1    Pfizer shall include or otherwise substantively incorporate in each such sublicense granted by it all terms and conditions that sublicensees are required to be subject to under (i) this Agreement, (ii) the Existing Spark License Agreements, (iii) Third Party Licenses entered into by Spark pursuant to Section 3.4.3(b) after the Effective Date under which Pfizer has elected to receive a sublicense, and (iv) any Spark Third Party Companion Diagnostic Technology Agreement, each as applicable; 2.3.2    Spark shall include or otherwise substantively incorporate in each such sublicense granted by it all terms and conditions that sublicensees are required to be subject to under (i) this Agreement and (ii) any Pfizer Third Party Companion Diagnostic Technology Agreement, each as applicable; 2.3.3    Each of Pfizer and Spark shall remain responsible for its obligations hereunder and, to the extent necessary to satisfy such obligations, shall be responsible for its sublicensees’ performance under each sublicense agreement; 2.3.4    Should any sublicensee of Pfizer fail to comply with the terms and conditions that such sublicensee is required to be subject to under this 7 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Agreement, the Existing Spark License Agreements, other Third Party license(s) entered into by Spark after the Effective Date under which Pfizer has elected to receive a sublicense or any Spark Third Party Companion Diagnostic Technology Agreement, each as applicable, Pfizer shall either promptly cause such sublicensee to comply with such terms and conditions or terminate the applicable sublicense; 2.3.5    Should any sublicensee of Spark fail to comply with the terms and conditions that such sublicensee is required to be subject to under this Agreement or any Pfizer Third Party Companion Diagnostic Agreement, as applicable, Spark shall either promptly cause such sublicensee to comply with such terms and conditions or terminate the applicable sublicense; and 2.3.6     Pfizer shall deliver to Spark a true and complete copy of each sublicense agreement between Pfizer and any Third Party sublicensee and Spark shall deliver to Pfizer a true and complete copy of each sublicense agreement between Spark and any Third Party sublicensee, each within [**] days after Pfizer or Spark, as applicable, enters into any such sublicense and, upon request by Spark or Pfizer, as applicable, from time to time, Pfizer or Spark, as applicable, shall promptly identify all Affiliates to which Pfizer or Spark, as applicable, has granted sublicenses. Notwithstanding the foregoing, the Party providing a copy of a sublicense Agreement it has entered into may redact from such copy (i) any information and provisions not relating to the rights sublicensed pursuant to this Section 2.3, (ii) all financial provisions of such sublicense agreement, (iii) confidential information of the Third Party, and (iv) other information that is competitively sensitive. Each such sublicense agreement provided by a Party to the other Party pursuant to this Section 2.3.5, is hereby deemed to be included as part of the providing Party’s Confidential Information. Pfizer and Spark shall be equally responsible for compliance with the provisions of this Section 2.3 as to sub-sublicenses granted by its sublicensees, as if such sub-sublicenses were granted directly by Pfizer or Spark, as applicable.” 3.5    Development Costs. Section 3.2.1 of the License Agreement is hereby amended by replacing Section 3.2.1 in its entirety with the following: “3.2.1 Product Development Costs. (a)    During the portion of the Collaboration Period prior to the later of (i) [**] or (ii) the completion of [**] (the later of (i) or (ii), the “Cost Responsibility Transition Date”), Pfizer shall reimburse Spark for [**] percent ([**]%) of the Development Costs and [**] percent ([**]%) of the Manufacturing Costs incurred under Product Development Plan, in accordance with the Budget. To the extent that the actual total Development Costs and Manufacturing Costs for expenses incurred under Product 8 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Development Plan expended prior to the end of the Collaboration Period exceed a cumulative aggregate of [**] U.S. dollars ($[**]) (the “Cap”), Pfizer will subject to Section 4.3.2(i) reimburse Spark for one hundred percent (100%) of the Development Costs and Manufacturing Costs in excess of the Cap; and thereafter if actual Development Costs and Manufacturing Costs exceed the Cap, Pfizer will, subject to the limitations set forth in Section 4.3.2(e), have final decision-making authority in the JSC with respect to any Disputed Matters. Following the Collaboration Period, Pfizer will pay all Development Costs and Manufacturing Costs. (b)     Beginning on the Cost Responsibility Transition Date and for the remainder of the Collaboration Period, Pfizer shall reimburse Spark for all Development Costs incurred under the Product Development Plan, in accordance with the Budget. Beginning on the Cost Responsibility Transition Date, Pfizer will, subject to the limitations set forth in Section 4.3.2(e), have final decision-making authority in the JSC with respect to any Disputed Matters. (c)    Following the Collaboration Period, Pfizer will be responsible for all Development Costs and Manufacturing Costs it incurs.” 3.6    Governance. Section 4.3.2(g) of the Agreement is hereby amended by replacing Section 4.3.2(g) in its entirety with the following: “(g) Post-Collaboration Period Role. Following the Collaboration Period, the JSC shall cease to have the responsibilities set forth in Section 4.3.2(d) and the decision-making authority set forth in Section 4.3.2(e) and, thereafter will no longer function as a decision-making body, at which point in time such committee will be dissolved and reconstituted and renamed as the Information Sharing and Advisory Committee (“ISAC”) with the understanding that, as of the end of the Collaboration Period, all references in the License Agreement to “the JSC” in the License Agreement will be replaced by “the ISAC” to the extent such references are applicable to activities occurring after the end of the Collaboration Period. Beginning on the earliest of (i) the Cost Responsibility Transition Date, (ii) the date on which Pfizer, pursuant to Section 3.2.1(a) becomes responsible for one hundred percent (100%) of the Development and Manufacturing Costs or (iii) the end of the Collaboration Period, Pfizer shall have final decision-making authority for matters previously within the JSC’s authority, subject to Pfizer’s obligations and Spark’s rights, under this Agreement, including Section 4.9.” 3.7    End of Phase II Meetings; Regulatory Activities. The Parties agree that (a) the joint preparation requirements of Section 4.10.3 of the License Agreement shall apply only to the first EOP2 Meeting and (b) Spark shall have no further obligation under Section 4.10.3 of the License Agreement after the completion of the first EOP2 Meeting, provided, however, that thereafter Spark, at no cost to Pfizer, shall provide reasonable available additional 9 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 information, in the form Spark has such information, relating to the Phase I/II Clinical Trial, other pre-clinical studies conducted by Spark, Spark’s manufacture of any Compound or Licensed Product, or Spark’s development, validation or conduct of assays or analytical methods relating thereto, each as reasonably requested by Pfizer, to assist Pfizer in its preparation for subsequent EOP2 Meetings, its preparation of any filings with a Regulatory Authority relating to the Compound or Licensed Product and its preparation for or of any other meeting or communication with any Regulatory Authority relating to the Compound or Licensed Product. 3.8    Regulatory Communications. Section 4.10.6 of the License Agreement is hereby amended by replacing Section 4.10.6 in its entirety with the following: “4.10.6    Regulatory Communications. With respect to each of the Major Market Countries, Canada and Japan, on a country by country basis, following the Collaboration Period and prior to the [**] of the first Licensed Product Developed by Spark pursuant to this Agreement (the “Regulatory Participation Period”), upon Spark’s reasonable request, Pfizer will reasonably consider and endeavor to accommodate Spark’s requests to attend, either in person or via teleconference (at Spark’s discretion), material meetings (including using reasonable efforts to request permission from the applicable Regulatory Authority to allow a reasonable number of employees of Spark to attend the portion of any material meeting with such Regulatory Authorities pertaining to the applicable Licensed Product developed by Spark under this Agreement (each a “Spark Developed Licensed Product”)) between Pfizer employees and Regulatory Authorities in such country when such meeting relates substantially to such Spark Developed Licensed Product, with any such attendance being at Spark’s sole cost and expense. Without limiting the generality of the foregoing, during the Regulatory Participation Period, Pfizer, to the extent practicable, shall notify Spark reasonably in advance of any such upcoming material meeting or material discussion that relates substantially to such Spark Developed Licensed Product(s), whether in-person, by teleconference or by video-conference, that Pfizer has scheduled with Regulatory Authorities in any of the Major Market Countries, Canada or Japan. During the Regulatory Participation Period, if requested by Spark with respect to any particular material meeting or material discussion attended in person or via teleconference by one or more Spark employees, Pfizer will provide Spark with copies of (i) the minutes (in a form where information not substantially related to the Spark Developed Licensed Product or Compound may be redacted by Pfizer) of any such material meeting or material discussion with a Regulatory Authority. During the Regulatory Participation Period Pfizer will provide to the ISAC at its regularly scheduled meetings an update regarding Pfizer’s regulatory plans, material communications with Regulatory Authorities and outcomes of such material regulatory interactions, each to the extent substantially related to such Spark Developed Licensed Product. Additionally, if requested by Spark to aid its understanding of the updates Pfizer provides to the ISAC during the Regulatory Participation Period, Pfizer shall reasonably consider Spark’s requests for access to copies of relevant portions of material filings, material notices and 10 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 material correspondence with, to or from a Regulatory Authority in any of the Major Market Countries, Canada or Japan which are in Pfizer’s possession and substantially relate to the Licensed Product) specified by Spark, provided that Pfizer may redact any information that is not substantially related to a Spark Developed Licensed Product, that relates to any product other than the Spark Developed Licensed Product or that is otherwise proprietary to Pfizer. Any copies of documents provided by Pfizer to Spark under this Section 4.10.6 may be provided by Pfizer by posting copies of such documents to a secure electronic repository to which Spark employees having a need to know such information are provided access. All materials and information made available to Spark, whether directly or indirectly, by Pfizer, or through Spark’s attendance at any meeting or discussion with any Regulatory Authority as provided herein, shall be deemed to be Pfizer’s Confidential Information and shall be treated by Spark as such pursuant to Article 6 of this License Agreement.” 3.9    Commercial Participation and Information Sharing. Section 4.11 of the License Agreement is hereby amended by adding the following to the end thereof as new Sections 4.11.3 and 4.11.4: “4.11.3    Advisory Boards. Following the Second Amendment Effective Date and prior to the earlier of (x) the [**] of a Spark Developed Licensed [**] or (y) the [**], Pfizer shall notify Spark reasonably in advance of any upcoming physician or patient advisory boards (all such advisory boards, “Ad Boards”) scheduled by Pfizer [**], which Ad Boards relate substantially to the Spark Developed Licensed Product. Upon Spark’s written request, Pfizer will invite Spark to have a reasonable number of employees of Spark to attend such Ad Boards, which attendance will be at Spark’s sole cost and expense. Pfizer shall have no obligation to invite any Spark employee and Spark shall have no right to have any of its employees attend [**], and it shall be Spark’s responsibility to ensure that its employees attending any such Ad Board are aware of such restrictions and take appropriate action to immediately discontinue their attendance at and participation in [**]. Pfizer may require each such Spark employee to sign a confidential disclosure agreement prior to permitting such Spark employee’s attendance at such Ad Board which confidential disclosure agreement may restrict such employee from using in any manner or disclosing to Spark or to any third party any information that [**] is obtained by such Spark employee in connection with his or her attendance at or participation in such Ad Board. All information made available, directly or indirectly, to Spark including, any discussions at any Ad Boards, under this Section 4.11.3 shall be deemed to be Pfizer’s Confidential Information and shall be treated by Spark as such pursuant to Article 6 of this License Agreement, provided, however, that the term of Spark’s obligations, as provided under Section 6.2 of the License Agreement, with respect thereto, shall expire [**] years after the expiration or earlier termination of the License Agreement. Notwithstanding the foregoing, in the event that a Spark employee receives any information [**] in connection with his or her attendance at 11 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 any Ad Board, Spark agrees that such information (i) also shall be deemed to be Pfizer’s Confidential Information, (ii) shall be treated as such by Spark pursuant to Article 6 of this License Agreement, provided, however, that the term of Spark’s obligations, as provided under Section 6.2 of the License Agreement, with respect to such Confidential Information, shall expire [**] years after the expiration or earlier termination of the License Agreement, and (iii) shall not be used by Spark for any purpose.” “4.11.4         Information Sharing. Following the Second Amendment Effective Date, Pfizer shall provide Spark with copies of clinical Development plans prepared by or on behalf of Pfizer that relate to the Licensed Product in any Major Market Country, Canada or Japan, provided, however, that Pfizer shall have the right to redact portions of any such clinical Development plans that, in whole or in part, relates to or includes information regarding any gene therapy product (other than the Licensed Product) owned or controlled by Pfizer or its Affiliates or that Pfizer or its Affiliates is developing or plans to Commercialize. All information provided to Spark under this Section 4.11.4 shall be deemed to be Pfizer’s Confidential Information and shall be treated by Spark as such pursuant to Article 6 of this License Agreement.” 3.10    Certain Spark Obligations; Transfer of Technology and Materials. 3.10.1 The Parties hereby agree that as of the Second Amendment Effective Date, any obligation of Spark remaining to be performed under (a) the Manufacturing Technology Transfer Plan (as it existed prior to the Second Amendment Effective Date), (b) the Technology Transfer Plan (as it existed prior to the Second Amendment Effective Date) and (c) Sections 4.5.1, 4.8.1, 4.8.4, 4.8.5 and 4.15 of the License Agreement each shall be and hereby is deleted from the License Agreement and superseded in its entirety and such obligations collectively shall be replaced by the obligations set forth in Sections 3.1.2, 3.6, and 3.9.4 of this Second Amendment and the obligations set forth in Section 4.5.3 of the License Agreement, as amended below. The Parties further agree that the Amended and Restated Technology Transfer Plan (as defined below) attached to this Second Amendment as Exhibit D, supersedes and replaces the Technology Transfer Plan and the Manufacturing Technology Transfer Plan (as each such plan existed prior to the Second Amendment Effective Date). From and after the Second Amendment Effective Date, any references in the License Agreement to the Manufacturing Technology Transfer Plan shall be deemed to be references to the Amended and Restated Technology Transfer Plan. 3.10.2 The Parties hereby agree that following the Collaboration Period, any obligation of Spark remaining to be performed under the final sentence of Section 4.10.2 of the License Agreement shall be and hereby is superseded in its entirety and such obligation shall be replaced by the obligations set 12 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 forth in Section 4.5.3 of the License Agreement, as amended below, and the obligations set forth in Section 3.2, 3.6 and 3.9.4 of this Second Amendment. 3.10.3 Section 4.5.3 of the License Agreement is hereby deleted and replaced in its entirety with: “4.5.3 Technology Transfer Plans. The Parties shall each use Commercially Reasonable Efforts to discharge in a timely manner the responsibilities set forth in the technology transfer plan set forth in Exhibit D to the Second Amendment (the “Amended and Restated Technology Transfer Plan”). In connection therewith, and, without limiting Spark’s obligations set forth in Section 4.5.2, Spark shall transfer or cause to be transferred to Pfizer, in a reasonably timely manner, the Manufacturing Process Technology and Spark Technology, as set forth in the Amended and Restated Technology Transfer Plan in order to enable (i) Pfizer and Spark to perform its respective activities set forth in the Roles and Responsibilities Plan and Amended and Restated Technology Transfer Plan and (ii) enable Pfizer to manufacture or have manufactured Compound and Licensed Products pursuant to Section 5.8 of the License Agreement and prepare the necessary Regulatory Approvals for the manufacture of Compounds and Licensed Products pursuant to Section 4.10 of the License Agreement. Each Party shall bear its own expenses in carrying out its responsibilities under the Amended and Restated Technology Transfer Plan. In addition, Spark agrees to perform such further acts and execute and deliver such further documents and materials as may be reasonably requested by Pfizer in order to more fully effect the transfer to Pfizer of Manufacturing Process Technology and Spark Technology, provided that Pfizer shall reimburse Spark for the reasonable out of pocket costs incurred by Spark in fulfilling such additional requests.” 3.10.4 Biological Samples. (a) “Biological Samples” means biological materials (such as blood, urine, tissue, cells, cell cultures or saliva) collected from study subjects during the conduct of the Phase I/II Clinical Trial during such times as Spark was the sponsor of the IND(s) for the Phase I/II Clinical Trial. (b) “Surplus Samples” means any Biological Samples that remain after completion of all protocol-required testing conducted as part of the Phase I/II Clinical Trial by or on behalf of Spark prior to the time that Spark transfers to Pfizer and Pfizer becomes the sponsor of the IND(s) for the Phase I/II Clinical Trial. (c) “Applicable Requirements” means: (i) the terms of the Agreement, including, but not limited to, standard operating procedures (“SOPs”) and other documents referred to in the Agreement or otherwise used by Spark in the conduct of the Phase I/II Clinical Trial; (ii) the 13 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 protocol(s) for the Phase I/II Clinical Trial (the “Protocols”); (iii) the Investigator Brochure(s) for the Phase I/II Clinical Trial; (iv) the terms of the IRB/IEC approval(s) for the Phase I/II Clinical Trial; (v) all Applicable Laws; and (vi) all applicable GxP. (d) To the extent (x) permissible or not prohibited under the Applicable Requirements and (y) permissible under informed consent documents signed by the applicable Study Subject, Spark, at or before the end of the Collaboration Period (or such later date as Pfizer may specify) shall transfer all Surplus Samples to Pfizer or to Pfizer’s designee. If Spark is unable to transfer any of the Surplus Samples to Pfizer, Spark shall cooperate with Pfizer and shall take such actions as may be necessary to allow for the continued use and testing of the Surplus Samples by or under the direction of Pfizer in connection with the development of any Licensed Product, including: (i) using reasonable efforts to amend the informed consent document signed by the applicable Study Subject to allow for the transfer to and use by Pfizer or Pfizer’s designee of such Surplus Samples; (ii) using reasonable efforts to obtain waivers or authorizations from the applicable IRB/IEC to allow for the transfer to and use by Pfizer or Pfizer’s designee of such Surplus Samples; (iii) using reasonable efforts to enter into an agreement (which agreement shall be subject to prior written approval of Pfizer) and/or facilitating Pfizer’s entry into an agreement with a Third Party to hold such Surplus Samples and make use thereof under the direction of Pfizer or Pfizer’s designee; and/or (iv) other actions as the Parties may mutually agree will achieve the goal of allowing Pfizer or Pfizer’s designee to hold and use such Surplus Samples. Pfizer and, as applicable, Pfizer’s designee, shall comply with all Applicable Requirements regarding its handling and use of the Surplus Samples once received from Spark. Costs incurred by Spark in taking any of the foregoing actions shall be borne solely by Spark, provided, however, that to the extent any Surplus Samples are to be held by a Third Party after the end of the Collaboration Period in order to allow the continued use thereof the amounts payable to such Third Party for performing its obligations with respect to the Surplus Samples under such Agreement shall be borne by Pfizer. 14 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 3.11    Materials Transfer. The Parties agree that Spark’s transfer of any materials to Pfizer or its Affiliates or, if requested by Pfizer, directly to a Third Party designee, in each case, for use in the Development (whether directly by Pfizer or through one or more Affiliates or Third Party contractors) of the Companion Diagnostic Assay or any other assay to be used to assess the efficacy, potency or safety of any Licensed Product (such development, the “Assay Development” and such materials, excluding any materials addressed in Section 3.10.4, collectively, the “Spark Materials”) shall be subject to this Section 3.11. The Spark Materials constitute Confidential Information of Spark, and shall be used by Pfizer, its Affiliates or Third Party designees (i) only as set forth in Exhibit E hereto and (ii) solely for Assay Development. Any transfer by Spark directly to a Third Party designated by Pfizer shall be pursuant to an agreement between Pfizer (or one of its Affiliates) and such Third Party that contains terms governing the use and treatment of such Spark Materials which terms are no less restrictive than the material transfer terms set forth in Exhibit E hereto. Spark acknowledges that Pfizer will and has the right to transfer certain of the Spark Materials to [**] and/or one or more affiliates of [**] (collectively, “[**]”) in order for [**] to perform its Companion Diagnostic Assay Development obligations under a Companion Diagnostic Assay Development Initiation Agreement and potentially one or more related agreements to be entered into by and between Pfizer and [**] or one or more Affiliates of [**] (as such agreement(s) may be amended, supplemented or restated by such parties, the “[**] Agreement”). Pfizer agrees that it shall not transfer any Spark Materials to any other Third Party for Assay Development without a written agreement between Pfizer and such transferee containing material transfer terms consistent with this Section 3.11 and Exhibit E hereto (any such agreement, including the [**] Agreement, a “Transfer Agreement” and any such transferee of Spark Materials, a “Transferee”). For clarity, this Section 3.11 and the material transfer terms set forth in Exhibit E shall have no effect on Pfizer’s right to use materials provided by Spark or to transfer to a Third Party materials provided by Spark, in each case for the manufacture of Licensed Products. 3.12    Payments. In consideration for Spark performing its obligations under this Second Amendment, including, without limitation, the timely performance of Spark’s obligations under each of the Roles and Responsibilities Plan and the Amended and Restated Technology Transfer Plan, Pfizer hereby agrees to make the following payments to Spark: 3.12.1 a one-time payment to Spark in the amount of ten million dollars ($10,000,000), which payment shall be made within [**] days after the Second Amendment Effective Date; 3.12.2 [**] dollars ($[**]) due as follows: (a) a one-time payment to Spark in the amount of [**] dollars ($[**]) due upon the [**]. Such payment shall be made within [**] days after Spark submits an invoice therefor to Pfizer, provided that such invoice shall not be submitted to Pfizer prior to the end of the [**]; and 15 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 (b) a one-time payment to Spark in the amount of [**] dollars ($[**]) upon completion, [**], a “Milestone 2 Activity” and, [**]. Such payment shall be made within [**] days after Spark submits an invoice therefor to Pfizer, provided that such invoice shall not be submitted to Pfizer prior to the end of the [**]. In the event that Pfizer, in good faith, disputes that Spark has, prior to the end of the [**], completed, in all material respects, one or more Milestone 2 Activities, Pfizer shall so notify Spark and the Parties shall use reasonable efforts to resolve such dispute, provided however, that (a) notwithstanding the existence of such dispute, Pfizer shall timely pay the portion of such invoice corresponding to any Milestone 2 Activity that Pfizer is not disputing has been completed in all material respects prior to the end of the [**], calculated at a rate of [**] dollars ($[**]) per Milestone 2 Activity and (b) the period for making payment with respect to any Milestone 2 Activity that is the subject of a good faith dispute by Pfizer shall be tolled pending the resolution of such dispute. Either Party may, at any point after Spark’s delivery of an invoice hereunder, escalate and submit a dispute under this Section 3.12.2(b) for resolution in accordance with Section 10.9 of the License Agreement, in which case the only consideration shall be whether Spark completed the disputed Milestone 2 Activity(s) in all material respects prior to the end of the [**]. If the resolution of such dispute is that Spark has completed one or more disputed Milestone 2 Activity(s) in all material respects prior to the end of the [**], then Pfizer shall pay the previously unpaid portion(s) of the invoiced amounts corresponding to the applicable disputed Milestone 2 Activity(s) on or before the later of (i) [**] days after Pfizer’s receipt of the applicable invoice submitted as described above in this Section 3.12.2(b) or (ii) [**] Business Days of such resolution (calculated as set forth above). If the resolution of such dispute is that Spark did not complete the disputed Milestone 2 Activity(s) in all material respects prior to the end of the [**], or if Spark concedes that it failed to complete a Milestone 2 Activity in all material respects prior to the end of the [**], then Spark shall forfeit the previously unpaid portion(s) of the invoiced amounts corresponding to such Milestone 2 Activity(s) (calculated as set forth above). 3.12.3 a one-time payment to Spark in the amount of [**] dollars ($[**]) due upon [**] as provided in the Roles and Responsibilities Plan, provided that such payment shall be made within [**] days after Spark submits an invoice therefor to Pfizer, which invoice shall not be submitted to Pfizer until [**]; and 3.12.4 a one-time payment to Spark in the amount of [**] dollars ($[**]) due upon [**], a “Milestone 4 Activity”, and, [**] on or before [**] (each, a “Target 16 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Date”). Such payment shall be made within [**] days after Spark submits an invoice therefor to Pfizer, provided that such invoice shall not be submitted to Pfizer until Spark believes, in good faith, that it has completed the Milestone 4 Activities in all material respects and delivered to Pfizer each of the deliverables required to be delivered to Pfizer as part of the completion of each such activity. In the event that Pfizer, in good faith, disputes that Spark on or before the applicable Target Date(s), has completed, in all material respects, one or more Milestone 4 Activities, Pfizer shall so notify Spark and the Parties shall use reasonable efforts to resolve such dispute, provided however, that (a) notwithstanding the existence of such dispute, Pfizer shall timely pay the portion of such invoice corresponding to any Milestone 4 Activity that Pfizer is not disputing that Spark has performed such Milestone 4 Activity in all material respects by the applicable Target Date, calculated at a rate of $[**] and (b) the period for making payment with respect to any Milestone 4 Activity that is subject to a good faith dispute by Pfizer shall be tolled pending the resolution of such dispute. Either Party may, at any point after Spark’s delivery of an invoice hereunder, escalate and submit a dispute under this Section 3.12.4 for resolution in accordance with Section 10.9 of the License Agreement, in which case the only consideration shall be whether Spark completed the disputed Milestone 4 Activity(s), in all material respects, prior to the applicable Target Date(s). If the resolution of such dispute is that Spark completed the disputed Milestone 4 Activity(s), in all material respects, prior to the applicable Target Date(s), then Pfizer shall pay the previously unpaid portion(s) of the invoiced amounts corresponding to such disputed Milestone 4 Activity(s) on or before the later of (i) [**] days after Pfizer’s receipt of the applicable invoice submitted as described above in this Section 3.12.4 or (ii) [**] Business Days after such resolution (calculated as set forth above). If the resolution of such dispute is that Spark did not complete the disputed Milestone 4 Activity(s), in all material respects, prior to the applicable Target Date(s), or if Spark concedes that it failed to complete a Milestone 4 Activity, in all material respects, prior to the applicable Target Date, then Spark shall forfeit the previously unpaid portion(s) of the invoiced amounts corresponding to such Milestone 4 Activity(s) (calculated as set forth above). In the event Spark fails to complete, in all material respects, any activity required of it under either the Roles and Responsibilities Plan or the Amended and Restated Technology Transfer Plan, as applicable, on or before the target completion date specified in the Roles and Responsibilities Plan or the Amended and Restated Technology Transfer Plan, as applicable, with respect to such activity, Spark shall remain obligated to complete such activity, in all material respects, regardless of whether any particular payment described above in this Section 3.12 becomes due and payable. [Signature page follows] 17 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 IN WITNESS WHEREOF, authorized representatives of the Parties have duly executed this Second Amendment as of the Second Amendment Effective Date. PFIZER INC. By:/s/ Robert J. Smith    Name: Robert J. Smith Title: Senior Vice President SPARK THERAPEUTICS, INC. By:/s/ Jeffrey D. Marrazzo    Name: Jeffrey D. Marrazzo Title: Chief Executive Officer Second Amendment – Signature Page -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 EXHIBIT A SPARK COMPANION DIAGNOSTIC PATENT RIGHTS Title Country Status Application Number Filing Date [**] [**] [**] [**] [**] Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of 4 pages were omitted. [**] Exhibit A – Page 1 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 EXHIBIT B CLINICAL COMPARABILITY CRITERIA [**] Exhibit B – Page 1 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 EXHIBIT C ROLES AND RESPONSIBILITIES PLAN Capitalized terms used and not otherwise defined in this Roles and Responsibilities Plan shall have the meaning assigned to such terms the License Agreement, as amended. Clinical Key Activity Pfizer’s Role Spark’s Role Timing of Spark Involvement Milestone 2 Activity Completion Required Prior to IND Transfer Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of 6 pages were omitted. [**] Medical Key Activity Pfizer’s Role Spark’s Role Timing of Spark Involvement Milestone #2 Activity Completion Required Prior to IND Transfer [**] [**] [**] [**] [**] [**]   Exhibit C – Page 1 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Regulatory Key Activity Pfizer’s Role Spark’s Role Timing of Spark Involvement Milestone #2 Activity Completion Required Prior to IND Transfer Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of 2 pages were omitted. [**] Assays Key Activity Pfizer’s Role Spark’s Role Timing of Spark Involvement Milestone #2 Activity Completion Required Prior to IND Transfer Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of 7 pages were omitted. [**] Exhibit C – Page 2 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 EXHIBIT D AMENDED AND RESTATED TECHNOLOGY TRANSFER PLAN Information Transfer Category Detail Timing Priority [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Exhibit D – Page 1 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Category Detail Timing Priority [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Materials Transfer Category Detail Timing Priority [**] [**]   [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Exhibit D – Page 2 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Testing/Consulting Category Detail Timing [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Exhibit D – Page 3 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Attachment 1 to Amended and Restated Technology Transfer Plan: DS & DP Methods for ICH Batches [**] [**] Exhibit D – Page 4 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 Attachment 1 to Amended and Restated Technology Transfer Plan: DS & DP Methods for ICH & PV/Commercial Batches [**]      Exhibit D – Page 5 -------------------------------------------------------------------------------- CONFIDENTIAL EXECUTION VERSION November 6, 2017 EXHIBIT E MATERIAL TRANSFER TERMS • Transferee shall use the Spark Material and any related information solely to conduct the Assay Development work, other testing, or product manufacturing activities, each as applicable and as described in the Transfer Agreement. • Transferee shall maintain in confidence the Spark Material and any related information provided in connection with the Transfer Agreement. • Transferee shall limit use and disclosure of the Spark Material and any related information to its representatives who are bound by the terms of the Transfer Agreement and any confidentiality agreement between Pfizer, and Transferee and who have an actual need to know. Transferee shall be liable for any breach of these terms by its representatives. • Transferee shall take reasonable precautions to prevent loss or theft of the Spark Material. • Transferee shall, upon completion of the work described in the Transfer Agreement, return any remaining used and/or unused Spark Material to Pfizer, and/or shall destroy any such remaining Spark Material at Pfizer's request. • Except as required by applicable laws or regulations or as may be ordered by a governmental authority of competent jurisdiction, Transferee shall not disclose information related to the Spark Material or any related information to any third party. • Transferee shall represent and warrant that any person or parties providing services in connection with the Spark Materials shall be bound by these provisions. • Transferees shall neither analyze nor attempt to determine or reverse engineer the Spark Material, nor furnish the Spark Material to a third party for such analysis. • Transferee shall not use the Spark Material in humans. • Transferee shall hold Spark harmless for any claims for injury resulting from such party’s use of the Spark Material, and for any claims for injury resulting from use of the Spark Material by any third party who received the Spark Material from such party. • No express or implied warranties with respect to the Spark Material are made by Spark, including, but not limited, to any express or implied warranties of merchantability or fitness for a particular purpose. Exhibit E – Page 1
[exhibit103offerletter_image1.gif] October 29, 2014 Stephen Nolan Re: Vista Outdoor Inc. Employment Offer Dear Stephen: I am pleased to offer you employment with Vista Outdoor Inc., a wholly owned subsidiary of ATK. As you know, it is expected that in the next several months pursuant to an executed Transaction Agreement, Vista Outdoor will be spun off from ATK and will become and independent publicly-traded company. The transfer of your employment to the position offered herein will occur as part of the Spin-Off and upon the Closing of the Transaction Agreement Your current title, roles and responsibilities will continue unchanged until Closing. Upon Closing, you will transfer to Vista Outdoor and will bold the title of Senior Vice President, Chief Financial Officer, and VP Corporate Development of Vista Outdoor Inc. Your primary work location will be the Vista Outdoor corporate headquarters in Utah. Your base salary will continue unchanged until Closing. Upon Closing, your base salary will be $450,000, less applicable deductions and withholdings. Your base salary will be paid in accordance with Vista Outdoor's regular payroll practices following Closing. Your current annual bonus opportunity will continue unchanged until Closing. Your annual bonus for the fiscal year ending March 31, 2015 (FY15) is not guaranteed and will be earned on fiscal year-end financial results and your individual performance. It will be pro-rated for your time of service with ATK from April, 2014 through Closing. Upon Closing, you will have the opportunity to participate in a Vista Outdoor annual bonus plan with a bonus target 65%. The annual bonus opportunity will be subject to the satisfaction of performance criteria to be determined by the Compensation Committee of Vista Outdoor's Board of Directors in its sole discretion. Your current Long-Term Incentive Compensation Program (LTI opportunity will be addressed per the terms of the Transaction Agreement and you will receive a separate communication on the impact of the closing on your current LTI. Upon Closing, you will be eligible to participate in Vista Outdoor's executive long-term incentive compensation program, which is intended to deliver compensation tied to tong-term performance of Vista Outdoor. The design of this program will be approved by the Compensation Committee of Vista Outdoor's Board of Directors in its sole discretion and may include a mix of both Vista Outdoor common stock and cash. The dollar amount of your LTI grant at target will be $658,000. However, the timing, form. and mix of the LTI award may be adjusted. For example, the value of any staking grant may offset future annual grants. Subject to the terms of the applicable benefit plan documents, you will continue to be eligible for all of the benefits in which you are currently enrolled through December 31, 2014 or Closing, whichever occurs first. Depending on the date of the Closing, you will have the same opportunity as all other similarly situated ATK employees to participate in open enrollment to select your benefit coverages for calendar year 2015. Upon Closing, you will cease being eligible for any ATK sponsored benefits and will immediately become eligible to participate in benefit plans that are offered by Vista Outdoor to its similarly situated employees at your grade level, which are subject to change from time to time. You will also be eligible to participate in any executive benefits programs established by the Compensation Committee of Vista Outdoor's Board of Directors in its sole discretion and offered to similarly situated employees such as a change-in-control severance plan and supplemental long-term disability. To help you transition to your new home, we offer our Home Owners Relocation Package. The attached brochures describe the details of the relocation program and the Relocation Repayment form is attached for your signature. If you accept this offer of employment, you will become an employee of Vista Outdoor Inc. at the time of the Closing. In consideration of the benefits provided under this offer of employment, and ATK's and Vista Outdoor's willingness to offer you employment with Vista Outdoor upon Closing, and for other good and valuable consideration, which is hereby acknowledged and agreed by the undersigned, you agree that upon Closing, you shall no longer be a participant in the Alliant Techsystems -------------------------------------------------------------------------------- Inc. Income Security Plan (ISP) and shall have no rights to any payments or benefits thereunder, either prior to, on or following the Closing. You shall instead be eligible to receive the payments and benefits described herein and, upon the Closing, to participate in the applicable plans and programs of Vista Outdoor Inc. This employment offer is conditional upon the Closing and will be null and void and of no further effect if the Spin-Off does not occur or if your employment with ATK is terminated for any reason prior to the Closing. You are accepting this offer of employment voluntarily and you acknowledge that it supersedes any prior or contemporaneous offers, verbal discussions, or promises and that it represents the entire agreement of the parties concerning your offer of employment with Vista Outdoor Inc. You agree and acknowledge that this offer of employment is not a contract of employment between you and ATK or Vista Outdoor Inc., that the terms and conditions of your employment are subject to review and may change from time to time, and that your employment is at-will and that either you or Vista Outdoor may terminate the employment relationship at any time for any lawful reason. The obligations herein may not be assigned by you, but ATK or Vista Outdoor Inc. may assign its obligations to any person or entity that succeeds to the ownership or operation of the business in which you are primarily employed. To accept this offer of employment, please return an executed copy along with the attached Confidentiality, Non-Competition, Non-Solicitation, and Invention Assignment Agreement to Carl Willis, VP Human Resources, Sporting Group, Anoka, MN. This offer of employment is contingent upon your executing and complying with the enclosed Confidentiality, Non­ Competition, Non-Solicitation, and Invention Assignment Agreement. Stephen, we are truly excited to extend this offer of employment to you and look forward to the contributions you will make at Vista Outdoor. If you have any questions, feel free to call Carl Willis at 763-323-2486. Very truly yours, VISTA OUTDOOR INC. [exhibit103offerletter_image2.gif] ALLIANT TECHSYSTEMS INC. AGREED TO AND ACCEPTED:    [exhibit103offerletter_image4.gif] [exhibit103offerletter_image3.gif] Stephen Nolan Date: 11/19/14
EXHIBIT 10.12 CONFIDENTIAL PORTIONS OMITTED PATENT LICENSE AGREEMENT   Licensor name:    Digimarc Corporation Licensor address:    9405 SW Gemini Drive Beaverton, OR 97008 Licensee name:    IV Digital Multimedia Inventions, LLC Licensee address:    2711 Centerville Road, Suite 400 Wilmington, DE 19808 License issue fee:    Thirty-six million U.S. dollars (U.S. $36,000,000), payable quarterly over three years as set forth in Schedule 2.1 Profit Participation percentage:    20% Effective Date    October 5, 2010     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- In witness whereof, intending to be legally bound, the parties have signed below to enter the attached Patent License Agreement (this “Agreement”) as of the Effective Date with the terms and conditions that follow. Capitalized terms not otherwise defined are set forth in Section 10 of this Agreement.   LICENSOR:     LICENSEE: DIGIMARC CORPORATION     IV DIGITAL MULTIMEDIA INVENTIONS, LLC By:   /s/ Bruce Davis     By:   /s/ Vincent Pluvinage   Bruce Davis,       Vincent Pluvinage,   Chairman and CEO       Authorized Person [Signature Page to Patent License Agreement]     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- PATENT LICENSE AGREEMENT RECITALS WHEREAS, Digimarc Corporation, an Oregon corporation (“Licensor”) is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects, including digital watermarking, and has developed one of the world’s leading patent portfolios relating to these technologies; WHEREAS, Invention Investment Fund II, LLC (“IV Fund”) is the second of two funds in the “Intellectual Ventures” family of funds that was formed to invest in intellectual property rights. As provided in IV Fund’s operating agreement, the purpose of IV Fund is to [**]; and WHEREAS, Licensor is willing to grant an exclusive license to certain patents in Licensor’s patent portfolio, and IV Fund is willing to acquire such exclusive license with an intent to license the Patents in an attempt to generate future profits, on the terms set forth in this Patent License Agreement. NOW, THEREFORE, the parties to this Patent License Agreement listed on the previous page hereby agree as follows:   1. GRANT OF EXCLUSIVE LICENSE   1.1 Exclusive Patent License Effective as of the Closing, Licensor hereby grants to Licensee the exclusive, worldwide, transferable (as provided in subsection 11.3), sublicensable license of all rights of any kind conferred by the Patents, including, without limitation, the rights of any kind to, or conferred by, the Patents to (a) use or otherwise practice any art, methods, processes, and procedures covered by the Patents, (b) make, have made, use, offer to sell, sell, import, and otherwise distribute or dispose of any inventions, discoveries, products, services, or technologies covered by the Patents, (c) otherwise exploit any rights granted in the Patents and/or any invention or discovery described in the Patents, and (d) exclude other Persons from exercising any of such rights.   1.2 Sublicenses The exclusive license rights granted Licensee under the Patents include the right to grant and authorize, from time to time and in Licensee’s sole and absolute discretion, one or more sublicenses. No sublicense granted to any Person pursuant to the terms of this Agreement will be terminable as a result of the termination of the Term.   1.3 Pre-Existing Encumbrances Licensee hereby acknowledges and agrees that the Patents are subject to the Existing Encumbrances.   1.4 Assignment of Causes of Action and Other Rights Effective as of the Closing, Licensor hereby assigns, transfers and conveys to Licensee all right, title and interest in and to:     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- (a) Rights to apply in any or all countries of the world for patents, certificates of invention, utility models, industrial design protections, design patent protections, or other governmental grants or issuances of any type corresponding to any of the Patents and the inventions and discoveries therein; (b) All causes of action and enforcement rights of any kind (whether such claims, causes of action or enforcement rights are known or unknown; currently pending, filed, to be filed; or otherwise) under the Patents and/or under or on account of any of the Patents for past, current and future infringement of the Patents, including without limitation, all rights to (i) pursue and collect damages, profits and awards of whatever nature recoverable, (ii) injunctive relief, (iii) other remedies, and (iv) compromise and/or settle all such claims, causes of action and enforcement rights for such infringement by granting an infringing party a sublicense or otherwise; and (c) Rights to collect royalties or other payments under or on account of any of the Patents or any of the foregoing, excluding the right to collect those royalties and other payments payable to Licensor as set forth on Schedule 1.4(c) pursuant to the Existing Encumbrances. For purposes of clarity, the word “title” in the first sentence of this subsection refers to title in the rights specified in this subsection, rather than title to the Patents.   1.5 No Implied Licenses Nothing contained in this Agreement or any of the other Transaction Agreements should be construed as conferring, by implication, estoppel or otherwise, a license to any other patents or patent applications other than the Patents. For the avoidance of doubt: (a) there are no implied licenses granted under this Agreement or other Transaction Agreements; and (b) nothing contained in this Agreement or other Transaction Agreements provides a license to any other patents or patent applications that do not fall within the definition of Patents but which may read on any inventions, discoveries, products, services or technologies covered by the Patents.   2. PAYMENT   2.1 License Issue Fee Licensee will pay to Licensor a nonrefundable combined license issue fee and past patent reimbursement (collectively, the “License Issue Fee”) in the amount set forth on the cover page of this Agreement, according to the schedule set forth on Schedule 2.1. Each of the payments referenced in Schedule 2.1 will be made by wire transfer to a designated bank account of Licensor. Prior to the Closing, Licensor will furnish Licensee with all necessary information to make such wire transfers, and will notify Licensee in writing of any changes to such wire transfer instructions at least twenty (20) business days prior to the deadline for the next payment due according to the above schedule. In the event that Licensee attempts to wire such payment on or prior to the applicable deadline in reliance on wire instructions in effect for the immediately preceding payment and Licensor fails to provide timely written notice of any change to the wire transfer instructions, then such payment shall not be considered late so long as Licensee makes such payment by the later of (i) the applicable payment deadline set forth in Schedule 2.1, or (ii) ten (10) business days after receiving such modified wire transfer instructions.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 2.2 Profit Participation Licensor will receive a non-refundable amount equal to the percentage (the “Profit Participation”) set forth on the cover page of this Agreement of any Profit that is generated following the Closing. Licensor expressly acknowledges and agrees that (i) neither IV Fund nor Licensee is providing any assurance that any Profit will be generated, nor is there any assurance regarding the amount and timing of any Profit, and (ii) any past indication of performance of IV Fund should not be relied upon as an indication of future performance. The Profit Participation will be payable on the due dates for the reports required by subsection 2.7 for Revenue received during the respective Reporting Period.   2.3 Portfolio Monetization; Allocation of Portfolio Profit to IP Groups Licensor acknowledges and agrees that Licensee and/or its Affiliates may from time to time sublicense, assert, litigate or otherwise exploit the Patents with other patents or patent applications held or controlled by Licensee and/or its Affiliates, at the discretion of Licensee and its Affiliates (a “Portfolio Monetization”). The parties acknowledge and agree that, unless a Portfolio Monetization specifies a particular royalty for one or more of the patents or patent applications (including the Patents), the Portfolio Profit will be determined according to the methodology set forth on Schedule 2.3. Any Monetization Expenses or IP Group Expenses for Reporting Periods that exceed Revenue for that Reporting Period will be carried forward to the next Reporting Period such that Profit will not be deemed to have occurred for any Reporting Period until cumulative Revenues exceed cumulative Monetization Expenses (whether of a Portfolio Monetization or a monetization event involving solely the Patents) and cumulative IP Group Expenses in the current Reporting Period and all prior Reporting Periods.   2.4 Adjustments to Value Allocations Notwithstanding the foregoing Value Allocations, for any given Portfolio Monetization, in the event that the formula set forth in Schedule 2.3 results in allocated per item Portfolio Profit in category R1 being less than the allocated per item Portfolio Profit in category R2, R3 or R4, or the allocated per item Portfolio Profit in category R2 being less than the allocated per item Portfolio Profit in category R3 or R4, or the allocated per item Portfolio Profit in category R3 being less than the allocated per item Portfolio Profit in category R4, then, in each such event, Licensee and/or its Affiliates will appropriately adjust the formula such that the allocated per item Portfolio Profit for each category is equal to or higher than the allocated per item Portfolio Profit for each higher numbered category (for example, the allocated per item Portfolio Profit in category R1 should be equal to or higher than allocated per item Portfolio Profit in categories R2, R3 and R4, after the adjustment). Furthermore, in the event that any patent category has no patents or patent applications, then Licensee and/or its Affiliates will adjust the Value Allocations to allocate the null category’s Value Allocation pro rata (based on relative Value Allocations) among the other categories. For purposes of this paragraph, an “item” will be a patent or a patent application included in the given Portfolio Monetization.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 2.5 Good-Faith Allocations Final In allocating patents or patent applications among categories for purposes of allocating Portfolio Profits, adjusting Value Allocations, and determining Portfolio Profits, Licensee and its Affiliates will exercise their reasonable business judgment, in good faith, without inequitable discrimination for or against patents or patent applications held or controlled by Licensee or any of its Affiliates. Any such allocation or adjustment that is not clearly and materially inconsistent with the foregoing will be final, binding, and conclusive.   2.6 Pre-existing Agreements of Licensee Licensor understands, acknowledges and agrees that (a) certain pre-existing agreements have been entered into prior to the Effective Date under which sublicensees may receive sublicense rights to the Patents without Licensee recognizing Revenue or generating Profit under the terms of this Agreement and (b) no additional Profit Participation or other monetary obligation will be due to Licensor as a result of rights granted pursuant to such pre-existing agreements.   2.7 Reports and Records As of each March 15 during the Term of this Agreement, Licensee will provide to Licensor a report reasonably detailing the sublicensing activities of Licensee and its Affiliates with respect to the Patents for the preceding twelve (12) month period ending as of December 31 (each, a “Reporting Period”) when there has been Revenue with respect to the Patents in such Reporting Period. If no Revenue was generated during a Reporting Period, such report will instead state that no Revenue was generated during such period, but will state the total Monetization Expenses and the IP Group Expenses incurred during such period. The Profit Participation will be payable to Licensor within ten (10) business days following the due dates for the reports required by this subsection 2.7 for Revenue received during the respective Reporting Period.   2.8 Books of Account Licensee and its Affiliates will keep accurate books of account containing all particulars that may reasonably be deemed necessary for the purpose of showing the Amounts payable to Licensor hereunder. All such books of account shall be kept available by Licensee and its Affiliates for no less than three (3) years after the end of each Reporting Period, or in the event of a dispute between the parties involving in any way those books of account, until such time as the dispute has been resolved, whichever is later. Said books of account will be kept at Licensee’s or its Affiliates’ principal place of business or, if notice thereof is given to Licensor, the principal place of business of the appropriate division of Licensee to which this Agreement relates. Not more than once during every twelve (12) month period and upon Licensor’s advance request of at least thirty (30) days, Licensee and its Affiliates will make said books and the supporting data available for inspection by Licensor or its agents during normal business hours for the two most recent Reporting Periods for the sole purpose of verifying Licensee’s calculations of the Profit Participation under this Agreement. Should such inspection lead to the discovery of a greater than [**] percent ([**]%) discrepancy in reporting to Licensor’s detriment, Licensee agrees to pay the reasonable fees and expenses of Licensor and/or its agents who conducted the inspection; provided however that such audit payment provision shall only     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- apply to discrepancies that constitute manifest errors (including errors in data entry or calculations, but excluding disputes over methodology). Licensee will promptly pay to Licensor all amounts appropriately determined by any audit to be due to Licensor. Any and all disputes with respect to the Profit Participation due under this Agreement or the calculation of Profit must be (a) raised within ninety (90) days after completion of the associated audit, and (b) resolved solely and exclusively pursuant to the provisions of subsection 11.9.   2.9 Nondivision No Person will anticipate, alienate, hypothecate, divide, pledge, exchange, encumber, or charge any right to payment of Profit Participation (if any) under this Agreement, and any attempt to anticipate, alienate, hypothecate, divide, pledge, exchange, encumber, or charge any right to payment of Profit Participation under this Agreement will be void, except that Licensor shall be entitled to pledge the payments due under Schedule 2.1 for credit. No creditor of Licensor (or other similar Person) shall in any manner be entitled to claim an interest in the right to Profit Participation hereunder as a result of the debts, contracts, liabilities or torts of the Licensor or otherwise.   2.10 Interest on Late Payments Licensor shall be entitled to charge, and Licensee shall pay, interest on any amounts that are more than ten (10) business days overdue for payment under Schedule 2.1, or payments determined by Licensee in accordance with subsections 2.3, 2.4, 2.5 and 2.7 to be due and payable under subsection 2.2, at the rate of [**]% per month (or part thereof), or at such lower rate as may be the maximum rate allowed under applicable law. This obligation of Licensee to pay interest on its overdue obligations does not prevent Licensor from terminating this Agreement for Payment Breach under subsection 11.4.   2.11 Taxes All payments by Licensee shall be made free and clear of and without deduction for or on account of any taxes or levies as may be payable by Licensee. Licensor agrees that it shall bear full responsibility for any and all taxes payable as a result of the payments made by Licensee hereunder.   2.12 Currency All royalties, fees and payments under this Agreement shall be in U.S. Dollars.   3. CLOSING   3.1 Deliverables Licensor has provided to Licensee, or its legal counsel, the items identified on Schedule D (the “Deliverables”). The lists of Live Assets on Schedules A and B and the list of Abandoned Assets on Schedule C may be revised by Licensee following the Closing to conform these lists to the definition of Patents set forth in this Agreement (and these revisions may therefore require the inclusion of additional provisional patent applications, patent applications, and patents on Schedules A and B or Schedule C). With respect to any originals of the Deliverables requested by Licensee for delivery as specified on Schedule D that have not been delivered as of the date hereof, Licensor will cause (i) such originals of     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- the Deliverables to be sent to Licensee or Licensee’s representative promptly once such originals are located, and (ii) with respect to any originals that cannot be located after Licensor’s commercially reasonable efforts, Licensor will deliver to Licensee a declaration, executed under penalty of perjury, detailing Licensor’s efforts to locate such unavailable original documents and details regarding how delivered copies were obtained.   3.2 Closing The execution and delivery of this Agreement is contingent upon the simultaneous execution and delivery of each of the other Transaction Agreements. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur simultaneously with the execution of this Agreement, and shall be conditioned upon the simultaneous closing of the transactions under the other Transaction Agreements. Upon the Closing, Licensee shall pay Licensor the initial payment required as part of the License Issue Fee, and Licensee may then record the Memoranda of Exclusive License/Rights.   3.3 Deliverables (a) Concurrently with the execution of this Agreement, Licensor shall deliver to Licensee each of the following items:     (i) Transmittal of Documents. Licensor will have delivered to Licensee all the Deliverables.     (ii) Delivery of Executed Memorandum of Exclusive License/Rights and Transfer of Rights in Abandoned Assets. Licensor will have delivered to Licensee executed and witnessed Memoranda of Exclusive License/Rights and the Transfer of Rights in Abandoned Assets. (b) Concurrently with the execution of this Agreement, Licensee shall deliver to Licensor the Certificate of Formation of Licensee.   3.4 Compliance with Laws Notwithstanding anything contained in this Agreement to the contrary, the obligations of the parties with respect to the consummation of the transactions contemplated by this Agreement shall be subject to all laws, present and future, of any government having jurisdiction over the parties and this transaction, and to orders, regulations, directions or requests of any such government.   4. COVENANTS OF LICENSOR   4.1 Further Cooperation At the reasonable request of Licensee, Licensor will execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of the transactions contemplated hereby, including, without limitation, execution, acknowledgment and recordation of other such papers, and using reasonable efforts to obtain the same from the respective inventors, as necessary or desirable for fully perfecting and conveying unto Licensee the benefit of the transactions contemplated hereby, including, without limitation, providing and assisting in     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- obtaining execution of any assignments, confirmations, powers of attorney, inventor declarations, and other documents that Licensee may request for prosecuting, maintaining, filing, obtaining issuance of, registering, enforcing, defending, or bringing any proceeding relating to the Patents. To the extent any attorney-client privilege or the attorney work-product doctrine applies to any portion of the Prosecution History Files, Licensor will ensure that, if any such portion of the Prosecution History File remains under Licensor’s possession or control after the Closing, it is not disclosed to any third party unless (a) disclosure is ordered by a court of competent jurisdiction, after all appropriate appeals to prevent disclosure have been exhausted, and (b) Licensor gave Licensee prompt notice upon learning that any third party sought or intended to seek a court order requiring the disclosure of any such portion of the Prosecution History File.   5. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS   5.1 Costs After the Closing, Licensee will have the sole right and responsibility for, but not the obligation for, the preparation, filing, prosecution, maintenance and defense of all Patents (except to the extent of any portion of the Patents abandoned by Licensee pursuant to the terms of this Agreement or otherwise provided to Licensor under subsection 5.4). Subject to subsection 5.4, Licensee may, but is not obliged to, consult with Licensor regarding execution of its responsibility, and Licensor agrees to cooperate and assist Licensee in connection therewith, as required by the terms of this Agreement.   5.2 Copies of Prosecution Documents Licensee will, upon Licensor’s reasonable written request, provide Licensor with a copy of documents received or filed by Licensee pertaining to the filing, prosecution, maintenance or defense of Patents, including, without limitation, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent issuing from such patent application. Licensee will provide Licensor access to the private Patent Application Information Retrieval (PAIR) docket of the USPTO for the Patents for so long as the Common Interest Agreement remains in effect.   5.3 Conduct of Prosecution Subject to subsection 5.4, the conduct of the preparation, filing, prosecution, maintenance, and defense of the Patents will be under Licensee’s exclusive control and discretion. Licensee is authorized to execute and record, on Licensor’s behalf, any document submitted to the USPTO or other governmental patent office that pertains to filing, prosecution, maintenance, or defense of the Patents, including, without limitation, consents to reissue applications, and declarations. Licensee will consult with Licensor on such matters from time to time on Licensor’s reasonable request. At the reasonable request of Licensee, Licensor will execute and deliver to Licensee such other documents, and do and perform such other acts and things, as may be reasonably necessary or desirable for confirming in Licensee exclusive right to prosecute, maintain, defend, file, obtain issuance, register, enforce, or bring any proceeding relating to the Patents including, without limitation, execution, acknowledgment and recordation of such documents necessary to convey to Licensee any right or power of attorney in the USPTO or other governmental patent office,     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- in respect to prosecution, maintenance, defense, filing, issuance, or registration of the Patents.   5.4 Abandonment (a) Licensee will at any time be entitled to abandon its license and other rights to all or any of the Patents (including abandonment of the Patents themselves, with respect to Patents to which Licensee acquires title). (b) Licensor may request Licensee to notify Licensor whether or not Licensee intends to abandon any particular Patent Family or Patent Families by delivering written notice (an “Abandonment Inquiry”) of such request to Licensee when Licensor identifies that Licensee has taken an action or failed to take an action indicating that Licensee may be abandoning a Patent Family. Licensee shall use reasonable efforts to notify Licensor of any instruction or plan to abandon a particular Patent Family or Patent Families, provided however that failure by Licensor to provide such notification shall not subject Licensee or any Affiliate of Licensee to liability associated with subsequent abandonment of such Patent Family or Patent Families. Licensee shall respond to any such Abandonment Inquiry by delivering a written statement (an “Abandonment Notice”) to Licensor within thirty (30) days as to whether or not Licensee intends to abandon the Patent Family(ies) specified in the Abandonment Inquiry. Any Patent Family or Patent Families designated for abandonment in the Abandonment Notice shall be referred to as “Released Patents”. Licensor hereby agrees that provisions in subsections 5.4(b) and (c) shall apply solely in the event that Licensee intends to abandon an entire Patent Family, and that in the event Licensee intends to abandon a particular Patent or Patents within a Patent Family, but to maintain other Patents within the Patent Family, Licensee shall not be obligated to provide an Abandonment Notice nor to assign the rights in such Patent or Patents to be abandoned to Licensor. (c) Upon receipt of an Abandonment Notice listing any Released Patents, Licensor shall be entitled to maintain all or any of such Released Patents, provided that Licensor hereby agrees with Licensee as follows with respect to such Released Patents: (i) Licensor shall assume, as of the date of the Abandonment Notice, sole right and responsibility for the preparation, filing, prosecution, maintenance and defense of each Released Patent, and, except as in the last sentence of this subsection 5.4(c), Licensee shall have no further obligation with respect to such Released Patents, (ii) each Released Patent shall be released and/or assigned AS IS, without any express or implied representation or warranty whatsoever with respect to such Released Patent, and (iii) Licensor hereby agrees, and shall confirm in writing to Licensee, that the Released Patents shall be subject to each sublicense, covenant not to sue or other encumbrance granted by Licensee or any Affiliate of Licensee prior to the date of the Abandonment Notice, which encumbrances will not be terminated, altered or affected as a result of such intended abandonment by Licensee. Except as in the last sentence of this subsection 5.4(c), with respect to each Released Patent that was licensed hereunder to Licensee immediately prior to the date of the Abandonment Notice, then Licensee’s and Licensor’s rights hereunder and under the other Transaction Agreements with respect to such Released Patents shall terminate as of the date of such Abandonment Notice. With respect to each Released Patent to which Licensee has acquired title pursuant to Sections 3 or 4 of the Patent Rights Agreement, then Licensee shall use commercially     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- reasonable efforts to assign all right, title and interest in such Released Patent to Licensor as soon as reasonably practicable, subject to the first sentence of this clause (c). Licensee agrees to reasonably cooperate with the recording of transfer of title of any Released Patent to Licensor, provided that Licensor shall bear all expenses (and shall reimburse Licensee for all of its expenses) relating to such transfer. For each Released Patent, Licensee shall continue to be obligated to pay Licensee Profits, if any, generated by any Revenue that may be paid to Licensee after a Patent becomes a Released Patent with respect to any such Released Patent that was subject to a sublicense, covenant not to sue or other encumbrance granted by Licensee or any Affiliate of Licensee prior to the date the Patent becomes a Released Patent.   5.5 Assistance by Licensor Licensor will provide Licensee with such advice and assistance as Licensee reasonably requests in connection with the filing, prosecution, maintenance, or defense of the Patents, as more fully set forth in the Work Agreement. Licensee will not be responsible for any costs incurred by Licensor under Section 5 without Licensee’s prior written agreement to bear such costs.   6. ENFORCEMENT OF PATENTS   6.1 Enforcement Licensee will have the exclusive right, but not the obligation, to institute, prosecute, and control any action or proceeding with respect to infringement of the Patents, using counsel of its choice, including any declaratory judgment action arising from such infringement. In the event Licensee exercises its right to commence such action or proceeding, Licensee will use reasonable efforts to advise Licensor prior to such commencement. Thereafter, on Licensor’s written request no more frequently than every two (2) months, Licensee will report to Licensor reasonable, nonprivileged information on the status of the action or proceeding commenced by Licensee. Licensor shall not have and/or retain any right to, and will not, institute any case, action or other enforcement proceeding with respect to infringement of the Patents.   6.2 Joinder; Cooperation in Litigation This Agreement transfers to Licensee all substantial rights under the Patents and, as a result, Licensee has the right to bring any future action or proceeding to enforce claims under the Patents in its own name, without naming Licensor as a party thereto. However, if necessary or desirable in Licensee’s sole discretion, Licensee may add Licensor as a named party in any action or proceeding to enforce or defend the Patents, and Licensor will consent to be added and will cooperate with Licensor in any such action or proceeding. Licensee will be entitled to select counsel and will be entitled to control such action or proceeding. If Licensee finds it necessary or desirable, Licensor will execute all papers or perform any other acts or provide any assistance, at Licensee’s expense (provided that Licensor shall be responsible for paying any fees or expenses of its own outside counsel), toward pursuing such action or proceeding, as reasonably required by Licensee. Licensor will use commercially reasonable efforts to ensure that any Licensor personnel will be available to cooperate, at Licensee’s expense for work of a nature contemplated by the Work Agreement, toward pursuing such action.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 6.3 In Event of Breach Notwithstanding any material breach of this Agreement by Licensee, in no event will Licensor be entitled to take any action or direct any proceeding with respect to the Patents, other than the Released Patents, without Licensee’s express consent and direction unless and until there has been a termination of the Term pursuant to subsection 11.4 of this Agreement.   7. REPRESENTATIONS AND WARRANTIES OF LICENSOR Licensor represents and warrant to Licensee as of the Effective Date and as of the Closing as follows:   7.1 All Substantial Rights By this Agreement, Licensor intends to, and will, transfer to Licensee all substantial rights under the Patents, other than those patents set forth on Schedule 7.1. No Person other than Licensee will, as of and immediately following the Closing, have or retain any right to license, sublicense, or grant any other rights with respect to the Patents, either generally or within any field of use or otherwise.   7.2 Organization; Authority and Approvals; Enforceability (a) Licensor is a company duly formed, validly existing, and in good standing under the laws of the jurisdiction of its formation. (b) Licensor has the full power and authority to enter into this Agreement and the other Transaction Agreements and to carry out its obligations hereunder and thereunder, including, without limitation, the assignment to Licensee of all causes of action with respect to the Patents. (c) The execution, delivery and performance by Licensor of this Agreement, each of the other Transaction Agreements and all other transactions and actions contemplated hereby and thereby have been duly and validly approved and authorized by Licensor’s Board of Directors, and do not require the approval of Licensor’s stockholders nor any other corporate action on the part of Licensor. (d) No consent, approval, order or authorization of, notification to, action by or registration, declaration or filing with, any governmental or regulatory authority, or any other person, governmental or otherwise, is necessary to enable Licensor to lawfully enter into, execute, deliver and perform its obligations under this Agreement and each of the other Transaction Agreements, or to consummate the transactions contemplated hereby and thereby. (e) This Agreement and each of the other Transaction Agreements have been duly executed and delivered by Licensor. Assuming due authorization, execution and delivery by Licensee, this Agreement and each of the other Transaction Agreements are valid and binding obligations of Licensor, enforceable against each in accordance with their respective terms, subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or limiting rights of creditors generally and (ii) rules of law and equity governing specific performance, injunctive relief and other equitable remedies.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 7.3 No Conflict Neither the execution and delivery of this Agreement or any of the other Transaction Agreements by Licensor, nor the consummation of the transactions contemplated hereby or thereby, will conflict with, or (with or without notice or lapse of time, or both) result in a termination, breach, impairment or violation of, give any rights of acceleration or cancellation under, or constitute a default under: (a) any provision of the Certificate of Incorporation or Bylaws of Licensor as currently in effect; (b) any law, rule, regulation, order, ruling or other legal requirement applicable to Licensor or any of the Patents; or (c) any material contract, agreement or understanding to which Licensor is a party or is bound, or by which any of the Patents are bound. Neither Licensor’s entering into this Agreement or any of the other Transaction Agreements nor the consummation of the transactions contemplated hereby or thereby will result in the creation of any encumbrance on any of the Patents or give rise to, or trigger the application of, any rights of any third party that would come into effect or become exercisable upon the consummation of the transactions contemplated hereby or thereby.   7.4 Title and Contest (a) Immediately prior to the Closing, and subject to the Existing Encumbrances, Licensor owns all right, title and interest in the Patents, and as of the Closing Licensor will convey to Licensee, subject to the Existing Encumbrances, all right, title and interest in each right conferred under this Agreement with respect to the Patents (but not title to the Patents), including, without limitation, all rights, title, and interest in and to the causes of action assigned by this Agreement. Except as set forth on Schedule 7.4, Licensor has obtained and properly recorded previously executed assignments for the Patents as necessary to fully perfect its rights and title therein in accordance with governing law and regulation in each jurisdiction. (b) Each right conferred under this Agreement with respect to the Patents is free and clear of all liens, mortgages, security interests, and restrictions on transfer. As of the Closing, there are no actions, suits, investigations, claims, or proceedings threatened, pending or in progress relating in any way to any right conferred under this Agreement with respect to the Patents. There are no existing contracts, agreements, options, commitments, proposals, bids, offers, or rights with, to or in any Person to acquire any Patents.   7.5 Existing Licenses and Restrictions on Rights Except as specifically identified on Schedule 7.5, (a) no license under the Patents has been granted by Licensor, any prior owner, or inventors, and (b) after Closing, none of Licensor, any prior owner, or any inventor will retain any rights or interest in the Patents or the related causes of action, except that Licensor shall retain title in the Patents. Except as specifically identified on Schedule 7.5, Licensee will not be subject to any covenant not to sue or similar restrictions on its enforcement or enjoyment of any of Patents or the related causes of action as a result of the transactions contemplated in this Agreement or any prior transaction related to the Patents or the Abandoned Assets. None of the licenses listed on Schedule 7.5 is an exclusive grant or right, unless specifically noted otherwise on Schedule 7.5. Each license listed on Schedule 7.5 is nontransferable and nonsublicensable, except as specifically noted otherwise on Schedule 7.5. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that Licensor will retain     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- the right to collect any amounts that are or become due or owing to Licensor as a result of payment obligations under any of the licenses listed on Schedule 7.5.   7.6 Validity and Enforceability (a) None of the Patents or the Abandoned Assets has ever been found invalid, unpatentable, or unenforceable for any reason in any judicial proceeding, arbitration proceeding, opposition proceeding, interference proceeding, ex parte reexamination proceeding, inter partes reexamination proceeding or other inter partes proceeding. (b) Except as in Schedule 7.6, Licensor neither knows of nor has received any notice or information of any kind from any source suggesting the invalidity, unpatentability, or unenforceability of any claimed subject matter within the Patents or Abandoned Assets that has ultimately been allowed, granted, or otherwise deemed patentable by a respective patent authority or patent office, with the exception of rejections, objections or other deficiencies identified by such patent authority or patent office, which were overcome to result in the allowance, grant or patenting of such claimed subject matter. (c) Except as in Schedule 7.6, Licensor neither knows of nor has received any notice or information of any kind from any source suggesting the invalidity, unpatentability or unenforceability of any of the pending patent applications or pending provisional patent applications listed in Schedules A and/or B. (d) If any of the Patents is terminally disclaimed to another patent or patent application, all patents and patent applications subject to such terminal disclaimer are included in this transaction. (e) To the extent “small entity” fees at the time of such payment were paid to the United States Patent and Trademark Office for any Patent, such reduced fees were then appropriate because the payor qualified to pay “small entity” fees and specifically had not licensed rights in any Patent to an entity that was not a “small entity.”   7.7 Conduct; SSOs Neither Licensor nor any of its representative have engaged in any conduct, or omitted to perform any necessary act, the result of which would invalidate any of the Patents or hinder its enforcement, including, without limitation, misrepresenting Licensor’s patent rights to a standard-setting organization. There is no obligation imposed by a standards-setting organization on Licensor to license any of the Patents on particular terms or conditions, nor will any such obligation apply to Licensee following the Closing.   7.8 Enforcement Except for any notices or letters included in the Deliverables, Licensor has not (a) provided to a third party notice of alleged actual or potential infringement of any of the Patents or the Abandoned Assets or (b) initiated enforcement action(s) with respect to any of the Patents or the Abandoned Assets.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 7.9 Patent Office Proceedings Except as set forth on Schedule 7.9, none of the Patents or the Abandoned Assets has been or is currently involved in any reexamination, reissue, interference proceeding, or any similar proceeding, and no such proceedings are pending or threatened.   7.10 Fees All maintenance fees, annuities and the like due or payable on each of the Patents have been timely paid. For the avoidance of doubt, Licensor shall pay any maintenance fees for which the fee is payable (e.g., the fee payment window opens) on or prior to the Closing even if the surcharge date or final deadline for payment of such fee would be after the Closing.   7.11 Abandoned Patents According to each applicable patent office, each of the Abandoned Assets has expired, lapsed, or been abandoned or deemed withdrawn.   7.12 Brokers Except for Licensor’s obligations to [**], if any, neither Licensor nor any Affiliate of Licensor is obligated for the payment of any fees or expenses of any investment banker, broker, finder or similar party in connection with the origin, negotiation or execution of this Agreement or in connection with the transactions contemplated hereby. Licensee will not incur any liability, either directly or indirectly, to any such investment banker, broker, finder or similar party as a result of, this Agreement, the transactions contemplated hereby or any act or omission of Licensor or any of its employees, officers, directors, stockholders, agents or Affiliates.   8. REPRESENTATIONS AND WARRANTIES OF LICENSEE Licensee represents and warrants to Licensor as of the Effective Date and the Closing:   8.1 Organization; Authority and Approvals; Enforceability (a) Licensee is a company duly formed, validly existing, and in good standing under the laws of the jurisdiction of its formation. (b) Licensee has the full power and authority to enter into this Agreement and the other Transaction Agreements and to carry out its obligations hereunder and thereunder. (c) Licensee is duly authorized to execute and deliver this Agreement and each of the other Transaction Agreements and to perform its obligations hereunder and thereunder. The individual executing this Agreement and each of the other Transaction Agreements on Licensee’s behalf has been duly authorized to do so by all requisite corporate action. (d) No consent, approval, order or authorization of, notification to, action by or registration, declaration or filing with, any governmental or regulatory authority, or any other person, governmental or otherwise, is necessary to enable Licensee to lawfully enter into, execute, deliver and perform its obligations under this Agreement and each of the     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- other Transaction Agreements, or to consummate the transactions contemplated hereby and thereby. (e) This Agreement and each of the other Transaction Agreements have been duly executed and delivered by Licensee. Assuming due authorization, execution and delivery by Licensor, this Agreement and each of the other Transaction Agreements are valid and binding obligations of Licensee, enforceable against Licensee in accordance with their respective terms, subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or limiting rights of creditors generally and (ii) rules of law and equity governing specific performance, injunctive relief and other equitable remedies.   8.2 No Conflict Neither the execution and delivery of this Agreement or any of the other Transaction Agreements by Licensee, nor the consummation of the transactions contemplated hereby or thereby, will conflict with, or (with or without notice or lapse of time, or both) result in a termination, breach, impairment or violation of, give any rights of acceleration or cancellation under, or constitute a default under: (i) the applicable organizational documents of Licensee, as currently in effect; (ii) any law, rule, regulation, order, ruling or other legal requirement applicable to Licensee; or (iii) any material contract, agreement or understanding to which Licensee is a party or is bound.   8.3 Brokers Neither Licensee nor any Affiliate of Licensee is obligated for the payment of any fees or expenses of any investment banker, broker, finder or similar party in connection with the origin, negotiation or execution of this Agreement or in connection with the transactions contemplated hereby. Licensor will not incur any liability, either directly or indirectly, to any such investment banker, broker, finder or similar party as a result of, this Agreement, the transactions contemplated hereby or any act or omission of Licensee or any of its employees, officers, members, agents or Affiliates.   8.4 Covenants Relating to Obligations to [**] and [**] Licensor is required, pursuant to agreements between Licensor and each of [**] (“[**]”) and [**] (“[**]”) to pay each of [**] and [**], respectively, $[**] USD for each patent issuing anywhere in the world from a patent application claiming priority to the patents that Licensor acquired from [**] and [**]. Licensee hereby covenants and agrees with Licensor to make the following payments in order to assist Licensor with satisfying the obligations under Licensor’s agreements with [**] and [**]: (a) Licensee hereby agrees to pay [**] $[**] USD for each patent issuing anywhere in the world from a patent application claiming priority to the patent rights that Licensor obtained from [**]. Currently pending patent applications are identified on Schedule A to this Agreement. This payment obligation also applies to patents issuing anywhere in the world from patent applications that Licensee files after Closing that claim priority to these patent applications or other patent rights that Licensor obtained from [**]. Such payments are required within thirty (30) days following issuance of each such issued patent. (b) Licensee hereby agrees to pay to pay US$[**] (net of any tax payable by Licensee) for each patent issuing from a patent application claiming priority to the patent rights that     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- Licensor obtained from [**]. Currently pending patent applications are identified on Schedule A to this Agreement. Licensee shall pay [**] ([**]) of each such payment directly to [**] on behalf of [**], and shall pay the remainder of each such payment to [**]. This payment obligation also applies to U.S. patents issuing from patent applications that Licensee files after Closing that claim priority to these patent applications or other patent rights that Licensor obtained from [**]. (c) Licensee agrees to indemnify and hold harmless Licensor and its directors, officers and employees of each of their Affiliates, from any losses, liabilities, damages, claims, payments, liens, judgments, demands, costs and expenses (including reasonable attorneys’ fees) arising out of failure by Licensee to pay [**] or [**] as required under this subsection 8.4.   9. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY; EXCLUSIONS FROM DAMAGES   9.1 Disclaimer of Representations and Warranties NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY EXCEPT FOR THEIR RESPECTIVE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 7 AND 8, AND EACH PARTY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. LICENSEE GIVES LICENSOR NO ASSURANCE THAT ANY PROFIT (EITHER FROM A MONETIZATION EVENT INVOLVING SOLELY THE PATENTS OR AS PART OF A PORTFOLIO MONETIZATION) WILL BE GENERATED FOR LICENSOR. LICENSOR ACKNOWLEDGES THAT ACCOUNTING FOR THIS TRANSACTION IS A MATTER SOLELY BETWEEN OR AMONG LICENSOR AND ITS ACCOUNTANTS, AND ACKNOWLEDGE THAT THEY HAVE NOT RELIED UPON ANY ADVICE OR REPESENTATION FROM LICENSEE TO DETERMINE THE ACCOUNTING TREATMENT FOR THE LICENSE ISSUE FEE OR ANY OTHER PAYMENT TO BE MADE BY LICENSEE TO LICENSOR. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 7, NEITHER PARTY GIVES THE OTHER PARTY ANY ASSURANCE (A) REGARDING THE PATENTABILITY OF ANY CLAIMED INVENTION IN, OR THE VALIDITY, OF ANY PATENT; OR (B) THAT MANUFACTURE, USE, SALE, OFFERING FOR SALE, IMPORTATION, EXPORTATION OR OTHER DISTRIBUTION OF ANY PRODUCT OR METHOD DISCLOSED AND CLAIMED IN ANY PATENT BY LICENSEE, ANY SUBLICENSEE OR ANYONE ELSE WILL NOT CONSTITUTE AN INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.   9.2 Limitation of Liability EXCEPT IN THE EVENT OF FRAUD OR INTENTIONAL MISREPRESENTATION OR THE BREACH OF THE REPRESENTATIONS AND WARRANTIES MADE IN SUBSECTIONS 7.4 AND 7.5 OF THIS AGREEMENT, THE COLLECTIVE LIABILITY OF LICENSOR, ON ONE HAND, AND LICENSEE, ON THE OTHER, WILL IN EACH CASE NOT EXCEED AN AMOUNT EQUAL TO THE SUM OF ALL PAYMENTS PAYABLE UNDER SUBSECTIONS 2.1 AND 2.2 OF THIS AGREEMENT. IN THE EVENT OF BREACH OF ANY OF THE REPRESENTATIONS OR WARRANTIES MADE IN SUBSECTIONS 7.4 AND 7.5 OF THIS AGREEMENT, LICENSOR’S COLLECTIVE LIABILITY UNDER THIS AGREEMENT WILL NOT EXCEED AN AMOUNT EQUAL TO THREE (3) TIMES THE     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- SUM OF ALL PAYMENTS PAYABLE UNDER SUBSECTIONS 2.1 AND 2.2 OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE FOREGOING LIMITATION ON POTENTIAL LIABILITY WAS AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT.   9.3 Exclusion of Certain Damages NEITHER PARTY WILL HAVE ANY OBLIGATION OR LIABILITY (WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE), AND NOTWITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED), REPRESENTATION, STRICT LIABILITY OR PRODUCT LIABILITY, FOR COVER OR FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, MULTIPLIED, PUNITIVE, SPECIAL, OR EXEMPLARY DAMAGES FOR LOSS OF REVENUE, PROFIT (EXCEPT TO THE EXTENT PROFIT BECOMES DUE AND PAYABLE IN ACCORDANCE WITH SUBSECTION 2.2 OF A PATENT LICENSE AGREEMENT), SAVINGS OR BUSINESS ARISING FROM OR OTHERWISE RELATED TO THIS AGREEMENT, EVEN IF A PARTY OR ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LICENSOR UNDERSTANDS AND CONFIRMS THAT THERE MAY NOT BE ANY PROFIT PARTICIPATION DISTRIBUTED UNDER THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THESE EXCLUSIONS OF SUCH POTENTIAL DAMAGES WERE AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT.   10. DEFINITIONS Capitalized terms used in this Agreement that are not otherwise defined have the meanings set forth in this Section. “Abandoned Assets” means those specific provisional patent applications, patent applications, patents and other governmental grants or issuances listed on Schedule C (as such list may be updated based on Licensee’s review pursuant to subsection 3.1). “Acquisition Transaction” means (i) a merger, consolidation or reorganization of a party with or into another Person (whether or not such party is the surviving Entity), in which such party’s shareholders holding the right to vote with respect to general matters immediately preceding such transaction own less than fifty percent (50%) of the voting securities of the surviving Entity; (ii) a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the assets of such party to another Person; or (iii) another Person becoming the beneficial owner of more than fifty percent (50%) of the outstanding voting securities of such party. “Affiliate” means, with respect to any Person, any Entity in whatever country organized that controls, is controlled by or is under common control with such Person; provided however, that an Entity that qualifies as an Affiliate but subsequently ceases to fall within this definition shall no longer be considered an Affiliate hereunder. The term “control” means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an Entity, whether through the ownership of voting securities, by contract or otherwise. For purposes of clarity, neither TVAura LLC nor TVAura Mobile LLC shall be considered an “Affiliate” of Licensor under this Agreement. “Amounts” as generally used in this Agreement refers to cash amounts, and amounts that are not cash will be valued by Licensee at their cash equivalent under customary valuation techniques.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- “Assignment Agreements” mean the agreements assigning to Licensor ownership of the Patents and the Abandoned Assets from the inventors and/or any prior owners to Licensor. “Closing” has the meaning set forth in subsection 3.2. “Common Interest Agreement” means an agreement, in the form set forth on Exhibit A, setting forth the terms under which Licensor and Licensee will protect certain information relating to the Patents under the common interest privilege. “Docket” means Licensor’s, or its agents’, list or other means of tracking information relating to the prosecution or maintenance of the Patents throughout the world, including, without limitation, the names, addresses, email addresses and phone numbers of prosecution counsel and agents, and information relating to deadlines, payments, and filings, which list or other means of tracking information is current as of the Effective Date. “Effective Date” means the date set forth as the Effective Date on the cover page of this Agreement. “Entity” means any corporation, partnership, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, governmental entity (or any department, agency, or political subdivision thereof) or any other legal entity. “Excluded Assets” means the patents and applications listed in the attached Schedule 7.1, any reissues or reexaminations thereof, and any other patent application (and resulting patent) filed by Licensor after the Effective Date that either (a) does not claim priority to any of the Live Assets or (b) claims priority to a Live Asset only through an intermediate application or patent that is also listed on Schedule 7.1.  “Existing Encumbrances” means all licenses or other encumbrances disclosed on Schedule 7.5. “Grant-Back License Agreement” means the Grant-Back License Agreement between Licensor and Licensee dated of even date herewith. “IV Fund” means Invention Investment Fund II, LLC, a Delaware limited liability company. “IP Group Expenses” means the Amounts paid, incurred, accrued, or allocated by or on behalf of Licensee in respect of acquiring, holding, prosecuting, maintaining, managing, protecting, or enhancing the Patents, including, without limitation, all such Amounts (other than Profit Participation) paid under this Agreement to Licensor and all fees, costs, commissions and expenses for legal, technical, advisory, and consulting services and filing, issuance, annuity and maintenance payments. “IP Group Expenses,” as used in this Agreement refers to IP Group Expenses of the Patents. “License Issue Fee” has the meaning set forth in subsection 2.1. “Live Assets” means the provisional patent applications, patent applications, and patents listed on Schedule A (as such lists may be updated based on License’s review pursuant to subsection 3.1). “Memoranda of Exclusive License/Rights” means one or more documents in substantially the form of Schedule B, which form may be adjusted for the requirements of     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- the particular government patent office, that memorialize the license and other rights transferred to Licensee by this Agreement. Memoranda of Exclusive License/Rights are created to comply with recordation requirements related to this grant/transfer/assignment, but in no way are intended by the parties to limit or expand the scope of the rights intended to be granted, transferred and assigned. “Monetization Expenses” means the Amounts paid, incurred, accrued, or allocated by or on behalf of Licensee in respect of commercializing, asserting, litigating, licensing, managing, or otherwise capturing value, including, without limitation, fees, costs, commissions and expenses for legal, technical, advisory, consulting and licensing services. “Monetization Expenses,” as used in this Agreement, may refer to Monetization Expenses of either a monetization event involving solely the Patents or a Portfolio Monetization. “Non-Exclusive License” means the Non-Exclusive License Agreement between Licensor and Licensee dated on or about even date herewith. “Patent Rights Agreement” means the Patent Rights Agreement in the form of Exhibit B. “Patents” means, excluding the Abandoned Assets and the Excluded Assets, all (a) Live Assets; (b) patents or patent applications (i) to which any of the Live Assets directly or indirectly claims priority, (ii) for which any of the Live Assets directly or indirectly forms a basis for priority, and/or (iii) that were co-owned applications that incorporate by reference, or are incorporated by reference into, the Live Assets; (c) reissues, reexaminations, extensions, continuations, continuations in part, continuing prosecution applications, requests for continuing examinations, divisions, and registrations of any item in any of the foregoing categories (a) and (b); (d) foreign patents, foreign patent applications and foreign counterparts relating to any item in any of the foregoing categories (a) through (c), including, without limitation, certificates of invention, utility models, industrial design protection, design patent protection, and other governmental grants or issuances; (e) items in any of the foregoing categories (b) through (d) whether or not expressly listed as Live Assets and whether or not claims in any of the foregoing have been rejected, withdrawn, cancelled, or the like; and (f) all patentable inventions, invention disclosures, and patentable discoveries described in any item in any of the foregoing categories (a) through (e) and all other patent rights arising out of such inventions, invention disclosures, and discoveries (each such Live Asset, together with patents and patent applications in categories (b)(i), (b)(ii), (c), (d) and (e) above relating to such Live Asset, is referred to collectively as a “Patent Family”). “Person” means any individual or Entity. “Portfolio Monetization” has the meaning set forth in subsection 2.3. “Portfolio Profit” means Revenue from, minus Monetization Expenses of, a Portfolio Monetization. “Profit” means the total of the Portfolio Profit that is allocated under subsections 2.3 through 2.5 to the patents and patent applications among the Patents included in a Portfolio Monetization;     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- plus Revenue from, minus remaining Monetization Expenses of, monetization events involving solely the Patents and which are not a Portfolio Monetization; minus any remaining IP Group Expenses. “Profit Participation” has the meaning set forth in subsection 2.2. “Prosecution History Files” means all files, documents and tangible things, as those terms have been interpreted pursuant to rules and laws governing the production of documents and things, constituting, comprising or relating to the investigation, evaluation, preparation, prosecution, maintenance, defense, filing, issuance, registration, assertion or enforcement of the Patents. “Reporting Period” has the meaning set forth in subsection 2.7. “Revenue” means Amounts received by or on behalf of Licensee and recognized as revenue under generally accepted accounting principles from (a) licensing and/or (b) damages awarded in litigation or other proceedings, and/or (c) sale of the rights granted to Licensee under this Agreement. “Revenue,” as used in this Agreement, may refer to Revenue from either a monetization event involving solely the Patents or a Portfolio Monetization. “Term” has the meaning set forth in subsection 11.4. “Transaction Agreements” means this Agreement, the Patent Rights Agreement (including the Patent Purchase Agreement attached as Exhibit A), the letter agreement between Licensor and an Affiliate of Licensee dated of even date herewith, the Work Agreement, the Common Interest Agreement, the Grant-Back License Agreement and the Non-Exclusive License. “Transmitted Copy” has the meaning set forth in subsection 11.14. “Work Agreement” means the Work Agreement entered into between Licensor and Licensee concurrently herewith.   11. MISCELLANEOUS   11.1 Confidentiality of Terms (a) Subject to subsection 11.1(b) below, the parties hereto will keep the terms and existence of this Agreement and the identities of the parties hereto and their Affiliates confidential and will not now or hereafter divulge any of this information to any third party except (i) with the prior written consent of the other party; (ii) as otherwise may be required by law (subject to Section 11.1(b) below) or legal process, including, without limitation, in confidence to legal and financial advisors in their capacity of advising a party in such matters; (iii) during the course of litigation, so long as the disclosure of such terms and conditions is restricted in the same manner as is the confidential information of other litigating parties; (iv) in confidence to its legal counsel, accountants, banks and financing sources and their advisors solely in connection with administering or complying with its obligations with respect to this Agreement (including reporting by Licensee and its Affiliates to its investors under existing confidentiality obligations between Licensee and its Affiliates     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- and such investors); (v) by Licensee (and, upon Licensee’s request, by Licensor), in order to perfect Licensee’s interest in the Patents or the Abandoned Assets with any governmental patent office; (vi) to enforce Licensee’s rights and interest in the Patents, the causes of action transferred under this Agreement, or the Abandoned Assets; or (vii) by Licensor or Licensee under a written obligation of confidentiality substantially similar as this subsection 11.1, to potential acquirers, licensees of or investors in Licensor or Licensee or the Patents, including without limitation such third parties’ legal counsel, accountants, banks, financing sources and advisors provided that such parties are subject to such confidentiality obligations; provided, in (ii) and (iii) above, (A) to the extent permitted by law, the disclosing party will use all legitimate and legal means available to minimize the disclosure to third parties, including, without limitation, seeking a confidential treatment request or protective order whenever appropriate or available; and (B) the disclosing party will provide the other party with at least ten (10) days’ prior written notice of such disclosure. Without limiting the foregoing, Licensor will cause its agents involved in this transaction to abide by the terms of this Section 11, including, without limitation, ensuring that such agents do not disclose or otherwise publicize the existence of this transaction with actual or potential clients in marketing materials or industry conferences. (b) Disclosure of this Agreement, the financial impact of this Agreement and the terms and conditions of this Agreement (both in summary form and through exhibit filings) may be required under the Securities Exchange Commission (“SEC”) regulations, stock market rules, or other laws. Licensor and Licensee may rely in good faith on advice of counsel when determining whether such disclosure is required; provided that Licensor and Licensee agree that such disclosures shall be limited to only those that are required by law in reliance on such opinion of counsel. Except as otherwise provided in this Section 11, Licensor or Licensee will make no public announcements and will not issue press releases relating to this Agreement without the prior written consent of the other Parties, which consent will not be unreasonably withheld. Licensor and Licensee have agreed to the text of a joint press release announcing the signing of this Agreement and the transactions contemplated hereby, a copy of which is attached hereto as Exhibit C. Licensor also agrees to provide Licensee an opportunity to review and an opportunity to comment on the Current Report on Form 8-K to be filed with the SEC and any script for investor calls announcing this Agreement and the transactions contemplated hereby. Licensor shall consult with Licensee before issuing or making, and shall provide Licensee with reasonable opportunity to review and comment upon, and shall consider in good faith and reasonably attempt to incorporate the views of Licensee in connection with any other press release, public filing or other public statement with respect to the transactions contemplated by this Agreement; provided that (i) any such disclosure will be limited to the specific information that is required by law to be disclosed, and (ii) Licensor shall not be required to consult, and shall only be required to give reasonable notice, of any public disclosure which is substantially similar in content to the joint press release, the script for the investor call and the Current Report on Form 8-K filed with respect to the transactions contemplated by this Agreement, or any other subsequent or previously made public filing, with respect to which Licensor has complied with the provisions of this subsection 11.1(b). Because Licensor has determined that this Agreement, the Patent Rights Agreement and the Grant-Back License are required by applicable law to be filed by Licensor as an exhibit to a Quarterly Report on Form 10-Q and/or Annual Report on Form 10-K, or otherwise needs to be filed with the SEC, Licensor shall (A) provide Licensee with at least ten (10) business days advance notice of such intent to file this Agreement and such other Transaction Agreements, and provide Licensee an opportunity to discuss and consider in good faith any input or request made by Licensee, (B) file a request with the SEC for confidential treatment of such portions of this Agreement and of such other Transaction Agreements that Licensee requests in writing to Licensor at     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- least five (5) business days prior to the intended filing date that counsel for Licensor, after consultation with counsel for Licensee, advises should be eligible for confidential treatment, and provide Licensee with any updates and consider in good faith any input from Licensee with respect to such confidential treatment request, and (C) in any event, only file those portions of this Agreement as counsel for Licensor, after consultation with and consideration in good faith of the views of counsel for Licensee, determines are required to be filed by applicable law. (c) Effective upon the Closing, the Reciprocal Non-disclosure Agreement dated as of July 13, 2009 between Licensor and an Affiliate of Licensee, together with all amendments and addendums (the “NDA”), shall be void and of no force or effect solely with respect to “Confidential Information” (as that term is defined in the NDA) that has been disclosed by or on behalf of Licensor and that relates to the Patents or Abandoned Assets; provided, however, that to the extent Licensor has shared information relating to third-party relationships with Licensee that is subject to a confidentiality obligation to a third party, Licensee agrees to keep such information confidential subject to the terms of the NDA except for disclosure to potential or actual licensees, purchasers or investors in the Patents, potential or actual investors or acquirers of Licensee or any Affiliate of Licensee, or any Licensee Affiliate’s counsel, auditors, consultants or other similar parties that are subject to a substantially similar confidentiality obligation to such Licensee Affiliate. (d) In the event of any breach or default, threatened or otherwise, under this Section 11, the parties acknowledge and agree that damages alone would be insufficient to compensate for any such breach or default and that irreparable harm would result from such breach or default. Consequently, in the event of any such breach or default, or any threat of such breach or default by either party, the other party will be entitled to temporary or permanent injunctive relief, specific performance and such other equitable relief as may be appropriate in the circumstances in order to restrain or enjoin such breach or default. These remedies will not be the exclusive remedies for violation of the terms of the confidentiality obligations contained in this Section 11 but will be in addition to all other remedies available to the parties at law or in equity.   11.2 Relationship of Parties The parties hereto are independent contractors. Nothing in this Agreement will be construed to create a partnership, joint venture, franchise, fiduciary, employment or agency relationship between the parties. Neither party has any express or implied authority to assume or create any obligations on behalf of the other or to bind the other to any contract, agreement or undertaking with any third party.   11.3 Assignment; Successors Any assignment of this Agreement by Licensor, on one hand, or by Licensee, on the other, shall require the prior written consent of the other parties; provided, however, that (a) without Licensor’s consent, Licensee may assign, in whole or in part, this Agreement, and/or any license or other rights Licensee acquires hereunder, to its Affiliates or to an unaffiliated Entity that is managed and controlled by representatives of Licensee or its Affiliates, (b) without the other party’s consent, Licensee may assign this Agreement to the acquiring party pursuant to an Acquisition Transaction in which the ultimate parent company of Licensee is the party being acquired or whose assets are being acquired in such transaction and (c) without the other party’s consent, Licensor may assign this Agreement to the     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- acquiring party pursuant to an Acquisition Transaction in which Licensor is the party being acquired or whose assets are being acquired in such transaction. Subject to the above provisions of this subsection 11.3, the terms and conditions of this Agreement will inure to the benefit of Licensor, Licensee, and their respective successors, assigns and other legal representatives, and will be binding upon each of Licensor, Licensee and their respective successors, assigns, and other legal representatives.   11.4 Term and Termination The term of this Agreement (the “Term”) will commence on the Effective Date and will continue in effect until the last of the Patents expires, or it will continue such longer time as may be necessary as determined at Licensee’s sole and absolute discretion, to permit Licensee to fully enforce and protect its rights under the Patents for any action or proceeding for infringement arising before such expiration (provided that Licensee’s obligation to pay Profit Participation, if any, in connection with such action or proceeding shall likewise continue in effect). Subject to the provisions of subsection 11.6, in the event of a Payment Breach by Licensee, or of a material breach of this Agreement by Licensor, the nonbreaching party will be entitled to terminate the Term by written notice to the breaching party, if such breach is not cured within ten (10) business days (for a Payment Breach) and sixty (60) days (for non-monetary breaches) after written notice specifying the breach is given to the breaching party. Such circumstances in the foregoing sentence shall be the sole basis for termination of this Agreement by either party. For purposes of this provision, a “Payment Breach” is defined as failure by Licensee or an Affiliate of Licensee (a) to make the payments required to be made to Licensor under the schedule set forth on Schedule 2.1, or (b) to make any payment that Licensee and/or its Affiliates have determined, in accordance with subsections 2.3, 2.4, 2.5 and 2.7 of this Agreement, is due and payable to Licensor.   11.5 Survival/Effect of Termination No termination of the Term will relieve a breaching party of its obligations arising prior to such termination. In the event of termination of this Agreement under subsection 11.4, (a) the license set forth in subsection 1.1 of this Agreement will terminate with respect to all Patents licensed thereunder, and (b) with respect to each Patent to which Licensee has acquired title pursuant to Sections 3 or 4 of the Patent Rights Agreement, Licensee shall use commercially reasonable efforts to assign all right, title and interest in such Patent to Licensor as soon as reasonably practicable, subject (in each case of clauses (a) and (b) above) to all of the conditions set forth with respect to the release or assignment of Released Patents in subsection 5.4(c) of this Agreement. Licensee agrees to reasonably cooperate with the recording of transfer of title of such Patents to Licensor, provided that Licensor shall bear all expenses (and shall reimburse Licensee for all of its expenses) relating to such transfer. In the event of termination of this Agreement by Licensor following a Payment Breach by Licensee, Licensee shall continue to be obligated to pay Licensee Profits, if any, generated by any Revenue that may be paid to Licensee after such termination with respect to any sublicenses, covenants not to sue or other encumbrances under the Patents granted by Licensee or any Affiliate of Licensee at or after the Closing and prior to such termination.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 11.6 Remedies Licensor’s sole and exclusive remedy in the event of any claim, dispute, or controversy under this Agreement, other than a Payment Breach, will be the recovery of money damages, subject to the disclaimer and limitations set forth in this Agreement, including, without limitation, those in subsections 9.1, 9.2 and 9.3.   11.7 Export Controls It is understood and agreed that to the extent Licensor is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities (including the Arms Export Control Act, as amended, and the Export Administration Act of 1979), its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by Licensee that Licensee will not export data or commodities to certain foreign countries without prior approval of such agency. Licensor neither represents that a license will not be required nor that, if required, it will be issued.   11.8 Governing Law Any claim arising under or relating to this Agreement will be governed by the laws of the State of Delaware, without regard to choice of law principles to the contrary.   11.9 Dispute Resolution Except for the payment of the License Issue Fee set forth in subsection 2.1 and as provided under subsection 11.1, the parties hereby waive their respective rights to seek remedies in court, and will resolve any and all claims, disputes, or controversies relating in any way to, or arising out of, this Agreement, including, without limitation, any breach or threatened breach of this Agreement, the amount of the Profit Participation due under this Agreement, or the calculation of Profit (“Disputes”), as follows: (a) The party raising the Dispute shall promptly provide the other party with a written notice describing the nature of the Dispute in reasonable detail (a “Dispute Notice”). During the thirty (30) day period after a party’s receipt of a Dispute Notice, the parties will commence discussions to attempt to resolve the Dispute. (b) If the parties cannot timely resolve the Dispute through negotiation, before resorting to arbitration the parties will try in good faith to settle the Dispute by mediation before a mutually agreed mediator in Seattle, Washington. The mediation will be conducted in English and administered by the American Arbitration Association (“AAA”) under its Commercial Mediation Procedures. If the parties are unable to agree upon a mutually acceptable mediator, the AAA will appoint a qualified mediator. The mediation proceeding shall take place on the earliest practicable date following the submission of a request for mediation by either party, which request shall be submitted within sixty (60) days after a party’s receipt of a Dispute Notice. (c) If the Dispute is not resolved through mediation within thirty (30) days after the mediation hearing, the parties will submit the Dispute to final and binding arbitration     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- administered by the AAA under its Commercial Arbitration Rules. The arbitrator may enter a default decision against any party who fails to participate in the arbitration proceedings. (i) The arbitration will be conducted before a mutually agreed panel of three (3) neutral arbitrators in Seattle, Washington. If the parties are unable to agree upon a mutually acceptable panel of three (3) arbitrators, the panel will be selected by the AAA. (ii) The arbitration hearing will be conducted in English, and under no circumstances will the arbitration hearing extend for more than one (1) business day. The award shall be rendered within one hundred twenty (120) days of the demand and the arbitrators shall agree to comply with this schedule before accepting appointment. The parties have included these time limits to expedite the proceeding, but they are not jurisdictional, and the arbitrator may for good cause permit reasonable extensions which shall not affect the validity of the award. (iii) All documents and information relevant to the Dispute in the possession of any party shall be made available to the other party not later than sixty (60) days after the demand for arbitration is served, and the arbitrator may permit such depositions or other discovery deemed necessary for a fair hearing. (iv) The parties agree that the arbitration method to be employed by the parties will be “baseball arbitration,” in which case each party will submit to the arbitrators and exchange with each other in advance of the hearing their last, best offers and the arbitrators will be limited to awarding only one or the other of the two figures submitted. (v) The arbitrators’ award may be entered and enforced in any court with competent jurisdiction and will be nonappealable. Such decision may be used in a court of law only for the purpose of seeking enforcement of the arbitrator’s decision permitted under this Agreement. (vi) The award shall be in writing, shall be signed by a majority of the arbitrators, and shall include a statement setting forth the reasons for the disposition of any claim. (vii) The costs of the arbitration proceeding, including reasonable attorneys’ fees and costs, will be determined by the arbitrators, who may apportion costs equally, or in accordance with any finding of fault or lack of good faith of either party. (viii) To the fullest extent permitted by law, no arbitration under this Agreement shall be joined to any other arbitration, and no class arbitration proceedings shall be permitted. (ix) Except as may be required by law, neither a party nor any arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- 11.10 Notices and Payment Delivery All notices required or permitted to be given hereunder will be in writing, will make reference to this Agreement and will be delivered by hand, or dispatched by prepaid air courier to the addresses set forth on the cover page of this Agreement. Such notices will be deemed given when received by addressee or, if delivery is not accomplished by reason of some fault of the addressee, when tendered for delivery. Either party may give written notice of a change of address to the other. After notice of such change has been received, any notice or request will thereafter be given to such party at such changed address.   11.11 Severability If any provision of this Agreement is found to be invalid or unenforceable, then the remainder of this Agreement will have full force and effect, and the invalid provision will be modified, or partially enforced, to the maximum extent permitted to effectuate the original objective.   11.12 Waiver Failure by either party to enforce any term of this Agreement will not be deemed a waiver of future enforcement of that or any other term in this Agreement or any other agreement that may be in place between the parties.   11.13 Miscellaneous This Agreement, including its exhibits and schedules, together with the other Transaction Agreements, constitute the entire agreement between the parties with respect to the subject matter hereof and merge and supersede all prior and contemporaneous agreements, understandings, negotiations, and discussions. Neither of the parties will be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided in this Agreement or in the other Transaction Agreements. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. This Agreement is not intended to confer any right or benefit on any third party (including, but not limited to, any employee or beneficiary of any party), and no action may be commenced or prosecuted against a party by any third party claiming as a third-party beneficiary of this Agreement or any of the transactions contemplated by this Agreement. No oral explanation or oral information by either party hereto will alter the meaning or interpretation of this Agreement. No amendments or modifications will be effective unless in writing and signed by authorized representatives of both parties; provided, however, that, after the Closing, Licensee may update Schedule A to include any patents or patent applications within the definition of Patents, based on its review of the Deliverables as defined in subsection 3.1, by providing updated Schedule A to Licensor. The terms and conditions of this Agreement and the other Transaction Agreements will prevail notwithstanding any different, conflicting or additional terms and conditions that may appear on any letter, email or other communication or other writing not expressly incorporated into this Agreement.   11.14 Counterparts; Electronic Signature This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together constitute one and the same instrument. Each party will execute     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- and promptly deliver to the other parties a copy of this Agreement bearing the original signature. Prior to such delivery, in order to expedite the process of entering into this Agreement, the parties acknowledge that a Transmitted Copy of this Agreement will be deemed an original document. “Transmitted Copy” means a copy bearing a signature of a party that is reproduced or transmitted via email of a .pdf file, photocopy, facsimile, or other process of complete and accurate reproduction and transmission.     ** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. -------------------------------------------------------------------------------- SCHEDULE A LIVE ASSETS   Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 5768426    US    10/21/1994    Graphics processing system employing embedded code signals   Rhoads, Geoffrey B. 5636292C1    US    05/08/1995    Steganography methods employing embedded calibration data   Rhoads, Geoffrey B. 5748763    US    05/08/1995    Image steganography system featuring perceptually adaptive and globally scalable signal embedding   Rhoads, Geoffrey B. 5850481C1    US    05/08/1995    Steganographic system   Rhoads, Geoffrey B. 5841978    US    07/27/1995    Network linking method using steganographically embedded data objects   Rhoads, Geoffrey B. 5745604    US    03/15/1996    Identification/authentication system using robust, distributed coding   Rhoads, Geoffrey B. 6122403    US    11/12/1996    Computer system linked by using information in data objects   Rhoads, Geoffrey B. 6026193    US    10/16/1997    Video steganography   Rhoads, Geoffrey B. 6122392C1    US    11/12/1997    Signal processing to hide plural-bit information in image, video, and audio data   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6324573    US    08/06/1998    Linking of computers using information steganographically embedded in data objects   Rhoads, Geoffrey B. 6229924    US    08/21/1998    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. 6421070    US    10/01/1998    Smart images and image bookmarking for an internet browser   Ramos, Daniel O. 7171016    US    11/05/1998    Method for monitoring internet dissemination of image, video and/or audio files   Rhoads, Geoffrey B. 6681028    US    05/19/1999    Paper-based control of computer systems   Rodriguez, Tony F. 6404898    US    06/24/1999    Method and system for encoding image and audio content   Rhoads, Geoffrey B. 6496591    US    06/29/1999    Video copy-control with plural embedded signals   Rhoads, Geoffrey B. 6400827    US    06/29/1999    Methods for hiding in-band digital data in images and video   Rhoads, Geoffrey B. 6311214    US    06/29/1999    Linking of computers based on optical sensing of digital data   Rhoads, Geoffrey B. 6343138    US    06/29/1999    Security documents with hidden digital data   Rhoads, Geoffrey B. 6700990    US    09/29/1999    Digital watermark decoding method   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6879701    US    09/29/1999    Tile-based digital watermarking techniques   Rhoads, Geoffrey B. 6408331    US    09/29/1999    Computer linking methods using encoded graphics   Rhoads, Geoffrey B. 6307949    US    11/04/1999    Methods for optimizing watermark detection   Rhoads, Geoffrey B. 6539095    US    11/17/1999    Audio watermarking to convey auxiliary control information, and media embodying same   Rhoads, Geoffrey B. 6381341    US    11/17/1999    Watermark encoding method exploiting biases inherent in original signal   Rhoads, Geoffrey B. 6363159    US    11/17/1999    Consumer audio appliance responsive to watermark data   Rhoads, Geoffrey B. 6542618    US    11/17/1999    Methods for watermark decoding   Rhoads, Geoffrey B. 6587821    US    11/17/1999    Methods for decoding watermark data from audio, and controlling audio devices in accordance therewith   Rhoads, Geoffrey B. 6408082    US    11/30/1999    Watermark detection using a fourier mellin transform   Rhoads, Geoffrey B. 6286036    US    12/15/1999    Audio- and graphics-based linking to internet   Rhoads, Geoffrey B. 6560349    US    12/28/1999    Audio monitoring using steganographic information   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6813366    US    12/30/1999    Steganographic decoding with transform to spatial domain   Rhoads, Geoffrey B. 7562392    US    12/30/1999    Methods of interacting with audio and ambient music   Rhoads, Geoffrey B. 6330335    US    01/13/2000    Audio steganography   Rhoads, Geoffrey B. 6983051    US    01/18/2000    Methods for audio watermarking and decoding   Rhoads, Geoffrey B. 6574350    US    02/03/2000    Digital watermarking employing both frail and robust watermarks   Rhoads, Geoffrey B. 6289108    US    02/10/2000    Methods for detecting alteration of audio and images   Rhoads, Geoffrey B. 6614914    US    02/14/2000    Watermark embedder and reader   Rhoads, Geoffrey B. 6965682    US    02/15/2000    Data transmission by watermark proxy   Davis, Bruce L. 6449379    US    02/29/2000    Video steganography methods avoiding introduction of fixed pattern noise   Rhoads, Geoffrey B. 6266430    US    03/08/2000    Audio or video steganography   Rhoads, Geoffrey B. 6353672    US    03/08/2000    Steganography using dynamic codes   Rhoads, Geoffrey B. 6611607    US    03/15/2000    Integrating digital watermarks in multimedia content   Davis, Bruce L.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6516079    US    03/15/2000    Digital watermark screening and detecting strategies   Rhoads, Geoffrey B. 6988202    US    03/17/2000    Pre-filteriing to increase watermark signal-to-noise ratio   Rhoads, Geoffrey 09/538493    US    03/30/2000    Method for inserting and detecting watermarks in digital data   Rhoads, Geoffrey B. 6775392    US    04/06/2000    Computer system linked by using information in data objects   Rhoads, Geoffrey B. 6535617    US    04/19/2000    Removal of fixed pattern noise and other fixed patterns from media signals   Hannigan, Brett T. 6590996    US    04/19/2000    Color adaptive watermarking   Reed, Alastair M. 6553129    US    04/28/2000    Computer system linked by using information in data objects   Rhoads, Geoffrey 6567533    US    04/27/2000    Method and apparatus for discerning image distortion by reference to encoded marker signals   Rhoads, Geoffrey B. 6505160    US    05/02/2000    Connected audio and other media objects   Levy, Kenneth L. 6424725    US    05/08/2000    Determining transformations of media signals with embedded code signals   Rhoads, Geoffrey B. 6947571    US    05/15/2000    Cell phones with optical capabilities, and related applications   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6522769    US    05/18/2000    Reconfiguring a watermark detector   Rhoads, Geoffrey B. 09/574726    US    05/18/2000    Method and systems employing digital watermarking in music and other media   Rhoads, Geoffrey B. 6944298    US    05/31/2000    Steganographic encoding and decoding of auxiliary codes in media signals   Rhoads, Geoffrey B. 6411725    US    06/20/2000    Watermark enabled video objects   Rhoads, Geoffrey B. 6681029    US    07/06/2000    Decoding steganographic messages embedded in media signals   Rhoads, Geoffrey B. 6535618    US    07/17/2000    Image capture device with steganographic data embedding   Rhoads, Geoffrey B. 6385329    US    07/19/2000    Wavelet domain watermarks   Sharma, Ravi K. 6542620    US    07/27/2000    Signal processing to hide plural-bit information in image, video, and audio data   Rhoads, Geoffrey B. 6522770    US    08/01/2000    Management of documents and other objects using optical devices   Seder, Phillip Andrew 6647128    US    09/07/2000    Method for monitoring internet dissemination of image, video, and/or audio files   Rhoads, Geoffrey B. 7003731    US    10/17/2000    User control and activation of watermark enabled objects   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 09/697009    US    10/25/2000    Digitally marked objects and promotional methods   Davis, Bruce L. 7261612    US    11/08/2000    Methods and systems for read-aloud books   Hannigan, Brett T. 6442285    US    12/08/2000    Controlling operation of a device using a re-configurable watermark detector   Rhoads, Geoffrey B. 6757406    US    01/10/2001    Steganographic image processing   Rhoads, Geoffrey B. 6567535    US    01/10/2001    Steganographic system with changing operations   Rhoads, Geoffrey B. 6430302    US    01/10/2001    Steganographically encoding a first image in accordance with a second image   Rhoads, Geoffrey B. 7224995    US    01/10/2001    Data entry method and system   Rhoads, Geoffrey B. 6760463    US    01/17/2001    Watermarking methods and media   Rhoads, Geoffrey B. 6829368    US    01/24/2001    Establishing and interacting with on-line media collections using identifiers in media signals   Meyer, Joel R. 6798894    US    02/06/2001    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. 6580808    US    02/27/2001    Method and apparatus for discerning image distortion by reference to encoded marker signals   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7061510    US    03/05/2001    Geo-referencing of aerial imagery using embedded image identifiers and cross-referenced data sets   Rhoads, Geoffrey B. 7051086    US    03/09/2001    Method of linking on-line data to printed documents   Rhoads, Geoffrey B. 7209571    US    04/20/2001    Authenticating metadata and embedding metadata in watermarks of media signals   Davis, Bruce L. 6590997    US    04/24/2001    Files and methods employing common information in both header and steganographic embedding   Rhoads, Geoffrey B. 7024016    US    04/24/2001    Digital watermarking apparatus and methods   Rhoads, Geoffrey B. 7185201    US    05/14/2001    Content identifiers triggering corresponding responses   Rhoads, Geoffrey B. 6675146    US    05/31/2001    Audio steganography   Rhoads, Geoffrey B. 7302574    US    06/21/2001    Content identifiers triggering corresponding responses through collaborative processing   Conwell, William Y. 6542927    US    06/29/2001    Linking of computers based on steganographically embedded digital data   Rhoads, Geoffrey B. 6560350    US    06/29/2001    Methods for detecting alteration of audio   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6721440    US    07/02/2001    Low visibility watermarks using an out-of-phase color   Reed, Alastair M. 6959386    US    07/25/2001    Hiding encrypted messages in information carriers   Rhoads, Geoffrey B. 6590998    US    08/01/2001    Network linking method using information embedded in data objects that have inherent noise   Rhoads, Geoffrey B. 6763123    US    08/20/2001    Detection of out-of-phase low visibility watermarks   Reed, Alastair M. 7058697    US    08/28/2001    Internet linking from image content   Rhoads, Geoffrey B. 6718046    US    08/31/2001    Low visibility watermark using time decay fluorescence   Reed, Alastair M. 6654887    US    09/25/2001    Steganography decoding methods employing error information   Rhoads, Geoffrey B. 6950519    US    11/28/2001    Geographically watermarked imagery and methods   Rhoads, Geoffrey B. 6738495    US    11/29/2001    Watermarking enhanced to withstand anticipated corruptions   Rhoads, Geoffrey B. 7042470    US    10/23/2001    Using embedded steganographic identifiers in segmented areas of geographic images and characteristics corresponding to imagery data derived from aerial platforms   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6920232    US    10/22/2001    Watermark encoding using arbitrary features   Rhoads, Geoffrey B. 7050603    US    12/13/2001    Watermark encoded video, and related methods   Rhoads, Geoffrey B. 7289643    US    12/19/2001    Method, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 6519352    US    01/23/2002    Encoding and decoding in accordance with steganographically-conveyed data   Rhoads, Geoffrey B. 7437430    US    03/06/2002    Network linking using index modulated on data   Rhoads, Geoffrey B. 6654480    US    03/25/2002    Audio appliance and monitoring device responsive to watermark data   Rhoads, Geoffrey B. 7054462    US    03/28/2002    Inferring object status based on detected watermark data   Rhoads, Geoffrey B. 7111170    US    03/29/2002    Distributed system for responding to watermarked documents   Hein, William 6804376    US    03/28/2002    Equipment employing watermark-based authentication function   Rhoads, Geoffrey B. 7054463    US    03/28/2002    Data encoding using frail watermarks   Rhoads, Geoffrey B. 6850626    US    03/28/2002    Methods employing multiple watermarks   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7095871    US    04/05/2002    Digital asset management and linking media signals with related data using watermarks   Jones, Kevin C. 6917724    US    04/08/2002    Methods for opening file on computer via optical sensing   Seder, Phillip Andrew 6694042    US    04/08/2002    Methods for determining contents of media   Seder, Phillip Andrew 6694043    US    04/08/2002    Method of monitoring print data for text associated with a hyperlink   Seder, Phillip Andrew 7653210    US    04/08/2002    Method for monitoring internet dissemination of image, video, and/or audio files   Rhoads, Geoffrey B. 6567780    US    04/09/2002    Audio with hidden in-band digital data   Rhoads, Geoffrey B. 6647129    US    05/08/2002    Method and system for encoding image and audio content   Rhoads, Geoffrey B. 7171018    US    05/15/2002    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. 7711564    US    06/27/2002    Connected audio and other media objects   Levy, Kenneth L. 6647130    US    07/03/2002    Printable interfaces and digital linking with embedded codes   Rhoads, Geoffrey B. 6704869    US    07/22/2002    Extracting digital watermarks using logarithmic sampling and symmetrical attributes   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6700995    US    07/30/2002    Applying digital watermarks using dot gain correction   Reed, Alastair M. 6778682    US    07/31/2002    Redundantly embedding auxiliary data in source signals   Rhoads, Geoffrey B. 6718047    US    08/07/2002    Watermark embedder and reader   Rhoads, Geoffrey B. 6993152    US    08/12/2002    Hiding geo-location data through arrangement of objects   Patterson, Philip R. 7113614    US    09/17/2002    Embedding auxiliary signals with multiple components into media signals   Rhoads, Geoffrey B. 7054465    US    10/16/2002    Data hiding method and system for embedding and extracting information in signals   Rhoads, Geoffrey B. 7224819    US    10/21/2002    Integrating digital watermarks in multimedia content   Levy, Kenneth L. 7006661    US    10/21/2002    Digital watermarking systems and methods   Miller, Marc D. 6768808    US    12/09/2002    Encoding and decoding methods in which decryption data is conveyed steganographically within audio or visual content   Rhoads, Geoffrey B. 7319775    US    07/12/2001    Wavelet domain watermarks   Sharma, Ravi K. 7158654    US    01/02/2003    Image processor and image processing method   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7333957    US    01/06/2003    Connected audio and other media objects   Levy, Kenneth L. 7349552    US    01/06/2003    Connected audio and other media objects   Levy, Kenneth L. 6744907    US    02/04/2003    Image capture methods and devices employing steganographic processing   Rhoads, Geoffrey B. 6768809    US    02/04/2003    Digital watermark screening and detection strategies   Rhoads, Geoffrey B. 7308110    US    02/26/2003    Methods for marking images   Rhoads, Geoffrey B. 7499564    US    03/05/2003    Methods for decoding watermark data from audio, and controlling audio devices in accordance therewith   Rhoads, Geoffrey B. 7181022    US    03/25/2003    Audio watermarking to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7003132    US    04/01/2003    Embedding hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7340076    US    04/16/2003    Digital watermarks for unmanned vehicle navigation   Stach, John 7391880    US    07/03/2003    Color adaptive watermarking   Reed, Alastair M. 6987862    US    07/11/2003    Video steganography   Rhoads, Geoffrey B. 6975746    US    08/25/2003    Integrating digital watermarks in multimedia content   Davis, Bruce L.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 10/658808    US    09/08/2003    Method for increasing the functionality of a media player/recorder device or an application program   Rhoads, Geoffrey B. 6882738    US    10/23/2003    Methods and tangible objects employing textured machine readable data   Davis, Bruce L. 10/764430    US    01/23/2004    Paper products and physical objects as means to access and control a computer or to navigate over or act as a portal on a network   Rhoads, Geoffrey B. RE40919    US    01/27/2004    Methods for surveying dissemination of proprietary empirical data   Inventor: Geoffrey B. Rhoads 7099492    US    02/13/2004    Method of steganographically embedding geo-location data in media   Rhoads, Geoffrey B. 10/792400    US    03/02/2004    Printer driver separately applying watermark and information   Rhoads, Geoffrey B. 10/797617    US    03/09/2004    Image processing using embedded registration data to determine and compensate for geometric transformation   Rhoads, Geoffrey B. 6996252    US    04/05/2004    Low visibility watermark using time decay fluorescence   Reed, Alastair M. 7062069    US    04/06/2004    Digital watermark embedding and decoding using encryption keys   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7035427    US    04/09/2004    Method and system for managing, accessing and paying for the use of copyrighted electronic media   Rhoads, Geoffrey B. 7027614    US    04/12/2004    Hiding information to reduce or offset perceptible artifacts   Reed, Alastair M. 7505605    US    04/13/2004    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. 10/836094    US    04/29/2004    Fragile and emerging digital watermarks   Reed, Alastair M. 7436976    US    05/11/2004    Digital watermarking systems and methods   Levy, Kenneth L. 7184570    US    05/27/2004    Methods and systems for steganographic processing   Rhoads, Geoffrey B. 7139408    US    09/28/2004    Transform domain watermarking of image signals   Rhoads, Geoffrey B. 7537170    US    11/15/2004    Machine-readable security features for printed objects   Reed, Alastair M. 7593576    US    12/03/2004    Systems and methods of managing audio and other media   Meyer, Joel R. 7515733    US    01/19/2005    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. 7685426    US    02/02/2005    Managing and indexing content on a network with image bookmarks and digital watermarks   Ramos, Daniel O.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7164780    US    02/17/2005    Digital watermarking apparatus and methods   Brundage, Trent J. 7177443    US    02/17/2005    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 7076084    US    04/13/2005    Methods and objects employing machine readable data   Davis, Bruce L. 7321667    US    05/11/2005    Data hiding through arrangement of objects   Stach, John 7174031    US    05/17/2005    Methods for using wireless phones having optical capabilities   Rhoads, Geoffrey B. 7184572    US    06/03/2005    Using steganographic encoded information with maps   Rhoads, Geoffrey B. 7738673    US    06/14/2005    Low visible digital watermarks   Reed, Alastair M. 7248717    US    07/27/2005    Securing media content with steganographic encoding   Rhoads, Geoffrey B. 11/198892    US    08/04/2005    Associating data with images in imaging systems   Rhoads, Geoffrey B. 11/226847    US    09/13/2005    Steganographic encoding and decoding of auxiliary codes in media signals   Rhoads, Geoffrey B. 11/231553    US    09/20/2005    Background watermark processing   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7502489    US    09/27/2005    Geographically watermarked imagery and methods   Rhoads, Geoffrey B. 7567686    US    10/25/2005    Hiding and detecting messages in media signals   Rhoads, Geoffrey B. 7461136    US    11/02/2005    Internet linking from audio and image content   Rhoads, Geoffrey B. 7545951    US    11/14/2005    Data transmission by watermark or derived identifier proxy   Davis, Bruce L. 7444392    US    11/23/2005    Registering with computer systems   Rhoads, Geoffrey B. 7643649    US    12/13/2005    Integrating digital watermarks in multimedia content   Davis, Bruce L. 7657058    US    12/13/2005    Watermark orientation signals conveying payload data   Sharma, Ravi K. 7577273    US    12/22/2005    Steganographically encoded video, deriving or calculating identifiers from video, and related methods   Rhoads, Geoffrey B. 7242790    US    12/22/2005    Video steganography   Rhoads, Geoffrey B. 7536555    US    01/03/2006    Methods for audio watermarking and decoding   Rhoads, Geoffrey B. 7587602    US    01/11/2006    Methods and devices responsive to ambient audio   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7424132    US    02/21/2006    Embedding hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7454035    US    02/24/2006    Digital watermarking systems and methods   Miller, Marc D. 7313251    US    04/25/2006    Method and system for managing and controlling electronic media   Rhoads, Geoffrey B. 11/382453    US    05/09/2006    Embedding geo-location information in media   Rhoads, Geoffrey B. 11/382850    US    05/11/2006    Digital media methods   Rhoads, Geoffrey B. 11/382855    US    05/11/2006    Content protection arrangements   Rhoads, Geoffrey B. 7266217    US    05/30/2006    Multiple watermarks in content   Rhoads, Geoffrey B. 7369678    US    06/13/2006    Digital watermark and steganographic decoding   Rhoads, Geoffrey B. 7305117    US    07/11/2006    Methods and tangible objects employing machine readable data   Davis, Bruce L. 11/458639    US    07/19/2006    Methods for inserting and detecting watermarks in digital data   Rhoads, Geoffrey B. 7650008    US    08/17/2006    Digital watermarking compressed video captured from aerial sensors   Rhoads, Geoffrey B. 7372976    US    08/22/2006    Content indexing and searching using content identifiers and associated metadata   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 11/536487    US    09/28/2006    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 11/538368    US    10/03/2006    Providing travel-logs based on hidden geo-location metadata   Rhoads, Geoffrey B. 11/562357    US    11/21/2006    Watermarking compressed data   Rhoads, Geoffrey B. 11/613876    US    12/20/2006    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 11/619123    US    01/02/2007    Methods, systems, and sub-combinations useful in media identification   Rhoads, Geoffrey B. 11/620993    US    01/08/2007    Visual content-based internet search methods and sub-combinations   Rhoads, Geoffrey B. 11/620999    US    01/08/2007    Audio-based internet search methods and sub-combinations   Rhoads, Geoffrey B. 7313253    US    01/10/2007    Methods and tangible objects employing machine readable data in photo-reactive materials   Davis, Bruce L. 7330564    US    01/11/2007    Digital watermarking apparatus and methods   Brundage, Trent J. 7486799    US    01/30/2007    Methods for monitoring audio and images on the internet   Rhoads, Geoffrey B. 7466840    US    01/30/2007    Soft error decoding of steganographic data   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7702511    US    02/02/2007    Watermarking to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7406214    US    02/05/2007    Methods and devices employing optical sensors and/or steganography   Rhoads, Geoffrey B. 11/671848    US    02/06/2007    Methods and devices employing content identifiers   Rhoads, Geoffrey B. 7792325    US    02/06/2007    Methods and devices employing content identifiers   Rhoads, Geoffrey B. 7359528    US    02/07/2007    Monitoring of video or audio based on in-band and out-of-band data   Rhoads, Geoffrey B. 7433491    US    02/12/2007    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 11/676942    US    02/20/2007    Audio encoding to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7724919    US    02/23/2007    Methods and systems for steganographic processing   Rhoads, Geoffrey B. 11/738973    US    04/23/2007    Fingerprinting of media signals   Rhoads, Geoffrey B. 11/739614    US    04/24/2007    Authenticating metadata and embedding metadata in watermarks of media signals   Rhoads, Geoffrey B. 11/746804    US    05/10/2007    Methods and systems employing digital content   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7565294    US    05/10/2007    Methods and systems employing digital content   Rhoads, Geoffrey B. 7676059    US    05/22/2007    Video steganography or encoding   Rhoads, Geoffrey B. 11/754126    US    05/25/2007    Gestural techniques with wireless mobile phone devices   Rhoads, Geoffrey B. 7460726    US    05/29/2007    Integrating steganographic encoding in multimedia content   Levy, Kenneth L. 7536034    US    05/31/2007    Gestural use of wireless mobile phone devices to signal to remote systems   Rhoads, Geoffrey B. 7760905    US    05/31/2007    Wireless mobile phone with content processing   Rhoads, Geoffrey B. 7415129    US    07/10/2007    Providing reports associated with video and audio content   Rhoads, Geoffrey B. 7444000    US    07/23/2007    Content identification, and securing media content with steganographic encoding   Rhoads, Geoffrey B. 11/847231    US    08/29/2007    Machine-readable features for objects   Rodriguez, Tony F. 11/874054    US    10/17/2007    Associating objects with corresponding behaviors   Rhoads, Geoffrey B. 7787653    US    10/22/2007    Methods for controlling rendering of images and video   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7545952    US    10/23/2007    Image or video display devices   Brundage, Trent J. 11/877832    US    10/24/2007    Content protection arrangements   Rhoads, Geoffrey B. 11/925261    US    10/26/2007    Audio encoding to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 11/925303    US    10/26/2007    Steganographic encoding and detecting for video signals   Rhoads, Geoffrey B. 7548643    US    10/26/2007    Methods, objects and apparatus employing machine readable data   Davis, Bruce L. 7590259    US    10/29/2007    Deriving attributes from images, audio or video to obtain metadata   Levy, Kenneth L. 7805500    US    10/31/2007    Network linking methods and apparatus   Rhoads, Geoffrey B. 11/932839    US    10/31/2007    Connected audio and other media objects   Levy, Kenneth L. 11/945859    US    11/27/2007    Content identifiers   Conwell, William Y. 7697719    US    12/20/2007    Methods for analyzing electronic media including video and audio   Rhoads, Geoffrey B. 7711143    US    12/11/2007    Methods for marking images   Rhoads, Geoffrey B. 12/014690    US    01/15/2008    Wavelet domain watermarks   Sharma, Ravi K. 7532741    US    01/22/2008    Data hiding in media   Stach, John   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/103513    US    04/15/2008    Apparatus and methods to process video or audio   Rhoads, Geoffrey B. 7756290    US    05/06/2008    Detecting embedded signals in media content using coincidence metrics   Rhoads, Geoffrey B. 7650009    US    05/07/2008    Controlling use of audio or image content   Rhoads, Geoffrey B. 12/120150    US    05/13/2008    Content indexing and searching using content identifiers and associated metadata   Rhoads, Geoffrey B. 12/143389    US    06/20/2008    Digital media methods   Rhoads, Geoffrey B. 7693300    US    06/24/2008    Color image or video processing   Reed, Alastair M. 7606390    US    08/14/2008    Processing data representing video and audio and methods and apparatus related thereto   Rhoads, Geoffrey B. 7672477    US    09/09/2008    Detecting hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7747038    US    10/07/2008    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 7693965    US    10/14/2008    Analyzing audio, including analyzing streaming audio signals   Rhoads, Geoffrey B. 12/251362    US    10/14/2008    Digital watermarking systems and methods   Levy, Kenneth L.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7564992    US    10/24/2008    Content identification through deriving identifiers from video, images and audio   Rhoads, Geoffrey B. 12/259890    US    10/28/2008    Image sensors worn or attached on humans for imagery identification   Rhoads, Geoffrey B. 7620253    US    11/17/2008    Steganographic systems and methods   Miller, Marc D. 7650010    US    11/21/2008    Connected video and audio   Levy, Kenneth L. 12/324422    US    11/26/2008    Internet linking from audio and image content   Rhoads, Geoffrey B. 7602978    US    12/02/2008    Deriving multiple identifiers from multimedia content   Levy, Kenneth L. 12/331227    US    12/09/2008    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 12/332654    US    12/11/2008    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 7751588    US    12/16/2008    Error processing of steganographic message signals   Rhoads, Geoffrey B. 7751596    US    01/08/2009    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. 12/397232    US    03/03/2009    Methods for managing content using intentional degradation and insertion of steganographic codes   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/401403    US    03/10/2009    Geographical encoding imagery and video   Rhoads, Geoffrey B. 12/407487    US    03/19/2009    Methods and systems employing digital content   Rhoads, Geoffrey B. 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Scott 12/050000    US    03/17/2008    Methods combining multiple frames of image data   Carr, J. Scott   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7508944    US    06/02/2000    Using classification techniques in digital watermarking   Brunk, Hugh L. 12/408529    US    03/20/2009    Using classification techniques in digital watermarking   Brunk, Hugh L. 7657064    US    09/26/2000    Methods of processing text found in images   Conwell, William Y. 12/691608    US    01/21/2010    Method and systems for processing text found in images   Conwell, William Y. CA2502232    CA    10/14/2003    Identification document and related methods   Brundage, Trent J. EP03779118.3    EP    10/14/2003    Identification document and related methods   Brundage, Trent J. 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Scott 12/687687    US    01/14/2010    Digital watermarking video captured from airborne platforms   Rhoads, Geoffrey B. 12/689453    US    01/19/2010    Controlling use of audio or image content   Rhoads, Geoffrey B. 12/689465    US    01/19/2010    Connected audio content   Levy, Kenneth L. 12/692451    US    01/22/2010    Watermark synchronization signals conveying payload data   Sharma, Ravi K.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/692470    US    01/22/2010    Assessing quality of service using digital watermark information   Tian, Jun 12/711906    US    02/24/2010    Methods and apparatus to process imagery or audio content   Rhoads, Geoffrey B. 12/727838    US    03/19/2010    System for managing display and retrieval of image content on a network with image identification and linking to network content   Ramos, Daniel O. 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Rhoads, Geoffrey B. 11/082217    US    3/15/2005    Watermark payload encryption for media including multiple watermarks   Levy, Kenneth L. 11/152686    US    6/13/2005    Digital watermarking methods, programs and apparatus   Rodriguez; Tony F.; Stach; John; Reed; Alastair M. 12/562883    US    9/18/2009    Digital watermarking methods, programs and apparatus   Rodriguez; Tony F.; Stach; John; Reed; Alastair M. 11/740,140    US    4/25/2007    Methods and Systems Responsive to Features Sensed From Imagery or Other Data   Rhoads, Geoffrey B. JP2010-158011    JP    6/13/2005    DIGITAL ASSET MANAGEMENT, TARGETED SEARCHING AND DESKTOP SEARCHING USING DIGITAL WATERMARKS   Rodriguez, Tony F. HK9108777.3    HK    5/7/1996    METHOD OF EMBEDDING A MACHINE READABLE STEGANOGRAPHIC CODE IN A DOCUMENT   Rhoads, Geoffrey B.   SCHEDULE A -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor EP10166581.8    EP    2/14/2001    WATERMARK ENCODER AND DECODER ENABLED SOFTWARE   Ramos, Daniel O JP2010-049197    JP    3/5/2010    WATERMARK ENCODER AND DECODER ENABLED SOFTWARE   Ramos, Daniel O.   SCHEDULE A -------------------------------------------------------------------------------- SCHEDULE B MEMORANDUM OF EXCLUSIVE LICENSE/RIGHTS Digimarc Corporation, an Oregon corporation, having offices at 9405 SW Gemini Drive, Beaverton, OR 97008, (“Licensor”), has granted to IV Digital Multimedia Inventions LLC, a Delaware limited liability company, having an office at 2711 Centerville Road, Suite 400, Wilmington, DE 19808 (“Licensee”), the exclusive, worldwide, transferable, sublicensable license of all its rights of any kind conferred by the patents, patent applications, and provisional patent applications listed in the attached Appendix, including, without limitation, the rights of any kind to, or conferred by, the Patents (defined below) to (a) use or otherwise practice any art, methods, processes, and procedures covered by the Patents, (b) make, have made, use, offer to sell, sell, import, and otherwise distribute or dispose of any inventions, discoveries, products, services, technologies or services covered by the Patents, (c) otherwise exploit any rights granted in the Patents and/or any invention or discovery described in the Patents, and (d) exclude other Persons from exercising any of such rights. The “Patents” include all right, title, and interest that exist today and may exist in the future in and to any and all of the provisional patent applications, patent applications and patents listed in the attached Appendix and any and all applications, patents, certificates, models, protections, grants, and/or issuances resulting from the rights granted in subsection (a) below. Licensor has also assigned, transferred and conveyed to Licensee all right, title, and interest in and to: (a) rights to apply in any or all countries of the world for patents, certificates of invention, utility models, industrial design protections, design patent protections, or other governmental grants or issuances of any type related to any of the Patents and the inventions and discoveries therein including the right to claim priority to any of the Patents (including, without limitation, continuation, division and continuation-in-part priority), with the resulting applications, patents, certificates, models, protections, grants, and/or issuances also being included under the definition of Patents; (b) all causes of action and enforcement rights of any kind (whether such claims, causes of action or enforcement rights are known or unknown; currently pending, filed, to be filed, or otherwise) under the Patents and/or under or on account of any of the Patents for past, current and future infringement of the Patents, including without limitation, all rights to (i) pursue and collect damages, profits and awards of whatever nature recoverable, (ii) injunctive relief, (iii) other remedies, and (iv) compromise and/or settle all such claims, causes of action and enforcement rights, for such infringement by granting an infringing party a sublicense or otherwise; and (c) rights to collect royalties or other payments under or on account of any of the Patents or any of the foregoing.   SCHEDULE B -------------------------------------------------------------------------------- The preparation, filing, prosecution, maintenance and defense of the Patents will be under Licensee’s exclusive control and discretion, in all pertinent governmental patent offices anywhere in the world. Licensor hereby irrevocably grants Licensee the exclusive power to grant one or more powers of attorney with respect to the Patents and the exclusive discretion to transfer that right to Licensee’s agent(s) or representative(s) that Licensee may designate one or more time, now or in the future. Licensor understands that execution of this document confers on any attorney(s) or agent(s) to whom Licensee may grant a power of attorney the exclusive right to correspond with any patent office with repect to the Patents, and that this document does not create an attorney - client relationship with such practitioners to whom Licensee grants powers of attorney pursuant to this paragraph. IN WITNESS WHEREOF this Memorandum of Exclusive License/Rights is executed at Beaverton, Oregon on October 5, 2010.   LICENSOR: DIGIMARC CORPORATION By:     Robert Chamness Chief Legal Officer and Secretary   STATE OF OREGON    )    ) ss. COUNTY OF WASHINGTON    ) ATTESTATION OF SIGNATURE PURSUANT TO 28 U.S.C. § 1746 The undersigned witnessed the signature of Robert Chamness to the above Assignment of Patent Rights on behalf of Digimarc Corporation and makes the following statements: 1. I am over the age of 18 and competent to testify as to the facts in this Attestation block if called upon to do so. 2. Robert Chamness is personally known to me (or proved to me on the basis of satisfactory evidence) and appeared before me on October 5, 2010 to   SCHEDULE B -------------------------------------------------------------------------------- execute the above Assignment of Patent Rights on behalf of Digimarc Corporation. 3. Robert Chamness subscribed to the above Assignment of Patent Rights on behalf of Digimarc Corporation. I declare under penalty of perjury under the laws of the United States of America that the statements made in the three(3) numbered paragraphs immediately above are true and correct. EXECUTED on October 5, 2010 _________________________________________ Print Name:_______________________________   SCHEDULE B -------------------------------------------------------------------------------- APPENDIX   Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 5768426    US    10/21/1994    Graphics processing system employing embedded code signals   Rhoads, Geoffrey B. 5636292C1    US    05/08/1995    Steganography methods employing embedded calibration data   Rhoads, Geoffrey B. 5748763    US    05/08/1995    Image steganography system featuring perceptually adaptive and globally scalable signal embedding   Rhoads, Geoffrey B. 5850481C1    US    05/08/1995    Steganographic system   Rhoads, Geoffrey B. 5841978    US    07/27/1995    Network linking method using steganographically embedded data objects   Rhoads, Geoffrey B. 5745604    US    03/15/1996    Identification/authentication system using robust, distributed coding   Rhoads, Geoffrey B. 6122403    US    11/12/1996    Computer system linked by using information in data objects   Rhoads, Geoffrey B. 6026193    US    10/16/1997    Video steganography   Rhoads, Geoffrey B. 6122392C1    US    11/12/1997    Signal processing to hide plural-bit information in image, video, and audio data   Rhoads, Geoffrey B. 6324573    US    08/06/1998    Linking of computers using information steganographically embedded in data objects   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6229924    US    08/21/1998    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. 6421070    US    10/01/1998    Smart images and image bookmarking for an internet browser   Ramos, Daniel O. 7171016    US    11/05/1998    Method for monitoring internet dissemination of image, video and/or audio files   Rhoads, Geoffrey B. 6681028    US    05/19/1999    Paper-based control of computer systems   Rodriguez, Tony F. 6404898    US    06/24/1999    Method and system for encoding image and audio content   Rhoads, Geoffrey B. 6496591    US    06/29/1999    Video copy-control with plural embedded signals   Rhoads, Geoffrey B. 6400827    US    06/29/1999    Methods for hiding in-band digital data in images and video   Rhoads, Geoffrey B. 6311214    US    06/29/1999    Linking of computers based on optical sensing of digital data   Rhoads, Geoffrey B. 6343138    US    06/29/1999    Security documents with hidden digital data   Rhoads, Geoffrey B. 6700990    US    09/29/1999    Digital watermark decoding method   Rhoads, Geoffrey B. 6879701    US    09/29/1999    Tile-based digital watermarking techniques   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6408331    US    09/29/1999    Computer linking methods using encoded graphics   Rhoads, Geoffrey B. 6307949    US    11/04/1999    Methods for optimizing watermark detection   Rhoads, Geoffrey B. 6539095    US    11/17/1999    Audio watermarking to convey auxiliary control information, and media embodying same   Rhoads, Geoffrey B. 6381341    US    11/17/1999    Watermark encoding method exploiting biases inherent in original signal   Rhoads, Geoffrey B. 6363159    US    11/17/1999    Consumer audio appliance responsive to watermark data   Rhoads, Geoffrey B. 6542618    US    11/17/1999    Methods for watermark decoding   Rhoads, Geoffrey B. 6587821    US    11/17/1999    Methods for decoding watermark data from audio, and controlling audio devices in accordance therewith   Rhoads, Geoffrey B. 6408082    US    11/30/1999    Watermark detection using a fourier mellin transform   Rhoads, Geoffrey B. 6286036    US    12/15/1999    Audio- and graphics-based linking to internet   Rhoads, Geoffrey B. 6560349    US    12/28/1999    Audio monitoring using steganographic information   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6813366    US    12/30/1999    Steganographic decoding with transform to spatial domain   Rhoads, Geoffrey B. 7562392    US    12/30/1999    Methods of interacting with audio and ambient music   Rhoads, Geoffrey B. 6330335    US    01/13/2000    Audio steganography   Rhoads, Geoffrey B. 6983051    US    01/18/2000    Methods for audio watermarking and decoding   Rhoads, Geoffrey B. 6574350    US    02/03/2000    Digital watermarking employing both frail and robust watermarks   Rhoads, Geoffrey B. 6289108    US    02/10/2000    Methods for detecting alteration of audio and images   Rhoads, Geoffrey B. 6614914    US    02/14/2000    Watermark embedder and reader   Rhoads, Geoffrey B. 6965682    US    02/15/2000    Data transmission by watermark proxy   Davis, Bruce L. 6449379    US    02/29/2000    Video steganography methods avoiding introduction of fixed pattern noise   Rhoads, Geoffrey B. 6266430    US    03/08/2000    Audio or video steganography   Rhoads, Geoffrey B. 6353672    US    03/08/2000    Steganography using dynamic codes   Rhoads, Geoffrey B. 6611607    US    03/15/2000    Integrating digital watermarks in multimedia content   Davis, Bruce L.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6516079    US    03/15/2000    Digital watermark screening and detecting strategies   Rhoads, Geoffrey B. 6988202    US    03/17/2000    Pre-filteriing to increase watermark signal-to-noise ratio   Rhoads, Geoffrey 09/538493    US    03/30/2000    Method for inserting and detecting watermarks in digital data   Rhoads, Geoffrey B. 6775392    US    04/06/2000    Computer system linked by using information in data objects   Rhoads, Geoffrey B. 6535617    US    04/19/2000    Removal of fixed pattern noise and other fixed patterns from media signals Hannigan, Brett T. 6590996    US    04/19/2000    Color adaptive watermarking   Reed, Alastair M. 6553129    US    04/28/2000    Computer system linked by using information in data objects   Rhoads, Geoffrey 6567533    US    04/27/2000    Method and apparatus for discerning image distortion by reference to encoded marker signals   Rhoads, Geoffrey B. 6505160    US    05/02/2000    Connected audio and other media objects   Levy, Kenneth L. 6424725    US    05/08/2000    Determining transformations of media signals with embedded code signals   Rhoads, Geoffrey B. 6947571    US    05/15/2000    Cell phones with optical capabilities, and related applications   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6522769    US    05/18/2000    Reconfiguring a watermark detector   Rhoads, Geoffrey B. 09/574726    US    05/18/2000    Method and systems employing digital watermarking in music and other media   Rhoads, Geoffrey B. 6944298    US    05/31/2000    Steganographic encoding and decoding of auxiliary codes in media signals   Rhoads, Geoffrey B. 6411725    US    06/20/2000    Watermark enabled video objects   Rhoads, Geoffrey B. 6681029    US    07/06/2000    Decoding steganographic messages embedded in media signals   Rhoads, Geoffrey B. 6535618    US    07/17/2000    Image capture device with steganographic data embedding   Rhoads, Geoffrey B. 6385329    US    07/19/2000    Wavelet domain watermarks   Sharma, Ravi K. 6542620    US    07/27/2000    Signal processing to hide plural-bit information in image, video, and audio data   Rhoads, Geoffrey B. 6522770    US    08/01/2000    Management of documents and other objects using optical devices   Seder, Phillip Andrew 6647128    US    09/07/2000    Method for monitoring internet dissemination of image, video, and/or audio files   Rhoads, Geoffrey B. 7003731    US    10/17/2000    User control and activation of watermark enabled objects   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 09/697009    US    10/25/2000    Digitally marked objects and promotional methods   Davis, Bruce L. 7261612    US    11/08/2000    Methods and systems for read-aloud books   Hannigan, Brett T. 6442285    US    12/08/2000    Controlling operation of a device using a re-configurable watermark detector   Rhoads, Geoffrey B. 6757406    US    01/10/2001    Steganographic image processing   Rhoads, Geoffrey B. 6567535    US    01/10/2001    Steganographic system with changing operations   Rhoads, Geoffrey B. 6430302    US    01/10/2001    Steganographically encoding a first image in accordance with a second image   Rhoads, Geoffrey B. 7224995    US    01/10/2001    Data entry method and system   Rhoads, Geoffrey B. 6760463    US    01/17/2001    Watermarking methods and media   Rhoads, Geoffrey B. 6829368    US    01/24/2001    Establishing and interacting with on-line media collections using identifiers in media signals   Meyer, Joel R. 6798894    US    02/06/2001    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. 6580808    US    02/27/2001    Method and apparatus for discerning image distortion by reference to encoded marker signals   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7061510    US    03/05/2001    Geo-referencing of aerial imagery using embedded image identifiers and cross-referenced data sets   Rhoads, Geoffrey B. 7051086    US    03/09/2001    Method of linking on-line data to printed documents   Rhoads, Geoffrey B. 7209571    US    04/20/2001    Authenticating metadata and embedding metadata in watermarks of media signals   Davis, Bruce L. 6590997    US    04/24/2001    Files and methods employing common information in both header and steganographic embedding   Rhoads, Geoffrey B. 7024016    US    04/24/2001    Digital watermarking apparatus and methods   Rhoads, Geoffrey B. 7185201    US    05/14/2001    Content identifiers triggering corresponding responses   Rhoads, Geoffrey B. 6675146    US    05/31/2001    Audio steganography   Rhoads, Geoffrey B. 7302574    US    06/21/2001    Content identifiers triggering corresponding responses through collaborative processing   Conwell, William Y. 6542927    US    06/29/2001    Linking of computers based on steganographically embedded digital data   Rhoads, Geoffrey B. 6560350    US    06/29/2001    Methods for detecting alteration of audio   Rhoads, Geoffrey B. 6721440    US    07/02/2001    Low visibility watermarks using an out-of-phase color   Reed, Alastair M.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6959386    US    07/25/2001    Hiding encrypted messages in information carriers   Rhoads, Geoffrey B. 6590998    US    08/01/2001    Network linking method using information embedded in data objects that have inherent noise   Rhoads, Geoffrey B. 6763123    US    08/20/2001    Detection of out-of-phase low visibility watermarks   Reed, Alastair M. 7058697    US    08/28/2001    Internet linking from image content   Rhoads, Geoffrey B. 6718046    US    08/31/2001    Low visibility watermark using time decay fluorescence   Reed, Alastair M. 6654887    US    09/25/2001    Steganography decoding methods employing error information   Rhoads, Geoffrey B. 6950519    US    11/28/2001    Geographically watermarked imagery and methods   Rhoads, Geoffrey B. 6738495    US    11/29/2001    Watermarking enhanced to withstand anticipated corruptions   Rhoads, Geoffrey B. 7042470    US    10/23/2001    Using embedded steganographic identifiers in segmented areas of geographic images and characteristics corresponding to imagery data derived from aerial platforms   Rhoads, Geoffrey B. 6920232    US    10/22/2001    Watermark encoding using arbitrary features   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7050603    US    12/13/2001    Watermark encoded video, and related methods   Rhoads, Geoffrey B. 7289643    US    12/19/2001    Method, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 6519352    US    01/23/2002    Encoding and decoding in accordance with steganographically-conveyed data   Rhoads, Geoffrey B. 7437430    US    03/06/2002    Network linking using index modulated on data   Rhoads, Geoffrey B. 6654480    US    03/25/2002    Audio appliance and monitoring device responsive to watermark data   Rhoads, Geoffrey B. 7054462    US    03/28/2002    Inferring object status based on detected watermark data   Rhoads, Geoffrey B. 7111170    US    03/29/2002    Distributed system for responding to watermarked documents   Hein, William 6804376    US    03/28/2002    Equipment employing watermark-based authentication function   Rhoads, Geoffrey B. 7054463    US    03/28/2002    Data encoding using frail watermarks   Rhoads, Geoffrey B. 6850626    US    03/28/2002    Methods employing multiple watermarks   Rhoads, Geoffrey B. 7095871    US    04/05/2002    Digital asset management and linking media signals with related data using watermarks   Jones, Kevin C.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6917724    US    04/08/2002    Methods for opening file on computer via optical sensing   Seder, Phillip Andrew 6694042    US    04/08/2002    Methods for determining contents of media   Seder, Phillip Andrew 6694043    US    04/08/2002    Method of monitoring print data for text associated with a hyperlink   Seder, Phillip Andrew 7653210    US    04/08/2002    Method for monitoring internet dissemination of image, video, and/or audio files   Rhoads, Geoffrey B. 6567780    US    04/09/2002    Audio with hidden in-band digital data   Rhoads, Geoffrey B. 6647129    US    05/08/2002    Method and system for encoding image and audio content   Rhoads, Geoffrey B. 7171018    US    05/15/2002    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. 7711564    US    06/27/2002    Connected audio and other media objects   Levy, Kenneth L. 6647130    US    07/03/2002    Printable interfaces and digital linking with embedded codes   Rhoads, Geoffrey B. 6704869    US    07/22/2002    Extracting digital watermarks using logarithmic sampling and symmetrical attributes   Rhoads, Geoffrey B. 6700995    US    07/30/2002    Applying digital watermarks using dot gain correction   Reed, Alastair M.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 6778682    US    07/31/2002    Redundantly embedding auxiliary data in source signals   Rhoads, Geoffrey B. 6718047    US    08/07/2002    Watermark embedder and reader   Rhoads, Geoffrey B. 6993152    US    08/12/2002    Hiding geo-location data through arrangement of objects   Patterson, Philip R. 7113614    US    09/17/2002    Embedding auxiliary signals with multiple components into media signals   Rhoads, Geoffrey B. 7054465    US    10/16/2002    Data hiding method and system for embedding and extracting information in signals   Rhoads, Geoffrey B. 7224819    US    10/21/2002    Integrating digital watermarks in multimedia content   Levy, Kenneth L. 7006661    US    10/21/2002    Digital watermarking systems and methods   Miller, Marc D. 6768808    US    12/09/2002    Encoding and decoding methods in which decryption data is conveyed steganographically within audio or visual content   Rhoads, Geoffrey B. 7319775    US    07/12/2001    Wavelet domain watermarks   Sharma, Ravi K. 7158654    US    01/02/2003    Image processor and image processing method   Rhoads, Geoffrey B. 7333957    US    01/06/2003    Connected audio and other media objects   Levy, Kenneth L.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7349552    US    01/06/2003    Connected audio and other media objects   Levy, Kenneth L. 6744907    US    02/04/2003    Image capture methods and devices employing steganographic processing   Rhoads, Geoffrey B. 6768809    US    02/04/2003    Digital watermark screening and detection strategies   Rhoads, Geoffrey B. 7308110    US    02/26/2003    Methods for marking images   Rhoads, Geoffrey B. 7499564    US    03/05/2003    Methods for decoding watermark data from audio, and controlling audio devices in accordance therewith   Rhoads, Geoffrey B. 7181022    US    03/25/2003    Audio watermarking to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7003132    US    04/01/2003    Embedding hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7340076    US    04/16/2003    Digital watermarks for unmanned vehicle navigation   Stach, John 7391880    US    07/03/2003    Color adaptive watermarking   Reed, Alastair M. 6987862    US    07/11/2003    Video steganography   Rhoads, Geoffrey B. 6975746    US    08/25/2003    Integrating digital watermarks in multimedia content   Davis, Bruce L.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 10/658808    US    09/08/2003    Method for increasing the functionality of a media player/recorder device or an application program   Rhoads, Geoffrey B. 6882738    US    10/23/2003    Methods and tangible objects employing textured machine readable data   Davis, Bruce L. 10/764430    US    01/23/2004    Paper products and physical objects as means to access and control a computer or to navigate over or act as a portal on a network   Rhoads, Geoffrey B. RE40919    US    01/27/2004    Methods for surveying dissemination of proprietary empirical data Inventor:   Geoffrey B. Rhoads 7099492    US    02/13/2004    Method of steganographically embedding geo-location data in media   Rhoads, Geoffrey B. 10/792400    US    03/02/2004    Printer driver separately applying watermark and information   Rhoads, Geoffrey B. 10/797617    US    03/09/2004    Image processing using embedded registration data to determine and compensate for geometric transformation   Rhoads, Geoffrey B. 6996252    US    04/05/2004    Low visibility watermark using time decay fluorescence   Reed, Alastair M. 7062069    US    04/06/2004    Digital watermark embedding and decoding using encryption keys   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7035427    US    04/09/2004    Method and system for managing, accessing and paying for the use of copyrighted electronic media   Rhoads, Geoffrey B. 7027614    US    04/12/2004    Hiding information to reduce or offset perceptible artifacts   Reed, Alastair M. 7505605    US    04/13/2004    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. 10/836094    US    04/29/2004    Fragile and emerging digital watermarks   Reed, Alastair M. 7436976    US    05/11/2004    Digital watermarking systems and methods   Levy, Kenneth L. 7184570    US    05/27/2004    Methods and systems for steganographic processing   Rhoads, Geoffrey B. 7139408    US    09/28/2004    Transform domain watermarking of image signals   Rhoads, Geoffrey B. 7537170    US    11/15/2004    Machine-readable security features for printed objects   Reed, Alastair M. 7593576    US    12/03/2004    Systems and methods of managing audio and other media   Meyer, Joel R. 7515733    US    01/19/2005    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. 7685426    US    02/02/2005    Managing and indexing content on a network with image bookmarks and digital watermarks   Ramos, Daniel O.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7164780    US    02/17/2005    Digital watermarking apparatus and methods   Brundage, Trent J. 7177443    US    02/17/2005    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 7076084    US    04/13/2005    Methods and objects employing machine readable data   Davis, Bruce L. 7321667    US    05/11/2005    Data hiding through arrangement of objects   Stach, John 7174031    US    05/17/2005    Methods for using wireless phones having optical capabilities   Rhoads, Geoffrey B. 7184572    US    06/03/2005    Using steganographic encoded information with maps   Rhoads, Geoffrey B. 7738673    US    06/14/2005    Low visible digital watermarks   Reed, Alastair M. 7248717    US    07/27/2005    Securing media content with steganographic encoding   Rhoads, Geoffrey B. 11/198892    US    08/04/2005    Associating data with images in imaging systems   Rhoads, Geoffrey B. 11/226847    US    09/13/2005    Steganographic encoding and decoding of auxiliary codes in media signals   Rhoads, Geoffrey B. 11/231553    US    09/20/2005    Background watermark processing   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7502489    US    09/27/2005    Geographically watermarked imagery and methods   Rhoads, Geoffrey B. 7567686    US    10/25/2005    Hiding and detecting messages in media signals   Rhoads, Geoffrey B. 7461136    US    11/02/2005    Internet linking from audio and image content   Rhoads, Geoffrey B. 7545951    US    11/14/2005    Data transmission by watermark or derived identifier proxy   Davis, Bruce L. 7444392    US    11/23/2005    Registering with computer systems   Rhoads, Geoffrey B. 7643649    US    12/13/2005    Integrating digital watermarks in multimedia content   Davis, Bruce L. 7657058    US    12/13/2005    Watermark orientation signals conveying payload data   Sharma, Ravi K. 7577273    US    12/22/2005    Steganographically encoded video, deriving or calculating identifiers from video, and related methods   Rhoads, Geoffrey B. 7242790    US    12/22/2005    Video steganography   Rhoads, Geoffrey B. 7536555    US    01/03/2006    Methods for audio watermarking and decoding   Rhoads, Geoffrey B. 7587602    US    01/11/2006    Methods and devices responsive to ambient audio   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7424132    US    02/21/2006    Embedding hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7454035    US    02/24/2006    Digital watermarking systems and methods   Miller, Marc D. 7313251    US    04/25/2006    Method and system for managing and controlling electronic media   Rhoads, Geoffrey B. 11/382453    US    05/09/2006    Embedding geo-location information in media   Rhoads, Geoffrey B. 11/382850    US    05/11/2006    Digital media methods   Rhoads, Geoffrey B. 11/382855    US    05/11/2006    Content protection arrangements   Rhoads, Geoffrey B. 7266217    US    05/30/2006    Multiple watermarks in content   Rhoads, Geoffrey B. 7369678    US    06/13/2006    Digital watermark and steganographic decoding   Rhoads, Geoffrey B. 7305117    US    07/11/2006    Methods and tangible objects employing machine readable data   Davis, Bruce L. 11/458639    US    07/19/2006    Methods for inserting and detecting watermarks in digital data   Rhoads, Geoffrey B. 7650008    US    08/17/2006    Digital watermarking compressed video captured from aerial sensors   Rhoads, Geoffrey B. 7372976    US    08/22/2006    Content indexing and searching using content identifiers and associated metadata   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 11/536487    US    09/28/2006    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 11/538368    US    10/03/2006    Providing travel-logs based on hidden geo-location metadata   Rhoads, Geoffrey B. 11/562357    US    11/21/2006    Watermarking compressed data   Rhoads, Geoffrey B. 11/613876    US    12/20/2006    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 11/619123    US    01/02/2007    Methods, systems, and sub-combinations useful in media identification   Rhoads, Geoffrey B. 11/620993    US    01/08/2007    Visual content-based internet search methods and sub-combinations   Rhoads, Geoffrey B. 11/620999    US    01/08/2007    Audio-based internet search methods and sub-combinations   Rhoads, Geoffrey B. 7313253    US    01/10/2007    Methods and tangible objects employing machine readable data in photo-reactive materials   Davis, Bruce L. 7330564    US    01/11/2007    Digital watermarking apparatus and methods   Brundage, Trent J. 7486799    US    01/30/2007    Methods for monitoring audio and images on the internet   Rhoads, Geoffrey B. 7466840    US    01/30/2007    Soft error decoding of steganographic data   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7702511    US    02/02/2007    Watermarking to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7406214    US    02/05/2007    Methods and devices employing optical sensors and/or steganography   Rhoads, Geoffrey B. 11/671848    US    02/06/2007    Methods and devices employing content identifiers   Rhoads, Geoffrey B. 7792325    US    02/06/2007    Methods and devices employing content identifiers   Rhoads, Geoffrey B. 7359528    US    02/07/2007    Monitoring of video or audio based on in-band and out-of-band data   Rhoads, Geoffrey B. 7433491    US    02/12/2007    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 11/676942    US    02/20/2007    Audio encoding to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 7724919    US    02/23/2007    Methods and systems for steganographic processing   Rhoads, Geoffrey B. 11/738973    US    04/23/2007    Fingerprinting of media signals   Rhoads, Geoffrey B. 11/739614    US    04/24/2007    Authenticating metadata and embedding metadata in watermarks of media signals   Rhoads, Geoffrey B. 11/746804    US    05/10/2007    Methods and systems employing digital content   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7565294    US    05/10/2007    Methods and systems employing digital content   Rhoads, Geoffrey B. 7676059    US    05/22/2007    Video steganography or encoding   Rhoads, Geoffrey B. 11/754126    US    05/25/2007    Gestural techniques with wireless mobile phone devices   Rhoads, Geoffrey B. 7460726    US    05/29/2007    Integrating steganographic encoding in multimedia content   Levy, Kenneth L. 7536034    US    05/31/2007    Gestural use of wireless mobile phone devices to signal to remote systems   Rhoads, Geoffrey B. 7760905    US    05/31/2007    Wireless mobile phone with content processing   Rhoads, Geoffrey B. 7415129    US    07/10/2007    Providing reports associated with video and audio content   Rhoads, Geoffrey B. 7444000    US    07/23/2007    Content identification, and securing media content with steganographic encoding   Rhoads, Geoffrey B. 11/847231    US    08/29/2007    Machine-readable features for objects   Rodriguez, Tony F. 11/874054    US    10/17/2007    Associating objects with corresponding behaviors   Rhoads, Geoffrey B. 7787653    US    10/22/2007    Methods for controlling rendering of images and video   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7545952    US    10/23/2007    Image or video display devices   Brundage, Trent J. 11/877832    US    10/24/2007    Content protection arrangements   Rhoads, Geoffrey B. 11/925261    US    10/26/2007    Audio encoding to convey auxiliary information, and media embodying same   Rhoads, Geoffrey B. 11/925303    US    10/26/2007    Steganographic encoding and detecting for video signals   Rhoads, Geoffrey B. 7548643    US    10/26/2007    Methods, objects and apparatus employing machine readable data   Davis, Bruce L. 7590259    US    10/29/2007    Deriving attributes from images, audio or video to obtain metadata   Levy, Kenneth L. 7805500    US    10/31/2007    Network linking methods and apparatus   Rhoads, Geoffrey B. 11/932839    US    10/31/2007    Connected audio and other media objects   Levy, Kenneth L. 11/945859    US    11/27/2007    Content identifiers   Conwell, William Y. 7697719    US    12/20/2007    Methods for analyzing electronic media including video and audio   Rhoads, Geoffrey B. 7711143    US    12/11/2007    Methods for marking images   Rhoads, Geoffrey B. 12/014690    US    01/15/2008    Wavelet domain watermarks   Sharma, Ravi K. 7532741    US    01/22/2008    Data hiding in media   Stach, John   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/103513    US    04/15/2008    Apparatus and methods to process video or audio   Rhoads, Geoffrey B. 7756290    US    05/06/2008    Detecting embedded signals in media content using coincidence metrics   Rhoads, Geoffrey B. 7650009    US    05/07/2008    Controlling use of audio or image content   Rhoads, Geoffrey B. 12/120150    US    05/13/2008    Content indexing and searching using content identifiers and associated metadata   Rhoads, Geoffrey B. 12/143389    US    06/20/2008    Digital media methods   Rhoads, Geoffrey B. 7693300    US    06/24/2008    Color image or video processing   Reed, Alastair M. 7606390    US    08/14/2008    Processing data representing video and audio and methods and apparatus related thereto   Rhoads, Geoffrey B. 7672477    US    09/09/2008    Detecting hidden auxiliary code signals in media   Rhoads, Geoffrey B. 7747038    US    10/07/2008    Method and apparatus for associating identifiers with content   Rhoads, Geoffrey B. 7693965    US    10/14/2008    Analyzing audio, including analyzing streaming audio signals   Rhoads, Geoffrey B. 12/251362    US    10/14/2008    Digital watermarking systems and methods   Levy, Kenneth L.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7564992    US    10/24/2008    Content identification through deriving identifiers from video, images and audio   Rhoads, Geoffrey B. 12/259890    US    10/28/2008    Image sensors worn or attached on humans for imagery identification   Rhoads, Geoffrey B. 7620253    US    11/17/2008    Steganographic systems and methods   Miller, Marc D. 7650010    US    11/21/2008    Connected video and audio   Levy, Kenneth L. 12/324422    US    11/26/2008    Internet linking from audio and image content   Rhoads, Geoffrey B. 7602978    US    12/02/2008    Deriving multiple identifiers from multimedia content   Levy, Kenneth L. 12/331227    US    12/09/2008    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 12/332654    US    12/11/2008    Methods, apparatus and programs for generating and utilizing content signatures   Brunk, Hugh L. 7751588    US    12/16/2008    Error processing of steganographic message signals   Rhoads, Geoffrey B. 7751596    US    01/08/2009    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. 12/397232    US    03/03/2009    Methods for managing content using intentional degradation and insertion of steganographic codes   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/401403    US    03/10/2009    Geographical encoding imagery and video   Rhoads, Geoffrey B. 12/407487    US    03/19/2009    Methods and systems employing digital content   Rhoads, Geoffrey B. 12/419800    US    04/07/2009    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. 12/464679    US    05/12/2009    Arrangement of objects in images or graphics to convey a machine-readable signal   Stach, John 12/468703    US    05/19/2009    Interactive systems and methods employing wireless mobile devices   Rhoads, Geoffrey B. 12/468727    US    05/19/2009    Methods for audio watermarking and decoding   Rhoads, Geoffrey B. 12/471172    US    05/22/2009    Methods and devices responsive to ambient audio   Rhoads, Geoffrey B. 12/477759    US    06/03/2009    Digital watermarking apparatus and methods   Rhoads, Geoffrey B. 12/481438    US    06/09/2009    Data transmission by extracted or calculated identifying data   Davis, Bruce L. 12/485666    US    06/16/2009    Methods, objects and apparatus employing machine readable data   Davis, Bruce L. 12/494036    US    06/29/2009    Deriving or calculating identifiers from video signals   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/498930    US    07/07/2009    Portable audio appliance   Rhoads, Geoffrey B. 12/506843    US    07/21/2009    Deriving identifying data from video and audio   Rhoads, Geoffrey B. 12/506854    US    07/21/2009    Methods and systems employing digital content   Rhoads, Geoffrey B. 12/510760    US    07/28/2009    Hiding and detecting messages in media signals   Rhoads, Geoffrey B. 12/554722    US    09/04/2009    Methods and devices responsive to ambient audio   Rhoads, Geoffrey B. 12/560177    US    09/15/2009    Methods and systems for steganographic processing   Rhoads, Geoffrey B. 12/560186    US    09/15/2009    Embedding hidden auxiliary information in media   Rhoads, Geoffrey B. 12/560223    US    09/15/2009    Connected audio and other media objects   Levy, Kenneth L. 12/564776    US    09/22/2009    Systems and methods of managing audio and other media   Meyer, Joel R. 12/577487    US    10/12/2009    Extracting multiple identifiers from audio and video content   Levy, Kenneth L. 12/577964    US    10/13/2009    Hiding and detecting auxiliary data in media materials and signals   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/582408    US    10/20/2009    Processing data representing video and audio and methods related thereto   Rhoads, Geoffrey B. 12/611004    US    11/02/2009    User feedback in connection with object recognition   Rhoads, Geoffrey B. 12/620295    US    11/17/2009    Steganographic systems and methods   Miller, Marc D. 12/652678    US    01/05/2010    Synchronizing rendering of multimedia content   Davis, Bruce L. 12/761242    US    04/15/2010    Methods and arrangements employing digital content items   Rhoads, Geoffrey B. AU2009200468    AU    02/06/2009    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Rhoads, Geoffrey B. CA2174413    CA    11/16/1994    Steganographic methods and apparatuses   Rhoads, Geoffrey B. CA2218957    CA    05/07/1996    Steganography systems   Rhoads, Geoffrey B.          CA2373208    CA    05/18/2000    Methods and systems for processing audio   Rhoads, Geoffrey B. CA2373511    CA    05/15/2000    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Rhoads, Geoffrey B. CA2422081    CA    10/25/2001    Digitally marked objects and promotional methods   Davis, Bruce L.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor CH1003324    CH    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. CH1137251    CH    05/07/1996    Use of calibration data steganographically embedded in the transform domain to discern image distortion   Rhoads, Geoffrey B. CH1372334    CH    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. DE69426787.2    DE    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. DE69432480.9    DE    11/16/1994    Steganographic system   Rhoads, Geoffrey B. DE69434237.8    DE    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B. DE69435076.1    DE    11/16/1994    Identification/authentication system using robust, distributed coding   Rhoads, Geoffrey B. DE69620751.6    DE    05/07/1996    Steganographical embedding of auxiliary data and calibration data in image data   Rhoads, Geoffrey B. DE69625626.6    DE    05/07/1996    Initiating a link between computers based on the decoding of an address steganographically embedded in an audio object   Rhoads, Geoffrey B. DE69629134.7    DE    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor DE69631806.7    DE    05/07/1996    Use of calibration data steganographically embedded in the transform domain to discern image distortion   Rhoads, Geoffrey B. DE69637782.9    DE    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. DE69739209.0    DE    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. EP00936096.7    EP    05/18/2000    Methods and systems employing digital watermarking in music and other media   Rhoads, Geoffrey B. EP01906702.4    EP    01/25/2001    Connected audio and other media objects   Meyer, Joel R. EP01988889.0    EP    10/25/2001    Digitally marked objects and promotional methods   Davis, Bruce L. EP04030490.9    EP    11/16/1994    Signal processing method   Rhoads, Geoffrey B. EP08100632.2    EP    05/15/2000    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Rhoads, Geoffrey B. EP08104558.5    EP    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. EP08171782.9    EP    05/07/1996    A method of recognising content signals in a network of computing devices   Rhoads, Geoffrey B. ES2302888    ES    11/16/1994    Identification/authentication system using robust, distributed coding   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor ES2236999    ES    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B. FI1049320    FI    05/07/1996    Initiating a link between computers based on the decoding of an address steganographically embedded in an audio object   Rhoads, Geoffrey B. FI0824821    FI    05/07/1996    Steganographical embedding of auxiliary data and calibration data in image data   Rhoads, Geoffrey B. FR1003324    FR    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. FR1049320    FR    05/07/1996    Initiating a link between computers based on the decoding of an address steganographically embedded in an audio object   Rhoads, Geoffrey B. FR1137251    FR    05/07/1996    Use of calibration data steganographically embedded in the transform domain to discern image distortion   Rhoads, Geoffrey B. FR1372334    FR    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. FR1389011    FR    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. FR0737387    FR    11/16/1994    Steganographic system   Rhoads, Geoffrey B. FR0824821    FR    05/07/1996    Steganographical embedding of auxiliary data and calibration data in image data   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor FR1019868    FR    05/16/1997    Computer system linked by using information in data objects Rhoads,   Geoffrey B. FR0959620    FR    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B. FR0959621    FR    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. GB1003324    GB    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. GB1049320    GB    05/07/1996    Initiating a link between computers based on the decoding of an address steganographically embedded in an audio object   Rhoads, Geoffrey B. GB1137251    GB    05/07/1996    Use of calibration data steganographically embedded in the transform domain to discern image distortion   Rhoads, Geoffrey B. GB1372334    GB    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. GB1389011    GB    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. GB0737387    GB    11/16/1994    Identification/authentication coding method and apparatus   Rhoads, Geoffrey B. GB0824821    GB    05/07/1996    Steganographical embedding of auxiliary data and calibration data in image data   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor GB1019868    GB    05/16/1997    Computer system linked by using information in data objects Rhoads,   Geoffrey B. GB0959620    GB    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B. GB0959621    GB    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. HK1026796    HK    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. HK1026968    HK    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. HK1030122    HK    05/07/1996    Initiating a link between computers based on the decoding of an address steganographically embedded in an audio object   Rhoads, Geoffrey B. HK05108893.6    HK    11/16/1994    Signal processing method   Rhoads, Geoffrey B. HK09102296.8    HK    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. IT1389011    IT    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. IT0824821    IT    05/07/1996    Steganographical embedding of auxiliary data and calibration data in image data   Rhoads, Geoffrey B. JP3649731    JP    11/16/1994    Identification/authentication coding method and apparatus   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor JP4068301    JP    08/24/1998    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. JP2000-618895    JP    05/18/2000    Methods and systems employing digital watermarking in music and other media   Rhoads, Geoffrey B. JP2000-618954    JP    05/15/2000    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Rhoads, Geoffrey B. JP2001-549260    JP    12/21/2000    Digital watermarks as data proxies   Davis, Bruce L. JP2001-555365    JP    01/25/2001    Connected audio and other media objects   Meyer, Joel R. JP4205624    JP    04/08/2004    Identification/authentication coding method and apparatus   Rhoads, Geoffrey B. JP3949679    JP    07/30/2004    Steganographic system   Rhoads, Geoffrey B. JP2007-025998    JP    02/05/2007    Verification/authentication encoding method and apparatus   Rhoads, Geoffrey B. JP2007-124835    JP    05/09/2007    Steganographic system   Rhoads, Geoffrey B. JP4417979    JP    05/09/2007    Steganographic system   Rhoads, Geoffrey B. 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JP2006-509158    JP    03/05/2004    Camera and digital watermarking systems and methods   Brundage, Trent J.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 7606790    US    03/03/2004    Integrating and enhancing searching of media content and biometric databases   Levy, Kenneth L. 12/582572    US    10/20/2009    Integrating and enhancing searching of media content and biometric databases   Levy, Kenneth L. 7352878    US    04/15/2004    Human perceptual model applied to rendering of watermarked signals   Reed, Alastair M. 12/057745    US    03/28/2008    Perceptability model applied to watermark signals   Reed, Alastair M. 6724914    US    10/16/2001    Progressive watermark decoding on a distributed computing platform   Brundage, Trent J. 7227972    US    04/20/2004    Progressive watermark decoding on a distributed computing platform   Brundage, Trent J. 7676060    US    06/05/2007    Distributed content identification   Brundage, Trent J. 12/720555    US    03/09/2010    Distributed decoding of digitally encoded media signals   Brundage, Trent J. 6766102    US    09/20/1999    Methods for reading watermarks in unknown data types, and dvd drives with such functionality   Rhoads, Geoffrey B. 10/841970    US    05/06/2004    Methods for reading watermarks in unknown data types, and dvd drives with such functionality   Inventor: Geoffrey B. 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Scott 12/050000    US    03/17/2008    Methods combining multiple frames of image data   Carr, J. Scott 7508944    US    06/02/2000    Using classification techniques in digital watermarking   Brunk, Hugh L. 12/408529    US    03/20/2009    Using classification techniques in digital watermarking   Brunk, Hugh L. 7657064    US    09/26/2000    Methods of processing text found in images   Conwell, William Y. 12/691608    US    01/21/2010    Method and systems for processing text found in images   Conwell, William Y. CA2502232    CA    10/14/2003    Identification document and related methods   Brundage, Trent J. 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EP02797258.7    EP    12/09/2002    Forensic digital watermarking with variable orientation and protocols   Levy, Kenneth L. JP2003-553418    JP    12/09/2002    Forensic digital watermarking with variable orientation and protocols   Levy, Kenneth L. EP03790079.2    EP    11/26/2003    Systems and methods for authentication of print media   Rodriguez, Tony F. JP4510643    JP    11/26/2003    Systems and methods for authentication of print media   Rodriguez, Tony F. EP05722787.8    EP    02/03/2005    Digital watermarking image signals on-chip and photographic travel logs through digital watermarking   Rodriguez, Tony F.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor JP2006-552319    JP    02/03/2005    Digital watermarking image signals on-chip and photographic travel logs through digital watermarking   Rodriguez, Tony F. 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Scott   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 12/687687    US    01/14/2010    Digital watermarking video captured from airborne platforms   Rhoads, Geoffrey B. 12/689453    US    01/19/2010    Controlling use of audio or image content   Rhoads, Geoffrey B. 12/689465    US    01/19/2010    Connected audio content   Levy, Kenneth L. 12/692451    US    01/22/2010    Watermark synchronization signals conveying payload data   Sharma, Ravi K. 12/692470    US    01/22/2010    Assessing quality of service using digital watermark information   Tian, Jun 12/711906    US    02/24/2010    Methods and apparatus to process imagery or audio content   Rhoads, Geoffrey B. 12/727838    US    03/19/2010    System for managing display and retrieval of image content on a network with image identification and linking to network content   Ramos, Daniel O. 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Rhoads, Geoffrey B. 11/082217    US    3/15/2005    Watermark payload encryption for media including multiple watermarks   Levy, Kenneth L. 11/152686    US    6/13/2005    Digital watermarking methods, programs and apparatus   Rodriguez; Tony F.; Stach; John; Reed; Alastair M. 12/562883    US    9/18/2009    Digital watermarking methods, programs and apparatus   Rodriguez; Tony F.; Stach; John; Reed; Alastair M. 11/740,140    US    4/25/2007    Methods and Systems Responsive to Features Sensed From Imagery or Other Data   Rhoads, Geoffrey B.   SCHEDULE B -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor JP2010-158011    JP    6/13/2005    DIGITAL ASSET MANAGEMENT, TARGETED SEARCHING AND DESKTOP SEARCHING USING DIGITAL WATERMARKS   Rodriguez, Tony F. HK9108777.3    HK    5/7/1996    METHOD OF EMBEDDING A MACHINE READABLE STEGANOGRAPHIC CODE IN A DOCUMENT   Rhoads, Geoffrey B. EP10166581.8    EP    2/14/2001    WATERMARK ENCODER AND DECODER ENABLED SOFTWARE   Ramos, Daniel O JP2010-049197    JP    3/5/2010    WATERMARK ENCODER AND DECODER ENABLED SOFTWARE   Ramos, Daniel O.   SCHEDULE B -------------------------------------------------------------------------------- SCHEDULE C TRANSFER OF RIGHTS IN ABANDONED ASSETS Digimarc Corporation, an Oregon corporation, having offices at 9405 SW Gemini Drive, Beaverton, OR 97008, (“Licensor”), has granted to IV Digital Multimedia Inventions LLC, a Delaware limited liability company, having an office at 2711 Centerville Road, Suite 400, Wilmington, DE 19808 (“Licensee”), the exclusive, worldwide, transferable, sublicensable license of all its rights of any kind conferred by the patents, patent applications, and provisional patent applications listed in the attached Appendix. Licensor assigns to Licensee the rights, if any, to revive prosecution of claims under such assets and to sue or otherwise enforce any claims under such assets for past, present or future infringement. Licensor hereby authorizes the respective patent office or governmental agency in each jurisdiction to make available to Licensee all records regarding the Abandoned Assets. DATED this 5th day of October, 2010.   LICENSOR: DIGIMARC CORPORATION By:     Robert Chamness Chief Legal Officer and Secretary   SCHEDULE C -------------------------------------------------------------------------------- APPENDIX   Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 08/154866    US    11/18/1993    Method and apparatus for positive identification of audio signals, images, and other forms of signals with inherent noise   Rhoads, Geoffrey B. 08/215289    US    03/17/1994    Identification/authentication system using robust, distributed coding   Rhoads, Geoffrey B. 5862260    US    05/16/1996    Methods for surveying dissemination of proprietary empirical data   Rhoads, Geoffrey B. 09/150147    US    09/09/1998    Steganographic system   Rhoads, Geoffrey B. 09/151492    US    09/11/1998    Methods and tangible objects employing steganographically encoded date information   Davis, Bruce L. 09/337590    US    06/21/1999    Electronic payment system for content delivery   Rhoads, Geoffrey B. 09/342971    US    06/29/1999    Advertising employing watermarking   Rodriguez, Tony F. 09/343101    US    06/29/1999    Enhanced input peripheral   Davis, Bruce L. 09/343104    US    06/29/1999    Paper products and physical objects as means to access and control a computer or to navigate over or act as a portal on a network   Rodriguez, Tony F. 09/413117    US    10/06/1999    Methods for making images   Rhoads, Geoffrey B. 09/482749    US    01/13/2000    Watermark embedder and reader   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 09/491534    US    01/26/2000    Data transmission by watermark proxy   Davis, Bruce L. 09/496380    US    02/02/2000    System for detecting embedded data in audio notwithstanding variation in playback speed   Rhoads, Geoffrey B. 09/507096    US    02/17/2000    Associating data with media signals using embedded signals   Davis, Bruce L. 09/515826    US    02/29/2000    Paper products and physical objects as means to access and control a computer or to navigate over or act as a portal on a network   Rodriguez, Tony F. 09/552998    US    04/19/2000    Watermark technology as applied to irregular objects   Hannigan, Brett T. 09/567405    US    05/08/2000    Postal methods and systems   Carr, J. 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IT0959621    IT    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. JP08-534258    JP    05/07/1996    Steganographic system   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor JP2002-538240    JP    10/25/2001    Digitally marked objects and promotional methods   Davis, Bruce L. JP2004-326916    JP    11/10/2004    Verification/authentication coding method and device   Rhoads, Geoffrey B. LI1003324    LI    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. LI1137251    LI    05/07/1996    Use of calibration data steganographically embedded in the transform domain to discern image distortion   Rhoads, Geoffrey B. LI1372334    LI    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. LI1389011    LI    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. LU1003324    LU    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. LU1372334    LU    05/07/1996    Method of embedding a machine readable steganographic code   Rhoads, Geoffrey B. LU1389011    LU    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. LU1019868    LU    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. LU0959620    LU    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor LU0959621    LU    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. MC1003324    MC    05/07/1996    Forgery-resistant documents with images conveying secret data and related methods   Rhoads, Geoffrey B. MC1389011    MC    11/16/1994    A method of embedding a steganographic code in an image signal   Rhoads, Geoffrey B. MC0959620    MC    11/16/1994    Video with hidden in-band digital data   Rhoads, Geoffrey B. MC0959621    MC    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. PCT/US1994/013366    WO    11/16/1994    Identification/authentication coding method and apparatus   Rhoads, Geoffrey B. PCT/US1996/006618    WO    05/07/1996    Steganography systems   Rhoads, Geoffrey B. PCT/US1997/008351    WO    05/16/1997    Computer system linked by using information in data objects   Rhoads, Geoffrey B. PCT/US1998/017530    WO    08/24/1998    Method and apparatus for watermarking video images   Rhoads, Geoffrey B. PCT/US2000/013333    WO    05/15/2000    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Rhoads, Geoffrey B. PCT/US2000/013798    WO    05/18/2000    Methods and systems employing digital watermarking in music and other media   Rhoads, Geoffrey, B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2000/029455    WO    10/25/2000    Methods for optimizing watermark detection   Rhoads, Geoffrey B. PCT/US2000/035038    WO    12/21/2000    Digital watermarks as data proxies   Davis, Bruce L. PCT/US2000/035630    WO    12/28/2000    Watermark-based personal audio appliance   Rhoads, Geoffrey B. PCT/US2001/000884    WO    01/11/2001    Watermark embedder and reader   Gustafson, Ammon E. PCT/US2001/002609    WO    01/25/2001    Connected audio and other media objects   Meyer, Joel R. PCT/US2001/003379    WO    02/01/2001    Integrating digital watermarks in multimedia content   Davis, Bruce L. PCT/US2001/007373    WO    03/07/2001    Digital watermark screening and detection strategies   Rhoads, Geoffrey B. PCT/US2001/012571    WO    04/17/2001    Color adaptive watermarking   Reed, Alastair M. PCT/US2001/014920    WO    05/08/2001    Envelopes and printed documents employing digital watermarks   Carr, J. Scott PCT/US2001/021268    WO    07/05/2001    Management of documents and other objects using optical devices   Seder, Phillip Andrew PCT/US2001/022173    WO    07/12/2001    Wavelet domain watermarks   Sharma, Ravi K. 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PCT/US2002/015187    WO    05/14/2002    Content identifiers triggering corresponding responses   Rhoads, Geoffrey B. 08/512993    US    08/09/1995    Security system for photographic identification   Rhoads, Geoffrey B. 09/776021    US    02/02/2001    Steganographic messaging through imagery   Rhoads, Geoffrey B. 09/818533    US    03/28/2001    Arrangement for embedding subliminal data in imaging   Rhoads, Geoffrey 09/986170    US    11/07/2001    Arrangement for embedding subliminal data in imaging   Rhoads, Geoffrey B. 10/177650    US    06/20/2002    Wireless methods and devices employing steganography   Levy, Kenneth L. 11/377708    US    03/15/2006    Authentication of identification documents   Rhoads, Geoffrey B. 90/005828    US    10/20/2000    Methods for controlling systems using control signals embedded in empirical data   Rhoads, Geoffrey B. 09/408878    US    09/29/1999    Protecting images with image markings   Powell, Robert D.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor EP93112290.7    EP    07/30/1993    Method and system for digital image signatures   Powell, Robert D. 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DE69927218.1    DE    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B EP99107280.2    EP    04/14/1999    Digital watermarking and banknotes   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor EP0981113    EP    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B. EP99917532.6    EP    04/14/1999    Digital watermarking and banknotes   Rhoads, Geoffrey B. FR0981113    FR    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B GB0981113    GB    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B IE0981113    IE    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B JP2000-543918    JP    11/14/1999    Digital watermarking and banknotes   Rhoads, Geoffrey B. JP2000-563056    JP    06/24/1999    Digital watermarks and methods for security documents   Rhoads, Geoffrey B. KR10-2001-7001267    KR    06/24/1999    Digital watermarks and methods for security documents   Rhoads, Geoffrey B. LU0981113    LU    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B MC0981113    MC    07/07/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B PCT/US1999/008252    WO    04/14/1999    Digital watermarking and banknotes   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US1999/014532    WO    06/24/1999    Digital watermarks and methods for security documents   Rhoads, Geoffrey B. 09/234780    US    01/20/1999    Multiple watermarketing techniques   Rhoads, Geoffrey 60/071983    US    01/20/1998    Determining authenticity of documents using multiple watermaking techniques   Rhoads, Geoffrey B. BR9907105    BR    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey EP00973864.2    EP    10/25/2000    Methods and systems using multiple watermarks   Rhoads, Geoffrey B. EP1050005    EP    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey IL137370    IL    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey IT1050005    IT    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey JP2000-540514    JP    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey PCT/US1999/001296    WO    01/20/1999    Multiple watermarking techniques   Rhoads, Geoffrey PCT/US2000/029454    WO    10/25/2000    Methods and systems using multiple watermarks   Rhoads, Geoffrey B. 60/125349    US    03/19/1999    Pre-filtering to increase watermark signal-to-noise ratio   Alattar, Adnan M. 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Scott 60/164619    US    11/10/1999    Image-based navigation system   Rhoads, Geoffey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2000/032573    WO    11/30/2000    Embedding and reading imperceptible codes on objects   Davis, Bruce L. PCT/US2002/020832    WO    07/01/2002    Hiding information out-of-phase in color channels   Reed, Alastair M. PCT/US2002/027954    WO    08/30/2002    Digitally watermarking checks and other value documents   Carr, J. Scott 09/465418    US    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey B. 60/112955    US    12/18/1998    Counterfeit deterrence system   Rhoads, Geoffrey B. AU23695/00    AU    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. CA2355715    CA    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. EP99967414.6    EP    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. JP2000-588925    JP    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. KR10-2001-7007645    KR    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. PCT/US1999/030217    WO    12/16/1999    Counterfeit deterrence system   Rhoads, Geoffrey, B. 09/437357    US    11/10/1999    Method and apparatus for encoding paper with information   Alattar, Adnan M. PCT/US2000/030694    WO    11/07/2000    Method and apparatus for encoding paper with information   Alattar, Adnan M.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 09/553112    US    04/20/2000    Image patterns that constitute digital watermarks   Rodriguez, Tony Forrest 60/131005    US    04/22/1999    Creating patterns that constitute digital watermarks   Rodriguez, Tony Forrest 09/636102    US    08/10/2000    Watermark encoder and decoder enabled software and devices   Ramos, Daniel O. 60/191778    US    03/24/2000    PCT/US2001/004812    WO    02/14/2001    Watermark encoder and decoder enabled software and devices   Ramos, Daniel O. 09/679261    US    10/04/2000    Peripheral device for a computer system.   Davis, Bruce L. 11/621254    US    01/09/2007    Enhanced input peripheral   Davis 60/158015    US    10/06/1999    Data entry method and system   Davis, Bruce L. PCT/US2001/026617    WO    08/23/2001    Watermarking recursive hashes into frequency domain regions and wavelet based feature modulation watermarks   Tian, Jun 60/163676    US    11/05/1999    Watermarking an image after the image is separated into color planes   Miller, Marc PCT/US2000/029244    WO    10/23/2000    Watermarking an image in color plane separations and detecting such watermarks   Miller, Marc   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/232163    US    09/11/2000    Watermaking enhancements including time based masking, context sensitive connected content, broadcast monitoring, semifragile watermarks, and time stamped watermarks   Levy, Kenneth L. PCT/US2001/028726    WO    09/11/2001    Time and object based masking for video watermarking   Levy, Kenneth L. PCT/US2001/019303    WO    06/14/2001    Perceptual modeling of media signals based on local contrast and directional edges   Hannigan, Brett T. 10/997813    US    11/23/2004    Steganographic data embedding in objects for authenticating and associating value with the objects   Perry, Burt W. CA2416532    CA    07/24/2001    Authentication watermarks for printed objects and related applications   Perry, Burt W. KR10-2003-7001052    KR    01/24/2003    Authentication watermarks for printed objects and related applications   Perry, Burt W. PCT/US2001/023336    WO    07/24/2001    Authentication watermarks for printed objects and related applications   Perry, Burt W. 60/183681    US    02/19/2000    Digital watermarks as a gateway mechanism   Jones, Kevin C. 10/137124    US    05/01/2002    Digital watermarking methods and related toy and game applications   Hannigan, Brett T. 10/193663    US    07/10/2002    Repetition coding of error correction coded messages in auxiliary data embedding applications   Sharma, Ravi K.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 10/850579    US    05/19/2004    Digital watermarks and trading cards   Mckinley, Tyler J. 60/257822    US    12/21/2000    Watermark systems and methods   Aggson, Cynthia K. EP1311973    EP    07/20/2001    Using embedded data with file sharing   Levy, Kenneth L. PCT/US2001/014014    WO    04/30/2001    Digital watermarking systems   Seder, Phillip Andrew PCT/US2001/022953    WO    07/20/2001    Using embedded data with file sharing   Levy, Kenneth L. 09/837564    US    04/17/2001    Authentication of physical and electronic media objects using digital watermarks   Rhoads, Geoffrey B. 60/198138    US    04/17/2000    Countermeasures to watermark attacks   Alattar, Adnan M. 11/468258    US    08/29/2006    Image management system and methods using digital watermarks   Patterson PCT/US2003/007776    WO    03/12/2003    Image management system and methods using digital watermarks   Lofgren, Neil E. 60/278049    US    03/22/2001    Elliptical curve fitting and application for digital watermarks   Sharma, Ravi K. PCT/US2002/008844    WO    03/22/2002    Quantization-based data hiding employing calibration and locally adaptive quantization   Stach, John 09/915824    US    07/26/2001    Collateral data combined with user characteristics to select web site   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 10/012676    US    11/05/2001    Collateral data combined with other data to select web site   Rhoads, Geoffrey B. 60/220945    US    07/26/2000    Collateral data used to obtain a match to users preferences   Rhoads, Geoffrey B. 09/741779    US    12/21/2000    Watermarking holograms   Decker, Stephen K. PCT/US2001/049399    WO    12/17/2001    Watermaking holograms   Lofgren, Neil E. 09/924402    US    08/07/2001    Using digital watermarks to facilitate counterfeit inspection and inventory management   Miolla, Ronald S. 09/940873    US    08/27/2001    Digitally watermarking physical media   Levy, Kenneth L. 10/233327    US    08/29/2002    Digitally watermarking physical media   Levy, Kenneth L. 60/282205    US    04/06/2001    Digital asset management and linking media signals with related data using watermarks   Jones, Kevin C. PCT/US1999/013320    WO    06/14/1999    Stochastic scanning documents to change moire effects   Rhoads, Geoffrey B. AU2002211634    AU    10/10/2001    Halftone watermarking and related applications   Brunk, Hugh L. CA2422412    CA    10/10/2001    Halftone watermarking and related applications   Brunk, Hugh L.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor EP01979700.0    EP    10/10/2001    Halftone watermarking and related applications   Brunk, Hugh L. KR10-2003-7005154    KR    10/10/2001    Halftone watermarking and related applications   Brunk, Hugh L. PCT/US2001/028523    WO    09/10/2001    Authenticating and measuring quality of service of multimedia signals using digital watermark analyses   Tian, Jun PCT/US2001/031784    WO    10/10/2001    Halftone watermarking and related applications   Brunk, Hugh L. PCT/US2002/027068    WO    08/23/2002    Digital watermarks for checking authenticity of printed objects   Rodriguez, Tony F. PCT/US2000/032013    WO    11/21/2000    Adjusting an electronic camera to acquire a watermarked image   Brunk, Hugh 10/017463    US    12/14/2001    Space filling quantizers for digital watermarking   Brunk, Hugh L. 60/256629    US    12/18/2000    Quantizer characteristics important for quantization index modulation   Brunk, Hugh L. 10/017679    US    12/13/2001    Audio/video commerce application architectural framework   Levy, Kenneth L. 60/256628    US    12/18/2000    Audio/video commerce application architectural framework   Levy, Kenneth L.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2001/049395    WO    12/17/2001    Audio/video commerce application architectural framework   Levy, Kenneth L. PCT/US2002/012171    WO    04/19/2002    User-friendly rights management system and methods   Levy, Kenneth L. PCT/US2006/032011    WO    08/15/2006    Rights management systems and methods using digital watermaking   Levy, Kenneth L. 10/020519    US    12/14/2001    Message coding for digital watermark applications   Brunk, Hugh L. 60/256627    US    12/18/2000    Message coding for watermark applications   Bradley, Brett A 60/284594    US    04/17/2001    Reversible watermarking and authentication of media signals   Tian, Jun PCT/US2001/032517    WO    10/17/2001    Content authentication and recovery using digital watermarks   Tian, Jun 09/706505    US    11/02/2000    Batch identifier registration and embedding in media signals   Hein Iii, William C. 10/121435    US    04/11/2002    Pre-exposure of emulsion media with a steganographic pattern   Lowe, Brian D. 60/284163    US    04/16/2001    Efficient interactive tv   Anglin, Hugh W. 60/286701    US    04/25/2001    Encoded reference signal for digital watermarks   Sharma, Ravi K.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/355856    US    02/10/2002    Digital watermarking methods and related toy and game applications   Hannigan, Brett T. PCT/US2002/013728    WO    05/01/2002    Digital watermarking methods and related toy and game applications   Hannigan, Brett T. 60/303173    US    07/05/2001    Using embedded identifiers with images   Davis, Bruce L. 60/335427    US    11/30/2001    Pattern recognition of objects in image streams   Shen, Lance Lixin PCT/US2002/028448    WO    09/05/2002    Pattern recognition of objects in image streams   Decker, Stephen K. 10/265085    US    10/03/2002    Digital watermarking methods, programs and apparatus   Mckinley, Tyler J. 10/265348    US    10/04/2002    Digital watermarking methods, programs and apparatus   Mckinley, Tyler J. 60/327687    US    10/05/2001    Digital watermarking methods, programs, and apparatus   Mckinley, Tyler J. PCT/US2001/051170    WO    11/02/2001    Batch identifier registration and embedding in media signals   Mckinley, Tyler J. 60/404038    US    08/15/2002    Digital watermarking of low bit rate video   Alattar, Adnan M. 60/340651    US    12/13/2001    Wavelet-based reversible watermarking for authentication   Tian, Jun   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/430511    US    12/02/2002    Reversible watermarking   Tian, Jun PCT/US2002/040162    WO    12/12/2002    Reversible watermarking   Tian, Jun PCT/US2004/014161    WO    05/07/2004    Reversible watermarking and related applications   Alattar, Adnan M. 60/351502    US    01/22/2002    Adaptive prediction filtering for digital watermarking   Bradley, Brett A. PCT/US2001/031671    WO    10/09/2001    Watermarks carrying content dependent signal metrics for detecting and characterizing signal alteration   Ahmed, Farid 60/359041    US    02/20/2002    Embedding location data in video   Rhoads, Geoffrey B. 60/361749    US    03/04/2002    Digital watermarking systems   Mckinley, Tyler J. 10/394507    US    03/21/2003    Visibly altering a product in response to invalidating event   Mckinley, Tyler J. 60/367033    US    03/22/2002    Visibly altering product in response to invalidating event   Mckinley, Tyler J. 60/383474    US    05/23/2002    Geographical information systems using digital watermarks and other digital watermarking techniques   Rhoads, Geoffrey B. 60/376720    US    04/29/2002    Image management system and methods using digital watermarks   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2003/017048    WO    05/29/2003    Layered security in digital watermarking   Bradley, Brett Alan PCT/US2001/021815    WO    07/10/2001    Multi-carrier watermarks   Gustafson, Ammon E. 60/434823    US    12/18/2002    Computing distortion of media signals using embedded data with repetitive structure and log-polar mapping   Alattar, Adnan M. 60/428485    US    11/21/2002    Digital watermarking of low bit-rate video   Alattar, Adnan M. PCT/US2003/001975    WO    01/22/2003    Digital watermarking and fingerprinting including symchronization, layering, version control, and compressed embedding   Alattar, Adnan M. 10/639598    US    08/11/2003    Document management with embedded data   Perry 60/403899    US    08/15/2002    Document management with embedded data   Gorriaran, Michael PCT/US2001/003138    WO    01/31/2001    Self-orienting watermarking method embedding frequency shift keying   Bradley, Brett A. 10/686495    US    10/14/2003    Identification document and related methods   Brundage, Trent J. 60/418762    US    10/15/2002    Identification document and related methods   Rhoads, Geoffrey B. 10/717211    US    11/18/2003    Watermarked printed objects and methods   Rodriguez, Tony F. 60/475389    US    06/02/2003    Digital watermarks in image replacement documents, as on-board mediators in authentication of printed media, and managing quality of imaging systems   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/456677    US    03/21/2003    Digital watermarking with laser engraving   Brian Labrec PCT/US2001/028927    WO    09/13/2001    Watermarking in the time-frequency domain   Hannigan, Brett T. 60/511848    US    10/15/2003    Image capture system for portable device   Shovoly, Steven KR10-2005-7016613    KR    03/05/2004    Camera and digital watermarking systems and methods   Brundage, Trent J. PCT/US2004/006724    WO    03/05/2004    Camera and digital watermarking systems and methods   Brundage, Trent J. 60/451840    US    03/03/2003    Integrating and enhancing searching of media content and biometric databases   Levy, Kenneth L. 60/463175    US    04/15/2003    Color image appearance model applied to offset printing of watermarked images   Reed, Alastair M. PCT/US2002/033161    WO    10/16/2002    Progressive watermark decoding on a distributed computing platform   Brundage, Trent J. 60/478386    US    06/13/2003    Digital watermarking with variable orientation and protocols   Levy, Kenneth L. 60/537054    US    01/16/2004    Watermarking electronic text documents   Adnan M. Alattar 60/486047    US    07/09/2003    Embedded data in gaming objects for authentication and association of behavior and information   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/514958    US    10/27/2003    Methods and apparatuses for printer recalibration   Reed, Alastair M. 10/996138    US    11/19/2004    Optimized digital watermarking functions for streaming data   Gustafson, Ammon E. 60/523748    US    11/19/2003    Optimized digital watermarking functions for streaming data   Gustafson, Ammon E. 60/542095    US    02/04/2004    Digital watermarking image signals on-chip   Rodriguez, Tony F. 60/554541    US    03/18/2004    Watermark payload encryption methods and systems   Ramos, Daniel O. 60/554748    US    03/19/2004    Digital watermarking for workflow   Levy, Kenneth L. 60/659022    US    03/03/2005    Enhanced bios system   Calhoon, Sean PCT/US2006/007327    WO    03/02/2006    Data processing systems and methods   Calhoon, Sean 60/673022    US    04/19/2005    Digital asset management, targeted searching and desktop searching using digital watermarks   Rodriguez, Tony F. PCT/US2005/020790    WO    06/13/2005    Digital asset management, targeted searching and desktop searching using digital watermarks   Rodriguez, Tony F. 09/631409    US    08/03/2000    Linking from paper invoices and statements to on-line resources   Brundage, Trent J.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2001/024114    WO    08/01/2001    Linking from paper invoices and statements to on-line resources   Brundage, Trent J. PCT/US2002/002325    WO    01/24/2002    Watermark detection using adaptive color projections   Reed, Allister PCT/US2001/017685    WO    05/31/2001    Using classification techniques in digital watermarking   Brunk, Hugh L. 60/495373    US    08/14/2003    Identification document and related methods   Sher-Jan, Mahmood MXPA05003984    MX    10/14/2003    Identification document and related methods   Durst, Robert T. PCT/US2003/032886    WO    10/14/2003    Identification document and related methods   Brundage, Trent J. 60/198857    US    04/21/2000    Authenticating metadata and embedding metadata in watermarks of media signals   Davis, Bruce L. PCT/US2001/001043    WO    01/11/2001    Authenticating metadata and embedding metadata in watermarks of media signals   Davis, Bruce L. KR10-2004-7009235    KR    12/09/2002    Forensic digital watermarking with variableorientation and protocols   Levy, Kenneth L. PCT/US2002/039467    WO    12/09/2002    Forensic digital watermarking with variable orientation and protocols   Levy, Kenneth L. 60/523159    US    11/17/2003    Machine-readable security features for printed objects   Reed, Alastair M.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2003/037802    WO    11/26/2003    Systems and methods for authentication of print media   Rodriguez, Tony F. 60/600618    US    08/09/2004    Photographic travel logs through digital watermarking   Brundage, Trent J. PCT/US2005/003777    WO    02/03/2005    Digital watermarking image signals on-chip and photographic travel logs through digital watermarking   Rodriguez, Tony F. 60/558767    US    03/31/2004    Appending information to digital watermark payloads   Rodriguez, Tony F. PCT/US2005/009072    WO    03/18/2005    Watermark payload encryption methods and systems   Sharma, Ravi K. JP2002-515380    JP    07/30/2001    Digital watermarks and trading cards   Mckinley, Tyler J. PCT/US2001/023886    WO    07/30/2001    Digital watermarks and trading cards   Mckinley, Tyler J. 60/198849    US    04/21/2000    Authenticating photo identification documents   Carr, J. Scott PCT/US2001/012561    WO    04/17/2001    Authentication of physical and electronic media objects using digital watermarks   Alattar, Adnan M. PCT/US2001/019254    WO    06/15/2001    Interactive video and watermark enabled video objects   Mckinley, Tyler J. 09/619264    US    07/19/2000    Print media with embedded messages for controlling printing   Kumar, Aruna B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor PCT/US2001/022185    WO    07/12/2001    Print media with embedded messages for controlling printing   Kumar, Aruna B. 09/670115    US    09/26/2000    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. PCT/US2001/030238    WO    09/26/2001    Portable devices and methods employing digital watermarking   Rhoads, Geoffrey B. PCT/US2002/005991    WO    02/28/2002    Watermarking a carrier on which an image will be placed or projected   Levy, Kenneth L. PCT/US2002/006858    WO    03/05/2002    Digital watermarking and maps   Rhoads, Geoffrey B. PCT/US2007/084933    WO    11/16/2007    Methods and systems responsive to feature sensed from imagery or other data   Rhoads, Geoffrey B. 09/562516    US    05/01/2000    Methods and systems for digital watermarking   Hannigan, Brett T. 09/825463    US    04/02/2001    Background watermark processing   Rhoads, Geoffrey B. 09/854408    US    05/10/2001    Digital watermarks used in automation equipment   Brundage, Trent J. 10/188340    US    07/01/2002    11/381309    US    05/02/2006    11/467995    US    08/29/2006      SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 11/877851    US    10/24/2007    12/258095    US    10/24/2008    60/141468    US    06/29/1999    Using digital watermarks on playing cards and casino chips to deter cheating   Livermore, Megan 60/151586    US    08/30/1999    Automated children’s books   Rodriguez, Tony Forrest 60/163332    US    11/03/1999    Data entry method and system   Rhoads, Geoffey B. 60/178028    US    01/26/2000    Managing on-line media library through links in media signals   Rhoads, Geoffrey B. 60/180364    US    02/04/2000    Integrating digital watermarks in multimedia content   Davis, Bruce L. 60/247389    US    11/08/2000    Authentication watermarking using sorting order embedding to embed a compressed bit stream in another signal   Tian, Jun 60/257924    US    12/21/2000    Detection of multiple watermarks   Shama, Ravi K. 60/260907    US    01/10/2001    Authentication watermarking enabling recovery of the original un-watermarked content   Tian, Jun 60/263987    US    01/24/2001    Halftone primitive watermarking and related applications   Haynes, Mark E. 60/284776    US    04/18/2001    Using embedded identifiers with images   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/285514    US    04/20/2001    User-friendly copy management system and method   Levy, Kenneth L. 60/288272    US    05/02/2001    Digital watermarking methods and related toy applications   Sharma, Ravi K. 60/297229    US    06/07/2001    Digital watermarking methods and related toy and game applications   Hannigan, Brett T. 60/305086    US    07/12/2001    Connected audio and other media objects   Rhoads, Geoffrey B. 60/315569    US    08/28/2001    User-friendly copy management system and method   Levy, Kenneth L. 60/316851    US    08/31/2001    Digital watermarking and checks   Carr, J. Scott 60/317773    US    09/06/2001    Pattern recognition of objects in image streams   Shen, Lance Lixin 60/323148    US    09/17/2001    Postal meters and systems employing watermarking   Davis, Bruce L. 60/332512    US    11/21/2001    Postal applications using digital watermarks   Rhoads, Geoffrey B. 60/336209    US    10/30/2001    Audio/video commerce application architectural framework   Levy, Kenneth L. 60/349644    US    01/15/2002    Wireless methods and devices employing steganography   Rhoads, Geoffrey B. 60/349970    US    10/19/2001    Digital watermarking systems and methods   Levy, Kenneth L.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/350082    US    10/19/2001    Integrating digital watermarks in multimedia content   Levy, Kenneth L. 60/351565    US    01/22/2002    Digital watermarking and fingerprinting enhancements   Alattar, Adnan M. 60/352652    US    01/28/2002    Digitally watermarking checks and other value documents   Carr, J. Scott 60/356881    US    02/12/2002    Idetification documents includung embedded data   Hannigan, Brett T. 60/404181    US    08/16/2002    Reversible watermarking that can exactly recreate the original image   Tian, Jun 60/421254    US    10/25/2002    Identification document and related methods   Rhoads, Geoffrey B. 60/430014    US    11/28/2002    Copy detect signals for automated authentication of print media   Decker, Stephen K. 60/435401    US    12/19/2002    Quantization-based data embedding in mapped data   Bradley, Brett A. 60/440593    US    01/15/2003    System for authentication of print media   Decker, Stephen K. 60/453031    US    03/06/2003    Camera for reading digital watermarks and digital watermarking methods and systems   Brundage, Trent J. 60/455824    US    03/18/2003    Camera for reading digital watermarks and digital watermarking methods and systems   Shovoly, Steven   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/463793    US    04/18/2003    Embedding digital watermarks with metallic inks   Brundage, Trent J. 60/466926    US    04/30/2003    Fragile and emerging digital watermarks   Reed, Alastair M. 60/480990    US    06/23/2003    Quantization based data embedding in mapped data   Bradley, Brett A. 60/480993    US    06/23/2003    Human perceptual model applied to rendering of watermarked signals   Reed, Alastair M. 60/482069    US    06/23/2003    Digital watermarking of text documents   Adnan M. Alattar 60/494709    US    08/12/2003    Identification document and related methods   Sher-Jan, Mahmood 60/495236    US    08/13/2003    Detecting media areas likely of hosting watermarks   Trent J. Brundage 60/582280    US    06/22/2004    Digital asset management and targeted searching using digital watermarks   Rodriguez, Tony F. 60/656642    US    02/25/2005    Digital asset management, targeted searching and desktop searching using digital watermarks   Rodriguez, Tony F. HK00102658.9    HK    5/2/2000    Digital watermarking and banknotes   Rhoads, Geofrey B. HK00104556.8    HK    7/24/2000    Digital watermarking and methods for security documents   Rhoads, Geofrey B   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor HK00107539.3    HK    11/24/2000    Method and apparatus for watermarking video images   Rhoads, Geoffrey B.; Davidson, Clay; Rodriguez, Anthony HK00105793.8    HK    9/14/2000    Method and apparatus for encoding audio with auxiliary digital data   Rhoads, Geoffrey B. HK01101031.8    HK    2/13/2001    Methods and systems for controlling computers or linking to internet resources from physical and electronic objects   Grossi, Brian J.; Seder, Phillip A.; McKinley, Tyler J.; Perry, Burt W.; Rhoads, Geoffrey B.; Davis, Bruce L.; Rodriquez, Tony F.; Carr, J. Scott; Hein, William C., III; MacIntosh; Brian T. CH0981113    CH    7/7/1999    Digital watermarking and methods for security documents   Rhoads, Geofrey B ES0959621    ES    11/16/1994    Video copy control with plural embedded signals   Rhoads, Geoffrey B. 60/554543    US    3/18/2004    Watermark payload encryption for media including multiple watermarks   Levy, Kenneth L. 60/582914    US    6/24/2004    Digital watermarking methods, programs and apparatus   Tony F. Rodriguez 60/866198    US    11/16/2006    Security Documents and Related Methods/Systems   Tony F. Rodriguez 90/005827    US    10/20/2000    Steganography methods employing embedded calibration data   Rhoads, Geoffrey B.   SCHEDULE C -------------------------------------------------------------------------------- Patent or Application No.    Country    Filing Date    Title of Patent and First Named Inventor 60/141538    US    6/28/1999    DIGITAL WATERMARKS IN TV AND RADIO OVER-THE-AIR BROADCASTS THAT LINK BROADCASTED CONTENT TO THE INTERNET 60/141763    US    6/30/1999    DIGITAL WATERMARKS IN TV AND RADIO OVER-THE-AIR BROADCASTS THAT LINK BROADCASTED CONTENT TO THE INTERNET, AND SUPPLEMENT RADIO WITH ANCILLARY IMAGES/VIDEO 09/502191    US    2/10/2000    WATERMARK EMBEDDER AND READER 09/670114    US    9/26/2000    METHODS FOR USING WATERMARKS ON CONSUMER DEVICES 09/660756    US    9/13/2000    PERSONAL DISPLAY FOR INTERACTIVE VIDEO HK05104773.0    HK    6/8/2005    Photographic identification document   Jonathan Carr PCT/US2001/050071    WO    10/24/2001    ACCESS CONTROL SYSTEMS AND METHODS   Davis, Bruce L.   SCHEDULE C -------------------------------------------------------------------------------- SCHEDULE D LIST OF DELIVERABLES Licensor will cause the following to be delivered to Licensee, or Licensee’s representative, within 14 days of closing for files necessary to respond to final deadlines of actions due for Live Assets within three months after closing, and for remaining items pertaining to Live Assets within 45 days of closing, and for remaining items pertaining to Abandoned Assets, within 45 days of a request by Licensee, but no earlier than 90 days after closing: (a) U.S. Patents. For each item of the Patents that is an issued United States patent, and for each Abandoned Asset to which any Live Asset claims priority to such issued U.S. patent (whether a patent or similar protection has been issued or granted), a copy of     (i) Assignment Agreement(s),     (ii) conception and reduction to practice materials, and     (iii) the publicly available file history for Abandoned Assets (to be obtained in both electronic disk image and hard copy, at Licensee’s option, by Licensee or by Licensor through a vendor designated by Licensee, in all cases for delivery directly to Licensee’s representative),     (iv) the Docket,     (v) each relevant license and security agreement; (b) U.S. Patent Applications. For each item of the Patents that is a U.S. patent application, a copy of     (i) the patent application, as filed,     (ii) if unpublished, a copy of the filing receipt and the non-publication request, if available,     (iii) the Assignment Agreement(s),     (iv) the Docket,     (v) all available conception and reduction to practice materials,     (vi) evidence of foreign filing license (or denial thereof),     (vii) each relevant license and security agreement, and     (viii) the Prosecution History Files; (c) Common Interest Agreement. Licensor will deliver any Initial Deliverables to be delivered by Licensor under paragraph (b) above to Licensee’s legal counsel, together with two (2) executed originals of the Common Interest Agreement. (d) Non-U.S. For each Live Asset for which a non-United States patent or similar protection has been issued or granted, a copy of     (i) the certificate for patent prosecution issued by the applicable government, if available     (ii) each pending foreign application     (iii) the Docket,     (iv) the Assignment Agreement(s),     (v) applicant name change, if necessary, and     (vi) each relevant license and security agreement. (e) Thorough Search/Declaration. If originals of the Initial Deliverables are not available and the required copies are not delivered to Licensee prior to Closing, Licensor will cause (i) such copies of the Initial Deliverables to be sent to Licensee or Licensee’s representative promptly if and after such originals are located and (ii) an appropriate executive officer of Licensor to deliver to Licensee a declaration, executed by such officer under penalty of perjury, detailing Licensor’s efforts to locate such unavailable original documents and details regarding how delivered copies were obtained. Capitalized terms used in this Schedule D are defined in the Patent License Agreement to which this Schedule D is attached.   SCHEDULE D -------------------------------------------------------------------------------- SCHEDULE 2.1 PAYMENT SCHEDULE FOR LICENSE ISSUE FEE   Date    Payment   Closing    $ 2,600,000    November 15, 2010    $ 2,675,000    February 15, 2011    $ 2,750,000    May 16, 2011    $ 2,825,000    August 15, 2011    $ 2,875,000    November 15, 2011    $ 2,950,000    February 15, 2012    $ 3,025,000    May 15, 2012    $ 3,100,000    August 15, 2012    $ 3,175,000    November 15, 2012    $ 3,250,000    February 15, 2013    $ 3,350,000    May 15, 2013    $ 3,425,000      SCHEDULE 2.1 -------------------------------------------------------------------------------- SCHEDULE 2.3 PORTFOLIO MONETIZATION ALLOCATION METHODOLOGY Licensee and/or its Affiliates will rank each of the patents and patent applications included in the Portfolio Monetization as of the date of the applicable Portfolio Monetization in one of the following four categories: Category R1: patents and patent applications actually asserted against the licensee and discussed in detail during the discussions leading to the Revenue (i.e., named, analyzed and discussed in the assertion materials and negotiations); Category R2: patents and patent applications specifically mentioned but not discussed in detail in the discussions leading to the Revenue (i.e., listed as one of the patents that the licensee might infringe or need to license); Category R3: patents and patent applications in the same patent class code as one or more R1 or R2 patents and patent applications (i.e., not asserted or specifically mentioned, but, as evidenced by its class code, may have been infringed or needed to be licensed by the licensee); and Category R4: all other patents and patent applications included in the Portfolio Monetization. Portfolio Profit will be allocated among the patents and patent applications included in the Portfolio Monetization according to the following formula (except, and to the extent, a Portfolio Monetization specifically assigns allocations otherwise): P = R * (VA/PN) Where: P = Portfolio Profit allocated to each patent and/or patent application included in a Portfolio Monetization in one of the four categories R = Portfolio Profit VA = Value Allocation for that patent category (see below) PN = Aggregate number of patents or patent applications from that category included in the Portfolio Monetization The Value Allocations for the four categories are: R1 = 55% R2 = 27.5% R3 = 13.75% R4 = 3.75%   SCHEDULE 2.3 -------------------------------------------------------------------------------- EXHIBIT A COMMON INTEREST AGREEMENT THIS COMMON INTEREST AGREEMENT (“Agreement”) is entered into between the undersigned legal counsel, for themselves and on behalf of the parties they represent (as indicated below).   1. Background. 1.1 Invention Law Group, P.C. and IV Digital Multimedia Inventions, LLC, a Delaware limited liability company (collectively the “IV Entities”), and Digimarc Corporation (“Digimarc”) (the IV Entities and Digimarc are sometimes hereafter referred to herein as a “party” or the “parties”), have entered into a Patent License Agreement and other transaction agreements with respect to certain patents (including their patent applications filed or to be filed throughout the world). This transaction will at least generate patent prosecution, patent portfolio monetization and patent licensing work (the “Patent Matters”). 1.2 The parties have a common interest concerning the Patent Matters and have agreed to treat their communications and those of their respective legal Counsel (“Counsel”) concerning the Patent Matters as protected by the common interest privilege. Furtherance of the Patent Matters requires the exchange of proprietary documents and information, the joint development of legal strategies and the exchange of attorney work product developed by the parties and their respective Counsel.   2. Common Interest. 2.1 The parties have a common, joint and mutual legal interest in cooperating with each other, to the extent permitted by law, to share information that one party asserts is protected by the attorney-client privilege and/or by the work product doctrine with respect to the Patent Matters. The parties shall cause any Counsel who may participate in this Agreement to be bound by its terms. 2.2 In order to further their common interest, the parties and their Counsel may exchange their own privileged and work product information, orally and in writing, including, without limitation, factual analyses, mental impressions, legal memoranda, source materials, draft legal documents, prosecution history files, analysis of the validity or infringement of patent claims and other information (hereinafter “Common Interest Materials”). The sole purpose for the exchange of the Common Interest Materials is to support the parties’ common interest with respect to the Patent Matters. Any Common Interest Materials exchanged shall continue to be protected under all applicable privileges and no such exchange shall constitute a waiver of any applicable privilege or protection.   3. Relationship; Additions; Termination. 3.1 This Agreement does not create any agency or similar relationship among the parties. Neither party nor their respective Counsel has the authority to waive any applicable privilege or doctrine on behalf of any other party. 3.2 Nothing in this Agreement affects the separate and independent representation of each party by its respective Counsel or creates an attorney client relationship between the Counsel for a party and the other party to this Agreement. 3.3 This Agreement shall continue until the earlier of: (a) the end of the term, or termination by either party, of the Patent License Agreement; or (b) until such time as either party exercises its ability to withdraw from and terminate the Agreement by thirty (30) days written notice if, in either parties’ reasonable judgment, the interests of the parties are no longer sufficiently aligned to have a common interest concerning the Patent Matters. 3.4 Notwithstanding termination, this Agreement shall continue to protect all Common Interest Materials disclosed prior to termination. Sections 3 and 4 shall survive termination of this Agreement.   4. General Terms. 4.1 This Agreement is governed by the laws of the State of Washington, without regard to its choice of law principles to the contrary. In the event any provision of this Agreement is held by any court of competent jurisdiction to be illegal, void or unenforceable, the remaining terms shall remain in effect. Failure of either party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. 4.2 The parties agree that a breach of this Agreement may result in irreparable injury, that money damages would not be a sufficient remedy and that the disclosing party shall be entitled to seek equitable relief, including injunctive relief, as a non-exclusive remedy for any such breach. 4.3 Notices given under this Agreement shall be given in writing and delivered by messenger or overnight delivery service to a party and their respective Counsel at their last known address, and shall be deemed to have been given on the day received. 4.4 This Agreement is effective and binding upon each party as of the date it is signed by or on behalf of a party and may be amended only by a writing signed by or on behalf of each party. This Agreement may be executed in counterparts. Any signature reproduced or transmitted via email of a .pdf file, photocopy, facsimile or other process of complete and accurate reproduction and transmission shall be considered an original for purposes of this Agreement.     EXHIBIT A -------------------------------------------------------------------------------- This Agreement is being executed by each of the undersigned Counsel with the fully informed authority and consent of the respective party it represents.   Counsel for Digimarc Corporation By:     Robert Chamness Chief Legal Officer and Secretary October 5, 2010   Counsel for Invention Law Group, P.C. By:       John Bove Date:       Counsel for IV Digital Multimedia Inventions, LLC By:       Thomas J. Hall Date:     [Signature Page to Common Interest Agreement]   EXHIBIT A -------------------------------------------------------------------------------- EXHIBIT C JOINT PRESS RELEASE LOGO [g154073g10i43.jpg] Company Contacts: Bruce Davis Chairman and CEO 503-469-4624 Bruce.Davis@diqimarc.com Scott Liolios or Matt Glover Liolios Group, Inc. Investor Relations for Digimarc 949-574-3860 info@liolios.com DRAFT FOR IMMEDIATE RELEASE Digimarc Partners with Intellectual Ventures to Expand Patent Licensing Program Beaverton, Ore, -October 5, 2010 — Digimarc Corporation (NASDAQ: DMRC) has entered into a long-term relationship with Intellectual Ventures™ (IV) to expand Digimarc’s patent licensing program and broaden adoption of its proprietary technologies. Pursuant to the agreement, Digimarc has exclusively licensed the right to sublicense a substantial portion of its patent assets to IV in exchange for various strategic and financial benefits. The key objectives of the relationship for Digimarc are to:     •   Materially advance progress toward realization of its vision and mission     •   Significantly expand the scope of its license program     •   More effectively monetize its patent assets     •   Encourage large scale adoption of its technologies by industry leaders     •   Improve the company’s financial performance     •   Increase the scale and rate of growth of its software and services business     •   Lay a foundation for continuing innovation Important financial aspects of the agreement for Digimarc include:     •   A license issue fee of $36 million, paid to Digimarc in increasing quarterly installments over three years     •   20% of the profits generated from the IV licensing program     •   IV assumes responsibility for approximately $1 million per year in prosecution and maintenance costs previously borne by Digimarc   EXHIBIT C --------------------------------------------------------------------------------   •   A minimum of $4 million of paid support over five years from Digimarc to assist IV in maximizing the value of the licensed assets     •   A royalty-free grant-back license to the licensed patents to continue Digimarc’s existing business related to those assets, including maintaining and renewing existing patent licenses, and providing software and services The Company and its auditors have not yet fully determined how the transaction should be accounted for. “This partnership is a huge step forward for Digimarc toward realizing its vision of teaching computers to see, hear and understand,” said Digimarc’s chairman and CEO Bruce Davis. “We believe that these capabilities are fundamental to the continuing evolution of more intuitive and pervasive computing that will dramatically change the meaning of computers in our lives. This partnership with IV is a remarkable opportunity for a company like Digimarc, with breakthrough technologies, but limited means to efficiently propagate its technologies throughout addressable markets. IV’s scale and expertise is well suited, we believe, to accelerating the licensing of our inventions on a global basis, faster than we could ever contemplate achieving alone. We are looking forward to a long and successful collaboration.” Vincent Pluvinage, head of strategic acquisitions and private equity for Intellectual Ventures, added: “Intellectual Ventures recognized that inventions made by Digimarc’s inventors during the last decade are increasingly valuable to many companies involved in leveraging both traditional (analog) and digital ways to distribute multi-media content, including using increasingly powerful smartphones and other network-enabled products and services. We hope these companies will leverage Digimarc’s know-how and technologies, as well as license relevant patent rights from Intellectual Ventures. Intellectual Ventures is making a significant financial investment in these patented inventions, helping Digimarc to continue creating new innovations and supporting the adoption of the patented ones.” Digimarc management will host a conference call later today to discuss this development in more detail. Please see below for more information. In other news, the Company advises that a declaratory judgment action has been filed against Digimarc in the United States District Court in Delaware by Verance Corporation, a licensee, alleging the invalidity of 22 patents held by Digimarc and other matters. Verance Corp. v. Digimarc Corp., 1:10-cv-00831-UNA. The Company has not been served, but a copy of the Complaint is posted on our home page at www.diqimarc.com. Based on preliminary analysis, the Company anticipates that third quarter revenues will be lower than in the past three quarters because Verance did not make their anticipated quarterly payment due to this litigation and a federal contract was deferred until the fourth quarter. Third quarter expenses will also be higher due to professional fees for services associated primarily with the IV transaction and new product initiatives. Conference Call Digimarc will hold a conference call later tomorrow prior to the opening of the market (October 6, 2010) to discuss the partnership. Chairman and CEO Bruce Davis and CFO Mike McConnell   EXHIBIT C -------------------------------------------------------------------------------- will host the call starting at 8:30 a.m . Eastern time (5:30 a.m. Pacific time). A question and answer session will follow management’s presentation. The call will be simulcast via a link available on Digimarc’s home page at www.diqimarc.com. and will be available for replay until October 20, 2010. Thereafter, the webcast will be archived at www.diqimarc.com/investors/events.asp. About Intellectual Ventures Founded in 2000, Intellectual Ventures (IV) is the global leader in the business of invention. IV collaborates with leading inventors, partners with pioneering companies, and invests both expertise and capital in the process of invention. IV’s mission is to energize and streamline an invention economy that will drive innovation around the world. For more information, visit www.intellectualventures.com. About Digimarc Digimarc Corporation (NASDAQ:DMRC), based in Beaverton, Oregon, is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects. The embedded digital IDs are imperceptible to humans, but not to computers, networks and devices like mobile phones, which can now use cameras and microphones as sensory inputs to “see, hear and understand” the world around them within the context of their environment. Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing, and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information, please visit www.digimarc.com . Forward-looking Statements With the exception of historical information contained in this release, the matters described in this release contain various “forward-looking statements.” These forwardlooking statements include statements regarding Digimarc’s objectives in entering into the relationship with IV, Digimarc’s realization of the intended benefits of its relationship with IV, and other statements identified by terminology such as “will,” “should,” “expects,” “estimates,” “predicts” and “continue” or other derivations of these or other comparable terms. These forward-looking statements are statements of management’s opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied from the statements in this release as a result of the failure of Digimarc’s relationship with IV to achieve its intended benefits, or changes in economic, business and/or regulatory factors. More detailed information about risk factors that may affect actual results is set forth in the company’s Form 10-K for the year ended December 31 , 2009 and in subsequent periodic reports filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date of this release. Except as required by law, Digimarc underlakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release.   EXHIBIT C
Exhibit 10.1 AMERICAN ITALIAN PASTA COMPANY CASH BONUS PLAN 1. Purpose. The purpose of the Cash Bonus Plan (the "Plan") is to enhance American Italian Pasta Company's (the "Company") ability to attract, motivate, reward, and retain key employees, to strengthen their commitment to the success of the Company and to align their interests with those of the Company's shareholders by providing additional compensation based on the achievement of performance objectives. To this end, the Plan provides a means of rewarding participants based on the performance of the Company. 2. Committee. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"). Each member of the Committee must be an "outside director" within the meaning of the Regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). 3. Eligible Employees. The eligible employees who will participate in the Plan for any Performance Period (defined below) and the performance goals for any Performance Period will both be designated by the Committee in its sole discretion not later than the earlier of the end of the first 25% of the Performance Period or 90 days after the commencement of the Performance Period. Those eligible employees who are participants with respect to any period are hereinafter referred to as "Participant". The fact that an employee is eligible for any year does not entitle that employee to be eligible for any other year. 4. Maximum Bonus. The maximum amount of compensation that may be paid to a Participant pursuant to this Plan is $2,000,000 per year. All amounts payable under the Plan with respect to a Performance Period shall be paid in a single lump sum at the direction of the Compensation Committee, provided that all such amounts shall be paid no later than the last day of the "applicable 2(1)/2 month period." The "applicable 2(1)/2 month period" is the period ending on the later of the 15th day of the third month following the end of the Participant's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture or the 15th day of the third month following the end of the Company's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. 5. Performance Goals. Awards to Participants will be based on performance goals, which shall provide for a targeted level or levels of achievement using one or more of the following predetermined measurements determined by the Committee (in its sole discretion) to be applicable to a Participant with respect to an Award, and such measures must be defined by the Committee to be objectively determinable so that a third party having knowledge of the relevant performance results could calculate the amount to be paid: (a) earnings (either in the aggregate or on a per-share basis); (b) net income (before or after taxes); (c) operating income or margin; (d) cash measures, including cash flow (operating cash flow or cash position) and cash generation; (e) return measures (including return on investment, assets, equity or sales); (f) earnings before or after taxes, before or after interest and before or after depreciation and amortization; (g) gross revenues; (h) share price or performance (including growth measures and total stockholder return or attainment by the Shares of a specified value for a specified period of time); (i) capital expenditure containment or improvement in capital structure; (j) productivity; (k) expenses (operating expense, expense management, expense ratios, expense efficiency ratios, other expense measures of cost containment, including, medical casualty and workers compensation costs); (l) net economic value; (m) market share; (n) dividends paid or payable; (o) borrowing levels, leverage ratios, credit rating, accounts receivable, inventory, lost time, accidents or safety; (p) financing (issuance of debt or equity) or refinancing; (q)completion of transactions intended to enhance the financial performance of the Company; (r) measures of customer satisfaction, acquisition or retention; (s) employee relations (surveys, employee claims) and retention, generally or with respect to any category of employees; (t) planning accuracy measured by comparing planned results to actual results; (u) sales of particular products or services; (v) supervision of litigation and information technology; (w) compliance goals (social goals, diversity goals, safety programs, regulatory or legal compliance). Such measurements may be designated by the Committee to include or exclude extraordinary and/or other items and may be measured against an absolute target, change in the measure, or the performance of the same measure by one or more peer companies or indices designated by the Committee. Such measurements may be designated by the Committee to be determined on a Company-wide basis, with respect to any one or more business units, products or other portions of the Company, or on a per share (diluted or not diluted) basis. The Performance Goals may differ from Participant to Participant and from award to award. The Committee shall designate the period for which the Performance Goals will be measured (the "Performance Period"). 6. Certification. Prior to payment of a bonus with respect to a Performance Period, the Committee must certify in writing that the performance goals and other material terms of the Plan for the Performance Period have been met and satisfied. -------------------------------------------------------------------------------- 7. Vesting. A Participant shall forfeit an award if the Participant is not employed by the Company in a position that requires the performance of substantial services on the date the bonus would otherwise be paid by the Company, except that (a) the Committee may specify otherwise; and (b) if the Participant dies or becomes disabled during the period beginning on the first day of the Performance Period and ending on the date of payment of the bonus for such Performance Period, then such Participant shall be entitled to the pro rata share of the bonus for such Performance Period that he or she would have received if he or she had remained employed in a position that requires the performance of substantial services. Such pro rata share will be the number of full days during the Performance Period that precede the date of death or disability, divided by 365. "Disability" or "Disabled" shall mean that the Participant is: (1) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (2) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant's employer. 8. Clawback. If the Company is required to restate any of its financial statements filed with the Securities and Exchange Commission, other than restatements due solely to facts external to the Company and its affiliates such as a change in accounting principles or a change in securities laws or regulations with retroactive effect; then the Committee may direct the Company to seek to recover or require reimbursement of any bonus paid pursuant to this Plan to the extent all or part of the Performance Period to which such bonus related was included in the period(s) covered by the restated financial statements, and such bonus exceeded the amount that would have been paid for such Performance Period if it had been based upon the restated financial statements. In exercising its discretion to cause the Company to seek to recover or require reimbursement of any amounts as a result of any restatement pursuant to this section, the Committee may give consideration to, among other relevant factors, the level of Participant's responsibility or influence, as well as the level of others' responsibility or influence, over the judgments or actions that gave rise to the restatement. 9. Amendment or Termination. The Committee may amend or terminate the Plan at any time in its discretion; provided, however, that no amendment or termination of the Plan may affect any award made under the Plan prior to that time. 10. Shareholder Approval. This Plan is being submitted to the shareholders of the Company for approval, in accordance with section 162(m) of the Code. 11. Books and Records; Expenses. The books and records to be maintained for the purpose of the Plan shall be maintained under the supervision and control of the Committee. All calculations and financial accounting matters relevant to this Plan shall be determined in accordance with GAAP, except as otherwise directed by the Committee. All expenses of administering the Plan shall be paid by the Company from the general funds of the Company. 12. Beneficiaries. Each Participant shall have the right to designate in writing a beneficiary (a "Beneficiary") to succeed to his right to receive payments hereunder in the event of his death. In case of a failure of designation or the death of a designated Beneficiary without a designated successor, payments shall be made to the Participant's estate. Beneficiaries may be changed by the Participant in writing without the consent of any prior Beneficiaries. 13. No Attachment. To the extent permitted by law, the right of any Participant or any Beneficiary in any benefit or to any payment hereunder shall not be subject in any manner to attachment or other legal process for the debts of such Participant or Beneficiary; and any such benefit or payment shall not be subject to anticipation, alienation, sale, transfer, assignment or encumbrance. 14. No Liability. No member of the Board or of the Committee and no officer or employee of the Company shall be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to his own fraud or willful misconduct; nor shall the Company be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director, officer or employee of the Company. 15. No Fiduciary Relationship. Nothing contained herein shall be deemed to create a trust of any kind or create any fiduciary relationship. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. 16. No Guarantee of Employment. Nothing contained in this Plan shall be deemed to give any Participant the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Participant, for or -------------------------------------------------------------------------------- without cause, at any time, regardless of the effect which such discharge shall have upon such individual as Participant in the Plan. 17. Governing Law. This Plan shall be construed in accordance with the laws of the State of Missouri. 18. Interpretation of Plan. The Committee shall have sole and absolute discretion and authority to interpret all provisions of this Plan and to resolve all questions arising under this Plan; including, but not limited to, determining whether any person is eligible under this Plan, whether any person shall receive any payments pursuant to this Plan, and the amount of any payments to be made pursuant to this Plan. Any interpretation, resolution or determination of the Committee shall be final and binding upon all concerned and shall not be subject to review. 19. Withholding. Prior to the delivery of any payment pursuant to this Plan, the Company shall have the power and the right to deduct or withhold or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant's FICA obligation) required to be withheld with respect to such delivery. 20. Not Exclusive. The Company may provide for and pay bonuses outside the terms of this Plan.
[a101executedewbhartmanvr001.jpg] MASTER CREDIT FACILITY AGREEMENT DATED: DECEMBER 27, 2018 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr002.jpg] MASTER CREDIT FACILITY AGREEMENT THIS MASTER CREDIT FACILITY AGREEMENT is made and entered into as of December 27, 2018 (the "Effective Date") by East West Bank, a California state-chartered bank having an address at 9090 Katy Freeway, 3rd Floor, Houston, Texas 77024 ("Lender"), and Hartman vREIT XXI Operating Partnership L.P., a Texas limited partnership, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman Partnership"), Hartman Spectrum, LLC, a Texas limited liability company, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman Spectrum"), Hartman 11211, LLC, Texas limited liability company, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman 11211"; and Hartman Spectrum, Hartman 11211 and Hartman Partnership are collectively referred to herein as "Borrowers" and each sometimes individually referred to as a "Borrower"), and Hartman vREIT XXI, a Maryland corporation, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Guarantor"; and Borrowers and Guarantor are collectively referred to herein as the "Loan Parties", and each sometimes individually referred to as a "Loan Party") RECITALS: A. The Loan Parties have requested that Lender to enter into this Agreement to make a $20,000,000 credit facility available (i) to Borrowers to purchase two Initial Properties (as hereinafter defined), (ii) to Additional Borrowers (as hereinafter defined) to purchase or re- finance additional tracts of land approved by Lender (the use of the Loan funds as set forth in (i) and (ii) immediately preceding are hereinafter referred to as "Acquisition/Refinance Purposes") and (iii) make funds available to the parties described in (i) and (ii) immediately preceding for future Operational Purposes (as hereinafter defined), all as described in this Agreement. Lender is willing to make such credit facility available to Borrower upon and subject to the provisions, terms, and conditions hereinafter set forth. B. Subject to and upon the terms and conditions of this Agreement, Lender has agreed to lend to Borrowers the amounts herein described for the purposes set forth below. AGREEMENT NOW, THEREFORE, in consideration of the premises, the covenants, representations, warranties and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: 1 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr003.jpg] ARTICLE ONE DEFINITIONS AND USE OF TERMS 1.1 Definitions. As used in this Agreement, all exhibits and schedules hereto and in any note, certificate, report or other Loan Documents made or delivered pursuant to this Agreement, the following terms will have the meanings given such terms in Article One. "Acquisition/Refinance Purposes" is defined in the Recitals paragraph of this Agreement. "Additional Borrowers" means one or more special purpose entities which (i) own and will own no other assets of any kind other than such Additional Borrower's Prospective Property, (ii) are direct wholly owned subsidiaries of Hartman Partnership and indirect subsidiaries of Guarantor, (iii) together with the Loan Parties will submit an Application for Advance for approval as a borrower under this Loan (iv) Lender has approved such party as a new additional borrower under the Loan, Note and Loan Documents and has approved the Prospective Property such party wishes to purchase or re-finance as collateral for the Loan and (iv) at or prior to the Advance of Loan funds to such party, has executed and delivered to Lender the Joinder Agreement and other Closing Deliveries regarding the Loan, the Note, the Loan Documents and the Prospective Property required by Lender. "Advance" means a disbursement by Lender, whether by journal entry, deposit to Borrowers or an Additional Borrower's account, check to third party or otherwise of any of the proceeds of the Loan, any insurance proceeds or any protective advance made under Section 8 of a Deed of Trust or any other Loan Document. "Agreement" means this Master Credit Facility Agreement, as the same may from time to time be amended, supplemented, replaced or restated. "Application for Advance" means that certain package of documents, materials and information listed on Exhibit A below together with such other information supporting such Application for Advance as requested by Lender. "Borrowers" means the Persons identified as such in the introductory paragraph hereof as Borrowers, and each of their successors and assigns. "Borrower's Equity" means an amount, in the form of cash or other assets approval by Lender, which equals at least fifty percent (50%) of the lesser of the Prospective Property's appraised fair market value or the Purchase Price of the Prospective Property. Borrower's Equity is not a requirement in the case of an Operation Draw Request for an Operational Purpose. "Breach" is defined in Section 2.5(b). 2 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr004.jpg] "Business Day" means a day other than a Saturday, Sunday or a day on which banks in the State of Texas are authorized to be closed. Unless otherwise provided, the term "days" means calendar days. "Closing Deliveries" is defined in Section 2.6. "Closing Statement" means a buyer/borrower closing statement for a Prospective Property issued by the Title Company issuing to Lender the Title Policy for such Property upon purchase or re-finance by the Additional Borrower approved by Lender, and which closing statement shall be executed by such Additional Borrower as the purchaser or re-financing borrower of the Prospective Property, show the final Purchase Price or re-finance amount of the Prospective Property and all of the Additional Borrower's closing costs for the Prospective Property, and shall otherwise be in form and substance acceptable to Lender in Lender's sole discretion. "Committed Sum" is defined in Section 2.1. "Deeds of Trust" means the Initial Deeds of Trust and any deed of trust encumbering a Mortgaged Property to secure all or any portion of the Loan, executed and delivered to Lender by any Borrower or Additional Borrower, and which Additional Borrower deed of trust has been approved by Lender to allow an Advance hereunder for the purchase or re-finance of such Prospective Property. "Disposition" means any sale, conveyance, transfer, trade, or other disposition of (a) a Mortgaged Property or any portion thereof or (b) any direct or indirect ownership interest in a Loan Party or Additional Borrower (other than sales of stock or other ownership interest for Hartman Partnership or Guarantor purchased pursuant to a valid registration statement filed and made effective with the Securities and Exchange Commission or otherwise sold pursuant to a valid exemption from registration requirements, such interest not to exceed twenty percent (20%) in the aggregate of the entire stock or ownership interest in any such entity in any single transaction or series of transactions occurring within any twelve (12) month period) without the prior written consent of Lender. "Effective Date" means the date set forth in the introductory paragraph hereof. "Default" has the meaning set forth in Article Six hereof. "Financial Statements" means all balance sheets, income statements, statements of profit and loss, statements of cash flow, statements of sources and uses of funds, and other financial data, statements and reports (whether of Borrowers, Additional Borrowers, any Guarantor, or any other Person or otherwise) which are required to, have been, or may from time to time hereafter, be furnished to Lender, for the purposes of, or in connection with, an Application for Advance, any Deeds of Trust or this Agreement. 3 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr005.jpg] "Guarantor" means the Person identified as such in the introductory paragraph hereof as Guarantor, and each of its successors and assigns together with any Person who from time to time guarantees the payment or performance of all or any part of the Loan. "Guaranty" means each guaranty agreement executed by a Guarantor, including, but not limited to the Initial Guaranty described in Section 2.3(f), guaranteeing all or any portion of the Loan, as such may be amended, restated, supplemented or otherwise modified from time to time. "ICR" is defined in the Note, except that when the definition of ICR is applied to a Prospective Property its terms shall apply to such Prospective Property and the owners thereof immediately prior to the acquisition or refinance. "Initial Deeds of Trust" is defined in Section 2.3(d). "Initial Properties" is defined in Section 2.3. "Joinder Agreement" means an agreement in form and substance as set forth on Exhibit F attached hereto and made part hereof where an Additional Borrower joins and becomes a borrower under the Loan, the Note, this Agreement and all other Loan Documents. "Lender" means East West Bank, a California state-chartered bank and its successors and assigns, whether or not such successor and/or assign is a financial institution. "Lien" means any valid and enforceable interest in any property, whether real, personal or mixed, securing an indebtedness, obligation or liability owed to or claimed by any Person other than the owner of such property, whether such indebtedness is based on the common law or any statute, ordinance or contract and including, but not limited to, liens created by or pursuant to a security interest, pledge, mortgage, assignment, conditional sale, trust receipt, lease, consignment or bailment for security purposes. "Loan" means the collective reference to all Advances made by Lender to Borrowers or Additional Borrowers pursuant to the Note or this Agreement together with any other sums advanced by Lender under any of the other Loan Documents, including but not limited to any Deed of Trust. This Loan is a revolving loan and, subject to the terms of this Agreement, all principal amounts repaid prior to the Maturity Date may be re-borrowed until the Maturity Date when all principal, all accrued and unpaid interest and other sums owing under any of the Loan Documents shall be due and payable. "Loan Documents" means this Agreement, the Note, each Deed of Trust, each Guaranty, and any other agreements, instruments and documents evidencing, securing, guaranteeing or pertaining to the Loan as shall from time to time be executed and delivered to Lender by any Loan Party or any Additional Borrower or any other party pursuant to this Agreement, including, without limitation, each Application for Advance, any future amendments hereto, or restatements hereof, or pursuant to the terms of any of the other loan documents, together with any and all 4 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr006.jpg] renewals, extensions, and restatements of, and amendments and modifications to, any such agreements, documents, and instruments. "Maximum Lawful Rate" means the maximum non-usurious rate of interest (or, if the context so requires, an amount calculated at such rate) which Lender is allowed to contract for, charge, take, reserve, or receive in this transaction under applicable federal or state (whichever is higher) law from time to time in effect after taking into account, to the extent required by applicable federal or state (whichever is higher) law from time to time in effect, any and all relevant payments or charges under the Loan Documents. "Maximum Property Advance Amount" means the lesser of: (x) fifty percent (50%) of the Purchase Price of a Prospective Property as shown on the both the Purchase Contract and the Closing Statement for such Prospective Property, approved by Lender in Lender's sole discretion, for such Prospective Property; or (y) fifty percent (50%) of the appraised value of such Prospective Property as shown on the MAI appraisal for such Prospective Property delivered by Borrowers and Additional Borrowers to Lender and approved by Lender in Lender's sole discretion or (z) the then current Remaining Committed Sum; provided, however, for an Application for Advance for a refinance of a Prospective Property and not an acquisition of a Prospective Property, sub-clause (x) shall not be included in the calculation as there is no Purchase Contract. "Mortgaged Property" means a Property which is then currently encumbered by the Lien of a Deed of Trust in favor of Lender securing the Loan and which Deed of Trust has been filed of record in the appropriate real property records of the county in which such Property is located. The Initial Properties are part of the Mortgaged Properties. "Obligated Party" means the Borrowers, each Additional Borrower, each Guarantor and any other Person who is or becomes party to or makes any agreement, instrument or document that guarantees or secures payment and performance of any of the Loan. "Operational Draw Request" is defined in Section 2.5(b). "Operational Purposes" is defined in Section 2.5(a). "Permitted Encumbrances" means the exceptions to title for a Mortgaged Property as defined and permitted for that particular Mortgaged Property under the Deed of Trust which encumbers that particular Mortgaged Property, it being agreed by Borrowers and each Additional Borrower that a Permitted Encumbrance allowed under one Deed of Trust is not a Permitted Encumbrance allowed for different Deed of Trust unless such different Deed of Trust specifically allows such Permitted Encumbrance. "Person" means any individual, firm, corporation, limited liability company, association, partnership, joint venture, trust, other entity, unincorporated organization or governmental authority. 5 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr007.jpg] "Property" means a tract of land located in the State of Texas, constituting its own separate tax lot, together with all of the improvements and all other property, both real and personal, located on, under and above the land. "Prospective Property" means (i) a Property that an Additional Borrower desires to purchase with a portion of the purchase funds advanced under the Note pursuant to terms of this Agreement, or (ii) a Property that an Additional Borrower wholly owns and desires to re-finance with a portion of such re-finance funds advanced under the Note pursuant to terms of this Agreement, and (iii) in both cases, the Loan Parties and such Additional Borrower has submitted to Lender an Application for Advance regarding such Prospective Property for Lender's review and approval, in Lender's sole discretion, pursuant to the terms of this Agreement together with all materials and other requirements required for an Application for Advance. "Prospective Property Closing Date" means the later of actual calendar day that (a) a Prospective Property is purchased or re-financed by an Additional Borrower, which must be no earlier than thirty (30) days nor no later than ninety (90) days after Lender receives the Application for Advance for such Prospective Property, unless an earlier or later date is approved in writing by Lender, in Lender's sole discretion and (b) the deed and Deed of Trust for such Prospective Property is filed of record in the real property records of the county in which the Prospective Property is located. "Purchase Contract" means a purchase and sale contract for a Prospective Property entered into or assumed by an Additional Borrower and delivered to Lender as part of an Application for Advance for such Prospective Property. "Purchase Price" means the purchase price under a Purchase Contract to be paid by an Additional Borrower for the Prospective Property covered by such Purchase Contract. "Request for Advance" means a written Request for Advance for Acquisition/Refinance Purposes in form and substance as set forth on Exhibit E attached hereto and made part hereof, , executed delivered by Borrower, each Guarantor and each Subsidiary to Lender. "Remaining Committed Sum" means an amount equal to the Committed Sum less (a) the then current unpaid principal balance under the Note, this Loan Agreement, any Deed of Trust or any other Loan Document and (b) any amount requested by Borrowers or Additional Borrowers for an Acquisition/Refinance Purpose or an Operational Purpose and Lender has approved to advance pursuant to the terms of this Loan Agreement but has not yet funded. "Submission Date" means the date the Loan Parties and any Additional Borrowers submit to Lender either an Operation Draw Request for Operational Purposes or a Request for Advance for an Acquisition/Refinance Purposes. "Survey" means an ALTA/ACSM "Class A" Land Title survey (or its Texas equivalent)of the Land of a Prospective Property consisting of a plat and field notes, prepared by 6 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr008.jpg] a licensed surveyor acceptable to Lender and the applicable Title Company which survey shall: (a) reflect the actual dimensions of the Prospective Property, the gross and net area of the Prospective Property, the location of any easements, rights-of-way, setback lines, encroachments or overlaps thereof or thereover and the outside boundary lines of any improvements located thereon; (b) identify by recording reference any easements, setback lines, adjacent streets or right of ways or other matters referred to in the title commitment for the Prospective Property issued by the applicable Title Company; (c) include the surveyor's registration number and seal and the date of the Survey; (d) include a surveyor's certificate acceptable to Lender within its reasonable discretion; (e) reflect that the Prospective Property has access to and from a publicly dedicated street, roadway or highway; (f) be sufficient to cause the applicable Title Company to delete the "survey exception" in Schedule B of the Title Policy to the extent permitted by the rules of the State Board of Insurance; and (g) reflect the area, including the boundaries thereof, within the Prospective Property that has been designated by the Federal Insurance Administration, the Army Corps of Engineers or any other Governmental Authority as being subject to special or increased flood hazards. The Survey must also contain the certification set forth on Exhibit B from the surveyor. "Title Company" means a title company acceptable to Lender and acting as the escrow agent under the Purchase Contract and issuer of the Title Policy for a Prospective Property. "Title Policy" means a TLTA mortgagee loan policy (or policies) of title insurance, and any reinsurance agreement (or agreements) insuring title on a Mortgaged Property issued by the Title Company acting as escrow agent under the Purchase Contract or a refinancing for such Mortgaged Property in accordance with the requirements of Exhibit C. "UCC" means the Uniform Commercial Code of the State of Texas or Delaware or other applicable jurisdiction where a Borrower or an Additional Borrower is formed or incorporated, as such code may be amended and in effect from time to time. ARTICLE TWO COMMITMENT TO LEND; ADVANCES 2.1 Commitment to Lend. Subject to and upon the terms, covenants, and conditions hereof, Lender hereby agrees to lend to Borrowers and Additional Borrowers approved by Lender an aggregate sum up to but not in excess of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00) (the "Committed Sum"); provided, however, Borrowers and Additional Borrowers have, for all Advances for Acquisition/Refinance Purposes, contributed Borrower's Equity to the purchase or re-finance of each Prospective Property prior to or simultaneously with the Advance of Loan funds under this Agreement to purchase or re-finance such Prospective Property. Lender may, in Lender's sole discretion, disburse Loan proceeds directly to third parties, including, but not limited to, Title Companies, to pay a portion of the Purchase Price or refinance loan amount of such Prospective Property together with other costs or expenses required to be paid by Borrowers or Additional Borrowers pursuant to this Agreement. All disbursements of Loan proceeds directly by Lender to third parties, including, 7 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr009.jpg] but not limited to, Title Companies, to pay costs or expenses required to be paid by Borrowers or Additional Borrowers pursuant to this Agreement, shall constitute Advances to Borrower. 2.2 Interest and Repayment. Interest shall accrue on the Loan at the rate specified in the Note, shall be computed on the unpaid principal balance thereof which exists from time to time and shall be computed with respect to each Advance only from the date of the Advance. Repayment of the Loan is governed by the terms of the Note and other Loan Documents. 2.3 Funding the Initial Advance on the date of this Agreement. Prior to the date of this Agreement, Borrowers submitted to Lender Financial Statements, due diligence materials and other items listed on Exhibit A in their Applications for Advance covering the purchase of (i) an office building located at 613 Northwest Loop 410 located in San Antonio, Texas 78216 (the "San Antonio Property"), and (ii) an office building located at 11211 Katy Freeway located in Houston, Texas 77079 (the "Houston Property"; and the San Antonio Property and the Houston Property are collectively referred to as the "Initial Properties" and sometimes each individually is referred to as an "Initial Property"). Lender approved the Applications for Advance and on the date hereof the Loan Parties have originally executed and delivered the following to Lender or its counsel: (a) This Agreement; (b) Revolving Promissory Note in the original principal amount of $20,000,000.00 executed by the Borrowers and payable to the order of Lender; (c) Deed of Trust, Assignment of Rents and Security Agreement executed by Hartman 11211, as grantor, to Charles E. Aster, as trustee, for the benefit of Lender encumbering the Houston Property (the "11211 DOT"); (d) Deed of Trust, Assignment of Rents and Security Agreement executed by Hartman Spectrum, as grantor, to Charles E. Aster, as trustee, for the benefit of Lender encumbering the San Antonio Property (the "Spectrum DOT"; and together with the 11211 DOT collectively referred to herein as the "Initial Deeds of Trust"); (e) Environmental Indemnity Agreement executed by the Loan Parties for the benefit of Lender (the "Initial EIA"); (f) Guaranty executed by Guarantor in favor of Lender (the "Initial Guaranty"); 8 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr010.jpg] (g) Affidavit of Lou Fox regarding the Loan Parties and Initial Properties (the "Initial Affidavit"); (h) UCC-1 Financing Statements authorized by Hartman Spectrum and Hartman 11211, as debtors, to Lender, as secured party; and (i) Unanimous consents, resolutions and certificates of officers for each Loan Party and Hartman Income REIT Management, Inc., a Texas corporation ("Manager"), which Manager is the limited liability company manager for both Hartman Spectrum and Hartman 11211 pursuant to their separate operating agreements (collectively, the "Initial Consents and Officer's Certificates"). The documents listed in subclauses (a)-(i) immediately preceding are hereinafter referred to as the "Initial Loan Documents" and the Loan Parties agree that the Initial Loan Documents are part of and also contained within the meaning of the defined term "Loan Documents". 2.4 Procedures for to obtain Advances of the Remaining Committed Sum. (a) The Loan Parties and Lender acknowledge that the Note is a revolving promissory note and, pursuant to the terms of the Note, the amount of the Remaining Committed Sum which has not been Advanced may (i) increase as Advances are made under the Note and (ii) decrease as principal payments (including, but not limited to, principal payments made under the partial release provisions of Article Seven of this Agreement) are received by Lender from Borrowers or Additional Borrowers. (b) The Loan Parties and Lender agree that no Advances under the Loan may be requested by Borrowers or Additional Borrowers for purposes other than Operation Purposes and/or Acquisition/Refinance Purposes. 2.5 Conditions to each Advance for an Operational PurposeBorrowers and Additional Borrowers may, pursuant to the terms of the Note, apply for Advances of the Remaining Committed Sum for the purpose of funding (i) operational needs for the Initial Properties, (ii) operational needs for additional Properties which, subject and pursuant to the terms of this Agreement, become Mortgaged Properties, and (iii) general corporate purposes of the Borrowers and Additional Borrowers (the purposes in sub-clauses (i) through (iii) immediately above being herein referred to collectively as, "Operational Purposes"). (b) Provided (i) there is no Default then existing, (ii) there is no breach then existing by any Loan Party under the Note, this Agreement, any Deed of Trust or any other Loan Document for which a cure period is allowed under any of the Loan Documents but such breach has not yet been cured by Borrowers or Additional Borrowers (a "Breach"), (ii) the then current ICR for all of the Mortgaged Properties does not then exceed 1.50 and the drawing of the requested Advance or re-advance under the Note will not cause the ICR to exceed 1.50; (iv) 9 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr011.jpg] each of the Loan Parties and Additional Borrowers executes and delivers to Lender a letter requesting an Advance or re-advance under the Note in the form of Exhibit D attached hereto and made part hereof (an "Operational Draw Request"), (v) the amount requested by Borrowers and Additional Borrowers for an Advance or re-advance when added to the unpaid principal balance of the Note then outstanding does not exceed the Committed Sum in the aggregate, and (vi) the liens and security interests of the Deeds of Trust and other Loan Documents encumbering the Mortgaged Properties have not been released or terminated for any reason, except as permitted under Article Seven of this Agreement, Borrowers and Additional may request advances and, in accordance with the provisions of the Note, make payments from time to time. The unpaid balance of the Note shall increase and decrease with each new Advance or payment thereunder, as the case may be. The Note shall not be deemed terminated or canceled prior to the date of its maturity, although the entire principal balance thereof may from time to time be paid in full. (c) Each Advance under this Section 2.5 shall be deemed to be a representation and warranty by the Borrowers and Additional Borrowers to Lender that the conditions specified in this Section 2.5 have been satisfied on or prior to the date of the applicable Advance 2.6 Conditions to each Advance for an Acquisition/Refinance Purpose. Borrowers and Additional Borrowers may, in addition to Advances for Operational Purposes, apply for Advances of the Remaining Committed Sum for Acquisition/Refinance Purposes. As conditions precedent to Lender funding any Advance to the Borrowers and Additional Borrowers for an Acquisition/Refinance Purpose, in addition to all other requirements herein, the Loan Parties and the Additional Borrower which desires to purchase or re-finance a Prospective Property must, for each Prospective Property, deliver to Lender: (i) no later than thirty (30) days prior and no longer than 90 days prior to the scheduled Prospective Property Closing Date for a Prospective Property, an Application for Advance which must (A) satisfy the following below listed requirements of this Section 2.6 and (B) contain all of the items listed in Exhibit A attached hereto and made part hereof, including, but not limited to a Request for Advance for Acquisition/Refinance Purpose in the form of Exhibit E attached hereto and made part hereof for all purposes, each of which items must be in form and substance acceptable to Lender, in Lender's sole discretion; and (ii) on or prior to the Closing Date, all of the documents, items and materials listed in Exhibit B attached hereto and made part hereof for all purposes (the "Closing Deliveries"). All conditions precedent to the obligation of Lender to make any Advances for an Acquisition/Refinance Purpose are imposed solely for the benefit of Lender. The following are additional conditions to each Advance for an Acquisition/Refinance Purpose which Lender, at Lender's option, may waive any of the following or elect not to require any of the following: (a) No Advance for a Prospective Property for an Acquisition/Refinance Purpose shall be made if the Prospective Property, on the Submission Date, has an ICR of more than 1.50 for the twelve (12) month period immediately preceding the Submission Date; (b) No Advance for a Prospective Property for an Acquisition/Refinance Purpose shall be made: (i) for more than the Maximum Property Advance Amount for the Prospective Property which is the subject of the Application for Advance submitted to Lender 10 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr012.jpg] by Borrowers and Additional Borrowers: or (ii) if, on the Prospective Property Closing Date, the amount of such requested Advance, when added to the outstanding principal balance of the Note on Prospective Property Closing Date will cause the outstanding principal balance of the Note to exceed the Committed Sum. (c) The funding of an Advance for an Acquisition/Refinance Purpose shall only occur on the applicable Prospective Property Closing Date. (d) There shall then exist no Default under any Loan Document, including, but not limited to, the Initial Loan Documents, nor shall there have occurred any event which with the giving of notice or the lapse of time, or both, could become a Default; (e) The representations and warranties made in this Agreement and in each Loan Document, including, but not limited to, the Initial Loan Documents, shall be true and correct: (i) on and as of the date on which such representation was made under such Loan Documents, on the date the Application for Advance is submitted to Lender and on the date of each Advance, and such submission of an Application for Advance by the Loan Parties shall constitute the representation and warranty by Loan Parties that such representations and warranties are true and correct at such times as to the Loan Parties; (ii) regarding each new Additional Borrower on the date the Application for Advance is submitted to Lender by such new Additional Borrower and on the date of each Advance, and such submission of an Application for Advance by such Additional Borrower shall constitute the representation and warranty by such Additional Borrower that such representations and warranties are true and correct at such times as to such Additional Borrower. (f) Such Application for Advance submitted by Borrowers and Additional Borrowers to Lender must be (a) actually received by Lender at Lender's office address set forth in the introductory paragraph of this Agreement or by Lender's attorneys at such attorneys' office and (b) Lender and its attorneys have reviewed and approved such Application for Advance, including, but not limited those items listed on Exhibit A attached hereto; (g) Lender and its attorneys have (i) received from Borrowers and Additional Borrowers on or prior to the scheduled Prospective Property Closing Date all of the Closing Deliveries, originally executed by the Loan Parties and Additional Borrowers as applicable, at such parties' sole cost and expense and (ii) reviewed and approved such Closing Deliveries, including, but not limited those items listed on Exhibit B attached hereto; 11 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr013.jpg] (h) Borrowers and Additional Borrowers have contributed Borrower's Equity to the purchase or re-finance of the Prospective Property for which such Advance is sought prior to or simultaneously with the Advance of Loan funds under this Agreement to purchase or re-finance such Prospective Property; (i) All proceeds of previous Advances shall have been spent or used only for the Operational Purposes, as set forth in the Operational Draw Request, or Acquisition/Refinance Purposes as set forth in the Applications for Advance for the applicable Prospective Property. (j) The physical condition of the Prospective Property, the status of title of the Prospective Property, the appraised fair market value of the Prospective Property and all other physical, legal, financial and other due diligence of any kind regarding the Prospective Property, including, but not limited to all of the items listed on Exhibits A and B attached hereto, reviewed by Lender or its attorneys must be acceptable to Lender in its sole discretion. Each Advance under this Section 2.6 shall be deemed to be a representation and warranty by the Borrowers and Additional Borrowers to Lender that the conditions specified in this Section 2.6 have been satisfied on or prior to the date of the applicable Advance. 2.7 No Waiver. No Advance shall constitute a waiver of any condition precedent to the obligation of Lender to make any further Advance or preclude Lender from thereafter declaring the failure of Borrowers and Additional Borrowers to satisfy such condition precedent to be a Default. Lender shall have no obligation to make any Advance or part thereof during the existence of any Default or during the occurrence of any event which with the giving of notice or the lapse of time, or both, could become a Default, but shall have the right and option to do so; provided that if Lender elects to make any such Advance, no such Advance shall be deemed to be either a waiver of the right to demand payment of the Loan, or any part thereof, or an obligation to make any other Advance. 12 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr014.jpg] ARTICLE THREE OPERATING ACCOUNTS Borrowers and Additional Borrowers covenant and agree with Lender that, so long as any amount of the Loan or any obligation of Lender to make any Advances under this Agreement, the Note or any other Loan Documents still remains outstanding, to induce Lender to establish the interest rates provided for in the Note, and if and to the extent permitted by applicable laws, Borrowers and all Additional Borrowers shall use and maintain Lender as its principal depository, including for the maintenance of business, cash management, operating and administrative deposit accounts. For all sums due and payable under the Loan, Lender shall have the right of setoff against any and all sums contained in any such account. ARTICLE FOUR NEGATIVE COVENANTS 4.1 No Disposition or Subordinate Lien Instruments. Borrowers and all Additional Borrowers will not: (a) cause or allow, other than as permitted under Article Seven below, a Disposition to occur without obtaining Lender's prior written consent to the Disposition. (b) Borrowers and all Additional Borrowers will not create, place or permit to be created or placed or through any act or failure to act, acquiesce in the placing of, or allow to remain any Lien regardless of whether such Lien is expressly subordinate to the liens or security interests of the Loan Documents with respect to a Mortgaged Property or any part thereof, other than Permitted Encumbrances shown and listed in the Title Policy for such Mortgaged Property. (c) Borrowers and all Additional Borrowers will not create, place or permit to be created, or placed or through any act or failure to act, acquiesce in the placing of, or allow to remain, any subordinate financing secured by any limited liability company interests, partnership interests, stock or shareholder interest in Borrowers or any Additional Borrowers, including, without limitation, a pledge or similar encumbrance of the direct or indirect ownership interest in any Borrowers or any Additional Borrowers. (d) Borrowers and all Additional Borrowers will not enter into any other title encumbrance of any nature whatsoever against all or any portion of a Mortgaged Property absent obtaining the prior written consent of Lender including, without limitation, any restrictive covenants, condominium declaration, plat, zoning or use restriction, easement or license; provided, however, such consent will not be required for any utility easement granted by Borrowers or any Additional Borrowers to any utility company for an utility easement which runs along the edges of a Mortgaged Property and does not run under any building. 13 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr015.jpg] ARTICLE FIVE DEFAULT The term "Default," as used herein and in the other Loan Documents, shall mean and include the occurrence of any one or more of the following events listed in Sections 5.1 (a)-(c) below: 5.1 Subject to the "PROVIDED HOWEVER" clause set forth below, upon: (a) any Loan Party's or Additional Borrower's breach of any representation, warranty, covenant or agreement of any Loan Party or Additional Borrower under this Agreement, the Note, any Deed of Trust (notwithstanding any provision contained in any Loan Document to the contrary, for the purposes of this Section 5.1, if, at any time prior to the Loan being paid in full and Lender having no further obligations to fund any further Advances under this Agreement or the Note there then exists no current effective Deed of Trust encumbering a Mortgaged Property, the representations, warranties, covenants and agreements concerning the Loan Parties (and not a particular Property) contained in the Initial Deeds of Trust shall be deemed to still survive and be effective against such Loan Parties until the Loan is paid in full and Lender has no further obligations to fund any further Advances under this Agreement or the Note (e.g., a failure of the Loan Parties to comply with their covenant to provide annual reports described in Paragraph 10 of the Initial Deeds of Trust or a breach by any of the Loan Parties of Paragraph 18 (insolvency) in the Initial Deeds of Trust), or any other Loan Document, including but not limited to, the covenants to pay when due any sums owing under the Note, this Agreement, the Deeds of Trust or any other Loan Document within ten (10) days after such sums shall fall due (such ten day period applying only to covenants to pay monetary sums due under any of the Loan Documents); or (b) a material adverse change occurs in any Loan Party's or Additional Borrower's financial condition or business which causes Lender, in Lender's commercially reasonable opinion, to believe that the prospect of (A) the payment of the indebtedness evidenced by the Note or any other sum secured by the Loan Documents, or (B) the performance of any Loan Party's or Additional Borrower's other obligations under any of the Loan Documents is materially and adversely impaired; or (c) the occurrence of any breach or default by Borrowers or any Additional Borrowers under any REA (as defined in a Deed of Trust) which could cause a termination of any REAs or the rights of any Borrowers or Additional Borrowers under any REA or the amendment, termination or surrender of any REA without Lender's prior written consent. Upon Default, Lender at Lender's option may (i) declare all unpaid principal and interest under the Note together with all other sums owing by any of the Borrowers, Additional Borrowers or the Guarantor under any of the Loan Documents to be immediately due and payable without further demand, (ii) terminate all obligations of Lender to make further Advances under this Agreement and the Note and (iii) may invoke the power of sale and any other remedies 14 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr016.jpg] permitted by applicable law or provided herein or in any of the Deeds of Trust or any of the other Loan Documents; PROVIDED, HOWEVER, (1) if such breach of any representation, covenant or agreement is other than (x) a breach of any representation, covenant or agreement contained in Paragraphs 2, 4, 5, 7(a)-(x), 18, 19 or 37 of any Deed of Trust or (y) a breach of any Loan Party's or Additional Borrower's obligation to pay money in accordance with the terms of the Note, this Agreement, any of the Deeds of Trust or any other Loan Document, such breach shall NOT constitute a Default unless Lender has provided written notice to the Loan Parties and then current Additional Borrowers describing such breach and the Loan Parties and then current Additional Borrowers have not cured such breach to Lender's sole satisfaction within thirty (30) days after the date of such written notice from Lender or within such longer period of time, not to exceed an additional thirty (30) days, as may be reasonably necessary to cure such non-compliance if the Loan Parties or then current Additional Borrowers have commenced such cure within such initial thirty (30) day period and are diligently and with continuity of effort pursing such cure, and (2) during any such cure period provided in subclause (1) immediately preceding, until such breach is cured to Lender's sole satisfaction, Borrowers shall not be permitted to draw any Advance or re-Advance under the Note, this Agreement or any other Loan Document. The Loan Parties and all Additional Borrowers acknowledge (x) that the power of sale herein granted may be exercised by Lender without prior judicial hearing and (y) that Lender may exercise other remedies under other Loan Documents in addition to the remedies under the Note, this Agreement, any of the Deeds of Trust and any other Loan Document and all such remedies shall be cumulative and not exclusive. Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing such remedies, including, but not limited to, attorney's fees and costs of documentary evidence, abstracts and title reports. ARTICLE SIX CERTAIN RIGHTS AND REMEDIES OF LENDER 6.1 Rights Upon Default. If any Default shall occur and be continuing or upon the final maturity of the Note, Lender may, without notice, terminate its commitment to Advance and declare the Loan and all sums owing under the Note, this Agreement, any of the Deeds of Trust or any other Loan Document or any part thereof to be immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by the Loan Parties and Additional Borrowers; provided, however, that upon the occurrence of an of Default under Paragraphs 18 or 19 of any Deed of Trust, Lender's commitment to Advance shall automatically terminate, and the Loan and all sums owing under the Note, this Agreement, any of the Deeds of Trust or any other Loan Document or any part thereof shall become immediately due and payable without notice, demand, presentment, notice 15 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr017.jpg] of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by the Loan Parties and all Additional Borrowers. If any Default shall occur and be continuing, Lender may exercise all rights and remedies available to it in law or in equity, under the Loan Documents, or otherwise. ARTICLE SEVEN PARTIAL RELEASES 7.1 Upon consummation of the sale of a Mortgaged Property (but not a sale of only a portion of a Mortgaged Property), the Borrower or Additional Borrower which owns the Mortgaged Property (the "Selling Borrower") shall be entitled to a partial release of the Lien of the Deed of Trust (the "Release DOT") encumbering for such Mortgaged Property covered by such sale (a "Release Tract") upon and subject to the following terms and conditions: 7.2 At least thirty (30) but not more than ninety (90) days prior to the date of any requested partial release, the Selling Borrower shall deliver to Lender (i) a written request ("Selling Borrower's Release Request") identifying the Release Tract to be sold, the closing date of the sale of the Release Tract (the "Release Date"), and the Release Price (as hereinafter defined) for the Release Tract to be paid by Selling Borrower to Lender on the Note, (ii) a fully executed copy of the contract of sale covering the Release Tract (the "Sales Contract") and (iii) the remaining Borrowers and Additional Borrowers shall deliver to Lender a written certificate certifying to Lender that the remaining Mortgaged Properties not being released per the Selling Borrowers' Release Request and which are to remain under the Lien of the Deeds of Trust not being released (the "Remaining Tracts") will have, in the aggregate, immediately following the Release Date, an aggregate ICR of 1.50 or greater. 7.3 On the Release Date which Selling Borrower has requested the release of the Release Tract to occur, Selling Borrower shall pay to the Lender in immediately available United States funds by federal funds wire transfer (at the same wire address Borrowers and Additional Borrowers make payments under the Note or at any other wire address pursuant to written wire instructions provided by Lender): (x) the Lender's Release Costs (as hereinafter defined), plus (y) the Release Price, which amounts in clauses (x) and (y) above will first be applied against the against Lender's Release Cost and then against the unpaid principal amount of the Note. The "Release Price" for a Release Tract shall equal as per any given Release Date, the greater of (1) the gross sales price for the Release Tract as shown on the Sales Contract and confirmed by the Closing Statement (as defined below), less customary reasonable closing costs not to exceed eight percent (8%) of the gross sales price for the Release Tract as shown on the Sales Contract and confirmed by the Closing Statement and (2) the following amounts for each Property as follows: Name of Property and Street Address Release Price 16 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr018.jpg] Hartman Spectrum $ 613 Northwest Loop 410 San Antonio, Texas 78216 Hartman 11211 $2,550,000.00 11211 Katy Freeway Houston, Texas 77079 Borrower will confirm the Release Price by delivering a copy of the fully executed closing statement for the sale of such Release Tract (the "Closing Statement") to Lender simultaneously with the closing of the sale of the Release Tract and the payment of the Release Price. 7.4 Notwithstanding anything contained to the contrary in Sections 7.2 or 7.3 above, in the event that at the time a Selling Borrowers' Release Request is received by Lender or on the Release Date on which the release is to occur (i) there then exists a Default under any Loan Document, including, but not limited to, the Initial Loan Documents (as defined in Section 2.3), or if there has occurred any event which with the giving of notice or the lapse of time, or both, could become a Default hereunder or under any of the other Loan Documents or (ii) the Borrowers and Additional Borrowers, as a result of such partial release, will not have, in the aggregate, an ICR of 1.50 or greater on the Remaining Tracts immediately following such release, then Selling Borrower shall not be entitled to receive a release of a Release Tract. 7.5 Selling Borrower, together with the Release Price, shall simultaneously pay to Lender, Lender's cost of preparing the partial release and any out-of-pocket expenses of Lender (including, but not limited to, reasonable attorney's fees and costs) in connection with any partial release of a Release Tract(s) (collectively, "Lender's Release Costs"). Such partial release shall be held by a title company or closing attorney acceptable to Lender, in Lender's sole discretion, in escrow to be delivered to Selling Borrower only upon payment to Lender, in accordance with the provisions of this Article Seven, of the Release Price and the Lender's Release Costs. ARTICLE EIGHT MISCELLANEOUS 8.1 Notices. If no Deed of Trust is then in effect encumbering a Mortgaged Property, then unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing and mailed or delivered, to the address specified for notices on the signature page below or to such other address as shall be designated by such party in a notice to the other parties. All such other notices and other communications shall be deemed to have been given or made upon the earliest to occur of (a) actual receipt by the intended recipient, or (b) (i) if delivered by hand or courier, when signed for by the designated recipient, (ii) if delivered by mail, upon deposit in the mail, postage prepaid, and (iii) if delivered by an overnight nationally recognized courier, such as FedEx or UPS, upon deposit, postage prepaid, with such courier. Electronic mail and internet websites may be used only to distribute routine 17 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr019.jpg] communications, such as Financial Statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. A notice may be sent by a party's attorney on such party's behalf. 8.2 Guarantor as Agent for Borrower . Borrowers and Additional Borrowers hereby irrevocably appoint Guarantor as the borrowing agent and attorney-in-fact for the Borrowers and Additional Borrowers (the “Administrative Borrower”), which appointment shall remain in full force and effect unless and until Lender shall have received prior written notice signed by Borrowers and Additional Borrowers that such appointment has been revoked and a Borrower or Additional Borrower has been appointed Administrative Borrower. Borrowers and Additional Borrowers hereby irrevocably appoint and authorize the Administrative Borrower (i) to provide Lender with all notices with respect to Loan obtained for the benefit of Borrowers and Additional Borrowers and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Loan and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement; provided, however, all Requests for Advance and Operational Draw Requests must be executed by all of the parties shown on their respective exhibits attached hereto. Borrowers and Additional Borrowers hereby jointly and severally agrees to indemnify and hold Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against Lender by any Borrower or Additional Borrower or Guarantor or any third party whatsoever, arising from or incurred by reason of (a) Lender’s reliance on any instructions from the Administrative Borrower, or (b) any other action taken by Lender hereunder or under the other Loan Documents. 8.3 Maximum Interest. It is expressly stipulated and agreed to be the intent of Borrowers and Additional Borrowers and Lender at all times to comply strictly with the applicable Texas law governing the maximum rate or amount of interest payable on the indebtedness evidenced by the Note or any other Loan Document (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount (a) contracted for, charged, taken, reserved or received pursuant to the Note, any of the other Loan Documents or any other communication or writing by or between Borrowers and Additional Borrowers and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, (b) contracted for, charged, taken, reserved or received by reason of Lender's exercise of the option to accelerate the maturity of the Note and/or any and all indebtedness paid or payable by Borrowers and Additional Borrowers to Lender pursuant to any Loan Document other than the Note, or (c) Borrowers or Additional Borrowers will have paid or Lender will have received by reason of any prepayment by Borrowers and Additional Borrowers of the Note, then it is Borrowers and Additional Borrowers' and Lender's express intent that all amounts charged in excess of the Maximum Lawful Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender shall be credited on the principal balance of the Note (or, if the Note has been or would thereby be paid in full, refunded to Borrower), and the provisions of the Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of 18 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr020.jpg] the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if the Note has been paid in full before the end of the stated term of the Note, then Borrowers and Additional Borrowers and Lender agree that Lender shall, with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Lawful Rate, either refund such excess interest to Borrowers and Additional Borrowers and/or credit such excess interest against the Note then owing by Borrowers and Additional Borrowers to Lender. Borrowers and Additional Borrowers hereby agree that as a condition precedent to any claim or counterclaim (in which event such proceeding shall be abated for such time period) seeking usury penalties against Lender, Borrowers and Additional Borrowers will provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrowers and Additional Borrowers or crediting such excess interest against the Note to which the alleged violation relates. All sums contracted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of any debt evidenced by the Note shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of the Note (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Note does not exceed the Maximum Lawful Rate from time to time in effect and applicable to the Note for so long as debt is outstanding. In no event shall the provisions of Chapter 346 of the Texas Finance Code which regulates certain revolving credit loan accounts and revolving triparty accounts apply to the Note. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. 8.4 Invalid Provisions. If any provision of any of the Loan Documents is held to be illegal, invalid, or unenforceable under present or future laws effective during the term thereof, such provision shall be fully severable, the appropriate Loan Document shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part thereof; and the remaining provisions thereof shall remain in full force and effect and shall not be effected by the illegal, invalid, or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of such Loan Document a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. 8.5 Entirety and Amendments. This instrument embodies the entire agreement between the parties relating to the subject matter hereof (except documents, agreements and instruments delivered or to be delivered in accordance with the express terms hereof), supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, and may be amended only by an instrument in writing executed jointly by the Loan Parties and Additional Borrowers and Lender and supplemented only by documents delivered or to be delivered in accordance with the express terms hereof. 19 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr021.jpg] 8.6 Multiple Counterparts. This Agreement has been executed in a number of identical counterparts, each of which constitutes an original and all of which constitute, collectively, one agreement; but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. 8.7 Parties Bound. This Agreement shall be binding upon and inure to the benefit of Loan Parties and Additional Borrowers, Lender and their respective successors and assigns; provided that Loan Parties and Additional Borrowers may not, without the prior written consent of Lender, assign any of its rights, duties, or obligations hereunder. No term or provision of this Agreement shall inure to the benefit of any Person other than the Loan Parties and Additional Borrowers and Lender and their respective successors and assigns; consequently, no Person other than Loan Parties and Additional Borrowers and Lender and their respective successors and assigns, shall be entitled to rely upon, or to raise as a defense, in any manner whatsoever, the failure of the Loan Parties and Additional Borrowers or Lender to perform, observe, or comply with any such term or provision. 8.8 Lender's Consent or Approval. Except where otherwise expressly provided in the Loan Documents, in any instance where the approval, consent or the exercise of judgment of Lender is required, the granting or denial of such approval or consent and the exercise of such judgment shall be (a) within the sole discretion of Lender, and (b) deemed to have been given only by a specific writing intended for that purpose and executed by Lender. Each provision for consent, approval, inspection, review, or verification by Lender is for Lender's own purposes and benefit only. 8.9 Sale of Loan and Participations. Lender may, from time to time and without notice to Loan Parties or Additional Borrowers, sell or offer to sell the Loan, or interests therein, to one or more assignees or participants and Lender is hereby authorized to disseminate and disclose any information (whether or not confidential or proprietary in nature) Lender now has or may hereafter obtain pertaining to Loan Parties and Additional Borrowers, any other Obligated Party, the Loan or the Loan Documents (including, without limitation, any credit or other information regarding Loan Parties and Additional Borrowers, any of its principals, or any other person or entity liable, directly or indirectly, for any part of the Loan, to (a) any assignee or participant or any prospective assignee or prospective participant, (b) any regulatory body having jurisdiction over Lender or the Loan, and (c) any other persons or entities as may be necessary or appropriate in Lender's reasonable judgment). Lender, as a courtesy to Loan Parties and Additional Borrowers, will endeavor to notify Loan Parties and Additional Borrowers of any such assignees or participants, or prospective assignees or participants, to which Lender disseminates any of the information described above. 8.10 Loan Agreement Governs. In the event of any conflict between the terms of this Agreement and any terms of any other Loan Document, the terms of this Agreement shall govern. All of the Loan Documents are by this reference incorporated into this Agreement. 8.11 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE LOAN PARTIES AND ADDITIONAL BORROWERS HEREBY 20 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr022.jpg] IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF. 8.12 GOVERNING LAW; PLACE OF PERFORMANCE. THE LOAN DOCUMENTS ARE BEING EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED, IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE AND OF THE UNITED STATES SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES HERETO AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THE LOAN DOCUMENTS, VENUE OF ANY LITIGATION INVOLVING THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL BE MAINTAINED IN AN APPROPRIATE STATE OR FEDERAL COURT LOCATED IN DALLAS COUNTY, TEXAS OR HARRIS COUNTY, TEXAS, TO THE EXCLUSION OF ALL OTHER VENUES. 8.13 WAIVER OF CONSEQUENTIAL, PUNITIVE AND SPECULATIVE DAMAGES. THE LOAN PARTIES AND ADDITIONAL BORROWERS AND LENDER AGREE THAT, IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, EACH MUTUALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECULATIVE DAMAGES. [Balance of Page Intentionally Left Blank. Signature Pages Follow.] 21 6502991 V5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr023.jpg] --------------------------------------------------------------------------------   [a101executedewbhartmanvr024.jpg] --------------------------------------------------------------------------------   [a101executedewbhartmanvr025.jpg] BANK: EAST WEST BANK, a California state-chartered bank By: Name: Esau Liu Title: S <1-f? Address for Notices: 9090 Katy Freeway, 3rd Floor Houston, Texas 77024 Attn: Mr. Esau Liu Facsimile No.: -------- EWB MASTER CREDIT FACILITY AGREEMENT [SIGNATURE PAGE] 6502991 (78055.00001000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr026.jpg] EXHIBIT A APPLICATION FOR ADVANCE FOR ACQUISITION/REFINANCE PURPOSE Request for Advance signed by all Loan Parties and the Additional Borrower desiring to purchase a Prospective Property. A copy of the Purchase Contract for the Prospective Property together with all amendments thereto (this requirement will not be necessary for a refinance of a Prospective Property and not an acquisition of a Prospective Property). Financial Statements regarding the new Additional Borrower and updated Financial Statements regarding the Loan Parties, which Financial Statements will use the same form as previously submitted by the Loan Parties at the origination of the Loan. Evidence reasonably satisfactory to Lender that the Prospective Property, on the Submission Date, has an ICR of 1.50 or more for the twelve (12) months immediately preceding the Submission Date. A copy of the organizational documents for the new Additional Borrower (e.g., articles of formation, limited liability operating agreements, articles of incorporation, by-laws, etc.) Current bankruptcy, federal tax lien and judgment searches and searches of all UCC records in the County where a Prospective Property is located and an Additional Borrower is formed or incorporated, demonstrating the absence of adverse claims. An appraisal of the Prospective Property by a qualified MAI appraiser approved by Lender, in form, scope and substance satisfactory to Lender, showing the fair market value of the Prospective Property. An inspection of and acceptable report on the buildings and other improvements located on such Prospective Property in form and substance and by an engineer acceptable to Lender in Lender's sole discretion, at Borrowers' and Additional Borrowers' sole cost and expense. Satisfactory evidence of the compliance of the Prospective Property with The Americans with Disabilities Act of 1990, as amended, similar state laws, and any regulations promulgated pursuant thereto, as amended. An environmental report prepared at Borrowers' and Additional Borrowers' expense by a qualified environmental consultant approved by Lender, dated not more than three months prior to the Prospective Property Closing Date and addressed to Lender (or subject to separate letter agreement permitting Lender to rely on such environmental report), which report shall, at a EXHIBIT A 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr027.jpg] minimum, (A) demonstrate the absence of any existing or potential hazardous material contamination or violations of environmental laws at, on, under or above the Prospective Property, except as acceptable to Lender in its sole and absolute discretion, (B) include the results of all sampling or monitoring to confirm the extent of existing or potential hazardous material contamination at the Prospective Property, including the results of leak detection tests for each underground storage tank located at the Prospective Property, if any, (C) describe response actions appropriate to remedy any existing or potential hazardous material contamination, and report the estimated cost of any such appropriate response, (D) confirm that any prior removal of hazardous material or underground storage tanks from the Prospective Property was completed in accordance with applicable Laws, and (E) confirm whether or not the Prospective Property is located in a wetlands district. A title commitment for a Title Policy covering the Prospective Property together with legible copies of all exceptions to title listed in such commitment. Such title commitment must be in a form that will result in a Title Policy in the amount of the Advance by Lender to purchase or refinance the Prospective Property and meeting the requirements on Exhibit C attached hereto being delivered to Lender on the Prospective Property Closing Date. A Survey, bearing a date not earlier than 30 days prior to the Prospective Property Closing Date and which must contain the following certification to Lender from the surveyor of the Survey: "I hereby certify to East West Bank, its successors and assigns, [Additional Borrower] and [name of Title Company] that: (a) the survey prepared by me entitled "[_________]" (i) meets the Minimum Standard Detail Requirements (including, but not limited to, items 1, 2, 3, 4, 5, 6, 7(a), 7(b)(1), 7(c), 8, 9, 11, 13, 14, 16, 17, 18 and 19 of Table "A" thereof) and the Accuracy Standards for ALTA/ACSM Land Title Surveys as adopted by the American Land Title Association, the National Society of Professional Surveyors, and the American Congress on Surveying and Mapping and in effect on the date of the Survey; (b) said property described hereinabove has access to and from a public roadway and (c) that the plat hereon is a true, correct and accurate representation of (i) the property described hereinabove, and (ii) the exceptions to title listed in the Commitment for Title Insurance issued by ______________________________ (their file No. _______________________)." Certificate of Occupancy and all other permits required by applicable law with respect to the use, ownership, or operation of the Prospective Property. Satisfactory evidence that all zoning ordinances or restrictive covenants affecting the Prospective Property permit the present and intended uses of the Prospective a Mortgaged and have been and will be complied with. Satisfactory evidence (by way of utility letters or otherwise shown on the Survey) establishing to the satisfaction of Lender that the Prospective Property has adequate water supply, storm and sanitary sewerage facilities, telephone, gas, electricity, fire and police protection. EXHIBIT A 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr028.jpg] Satisfactory evidence (this may be evidenced on the Survey) that all of the streets providing access to the Prospective Property have been either dedicated to public use or established by private easement, duly recorded in the records of the county in which the Prospective Property is located, and have been fully installed and accepted by the appropriate governmental authority, that all costs and expenses of the installation and acceptance thereof have been paid in full and that there are no restrictions on the use and enjoyment of such streets that adversely affect, limit or impair the applicable Additional Borrower's ability to operate the Prospective Property for the purposes and in the manner represented to Lender. True, correct and complete copies of all tenant and other space leases encumbering any portion of the Prospective Property on the Prospective Property Closing Date together with a copy of the form of lease which the applicable Additional Borrower intends to utilize in connection with the leasing of space in the Prospective Property. Copies of any leasing, management and development agreements entered into or to be entered into by applicable Additional Borrower in connection with the proposed operation of the Prospect Property. EXHIBIT A 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr029.jpg] EXHIBIT B CLOSING DELIVERIES The following documents, items and materials are hereinafter collectively referred to as the "Closing Deliveries": A Joinder Agreement executed by the new Additional Borrower that is purchasing the Prospective Property and all Loan Parties and all then existing Additional Borrowers. A Deed of Trust encumbering the Prospective Property, in the same form as the Initial Deeds of Trust, executed, notarized and delivered by the Additional Borrower purchasing the Prospective Property and Hartman Partnership. An environmental indemnity agreement executed by the new Additional Borrower that is purchasing the Prospective, Hartman Partnership and Guarantor by for the benefit of Lender, which agreement will be in the same form as the Initial EIA; A Closing Affidavit executed by a senior officer of the Additional Borrower that is purchasing the Prospective Property. All other Loan Documents applicable to a Prospective Property reasonably requested by Lender. Borrowers and Additional Borrowers shall provide to Lender evidence which is reasonably satisfactory to Lender that the Additional Borrower that is purchasing a Prospective has contributed Borrower's Equity toward acquisition of the Prospective Property. Subordination, Non-Disturbance, and Attornment Agreements from each tenant under each lease for such Prospective Property that has previously been requested by Lender. Casualty, Commercial Liability and other Insurance Policies, certificates and binders insuring the Prospective Property and Additional Borrower that is purchasing the Prospective Property, meeting the same requirements as set forth in Section 5 of the Initial Deed of Trust. The Survey for the Prospective Property, which has been previously reviewed and approved by Lender's attorneys prior to the Prospective Property Closing Date. The Title Policy, in the amount of the Advance by Lender to purchase or refinance the Prospective Property insuring the Prospective Property, which has been previously reviewed and approved by Lender's attorneys prior to the Prospective Property Closing Date. EXHIBIT B 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr030.jpg] A copy of the Closing Statement for the Prospective Property executed by both the seller and the Additional Borrower purchaser of the Prospective Property. A certificate of incumbency, in a form acceptable to Lender, of all agents of the entity who will be authorized to execute any of the Loan Documents on behalf of the Loan Parties and the applicable Additional Borrower, dated the Closing Date, and in a form acceptable to Lender. A copy of resolutions of the Loan Parties and the applicable Additional Borrower that is a corporation, limited liability company, partnership or other entity, approving and authorizing the Loan Documents and the transactions contemplated by this Agreement, duly adopted by the governing body of each such entity, accompanied by a certificate of an authorized representative of each such entity, dated the Prospective Property Closing Date, that such copy is a true and correct copy of resolutions duly adopted at a meeting of the governing body of each such entity and that such resolutions have not been amended or revoked in any respect and are in full force and effect as of the Prospective Property Closing Date. Such other satisfactory evidence as Lender shall require that all necessary action on the part the Loan Parties and the applicable Additional Borrower has been taken with respect to the execution and delivery of the Closing Deliveries and the consummation of the transactions contemplated hereby so that this Agreement will be valid and binding upon the Loan Parties and the applicable Additional Borrower. UCC-1 Financing Statements with respect to the security interests granted in the Loan Documents, together with evidence of the priority of the respective security interests perfected thereby. The Additional Borrower hereby irrevocably authorizes Lender at any time and from time to time to prepare and file one or more financing statements regarding the Prospective Property, including any personal property in connection therewith and or such Additional Borrower, together with all uniform commercial code UCC-3 continuation statements that may, from time to time, be necessary to be filed of record to keep such financing statements from terminating. Payment by wire transfer to Lender and Lender's attorneys of (i) any third party costs incurred by Lender such as report or search costs, (ii) all legal fees and expenses of Lender's attorneys in the review of the Application for Advance and materials contained therein, the preparation and negotiation of all closing documents and the closing of the Advance, and (iii) the payment of all document recording fees and third party fees such as Title Policy premiums, Survey costs, etc. Legal opinion letters from the counsel for the Loan Parties and Additional Borrowers in form and substance acceptable to Lender and Lender's counsel covering the Loan Parties and Additional Borrowers and the enforceability of each the documents listed above in this Exhibit B and any other new Loan Document being delivered on such Prospective Property Closing Date, including, but not limited to, any Joinder Agreement, Deed of Trust, amend to this Agreement being executed and delivered on such Prospective Property Closing Date. EXHIBIT B 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr031.jpg] Such other materials, documents, papers or requirements regarding the Prospective Property, any Loan Parties and Additional Borrowers or lease as Lender shall reasonably request. EXHIBIT B 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr032.jpg] EXHIBIT C TITLE POLICY REQUIREMENTS The Additional Borrower that is purchasing the Prospective Property shall deliver to Lender, at such Additional Borrower's expense, for Texas property, a Texas loan policy of title insurance (Form T-2), acceptable to Lender and Lender's counsel. The Title Policy shall (a) show "East West Bank, a California state-chartered bank" as the insured mortgagee, (b) insure the Lien of the Deed of Trust to encumber the Prospective Property as a first lien against such Property in the full amount of the Advance by Lender, (c) delete the exception for matters which a current survey would show, and all "standard" exceptions which can be deleted, to the fullest extent authorized under applicable title insurance rules and such Additional Borrower shall satisfy all requirements therefor, (d) contain (i) no exception for standby fees or real estate taxes other than standby fees and real estate taxes for the year in which the Prospective Property Closing Date occurs to the extent the same are not then due and payable in which case the same shall be endorsed "not yet due and payable" and (ii) no exception for subsequent assessments for prior years, (e) provide full coverage against mechanic's liens to the extent authorized by applicable title insurance rules and such Additional Borrower shall satisfy all requirements therefor, (f) contain only such exceptions (regardless of rank or priority) Lender approves, and such Additional Borrower shall cause to be delivered to Lender true, complete and fully legible copies of all recorded instruments shown as exceptions, including the subdivision plat (if any) and any restrictive covenants, (g) insure that no restrictive covenants shown in the Title Policy have been violated, and that no violation of the restrictions will result in a reversion or forfeiture of title, (h) insure that the lands shown in the required Survey are one and the same as the lands encumbered by such Deed of Trust, and that all recorded easements and other exceptions locatable on the ground are located as shown on the Survey, (i) insure that indefeasible or marketable (as coverage is available) fee simple title to the Prospective Property is vested in such Additional Borrower, (j) contain such endorsements Lender requires and are available under applicable title insurance rules and such Additional Borrower shall satisfy all requirements therefor, (k) insure any easements, leasehold estates or other matters appurtenant to or benefiting the Prospective Property as part of the insured estate and not show the same as exceptions, (l) provide the recording information for the UCC financing statement (if any) filed in the real estate records of the county where the Prospective Property is located, (m) insure the zoning of (if permitted by state regulations), and the right of access to, the Prospective Property to the extent authorized under applicable title insurance rules and such Additional Borrower shall satisfy all requirements therefor, and (n) contain provisions acceptable to Lender regarding Advances of Loan funds after the Loan closing (including any Advances for which no title update may be required). The Borrowers and Additional Borrowers shall be solely responsible for satisfying the requirements of the Title Company necessary to allow the Company to issue the Title Policy required by this Agreement. The conditions to Lender's obligation to make the Loan will not be EXHIBIT C 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr033.jpg] satisfied if the Title Policy required hereunder is not, or cannot be, issued, whether caused by such Additional Borrower's failure to satisfy the underwriter's requirements or otherwise. EXHIBIT C 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr034.jpg] EXHIBIT D FORM OF REQUEST FOR ADVANCE FOR OPERATIONAL PURPOSES (LETTERHEAD OF HARTMAN PARTNERSHIP) Date: _____________, ____ East West Bank 9090 Katy Freeway, 3rd Fl. Houston, Texas 77024 Attention: Esau Liu $20,000,000.00 loan (the "Loan") from East West Bank ("Lender") to Hartman Spectrum, LLC ("Hartman Spectrum"), Hartman 11211, LLC ("Hartman 11211"), Hartman vREIT XXI Operating Partnership L.P. ("Hartman Partnership"; and Hartman Spectrum, Hartman 11211 and Hartman Partnership are collectively referred to herein as "Borrowers" and each sometimes individually referred to as a "Borrower"), which Loan is guaranteed by Hartman vREIT XXI ("Guarantor"). Ladies and Gentlemen: In accordance with that certain Revolving Promissory Note dated as of December 27, 2018 (the "Note") and that certain Master Credit Facility Agreement dated of even dated therewith executed by Borrowers and Guarantors (the "Loan Agreement"), this letter will serve as the Operational Draw Request of Borrowers requesting the sum of $_____________ under the Note. All capitalized terms used herein, and not otherwise defined herein, have the same meaning as in the Loan Agreement. The requested draw amount (the "Requested Draw Amount") is $__________. Each of the Loan Parties hereby acknowledges that it has no outstanding defenses, claims, counterclaims or offsets against Lender under the Loan Documents. Each of the Loan Parties represents and warrants to Lender as of the date hereof that: (a) each of the representations and warranties of any Loan Party contained in the Loan Documents were true, correct and complete as of the date of the Note and as of the date of any previous EXHIBIT D 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr035.jpg] Advance and continue to be true and correct in all material respects as of the date hereof; (b) the Requested Draw Amount, when added to the principal balance of the Note outstanding on the date hereof does not exceed $20,000,000.00; (c) the funding of the Requested Draw Amount will not cause the ICR for all of the Mortgaged Properties to exceed 1.50; (d) no Default or Breach has occurred and is continuing under the Note, the Instrument or any other Loan Document; and (e) each of the Loan Parties continues to be in compliance in all material respects with all of the other terms, covenants and conditions contained in the Note, the Instrument and the other Loan Documents. Very truly yours, BORROWERS: HARTMAN VREIT XXI OPERATING PARTNERSHIP L.P., a Texas limited partnership By: Hartman vREIT XXI, Inc., a Maryland Corporation its General Partner By: Name: Title: HARTMAN SPECTRUM, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Name: Title: EXHIBIT D 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr036.jpg] HARTMAN 11211, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Name: Title: ADDITIONAL BORROWER: __________________________________ a _____________________________ By: Print Name:_________________________ Title:_______________________________ GUARANTOR: HARTMAN VREIT XXI, INC., a Maryland corporation By: Name: Title: EXHIBIT D 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr037.jpg] EXHIBIT E FORM OF REQUEST FOR ADVANCE FOR ACQUISITION/REFINANCE PURPOSE (LETTERHEAD OF HARTMAN PARTNERSHIP) Date: ____________________________ East West Bank 9090 Katy Freeway, 3rd Floor Houston, Texas 77024 ("Lender") Re: Request for Advance to pay for the acquisition or re-finance of a Prospective Property in accordance with that certain Master Credit Facility Agreement (the "Loan Agreement") dated as of December 27, 2018, by and among by East West Bank ("Lender"), Hartman vREIT XXI Operating Partnership L.P., a Texas limited partnership ("Hartman Partnership"), Hartman Spectrum, LLC, a Texas limited liability company ("Hartman Spectrum"), Hartman 11211, LLC, Texas limited liability company ("Hartman 11211"; and Hartman Spectrum , Hartman 11211 and Hartman Partnership are collectively referred to herein as "Borrowers" and each sometimes individually referred to as a "Borrower"), and Hartman vREIT XXI, a Maryland corporation ("Guarantor"; and Borrowers and Guarantor are collectively referred to herein as the "Loan Parties", and each sometimes individually referred to as a "Loan Party"). Capitalized terms not otherwise defined herein shall have the meanings given them in the Loan Agreement. Ladies and Gentlemen: The Loan Parties and ________________________________, a _________________________ ("Additional Borrower") request an Advance under the Loan Agreement to pay costs incurred in connection with the acquisition or re-finance of a Prospective Property, in the amount of $__________________. The documents, materials and other information required under Exhibit A of the Loan Agreement are submitted with this letter and, among other things, identifies the Prospective Property and provides information about Additional Borrower. If there is any additional information that Lender requires please contact the undersigned. The status of available funds under the Loan Agreement is as follows: Total Committed Sum of Loan $20,000,000.00 EXHIBIT E 1 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr038.jpg] less Advances to date - ($ ) Remaining unadvanced Loan proceeds $ Amount of this certification and Advance $ The Loan Parties and Additional Borrower represent as follows: (a) The amount requested above does not exceed the lesser of (i) fifty percent (50%) of the Prospective Property Purchase Price as shown on the Prospective Property Purchase Contract submitted by the undersigned with this Request for Advance, (ii) or fifty percent (50%) of the fair market appraised value of the Prospective Property as shown in the MAI appraisal submitted by the undersigned with this Request for Advance or (iii) the Remaining Committed Sum. (b) The Prospective Property does not have an ICR of more than 1.50 for the twelve (12) months immediately preceding the date of this Request for Advance. (c) No previous Advance has been made under the Loan Agreement to pay any of the costs for which the Loan Parties and Additional Borrower Requests this Advance. (d) The representations in the Loan Agreement, Deeds of Trust and other Loan Documents are true and correct as of the date this Advance Request is submitted to Lender. (e) No Default has occurred under the Loan Agreement, the Note, any Deed of Trust or any other Loan Document that has not been waived in writing by Lender or cured to the satisfaction of Lender. The undersigned represents that he/she is a duly elected officer of the undersigned and is authorized to make this Request for Advance. Very truly yours, HARTMAN VREIT XXI OPERATING PARTNERSHIP L.P., a Texas limited partnership By: Hartman vREIT XXI, Inc., a Maryland Corporation its General Partner EXHIBIT E 2 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr039.jpg] By: ________________________________ Print Name:______________________ Title:___________________________ HARTMAN SPECTRUM, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Print Name:______________________ Title:___________________________ HARTMAN 11211, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Print Name:______________________ Title:___________________________ HARTMAN vREIT XXI, a Maryland corporation By: Print Name:______________________ Title: _________________________ [ADDITIONAL BORROWER, a ________________] EXHIBIT E 3 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr040.jpg] By: Print Name:______________________ Title:___________________________ EXHIBIT E 4 6502991 v5 (78055.00001.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr041.jpg] EXHIBIT F JOINDER TO REVOLVING PROMISSORY NOTE AND MASTER CREDIT FACILITYAGREEMENT This JOINDER TO REVOLVING PROMISSORY NOTE AND MASTER CREDIT FACILITY AGREEMENT (this "Agreement"), dated as of _________ __, 20__, is executed by East West Bank, a California state-chartered bank having an address at 9090 Katy Freeway, 3rd Floor, Houston, Texas 77024 ("Lender"), and Hartman vREIT XXI Operating Partnership L.P., a Texas limited partnership, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman Partnership"), Hartman Spectrum, LLC, a Texas limited liability company, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman Spectrum"), Hartman 11211, LLC, Texas limited liability company, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Hartman 11211"; and Hartman Spectrum, Hartman 11211 and Hartman Partnership are collectively referred to herein as "Original Borrowers" and each sometimes individually referred to as a "Original Borrower"), Hartman vREIT XXI, a Maryland corporation, having an address at 2909 Hillcroft, Suite 420, Houston, Texas 77057 ("Guarantor"; and Borrowers and Guarantor are collectively referred to herein as the "Loan Parties", and each sometimes individually referred to as a "Loan Party"), and _________________________________, a _________________________________, having an address at _______________________ ("Additional Borrower"). RECITALS: A. The Loan Parties and Lender, on December 27, 2018, entered into that certain Master Credit Facility Agreement (the "Loan Agreement") governing the advance of that certain $20,000,000 loan (the "Loan") evidenced by that certain Revolving Promissory Note (the "Note") dated of even date therewith and executed by the Original Borrowers, and secured by, among other things, those two certain Deeds of Trust, Assignment of Rents and Security Agreements, both dated of even date herewith, one granted by Hartman Spectrum for the benefit of Lender (the "Spectrum DOT") and the other granted by Hartman 11211 for the benefit of Lender (the "11211 DOT"; and the Spectrum DOT and the 11211 DOT are hereinafter collectively referred to as the "Initial Deeds of Trust" and each sometimes individually referred to as an "Initial Deed of Trust"), and the payment and performance of which Loan is guaranteed by Guarantor pursuant to that certain Guaranty executed by Guarantor, dated of even date therewith in favor of Lender. Capitalized terms not otherwise defined herein are being used herein as defined in the Loan Agreement. B. Additional Borrower is this day executing and delivering to Lender together with this Agreement: EXHIBIT F 6785977 v5 (78055.00038.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr042.jpg] (i) A Deed of Trust, Assignment of Rents and Security Agreement (the "Additional Deed of Trust") in favor of Lender encumbering real property located at _____________________, Texas (the "Additional Property"); (ii) An environmental indemnity agreement in favor of Lender covering the Additional Property (the "Additional EIA"); (iii) Uniform Commercial Code UCC-1 state and county financing statements covering personal property on the Additional Property (the "Additional UCC-1s"); and (iv) Additional agreements, resolutions and certificates in favor or Lender (the "Additional Agreements"; and this Agreement, the Additional Deed of Trust, the Additional EIA, the Additional UCC and the Additional Agreements are hereafter collectively referred to herein as the "Additional Loan Documents"). In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Loan Parties and Additional Borrower agree as follows: 1. Additional Borrower hereby acknowledges, agrees and confirms that, by its execution of this Agreement, Additional Borrower is now and will be deemed to be a Borrower under the Note and Loan Agreement. Additional Borrower hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions applicable to the Original Borrowers contained in the Note and Loan Agreement as if it had been an original signatory to the Note and Loan Agreement, including, but not limited to, providing all Financial Statements, reports and other information required of an Original Borrower under the Note, Loan Agreement, the Additional Deed of Trust simultaneously with this Agreement and other Loan Documents 2. Additional Borrower hereby assumes all the obligations of a Borrower under the terms of the Note and Loan Agreement and agrees that Additional Borrower is a Borrower and bound as a Borrower under the terms of the Note and Loan Agreement, as if it had been an original signatory to Note and Loan Agreement. 3. Additional Borrower hereby acknowledges and agrees that the Additional Loan Documents are now part of and included within the Loan Documents. 4. The Loan Parties hereby acknowledge and agree that Additional Borrower is now a Borrower under the Note and Loan Agreement and has assumed all obligations under the Loan Documents. EXHIBIT F 6785977 v5 (78055.00038.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr043.jpg] 5. The Loan Parties hereby acknowledge and agree that the Additional Loan Documents are now part of and included within the Loan Documents. 6. The Loan Parties confirm that, on the date hereof, all representations and warranties contained in the Loan Documents, including, but not limited to, the Initial Deeds of Trust, are true and correct in all material respects. 7. Additional Borrower's address for notices under the Loan Agreement is set forth above in the introductory paragraph of this Agreement. 8. This Agreement shall be deemed to be part of, and a modification to, the Note, the Loan Agreement and all other Loan Documents and shall be governed by all of the terms and provisions of the Loan Agreement, as applicable, with respect to the modifications intended to be made to each such agreement, which terms are incorporated herein by reference, are ratified and confirmed and shall continue in full force and effect as valid, binding and enforcable agreements of Additional Borrower. Wherever in the Note, Loan Agreement or any other Loan Document, the term "Borrower" or any similar description is used such term shall henceforth include Additional Borrower. Additional Borrower hereby waives notice of the Lender's acceptance of this Agreement. Additional Borrower will deliver an executed original of this Agreement to the Lender. 9. Guarantor, in its capacity as guarantor of the Loan pursuant to the Guaranty, hereby joins in the execution of this Agreement to confirm and ratify the Guaranty and all of Guarantor's obligations thereunder notwithstanding the joinder of Additional Borrower as a borrower under the Note, the Loan Agreement and other the Loan Documents. Guarantor consents to the joinder of Additional Borrower as contemplated under this Agreement. The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above. ADDITIONAL BORROWER: __________________________________ a _____________________________ By: Print Name:_________________________ Title:_______________________________ EXHIBIT F 6785977 v5 (78055.00038.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr044.jpg] ACKNOWLEDGED AND AGREED: ORIGINAL BORROWERS: HARTMAN VREIT XXI OPERATING PARTNERSHIP L.P., a Texas limited partnership By: Hartman vREIT XXI, Inc., a Maryland Corporation its General Partner By: ________________________________ Print Name:______________________ Title:___________________________ HARTMAN SPECTRUM, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Print Name:______________________ Title:___________________________ HARTMAN 11211, LLC, a Texas limited liability company By: Hartman Income REIT Management, Inc., a Texas corporation, its Manager By: Print Name:______________________ Title:___________________________ EXHIBIT F 6785977 v5 (78055.00038.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr045.jpg] NEW BORROWER: [NAME] By: Print Name:______________________ Title:___________________________ GUARANTOR: HARTMAN vREIT XXI, a Maryland corporation By: Print Name:______________________ Title: _________________________ EXHIBIT F 6785977 v5 (78055.00038.000) --------------------------------------------------------------------------------   [a101executedewbhartmanvr046.jpg] LENDER: EAST WEST BANK By: Name: Title: EXHIBIT F 6502991 V5 (78055.00038.000)) --------------------------------------------------------------------------------
Exhibit 10.3    [tex1-1logo.jpg]   November 16, 2015   STRICTLY CONFIDENTIAL   Northwest Biotherapeutics, Inc. 4800 Montgomery Lane, Suite 800 Bethesda, MD 20814 Attn: Linda Powers, Chief Executive Officer   Dear Ms. Powers:   This letter agreement (this “Agreement”) constitutes the agreement between Northwest Biotherapeutics, Inc. (the “Company”) and H.C. Wainwright & Co., LLC (“HCW”) that HCW shall serve as the exclusive (i) placement agent for the Company in the U.S. (“Direct Placement”) on a reasonable best efforts basis or (ii) underwriter for the Company in the U.S., on a firm commitment basis (“Underwritten Placement”), in connection with the proposed transaction, or series of transactions, to occur during the term of this Agreement (each, a “Placement”). The Placement shall consist of registered or unregistered securities (the “Securities”) of the Company, which Securities may include one or any combination of the following: shares of common stock, par value $0.001 per share (the “Common Stock”), warrants to purchase shares of Common Stock (“Warrants”) or securities of the Company convertible into shares of Common Stock of the Company (“Convertible Securities”). The terms of such Placement and the Securities issued in connection therewith shall be mutually agreed upon by the Company, HCW and, if a Direct Placement, the purchasers (each, a “Purchaser” and collectively, the “Purchasers”) and nothing herein implies that HCW would have the power or authority to bind the Company or any Purchaser, and the Company shall not, and nothing herein implies that the Company shall, have an obligation to issue any Securities or complete a Direct Placement. This Agreement and the documents executed and delivered by the Company and the Purchasers in connection with a Placement shall be collectively referred to herein as the “Transaction Documents.” The date of a closing of a Placement (including any subsequent closings that occur pursuant to a Placement, whether at the discretion of the Company, the Purchasers (through additional investment rights or otherwise), milestones or otherwise) shall be referred to herein as a “Closing Date.” The Company expressly acknowledges and agrees that the execution of this Agreement does not constitute a commitment by HCW or any Purchaser to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of HCW with respect to securing any other financing on behalf of the Company. In the event the Placement will consist of unregistered securities of the Company Sections 2 and 3 (unless otherwise indicated) of Annex A will apply in addition to the provisions set forth herein and in the event that the Placement will consist of registered securities of the Company, Sections 1, 2 and 3 of Annex A will apply in addition to the provisions set forth herein.   In the event that a Placement is an Underwritten Placement, prior to the commencement of the Underwritten Placement, the Company shall negotiate the terms of an underwriting agreement with HCW containing such terms, covenants, conditions, representations, warranties, and providing for the delivery of legal opinions, comfort letters and officer’s certificates, all in form and substance satisfactory to HCW and its counsel and the Company.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         In the event that a Placement is a Direct Placement, the sale of Securities to any Purchaser will be evidenced by a purchase agreement (“Purchase Agreement”) between the Company and such Purchaser, if required by the Purchaser, in a form reasonably satisfactory to the Company and HCW. Prior to the signing of any Purchase Agreement, officers of the Company with responsibility for financial affairs will be available to answer inquiries from prospective Purchasers.   Notwithstanding anything herein to the contrary, in the event that HCW determines that any of the terms provided for hereunder shall not comply with a FINRA rule, including but not limited to FINRA Rule 5110, then the Company shall agree to amend this Agreement in writing upon the request of HCW to comply with any such rules; provided that any such amendments shall not provide for terms that are less favorable to the Company.   Before contacting any potential investor and/or lender, HCW shall propose to the Company in writing each party it intends to approach, and the Company shall reply in writing approving or disapproving any such contact prior to such contact being initiated by HCW. Any parties disapproved by the Company will not be approached by HCW.   A.         Fees. In connection with the Services described above, the Company shall pay to HCW the following compensation:   1.          HCW’s Fee. The Company shall pay to HCW a cash placement fee (the “HCW’s Fee”) on each Closing Date equal to 7% of the aggregate purchase price paid by each purchaser of Securities that are placed in a Placement on such Closing Date during the Term and, in the event there is an “oversubscription option” or “greenshoe” granted to the investors, on the purchase or exercise price paid by each holder of such oversubscription option or greeshoes if and when exercised (whether or not such exercise occurs during the Term). Notwithstanding anything herein to the contrary, compensation payable or issuable as a result of the exercise of an “oversubscription option” or “greenshoe” shall be required only if and when exercised, not on the closing of the Placement. Other than through an Underwritten Placement, HCW’s Fee shall be paid at each closing of the Placement (each, a “Closing”) through a third party escrow agent from the gross proceeds of the Securities sold.   2.          Warrants.         As additional compensation for the services performed hereunder, the Company shall issue to HCW or its designees at each Closing, warrants (the “HCW Warrants”) to purchase that number of shares of common stock of the Company (“Shares”) equal to 5% of the aggregate number of Shares placed in the Placement (or, if Convertible Securities, shares of Common Stock underlying any Convertible Securities sold in the Placement to such Purchasers, but excluding shares of Common Stock issuable upon the exercise of any Warrants issued to Purchasers in the Placement) and, in the event there is an “oversubscription option” or “greenshoe” granted to the investors, if and when such rights are exercised by the holders, on the shares issued to each holder in such oversubscription option or greeshoes (whether or not such exercise occurs during the Term). Notwithstanding anything herein to the contrary, compensation payable or issuable as a result of the exercise of an “oversubscription option” or “greenshoe” shall be required only if and when exercised, not on the closing of the Placement. The HCW Warrants shall have the same terms as the warrants issued to the Purchasers in the Placement, if any, except that the exercise price shall be 125% of the offering price per share and they shall have an exercise period of five years from issuance except that if the offering is registered 5 years from the effective date of the shelf registration statement referred to in Section 1.A of Annex A, attached hereto if applicable. If no warrants are issued to Purchasers, the HCW Warrants shall be in a customary form reasonably acceptable to HCW. If required by FINRA Rule 5110, the HCW Warrants shall not be transferable for six months from the date of the Placement, and further, the number of Shares underlying the HCW Warrants shall be reduced if necessary to comply with FINRA rules or regulations.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         3.          Expenses. The Company will pay to HCW at closing fifty thousand dollars ($50,000) for all out of pocket fees and expenses incurred by HCW in connection with this Transaction. Such expense payment, plus the additional reimbursable amount payable by the Company pursuant to Section C below, shall constitute the aggregate total of all expense payments or reimbursements under this Agreement.   4.          Tail Fee. HCW shall be entitled to compensation under clauses (1) and (2) hereunder, calculated in the manner set forth therein, with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”) to the extent that such financing or capital is provided to the Company by investors whom HCW first introduced to the Company during the Term or who are listed on Annex B, if such Tail Financing is consummated at any time within the 3-month period following the expiration or termination of this Agreement.   B.           Term and Termination of Engagement. The term (the “Term”) of HCW’s exclusive engagement will begin on the date hereof and end thirty (30) days after the date hereof. Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in Section H hereof will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section A hereof, if any, will survive any expiration or termination of this Agreement, as permitted by FINRA Rule 5110(f)(2)(d). Upon any expiration or termination of this Agreement, the Company's obligation to reimburse HCW for out of pocket accountable expenses actually incurred by HCW and reimbursable upon closing of the Placement pursuant to Section A or otherwise due under Section A hereof, will be limited to the $50,000 provided in Section 3 above, and will survive any expiration or termination of this Agreement, as permitted by FINRA Rule 5110(f)(2)(d).   C.           Settlement. If the Offering is settled in whole or in part via delivery versus payment (“DVP”), HCW shall arrange for its clearing agent to provide the funds to facilitate such settlement. The Company shall bear the cost of the escrow agent and shall reimburse HCW for the actual out of pocket cost of such clearing agent settlement and financing, if any, which such cost shall not exceed six thousand dollars ($6,000).   D.           Use of Information. The Company will furnish HCW such written information as HCW reasonably requests in connection with the performance of its services hereunder. The Company understands, acknowledges and agrees that, in performing its services hereunder, HCW will use and rely entirely upon such information as well as publicly available information regarding the Company and other potential parties to an Placement and that HCW does not assume responsibility for independent verification of the accuracy or completeness of any information, whether publicly available or otherwise furnished to it, concerning the Company or otherwise relevant to an Placement, including, without limitation, any financial information, forecasts or projections considered by HCW in connection with the provision of its services.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         E.           Confidentiality. In the event of the consummation or public announcement of any Placement, HCW shall have the right to disclose its participation in such Placement, including, without limitation, the placement at its cost of “tombstone” advertisements in financial and other newspapers and journals.   F.           Securities Matters. The Company shall be responsible for any and all compliance with the securities laws applicable to it, including Regulation D and the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, and unless otherwise agreed in writing, all state securities (“blue sky”) laws. HCW agrees to cooperate with counsel to the Company in that regard.   G.           Company Acknowledgement. The Company acknowledges that the Placement of convertible Securities may create significant risks, including the risk that the Company may have insufficient cash resources and/or registered shares to timely meet its payment and conversion obligations. The Company further acknowledges that, depending on the number and price of new shares issued, such transaction may result in substantial dilution which could adversely affect the market price of the Company’s shares. The Company agrees that it will perform and comply with the covenants and other obligations set forth in the Transaction Documents and that HCW will be entitled to rely on the representations, warranties, agreements and covenants of the Company contained in such Transaction Documents as if such representations, warranties, agreements and covenants were made directly to HCW by the Company hereunder.   H.           Indemnity.   1.          In connection with the Company’s engagement of HCW as placement agent, the Company hereby agrees to indemnify and hold harmless HCW and its affiliates, and the respective controlling persons, directors, officers, members, shareholders, agents and employees of any of the foregoing (collectively the “Indemnified Persons”), from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by any of them (including the reasonable fees and expenses of counsel), as incurred, (collectively a “Claim”), that are (A) related to or arise out of (i) any actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be taken by any Indemnified Person in connection with the Company’s engagement of HCW, or (B) otherwise relate to or arise out of HCW’s activities on the Company’s behalf under HCW’s engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party. The Company will not, however, be responsible for any Claim that is finally judicially determined to have resulted from the gross negligence or willful misconduct of any person seeking indemnification for such Claim. The Company further agrees that no Indemnified Person shall have any liability to the Company for or in connection with the Company’s engagement of HCW except for any Claim incurred by the Company as a result of such Indemnified Person’s gross negligence or willful misconduct.   2.          The Company further agrees that it will not, without the prior written consent of HCW, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person from any and all liability arising out of such Claim.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         3.          Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which indemnification is being sought hereunder, such Indemnified Person shall notify the Company in writing of such complaint or of such assertion or institution but failure to so notify the Company shall not relieve the Company from any obligation it may have hereunder, except and only to the extent such failure results in the forfeiture by the Company of substantial rights and defenses. If the Company so elects or is requested by such Indemnified Person, the Company will assume the defense of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably determines that having common counsel would present such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses available to it or other Indemnified Persons different from or in addition to those available to the Company, then such Indemnified Person may employ its own separate counsel to represent or defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses of such counsel. Notwithstanding anything herein to the contrary, if the Company fails timely or diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified by the Company therefor, including without limitation, for the reasonable fees and expenses of its counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In addition, with respect to any Claim in which the Company assumes the defense, the Indemnified Person shall have the right to participate in such Claim and to retain his, her or its own counsel therefor at his, her or its own expense.   4.          The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason then (whether or not HCW is the Indemnified Person), the Company and HCW shall contribute to the Claim for which such indemnity is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and HCW on the other, in connection with HCW’s engagement referred to above, subject to the limitation that in no event shall the amount of HCW’s contribution to such Claim exceed the amount of fees actually received by HCW from the Company pursuant to HCW’s engagement. The Company hereby agrees that the relative benefits to the Company, on the one hand, and HCW on the other, with respect to HCW’s engagement shall be deemed to be in the same proportion as (a) the total value paid or proposed to be paid or received by the Company pursuant to the Placement (whether or not consummated) for which HCW is engaged to render services bears to (b) the fee paid or proposed to be paid to HCW in connection with such engagement.   5.          The Company’s indemnity, reimbursement and contribution obligations under this Agreement (a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights that any Indemnified Party may have at law or at equity and (b) shall be effective whether or not the Company is at fault in any way.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         I.           Limitation of Engagement to the Company. The Company acknowledges that HCW has been retained only by the Company, that HCW is providing services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of HCW is not deemed to be on behalf of, and is not intended to confer rights upon, any shareholder, owner or partner of the Company or any other person not a party hereto as against HCW or any of its affiliates, or any of its or their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), employees or agents. Unless otherwise expressly agreed in writing by HCW, no one other than the Company is authorized to rely upon this Agreement or any other statements or conduct of HCW, and no one other than the Company is intended to be a beneficiary of this Agreement. The Company acknowledges that any recommendation or advice, written or oral, given by HCW to the Company in connection with HCW’s engagement is intended solely for the benefit and use of the Company’s management and directors in considering a possible Placement, and any such recommendation or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person or be used or relied upon for any other purpose. HCW shall not have the authority to make any commitment binding on the Company. The Company, in its sole discretion, shall have the right to reject any investor introduced to it by HCW.   J.           Limitation of HCW’s Liability to the Company. HCW and the Company further agree that neither HCW nor any of its affiliates or any of its their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents shall have any liability to the Company, its security holders or creditors, or any person asserting claims on behalf of or in the right of the Company (whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating to this Agreement or the Services rendered hereunder, except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to act by HCW and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of HCW.   K.          Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be fully performed therein. Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only in the state or federal courts located in the City of New York, State of New York. The parties hereto expressly agree to submit themselves to the jurisdiction of the foregoing courts in the City of New York, State of New York. The parties hereto expressly waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting in the City and State of New York. In the event of the bringing of any action, or suit by a party hereto against the other party hereto, arising out of or relating to this Agreement, the party in whose favor the final judgment or award shall be entered shall be entitled to have and recover from the other party the costs and expenses incurred in connection therewith, including its reasonable attorneys’ fees. Any rights to trial by jury with respect to any such action, proceeding or suit are hereby waived by HCW and the Company.   L.           Notices. All notices hereunder will be in writing and sent by certified mail, hand delivery, overnight delivery or email, if sent to HCW, to H.C. Wainwright & Co., LLC, at the address set forth on the first page hereof, email to: notices@hcwco.com and if sent to the Company, to the address set forth on the first page hereof, fax number 240-627-4121, Attention: Chief Executive Officer. Notices shall be effective upon delivery.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         M.           Miscellaneous. This Agreement shall not be modified or amended except in writing signed by HCW and the Company. This Agreement shall be binding upon and inure to the benefit of both HCW and the Company and their respective assigns, successors, and legal representatives. This Agreement constitutes the entire agreement of HCW and the Company with respect to this Placement and supersedes any prior agreements with respect to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect, and the remainder of the Agreement shall remain in full force and effect. This Agreement may be executed in counterparts (including facsimile counterparts), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.   *********************   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         In acknowledgment that the foregoing correctly sets forth the understanding reached by HCW and the Company, please sign in the space provided below, whereupon this letter shall constitute a binding Agreement as of the date indicated above.     Very truly yours,       H.C. WAINWRIGHT & CO., LLC     By             Name: Mark W. Viklund           Title: Chief Executive Officer   Accepted and Agreed:   Northwest Biotherapeutics, Inc.   By             Name: Linda Powers           Title: Chairman & Chief Executive Officer     430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         Annex A   SECTION 1. REGISTRATION STATEMENT   The Company represents and warrants to, and agrees with, the Placement Agent that:   (A)         The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (Registration File No. 333-185898) under the Securities Act of 1933, as amended (the “Securities Act”), which became effective on February 5, 2013, for the registration under the Securities Act of the Shares. At the time of such filing, the Company met the requirements of Form S-3 under the Securities Act. Such registration statement meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies with said Rule. The Company will file with the Commission pursuant to Rule 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder, a supplement to the form of prospectus included in such registration statement relating to the placement of the Shares and the plan of distribution thereof and has advised the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, including the exhibits thereto, as amended at the date of this Agreement, is hereinafter called the “Registration Statement”; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “Base Prospectus”; and the supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the “Prospectus Supplement.” Any reference in this Agreement to the Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus Supplement, as the case may be; and any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Base Prospectus or the Prospectus Supplement (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 the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be. No stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or the Prospectus Supplement has been issued, and no proceeding for any such purpose is pending or has been initiated or, to the Company's knowledge, is threatened by the Commission. For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act and the “Time of Sale Prospectus” means the preliminary prospectus, if any, together with the free writing prospectuses, if any, used in connection with the Placement, including any documents incorporated by reference therein.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         (B)         The Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations and did not and, as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus Supplement), in light of the circumstances under which they were made not misleading; and any further documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus Supplement, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There are no contracts or other documents required to be described in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.   (C)         The Company is eligible to use free writing prospectuses in connection with the Placement pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. The Company will not, without the prior consent of the Placement Agent, prepare, use or refer to, any free writing prospectus.   (D)         The Company has delivered, or will as promptly as practicable deliver, to the Placement Agent complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the Placement Agent reasonably requests. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in connection with the offering and sale of the Shares other than the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus Supplement, the Registration Statement, copies of the documents incorporated by reference therein and any other materials permitted by the Securities Act.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         In the event that a Direct Placement occurs off a registration statement other than the Registration Statement, prior to the commencement of any such Placement, the Company shall make written representations, warranties and covenants to HCW as to such subsequent registration statement (and other offering documents) that are substantially the same as the representations, warranties and covenants made under this Section, which representations, warranties and covenants shall be reasonably satisfactory to HCW.   SECTION 2.          REPRESENTATIONS AND WARRANTIES. The Company hereby makes the representations and warranties set forth below to HCW as of the date of the applicable Placement and as of the applicable Closing Date.   (A)         Reliance on Representations and Warranties to Purchasers. HCW shall be entitled to rely upon any and all representations and warranties of the Company included in the purchase agreements entered into by the Company and the Purchasers in connection with the Placement, subject to the qualifications and limitations therein, and such representations and warranties are incorporated by reference as though fully set forth in this Agreement.   (B)         FINRA Affiliations. There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater stockholder of the Company.   SECTION 3.          CLOSING. The obligations of HCW and the Purchasers, and the closing of the sale of the Securities under the Transaction Documents are subject to the accuracy, when made and on the applicable Closing Date, of the representations and warranties on the part of the Company and its Subsidiaries contained herein, to the accuracy of the statements of the Company and its Subsidiaries made in any certificates pursuant to the provisions hereof, to the performance by the Company and its Subsidiaries of their obligations hereunder, and to each of the following additional terms and conditions:   (A)         [REGISTERED OFFERINGS ONLY] No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Commission, and any request for additional information on the part of the Commission (to be included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall have been complied with to the reasonable satisfaction of HCW.   (B)         [REGISTERED OFFERINGS ONLY] HCW shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for HCW, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading.   (C)         All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each Transaction Document, and the Securities, and, if the Securities are registered, the Registration Statement, the Base Prospectus and the Prospectus Supplement, and all other legal matters relating to the Transaction documents and the transactions contemplated thereby shall be reasonably satisfactory in all material respects to counsel for HCW, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         (D)         HCW shall have received from outside counsel to the Company such counsel’s written opinion, addressed to HCW and the Purchasers dated as of the applicable Closing Date, in form and substance reasonably satisfactory to HCW, which opinion shall include a “10b-5” representation from such counsel.   (E)         Neither the Company nor any of its Subsidiaries shall have sustained since the date of the latest audited financial statements, any loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in or contemplated by the Base Prospectus and (ii) except as provided in the Transaction Documents, since such date there shall not have been any change in the capital stock or long-term debt of the Company or any of its Subsidiaries or any material change, or any material development involving a prospective material change, in or affecting the business, general affairs, management, financial position, stockholders’ equity, results of operations or prospects of the Company and its Subsidiaries, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of HCW, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated under the Transaction Documents or, if pursuant to an Underwritten Placement, pursuant to the Prospectus Supplement.   (F)         The Common Stock is registered under the Exchange Act and, as of the applicable Closing Date, the Shares shall be listed and admitted and authorized for trading on the Trading Market, and satisfactory evidence of such actions shall have been provided to HCW. The Company shall have taken no action designed to, or likely to have the effect of terminating the registration of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor has the Company received any information suggesting that the Commission or the Trading Market is contemplating terminating such registration or listing.   (G)         Subsequent to the execution and delivery of the Transaction Documents or underwriting agreement, as applicable, there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the Nasdaq National Market or the NYSE Alternext US or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum or maximum prices or maximum ranges for prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities in which it is not currently engaged, the subject of an act of terrorism, there shall have been an escalation in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred any other calamity or crisis or any change in general economic, political or financial conditions in the United States or elsewhere, if the effect of any such event in clause (iii) or (iv) makes it, in the sole judgment of HCW, impracticable or inadvisable to proceed with the sale or delivery of the Securities.   (H)         No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the applicable Closing Date, prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the applicable Closing Date which would prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC         (I)         The Company shall have prepared and filed with the Commission a Current Report on Form 8-K with respect to the Placement, including as an exhibit thereto this Agreement.   (J)         If a Direct Placement, the Company shall have entered into subscription agreements with each of the Purchasers and such agreements shall be in full force and effect and shall contain representations and warranties of the Company as agreed between the Company and the Purchasers.   (K)         FINRA shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition, the Company shall, if requested by HCW, make or authorize HCW’s counsel to make on the Company’s behalf, an Issuer Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay all filing fees required in connection therewith.   (L)         Prior to the applicable Closing Date, the Company shall have furnished to HCW such further information, certificates and documents as HCW may reasonably request.   All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for HCW.   430 Park Avenue | New York, New York 10022 | 212.356.0500 | www.hcwco.com Member: FINRA/SIPC
Exhibit 10.1     AMENDING AGREEMENT     THIS AGREEMENT dated as of the 8th day of November, 2011   BETWEEN:   LML PAYMENT SYSTEMS INC., a corporation continued under the laws of the Yukon Territory of 1680 – 1140 West Pender Street, Vancouver, B.C., V6E 4G1   (the “Corporation”)   AND:   CRAIG THOMSON, of 4787 Amblewood Dr., Victoria, B.C., V8Y 2S2   (the “Executive”)     WHEREAS:   A.   The Corporation and the Executive are parties to an employment agreement dated February 5, 2009 (the “Original Agreement”) whereby the Corporation has retained the services of the Executive in acting as the Corporation’s President;   B.   The Compensation Committee of the Board of Directors has determined that it is in the best interests of the Corporation to:   (a)   amend Section 8.1 of the Original Agreement to increase the Executive’s annual vacation entitlement from fifteen (15) days to twenty (20) days;   (b)   amend Section 11.7 of the Original Agreement to make certain provisions the same as that of other senior executives of the Corporation;   (c)   amend Section 13.1 of the Original Agreement such that the Executive shall not engage in or become associated with any business or other endeavour that engages in any country in which the Company has significant business operations until the twelve (12) month anniversary of the date of termination.   C.   It is appropriate to amend the Original Agreement as described in recital B of this Amending Agreement, and   D.   The parties now wish to amend the Original Agreement upon the terms and conditions set out in this Agreement;       -1- --------------------------------------------------------------------------------         NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto covenant and agree as follows:   1.   Section 8.1 of the Original Agreement is deleted in its entirety.   2.   The following new section 8.1 is added to the Original Agreement:     8.1 The Executive shall be entitled to twenty (20) days’ vacation.  Vacation not taken during the applicable fiscal year may be carried over to the next following fiscal year.   3.   Section 11.7 of the Original Agreement is deleted in its entirety.   4.   The following new section 11.7 is  added to the Original Agreement     11.7 In the event that the Executive’s employment terminates during the Term, the Company shall provide the Executive with the payments and benefits set forth below. The Executive acknowledges and agrees that the payments set forth in this Section 11.7 constitute adequate liquidated damages for termination of his employment during the Term.     (a) If the Executive’s employment is terminated by the Company without Cause, or the Executive terminates his employment for Good Reason,   (i)           the Company shall pay to the Executive on or before the date of termination (the “Date of Termination”) a lump sum equal to     A. Base Salary and accrued vacation pay through to the Date of Termination; plus     B. Two (2) years’ current Base Salary plus two (2) times the Executive’s last Annual Bonus;   (ii)           the Company shall, consistent with past practice, reimburse the Executive pursuant to Section 6 for business expenses incurred but not paid prior to such termination of his employment;   (iii)            upon the Date of Termination all of the Executive’s granted but unexpired stock options shall vest forthwith; and   (iv)           the Company shall continue the welfare benefit plan and programs described in Section 5 above for two (2) years’ following the Date of Termination, or until the Executive replaces such plans and programs, whichever is earlier.   5.   Section 13.1 of the Original Agreement is deleted in its entirety.     -2- --------------------------------------------------------------------------------       6.   The following new section 13.1 is added to the Original Agreement:     13.1 During the Term and until the 12 month anniversary of the Date of Termination, if the Executive’s employment is terminated by the Company for Cause or the Executive terminates employment without Good Reason, the Executive shall not engage in or become associated with any business or other endeavour that engages in any country in which the Company has significant business operations as of the Date of Termination to a significant degree in a business that directly competes with all or any substantial part of the Company’s business of:   (a)   Electronic  payment processing solutions including:   (i)   credit card, debit card, EFT, ACH, authentication, payroll;   (ii)   merchant acquiring and payment gateway;   (iii)   electronic check re-presentment (whereby returned paper checks are re-presented for payment electronically)   (iv)   mobile payments;   (v)   mobile wallet, and   (vi)   check collection;     7.   All provisions of the Original Agreement which are not amended by this Agreement remain unchanged and the amendments contemplated in sections 1 to 6  hereof taken together with all other unamended provisions of the Original Agreement form the employment agreement between the Corporation and the Executive as if such amendments formed part of the Original Agreement.   IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written.   LML PAYMENT SYSTEMS INC.     Per:      /s/ Greg A. MacRae     Authorized Signatory     CRAIG THOMSON             Signature: /s/ Craig Thomson     Witness Signature: /s/ Ryan Stewart             Print Witness Name:  Ryan Stewart                             -3- --------------------------------------------------------------------------------
Exhibit 10.1 [insuletcorpa02.gif] January 6, 2015 Peter Devlin 65 Walnut Ave Andover, MA 01810      Dear Peter: The purpose of this letter agreement (the “Agreement”) is to set forth the terms of your separation from Insulet Corporation (“Insulet” or the “Company”).1 The Transitional Pay and Benefits described below are contingent on your agreement to and compliance with the terms of this Agreement, including your signing and not revoking of this Agreement. This Agreement will become effective and enforceable on the eighth day after you sign it, provided it is not revoked before that time (the “Effective Date”). 1. Transition Role. The Company will continue to employ you on an at-will basis. On a mutually agreed upon date, you will resign as an officer of the Company (including as a Section 16 officer) and from any other director or officer positions you hold with any of the Company’s subsidiaries or entities affiliated with the Company. Effective your resignation date and continuing until April 3, 2015 (the “Transitional Employment Period”), you shall be in a “Transition Role.” During the Transitional Employment Period, you shall be working a fulltime assignment focusing on strategic business development efforts. During the Transitional Employment Period, you shall receive the following Transition Pay and Benefits: (i) continuation of your base bi-weekly salary of twelve thousand two hundred thirty dollars seventy seven cents ($12,230.77), subject to all ordinary payroll taxes and withholdings, in accordance with Insulet’s payroll policies and procedures; and (ii) continuation of your participation in Insulet’s employee insurance benefits programs, but only to the extent that you currently participate in such programs and remain eligible under any applicable plan document(s). Vesting of any outstanding stock options or restricted stock units previously granted to you by the Company will continue on account of your employment during the Transitional Employment Period and will cease as of the Separation Date. You specifically acknowledge that the opportunities to remain employed on an at will basis during the Transitional Employment Period and to receive associated Transition Pay and Benefits are being provided as part of the separation of your employment and are in consideration of your agreements, including the release of claims, included in this Agreement. It is further understood and agreed that no other benefits or payments of any kind are owed to you other than as set forth in this Section 1. 2. Separation of Employment. Your employment with the Company shall terminate on April 3, 2015, unless you resign on an earlier date or the Company ends the employment relationship due to your material breach of this agreement “provided, however, that before taking any such action to end your employment, the Company will provide you with written notice detailing the alleged material breach and ten business days to cure the breach. For purposes of this Agreement the actual last date of your employment whether it is April 3, 2015 or an earlier date shall be referred to the “Separation Date”. For purposes of clarity, unless you resign on an earlier date or the Company ends the employment relationship due solely to a material breach of this Agreement, this agreement will be enforceable by the parties hereto in accordance with its terms. You acknowledge that from and after the Separation Date, you have no authority to, and shall not, represent yourself as an employee or agent of the Company. On the Separation Date, the Company shall pay your final accrued but unpaid base salary and any accrued but unused vacation based on your employment through the Separation Date. You shall be entitled to be reimbursed 1 Except for the obligations set forth in Sections 2 and 3 of this Agreement which shall solely be the obligations of Insulet Corporation, whenever the terms “Insulet” or “the Company” are otherwise used in this Agreement, they shall be deemed to include Insulet Corporation and any related entities (including, without limitation, any divisions, affiliates, parents or subsidiaries of Insulet Corporation), and its and their respective current and former officers, directors, employees, agents, successors and assigns. -------------------------------------------------------------------------------- for reasonable business expenses incurred prior to the Separation Date in connection with your employment subject to the Company’s policies and procedures with respect to expense reimbursement. 3. Severance Pay and Other Economic Benefits. Provided you enter into and comply with this Agreement and in exchange for the mutual covenants set forth in this Agreement, the Company will provide the following: (i) The Company will pay you salary continuation in the amount of one year of your base salary of three hundred eighteen dollars ($318,000), less applicable deductions and withholdings (“Severance Pay”), payable in substantially equal installments in accordance with the Company’s payroll practice over twelve (12) months, beginning on the first payroll date that occurs after the Separation Date. As used herein, Severance Period means the period from April 4, 2015 to April 2, 2016. (ii) Upon your making a timely COBRA election, the Company will pay the standard employer portion of your medical and dental insurance premiums until the earlier of (i) the last day of the Severance Period, (ii) the date you become eligible for health insurance through another employer, and (iii) the date you otherwise become ineligible for COBRA (the “Severance Benefits”), provided that you timely pay your regular employee contribution toward your medical and dental insurance premiums as required by the Company or its COBRA administrator. The Company’s obligations under this subsection are contingent on you making a timely COBRA election. Additionally, the Company shall only be required to continue and contribute to your medical and dental insurance under this subsection to the same extent that such insurance is provided to persons employed by the Company. (iii) You will be eligible for 2014 bonus which shall be calculated as follows: 70% of your 2014 bonus will be paid at the level established by the Company’s Board of Directors based upon the Company’s overall achievement of the quantitative Company goals for 2014; 30% of your 2014 bonus will be paid at 84% of the target for your individual Executive Goals for 2014. Payment will be made in Q1 consistent with standard payment practices. In addition payment of a pro-rata 2015 bonus in the amount of thirty nine thousand seven hundred fifty dollars ($39,750) less state and federal income and welfare taxes and any other mandatory deductions under applicable laws (the “2015 Bonus”), payable in substantially equal installments in accordance with the Company’s payroll practice over twelve (12) months, beginning on the first payroll date that occurs after the Separation Date. (iv) Reimburse you up to a maximum of Fifteen Thousand Dollars ($15,000) for documented expenses incurred for professional outplacement services.   4. Continued Medical Insurance after the Severance Period. After the expiration of the Severance Period, you will have the right to continue your medical and dental insurance solely at your own cost pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to the extent you and your qualified beneficiaries remain eligible. The “qualifying event” under COBRA shall be the Separation Date. 5. Acknowledgements. You acknowledge and agree that your entitlement to the Severance Pay and Severance Benefits is subject to and conditioned upon your execution, nonrevocation and compliance with this Agreement. You further acknowledge that the Severance Pay and Severance Benefits provided herein are in lieu of and intended by both parties to supersede any other right to severance pay or benefits including without limitation the severance pay and benefits set forth in the Insulet Amended and Restated Executive Severance Plan, as amended (hereinafter the “Executive Severance Plan”), a copy of which is attached hereto as Exhibit A. You further acknowledge and agree that except as set forth herein in this Agreement (see Section 7(i) below), this Agreement supersedes the Executive Severance Plan. The Severance Pay and Severance Benefits are not intended to, and shall not be construed to, constitute a severance plan, and shall confer no benefit on anyone other than the parties hereto. You further acknowledge that except for (i) the specific financial consideration set forth in this Agreement, (ii) earned but unpaid regular wages earned through the Separation Date, (iii) accrued but unused vacation (which shall be paid to you in accordance with applicable law), you are not now and shall not in the future be entitled to any other compensation or benefit including, without limitation, other wages, commissions, bonuses, incentives, vacation pay, holiday pay, stock options or other equity, or any other form of compensation or benefit.   -------------------------------------------------------------------------------- 6. Unemployment Benefits. You may seek unemployment benefits as a result of the termination of your employment from the Company, and nothing in this Agreement impairs that right. Decisions regarding eligibility for and amounts of unemployment benefits are made by the applicable state unemployment agency, not by the Company. The Company agrees to provide any and all requested or necessary documents to enable you to seek unemployment benefits, and further agrees that it will not take a position that would interfere with your ability to obtain unemployment benefits as a result of the separation of your employment from the Company. Nothing in this Section shall be construed to require the Company to make untruthful statements to a state agency in connection with any claim for unemployment benefits. 7. Confidentiality and Other Obligations. You expressly acknowledge and agree to the following: (i) That the provisions of Sections 4 and 9 of the Executive Severance Plan, and your obligations pursuant to Section 5 of the Executive Severance Plan, are incorporated herein by reference. (ii) That you will promptly return to the Company all the Company documents, electronic, hardcopy otherwise (and any copies) and other Company property, on or before the Separation or promptly upon an earlier request by the Company. (iii) That you will abide by the terms of the Employee Non-Disclosure and Developments Agreement and the Non-Competition and Non-Solicitation Agreement both of which are attached hereto as Exhibit B, the terms of which are hereby incorporated into this Agreement by reference, and that you otherwise will keep all confidential information and trade secrets of the Company confidential. (iv) That you will abide by any and all common law and/or statutory obligations relating to protection and non-disclosure of the Company’s trade secrets and/or confidential and proprietary documents and information. (v) That all information relating in any way to this Agreement, including the terms and amount of financial consideration provided for in this Agreement, shall be held confidential by you and shall not be publicized or disclosed to any person or entity (other than an immediate family member, legal counsel, or financial advisor, provided that any such individual to whom disclosure is made agrees to be bound by these confidentiality obligations), except as otherwise mandated by law. (vi) During your employment and after the termination of your employment you agree not to make or cause to be made, directly or indirectly, any statement to any person disparaging the Company or any of its stockholders, directors, officers or employees or commenting unfavorable or falsely on the character, business judgment, services, products, business practices or business reputation of the Company or any of its stockholder, directors, officers or employees. For its part, the Company shall instruct its CEO, General Counsel, Chief Financial Officer, Executive Vice President Human Relations, Chief Operating Officer, Vice President Sales, Vice President, Marketing, and Board of Directors to not make any statements that are professionally or personally disparaging about, or adverse to, your interests, including, but not limited to, any statements that disparage you, and shall further instruct said officers and directors to not engage in any conduct that could reasonably be expected to harm professionally or personally your reputation. (vii) To the extent that any of your obligations under Sections 4 and 5 of the Executive Severance Plan exceed those set forth in Exhibit B, then the provisions of the Executive Severance Plan shall prevail. If a court of competent jurisdiction finally determines that you have materially breached any covenant in this Section 7, the breach shall relieve the Company of any further obligations under this Agreement and, in addition to any other legal or equitable remedy available to the Company, shall entitle the Company to end your employment if you are still employed, and/or to stop providing and/or recover any Severance Pay and Severance Benefits payable or paid to you (or on your behalf) pursuant to Section 3 of this Agreement -------------------------------------------------------------------------------- 7. Cooperation. During the Severance Period, you will make yourself available to Insulet, upon reasonable notice, either by telephone or, if Insulet believes necessary, in person to assist Insulet in any matter relating to the services performed by you during your employment with Insulet including, but not limited to, transitioning your duties to others at Insulet, and ensuring that all documentation is recorded fully and completely. Such cooperation shall not be a service relationship for purposes of any of your outstanding equity. 8. Release of Claims. You hereby acknowledge and agree that by signing this Agreement, you are waiving your right to assert any Claim (as defined below) against the Company arising from acts or omissions that occurred on or before the date you sign this Agreement. Please note the definition of the Company contained in footnote 1 of this Agreement. Your waiver and release is intended to bar any form of legal claim, lawsuit, charge, complaint or any other form of action (jointly referred to as “Claims”) against the Company seeking money or any other form of relief, including but not limited to equitable relief (whether declaratory, injunctive or otherwise), damages or any other form of monetary recovery (including but not limited to back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys’ fees and any other costs). You understand that there could be unknown or unanticipated Claims resulting from your employment with the Company and the termination of your employment, and you agree that such Claims are included in this waiver and release. Without limiting the generality of the previous paragraph, you specifically waive and release the Company from any Claims arising from or related to your employment relationship with the Company or the termination of your employment, including without limitation: (i) Claims under any statute, ordinance, regulation, executive order, common law, constitution and/or other source of law of any state, country and/or locality (collectively and individually referred to as “Law”), including but not limited to the United States, the Commonwealth of Massachusetts and any other state or locality where you worked for the Company; (ii) Claims under any Law concerning discrimination, harassment or fair employment practices, including but not limited to Massachusetts General Laws Chapter 151B, Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.), 42 U.S.C. § 1981, the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.) and the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.), each as they may have been amended through the Effective Date; (iii) Claims under any Law relating to wages, hours, whistleblowing, leaves of absences or any other terms and conditions of employment, including but not limited to the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 et seq.), the Massachusetts Payment of Wages Law (Massachusetts General Laws Chapter 149, §§ 148, 150), Massachusetts General Laws Chapter 149 in its entirety, and Massachusetts General Laws Chapter 151 in its entirety (including but not limited to the minimum wage and overtime provisions), each as they may have been amended through the Effective Date. You specifically acknowledge that you are waiving any Claims for unpaid wages under these and other Laws; (iv) Claims under any local, state or federal common law theory; (v) Claims arising under the Company’s policies or benefit plans; and (vi) Claims arising under any other Law or constitution. This Section 9 shall not release the Company from any obligation expressly set forth in this Agreement. or preclude you from pursuing any claims to enforce this Agreement. In addition, nothing in this Agreement operates as a waiver of or otherwise impacts your (x) vested benefits under the Company’s 401(k) plan, (y) vested equity under the Company’s stock plan(s), and (z) any rights to indemnification, whether pursuant to insurance policy including directors and officers insurance, contract, the Company’s articles of incorporation, by-laws, and/or charter, or applicable law. You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the Severance Pay and/or Severance Benefits provided for in this Agreement. -------------------------------------------------------------------------------- The Company hereby releases and forever discharges you generally from all known, or reasonably susceptible of being known, claims, demands, debts, damages and liabilities of every name and nature that, as of the date when the Company signs this Agreement, the Company has, ever had, now claims to have or ever claimed to have had against you (“Company Claims”). This release includes, without implication of limitation, the complete waiver and release of all Company Claims arising in connection with your employment with and/or service as an officer and/or director of the Company and its subsidiaries or affiliates, and/or separation from employment with and/or service as an officer and/or director of the Company, provided, however, that notwithstanding the foregoing, the Company does not release you from any civil claims based on any acts and/or omissions that satisfy the elements of a criminal offense or claims arising out of any deliberate misconduct that resulted in injury to the Company (provided that the Company hereby represents that it knows of no such claims) nor does the Company release you with respect to any clawback of your compensation to the extent required by the Sarbanes-Oxley Act (“SOX”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) or any other applicable law. 9. OWBPA. Because you are at least forty (40) years of age, you have specific rights under the federal Age Discrimination in Employment Act (“ADEA”) and Older Workers Benefits Protection Act (“OWBPA”), which prohibit discrimination on the basis of age. The release in Section 9 is intended to release any Claim you may have against the Company alleging discrimination on the basis of age under the ADEA, OWBPA and other Laws. Notwithstanding anything to the contrary in this Agreement, the release in Section 9 does not cover rights or Claims under the ADEA that arise from acts or omissions that occur after the date you sign this Agreement.          It is the Company’s desire and intent to make certain that you fully understand the provisions and effects of this Agreement. To that end, the Company hereby advises you in writing to consult with legal counsel prior to signing this Agreement for the purpose of reviewing the terms of this Agreement. Also, because you are at least age 40, and consistent with the provisions of the OWBPA, the Company is providing you with twenty-one (21) days to consider and accept the terms of this Agreement by signing below and returning it to Insulet, c/o Kathleen Hayes at Insulet, 600 Technology Park Drive, Suite 200, Billerica, MA 01821. In addition, you may rescind your assent to this Agreement if, within seven (7) days after you sign this Agreement, you deliver a notice of rescission to Kathleen Hayes at the Company. To be effective, such rescission must be hand delivered or postmarked within the seven (7) day period and sent by certified mail, return receipt requested, to Kathleen Hayes at the Company at the above referenced address. Further, consistent with federal laws prohibiting discrimination (the “Federal Discrimination Laws”), nothing in this Agreement shall be deemed to prohibit you from challenging the validity of the release set forth in Section 9 under the Federal Discrimination Laws or from filing a charge or complaint of employment related discrimination with the Equal Employment Opportunity Commission (“EEOC”), or from participating in any investigation or proceeding conducted by the EEOC. However, this Agreement does prohibit you from seeking or receiving monetary damages or other individual-specific relief in connection with any such charge or complaint of employment-related discrimination. Further, nothing in this Agreement shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the basis that your signing of this Agreement constitutes a full release of any individual rights under the Federal Discrimination Laws, or the Company’s right to seek restitution or other legal remedies to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that you successfully challenge the validity of this release and prevail in any claim under the Federal Discrimination Laws.   10. Miscellaneous Provisions. (i) Except as otherwise expressly provided in this Agreement this Agreement supersedes any and all other prior oral and/or written agreements, and sets forth the entire agreement between you and the Company. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. (ii) This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts, shall take effect as an instrument under seal, and shall be governed by the law of the Commonwealth of Massachusetts, without giving effect to conflict of law principles. -------------------------------------------------------------------------------- (iii) You agree that any action, demand, claim or counterclaim relating to the terms and provisions of this Agreement, or to its breach, shall be commenced in Massachusetts in a court of competent jurisdiction, and you further acknowledge that venue for such actions shall lie exclusively in Massachusetts and that material witnesses and documents would be located in Massachusetts. You also agree that a court in Massachusetts will have personal jurisdiction over you, and you waive any right to raise a defense of lack of personal jurisdiction by such a court. (iv) Both parties agree that any action, demand, claim or counterclaim arising out of this Agreement shall be resolved by a judge alone, and both parties hereby waive and forever renounce the right to a trial before a civil jury. (v) If your release of Claims pursuant to Section 9 is found to be unenforceable in whole or part (except for your release of federal age discrimination Claims, which shall not be subject to this sentence), the Company will have the option, in its sole discretion, to enforce the portions of the Agreement found not to be unenforceable. In the event that any other provision of this Agreement is determined to be unenforceable in whole or part (including your release of federal age discrimination Claims), the remainder of the Agreement shall be enforced in full. (vi) The parties intend that all payments and benefits provided for in this Agreement will be administered in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder either comply with Section 409A or are exempt from Section 409A. All expenses eligible for reimbursement hereunder shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.   (vii) This Agreement shall inure to the benefit of and be binding upon the Company and you, and its and your respective successors, executors, administrators, heirs and permitted assigns. In the event of your death after the Separation Date but prior to the provision by the Company of all of the Severance Pay and Other Economic Benefits described in Section 3 of this Agreement, the Company shall continue to provide such severance pay and Severance Benefits to your beneficiary designated in writing to the Company prior to your death (or to your estate, if you fail to make such designation). By executing this Agreement, you are acknowledging that you have been afforded sufficient time to understand the terms and effects of this Agreement and to consult with legal counsel, that your agreements and obligations hereunder are made voluntarily, knowingly and without duress, and that neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement. -------------------------------------------------------------------------------- If you wish to accept this Agreement, please sign, date and return the enclosed copy of this Agreement within twenty-one (21) days to Kathleen Hayes at Insulet, 600 Technology Park Drive, Billerica, MA 01821.       Yours very truly,               Insulet Corporation             By: /s/ Patrick J. Sullivan       Patrick J. Sullivan       President & Chief Executive Officer           /s/ Peter Devlin       Peter Devlin             Dated: January 6, 2015
Exhibit 10.16 Tuesday, December 15, 2015 PERSONAL AND CONFIDENTIAL Frank H. Smalla 98 Locust Road Winnetka, IL 60093 Dear Frank: We are pleased to offer you the position of Senior Vice President, Finance of The Boston Beer Company, Inc., reporting directly to me. The following are the parameters of our offer:     •   Title: Senior Vice President, Finance. You will assume the role of Chief Financial Officer of the Company at the time that position is vacated by Bill Urich, anticipated end-February or early March, 2016.     •   Anticipated Start Date: January 4, 2016     •   Base Annualized Salary: $500,000, payable in bi-weekly installments, subject to applicable payroll and withholding taxes.     •   Annual Bonus Potential: 60% of paid salary each calendar year. The bonus will be tied to Company Goals to be determined annually. Bonuses are paid on calendar year performance and you must be employed on December 31st of the applicable year to receive the bonus. Bonus multiplier of 1.5x is available for significant performance above Target.     •   Options Grant: You will be granted options for Class A Common Stock of The Boston Beer Company, Inc. valued at approximately $4,000,000 (accounting value of the options). The Option will be granted on the third business day after the first release of quarterly financial results following the date on which you commenced full-time employment (on or about February 23, 2016). The number of shares will be determined based on the market price on the day prior to the date of grant and the per share exercise price will be that market price.     •   The options will vest on the following schedule:     •   20% vest on third anniversary of date of grant     •   20% vest on fourth anniversary of date of grant     •   20% vest on fifth anniversary of date of grant     •   20% vest on sixth anniversary of date of grant     •   20% vest on seventh anniversary of date of grant -------------------------------------------------------------------------------- Frank H. Smalla December 15, 2015 Page 2 Offer Letter     •   The options have a ten-year life but expire ninety days after the end of employment. Details are in the attached form of the Option Agreement.     •   Compensation structure is determined and additional option grants are made at the discretion of the Company’s Board of Directors based on the recommendation of the Board’s Compensation Committee, as is the case with other Company senior officers. Discretionary option awards are generally granted effective January 1 each year and are based on Company and individual performance. Vesting of discretionary options is frequently both time- and performance-based. Due to the size of the initial grant in this offer, you should not expect any further awards to occur prior to January 1, 2018.     •   Restricted Stock: At the same time that you will receive your Option grant, you will be granted restricted stock in The Boston Beer Company, Inc. valued at $1,000,000. The actual number of shares to be granted will be determined based on the market price on the day prior to the date of grant.     •   The shares will vest one-third each year on the first, second and third anniversary of your date of grant.     •   Performance and Compensation Review: Your performance will be formally reviewed on an annual basis and any adjustment to compensation may require approval of the Compensation Committee. Adjustments generally take effect as of January 1.     •   Relocation: Provided you agree to the Company’s Relocation Payback guidelines included with this offer, the Company will provide you with the following relocation assistance:     •   Sale of Current Home - Reimbursement of third party agent commission up to 6%. Legal fees will be reimbursed (maximum of $2,000).     •   If you need to sell your home in order to relocate, the Company has a program which may, in some circumstances, provide you with some tax savings related to the transaction. When the time comes to place your house on the market, please do not contact or sign with a selling agent prior to discussing your home sale needs with the HR Department.     •   Boston Beer will not assume any liability or risk with respect to the sale of your home, including but not limited to, covering a negative equity position, guaranteed buy-out of property, etc.     •   Assistance in Purchasing New Residence - Purchase closing costs normally paid by the purchaser up to a maximum of 1% of the value of the loan. Mortgage loan points are not reimbursed.     •   Boston Beer will not assume any liability or risk in reference to the purchase of a new home, including but not limited to equity loans, advanced pay, etc.   -------------------------------------------------------------------------------- Frank H. Smalla December 15, 2015 Page 3 Offer Letter     •   Home Finding – reasonable number of trips for you and your spouse including food, lodging and transportation (utilizing the Company’s travel agency to the extent practicable).     •   Transportation to New Location – actual expenses incurred by using the most direct route for one trip (utilizing the Company’s travel agency to the extent practicable).     •   Temporary Housing – lodging (e.g., short term apartment in Boston) through August, 2016.     •   Movement of Household Goods – moving company will pack and move ordinary household goods, and two (2) vehicles.     •   Storage – storage of household goods up to 60 days.     •   Settling-in Allowance – reimbursement of actual out of pocket expenses incurred during your move, including but not limited to application fees, driver’s license fee, car registration fees and utility hook-up fees.     •   Miscellaneous Allowance –should you utilize temporary housing, Boston Beer will reimburse up to $2,000 (net of taxes) each month for miscellaneous commuting and travel expenses through August, 2016.     •   Paid Time Off (PTO): During the first two (2) years of your employment, in addition to 10 company holidays, you will be eligible for seventeen (17) PTO days per year, accruing at 2.62 hours / week, which will be pro-rated during your first year of employment. On your second anniversary, you will be eligible for twenty-two (22) PTO days per year, accruing at 3.38 hours / week. You will begin accruing PTO immediately, and we encourage you to take all of this time within the calendar year in which accrued.     •   Benefits: You will be eligible to participate in the Company’s medical and dental programs upon your first day of employment with us. You will be eligible to participate in our 401(k) plan at the beginning of the month following your start date. Enclosed you will find a more detailed description of our benefits package and payroll information. You should complete the enclosed forms and send them to Ai-Li Lim, VP of Human Resources, at the above address prior to your first day of employment with us. If you have specific questions regarding your benefits, you may contact Ai-Li directly at . Please note — it is imperative that you provide I-9 documentation to Ai-Li on or before your first day so we are able to add you to our payroll system. Failure to do so may delay your first paycheck.     •   Employment Agreement: Enclosed are two (2) copies of an Employment Agreement, which includes, among other provisions, an agreement to protect the Company’s proprietary and confidential information and a covenant not to compete. This offer is contingent on your signing the Employment Agreement prior to your start date. Please sign both copies and send to Ai-Li Lim. You will receive a fully-executed copy of the agreement for your files after your start date.   -------------------------------------------------------------------------------- Frank H. Smalla December 15, 2015 Page 4 Offer Letter     •   At-Will Employment: Your employment is, and will at all times remain, at will, meaning that you or the Company may terminate your employment at any time, with or without cause, for any reason or for no reason. It also means that, if your employment is terminated by the Company, you have no legal entitlement to severance pay. By accepting our offer of employment you confirm that you understand your at-will status. Please note that at this level, your compensation, equity grants, and biographical information may be disclosed publicly in our proxy statement and other public documents filed with the Securities and Exchange Commission. Also, all aspects of your compensation may be subject to Compensation Committee review and approval from time to time. The Company has also established claw-back provisions to recover executive compensation not earned. All employees are expected to abide by our Code of Ethics and Business Conduct and Insider Trading Policy (copies of which are enclosed), and such other policies as may be adopted from time to time by the Company. Please indicate your acceptance of this offer by signing one copy of this letter and returning it to Ai-Li Lim by fax at or by mail at the above address. This offer is valid until December 24, 2016 and is contingent upon our receipt of satisfactory background and reference checks, as well as your signing the Employment Agreement in the form enclosed with this letter. Frank, we are delighted to extend this offer and hope you decide to join us. I look forward to working with you as together we grow this company. Best regards, /s/ Martin F. Roper Martin Roper President and CEO   Enc. Form of Option Agreement Form of Restricted Stock Agreement Employee Equity Incentive Plan (EEIP) Disclosure Statement Employment Agreement (2 copies) Code of Ethics and Business Conduct Insider Trading Policy Corporate Governance Guidelines Benefits Guide Relocation Approval Payback Form Relocation Survey Form   cc: Jim Koch Bill Urich Ai-Li Lim   -------------------------------------------------------------------------------- Frank H. Smalla December 15, 2015 Page 5 Offer Letter   Accepted and agreed to:   /s/ Frank H. Smalla     December 16, 2015 Frank H. Smalla     Date This document should not be misconstrued as a contract. This is an offer for employment at will.
Exhibit 10.20 ACHAOGEN, INC. CHANGE IN CONTROL SEVERANCE AGREEMENT This Change in Control Severance Agreement (the “Agreement”) is made and entered into by and between [__________] (“Executive”) and Achaogen, Inc. (the “Company”), effective as of the latest date set forth by the signatures of the parties hereto below (the “Effective Date”). R E C I T A L S A.The Board of Directors of the Company (the “Board”) recognizes that Executive’s changing role at the Company and that the possibility of an acquisition of the Company or an involuntary termination can be a distraction to Executive and can cause Executive to consider alternative employment opportunities.  The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of such an event. B.The Board believes that it is in the best interests of the Company and its stockholders to provide Executive with an incentive to continue Executive’s employment and to motivate Executive to maximize the value of the Company upon a Change in Control (as defined below) for the benefit of its stockholders. C.The Board believes that it is imperative to provide Executive with severance benefits upon certain terminations of Executive’s service to the Company that enhance Executive’s financial security and provide incentive and encouragement to Executive to remain with the Company notwithstanding the possibility of such an event. D. Unless otherwise defined herein, capitalized terms used in this Agreement are defined in Section 9 below. The parties hereto agree as follows: 1.Term of Agreement.  This Agreement shall become effective as of the Effective Date and terminate upon the date that all obligations of the parties hereto with respect to this Agreement have been satisfied. 2.At-Will Employment.  The Company and Executive acknowledge that Executive’s employment is and shall continue to be “at-will,” as defined under applicable law.  If Executive’s employment terminates for any reason, Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement. 3.Covered Termination Other Than During a Change in Control Period.  If Executive experiences a Covered Termination other than during a Change in Control Period, and if Executive       --------------------------------------------------------------------------------   delivers to the Company a general release of all claims against the Company and its affiliates (a “Release of Claims”) that becomes effective and irrevocable within sixty (60) days, or such shorter period of time specified by the Company, following such Covered Termination, then in addition to any accrued but unpaid salary, bonus, benefits, vacation and expense reimbursement payable in accordance with applicable law, the Company shall provide Executive with the following: (a)Severance.  Executive shall be entitled to receive a severance payment equal to [“twelve (12)” for the Tier 1 and Tier 2 executives; “nine (9)” for the Tier 3 executives; and “six (6)” for the Tier 4 executives] months of Executive’s base salary at the rate in effect immediately prior to the Termination Date payable in a cash lump sum, less applicable withholdings, on the first payroll date following the date the Release of Claims becomes effective and irrevocable. (b)Continued Healthcare.  If Executive elects to receive continued healthcare coverage pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall directly pay, or reimburse Executive for, the premium for Executive and Executive’ s covered dependents through the earlier of (i) the [“twelve (12)” for the Tier 1 and Tier 2 executives; “nine (9)” for the Tier 3 executives; and “six (6)” for the Tier 4 executives] month anniversary of the Termination Date and (ii) the date Executive and Executive’s covered dependents, if any, become eligible for healthcare coverage under another employer’s plan(s).  After the Company ceases to pay premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at Executive’s expense in accordance the provisions of COBRA. (c)Equity Awards.  Each outstanding and unvested equity award, including, without limitation, each stock option and restricted stock award, held by Executive shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, in each case, with respect to that number of shares that would have vested during the [“twelve (12)” for the Tier 1 and Tier 2 executives; “nine (9)” for the Tier 3 executives; and “six (6)” for the Tier 4 executives] month period immediately following the Termination Date had Executive’s employment with the Company continued during such period.   4.Covered Termination During a Change in Control Period.  If Executive experiences a Covered Termination during a Change in Control Period, and if Executive executes and fails to revoke during any applicable revocation period a Release of Claims within sixty (60) days, or such shorter period of time specified by the Company, following such Covered Termination, then in addition to any accrued but unpaid salary, bonus, benefits, vacation and expense reimbursement payable in accordance with applicable law, the Company shall provide Executive with the following: (a)Severance.  Executive shall be entitled to receive an amount equal to the sum of (i) [“eighteen (18)” for the Tier 1 executives, “fifteen (15)” for the Tier 2 executives; “twelve (12)” for the Tier 3 executives; and “nine (9)” for the Tier 4 executives] months of Executive’s base salary and (ii) to [“one hundred percent (100%)” for the Tier 1, Tier 2 and Tier 3 executives; and “seventy-five percent (75%)” for the Tier 4 executives] of Executive’s target annual bonus assuming achievement of performance goals at one hundred percent (100%) of target, in each case, at the rate in effect immediately prior to the Termination Date, payable in a cash lump sum, less applicable -2-     --------------------------------------------------------------------------------   withholdings, on the first payroll date following the date the Release of Claims becomes effective and irrevocable. (b)Continued Healthcare.  If Executive elects to receive continued healthcare coverage pursuant to the provisions of COBRA, the Company shall directly pay, or reimburse Executive for, the premium for Executive and Executive’s covered dependents through the earlier of (i) the [“eighteen (18)” for the Tier 1 executives, “fifteen (15)” for the Tier 2 executives; “twelve (12)” for the Tier 3 executives; and “nine (9)” for the Tier 4 executives]  month anniversary of the Termination Date and (ii) the date Executive and Executive’s covered dependents, if any, become eligible for healthcare coverage under another employer’s plan(s).  After the Company ceases to pay premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at Executive’s expense in accordance the provisions of COBRA. (c)Equity Awards.  Each outstanding and unvested equity award, including, without limitation, each stock option and restricted stock award, held by Executive shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, in each case, with respect to one hundred percent (100%) of the unvested shares underlying Executive’s equity awards as of the Termination Date.   5.Certain Reductions.  Notwithstanding anything herein to the contrary, the Company shall reduce Executive’s severance benefits under this Agreement, in whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits payable to Executive by the Company in connection with Executive’s termination, including but not limited to payments or benefits pursuant to (a) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act, or (b) any Company agreement, arrangement, policy or practice relating to Executive’s termination of employment with the Company.  The benefits provided under this Agreement are intended to satisfy, to the greatest extent possible, any and all statutory obligations that may arise out of Executive’s termination of employment.  Such reductions shall be applied on a retroactive basis, with severance benefits previously paid being recharacterized as payments pursuant to the Company’s statutory obligation. 6.Deemed Resignation.  Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, and then held with the Company or any of its affiliates, and, at the Company’s request, Executive shall execute such documents as are necessary or desirable to effectuate such resignations. 7.Other Terminations.  If Executive’s service with the Company is terminated by the Company or by Executive for any or no reason other than as a Covered Termination, then Executive shall not be entitled to any benefits hereunder other than accrued but unpaid salary, bonus, vacation and expense reimbursement in accordance with applicable law and to elect any continued healthcare coverage as may be required under COBRA or similar state law.   8.Limitation on Payments. Notwithstanding anything in this Agreement to the contrary, if any payment or distribution Executive would receive pursuant to this Agreement or otherwise (“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the -3-     --------------------------------------------------------------------------------   Internal Revenue Code of 1986, as amended (the “Code”), and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall either be (i) delivered in full, or (ii) delivered as to such lesser extent which would result in no portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the largest payment, notwithstanding that all or some portion the Payment may be taxable under Section 4999 of the Code.  The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.  The accounting firm shall provide its calculations to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.  Any reduction in payments and/or benefits pursuant to this Section 8 will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits payable to Executive. 9.Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings: (a)Cause.  “Cause” means (i) Executive’s gross negligence or willful misconduct in the performance of the duties and services required of Executive pursuant to this Agreement or Executive’s employment or offer letter agreement with the Company (the “Employment Agreement”); (ii) Executive’s conviction of, or plea of guilty or nolo contendre to, a felony or crime involving moral turpitude (or any similar crime in any jurisdiction outside the United States); (iii) Executive’s willful refusal to perform the duties and responsibilities required of Executive under this Agreement or the Employment Agreement which remains uncorrected for thirty (30) days following written notice to Executive by the Company of such breach; (iv) Executive’s material breach of any material provision of this Agreement, the Employment Agreement, the Confidential Information Agreement (as defined below) or corporate code or policy which remains uncorrected for thirty (30) days following written notice to Executive by the Company of such breach; (v) any act of fraud, embezzlement, material misappropriation or dishonesty committed by Executive against the Company; or (v) any acts, omissions or statements by Executive which the Company determines to be materially detrimental or damaging to the reputation, operations, prospects or business relations of the Company.  For purposes of this Section 9(a), an act or failure to act shall be considered “willful” only if done or omitted to be done without a good faith reasonable belief that such act or failure to act was in the best interests of the Company. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions that the Company (or any parent or subsidiary or acquiror or successor) may consider as reasonable grounds for Executive’s dismissal or discharge.   -4-     --------------------------------------------------------------------------------   (b)Change in Control.  “Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) a transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or (ii) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 9(b)(i) or 9(b)(iii)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction: (1) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and (2) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 9(b)(iii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction;  or (iv) The Company’s stockholders approve a liquidation or dissolution of the Company. Notwithstanding the foregoing, if a Change in Control constitutes a payment event for any amount that constitutes deferred compensation that is subject to Section 409A of the Code, the transaction or event described in subsection (i), (ii), (iii) or (iv) with respect to such amount (or portion thereof) must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A. (c)Change in Control Period.  “Change in Control Period” means the period of time commencing three (3) months prior to a Change in Control and ending twelve (12) months following the Change in Control. -5-     --------------------------------------------------------------------------------   (d)Constructive Termination.  “Constructive Termination” means Executive’s resignation from employment with the Company that is effective within one-hundred twenty (120) days after the occurrence, without Executive’s written consent, of any of the following: (i) a material diminution in Executive’s base compensation that is not proportionately applicable to other officers and key employees of the Company generally; (ii) [for the CEO only:  other than as contemplated by a mutually agreed upon succession plan,] a material diminution in Executive’s job responsibilities or duties; (iii) the relocation of Executive’s principal office to a facility or a location more than fifty (50) miles from Executive’s then-present principal office location; or (iv) the failure by any successor entity or corporation following a Change in Control to assume the obligations under this Agreement.  Notwithstanding the foregoing, a resignation shall not constitute a “Constructive Termination” unless the condition giving rise to such resignation continues uncured by the Company more than thirty (30) days following Executive’s written notice of such condition provided to the Company within ninety (90) days of the first occurrence of such condition and such resignation is effective within thirty (30) days following the end of such notice period.   (e)Covered Termination.  “Covered Termination” means the termination of Executive’s employment by the Company other than for Cause or Executive’s Constructive Termination, in each case, that, to the extent necessary, constitutes a “Separation from Service” (as defined below). (f)Termination Date.  “Termination Date” means the date Executive experiences a Covered Termination. 10.Successors. (a)Company’s Successors.  Except as set forth above, any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section 10(a) or which becomes bound by the terms of this Agreement by operation of law. (b)Executive’s Successors.  The terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 11.Notices.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or one day following mailing via Federal Express or similar overnight courier service.  In the case of Executive, mailed notices shall be addressed to Executive at Executive’s home address that the Company has on file for Executive.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Chief Executive Officer. -6-     --------------------------------------------------------------------------------   12.Confidentiality; Non-Disparagement. (a)Confidentiality.  Executive hereby expressly confirms Executive’s continuing obligations to the Company pursuant to Executive’s At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement with the Company (the “Confidential Information Agreement”). (b)Non-Disparagement.  Executive agrees that Executive shall not disparage, criticize or defame the Company, its affiliates and their respective affiliates, directors, officers, agents, partners, stockholders or employees, either publicly or privately.  The Company agrees that it shall not, and it shall instruct its officers and members of its Board to not, disparage, criticize or defame Executive, either publicly or privately.  Nothing in this Section 12(b) shall have application to any evidence or testimony required by any court, arbitrator or government agency. 13.Dispute Resolution.  To ensure the timely and economical resolution of disputes that arise in connection with this Agreement, Executive and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance or interpretation of this Agreement, Executive’s employment, or the termination of Executive’s employment, shall be resolved to the fullest extent permitted by law by final, binding and confidential arbitration in San Francisco County, California through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) in conformity with the then-existing JAMS employment arbitration rules and California law.  By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.  The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award.  The Company shall pay all JAMS’s arbitration fees in excess of the amount of court fees that would be required if the dispute were decided in a court of law.  Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by Court action instead of arbitration. 14.Miscellaneous Provisions. (a)Section 409A.   (i)Separation from Service.  Notwithstanding any provision to the contrary in this Agreement, no amount deemed deferred compensation subject to Section 409A of the Code shall be payable pursuant to Sections 3 or 4 above unless Executive’s termination of employment constitutes a “separation from service” with the Company within the meaning of Section 409A of the Code and the Department of Treasury regulations and other guidance promulgated thereunder (“Separation from Service”) and, except as provided under Section 14(a)(ii) of this Agreement, any such amount shall not be paid, or in the case of installments, commence payment, until the sixtieth (60th) day following Executive’s Separation from Service.  Any installment payments that would have been made -7-     --------------------------------------------------------------------------------   to Executive during the sixty (60) day period immediately following Executive’s Separation from Service but for the preceding sentence shall be paid to Executive on the sixtieth (60th) day following Executive’s Separation from Service and the remaining payments shall be made as provided in this Agreement. (ii)Specified Employee.  Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six (6)-month period measured from the date of Executive’s Separation from Service or (B) the date of Executive’s death.  Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 14(a)(ii) shall be paid in a lump sum to Executive, and any remaining payments due under this Agreement shall be paid as otherwise provided herein. (iii)Expense Reimbursements.  To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any such reimbursements payable to Executive pursuant to this Agreement shall be paid to Executive no later than December 31st of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit. (iv)Installments.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment. (b)Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c)Whole Agreement.  This Agreement, the Confidential Information Agreement and any offer letter by and between the Company and Executive represent the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all prior promises, arrangements and understandings regarding same, whether written or written, including, without limitation, any severance or change in control benefits in Executive’s offer letter agreement and employment agreement or previously approved by the Board.   -8-     --------------------------------------------------------------------------------   (d)Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. (e)Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (f)Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. (Signature page follows)   -9-     --------------------------------------------------------------------------------   IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.         ACHAOGEN, INC. By:   Title:   Date:         EXECUTIVE   [__________] Date:     Signature Page to Change in Control Severance Agreement
Exhibit 10.1 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this “Agreement”) is dated as of June 30, 2009, between Spectrum Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: ARTICLE I. DEFINITIONS 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(j). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. “Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1. “Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived. “Commission” means the United States Securities and Exchange Commission.     --------------------------------------------------------------------------------   “Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed. “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. “Company Counsel” means Stradling Yocca Carlson & Rauth, P.C., with offices located at 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660. “Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any 401k, stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to stock splits, stock dividends or distributions, recapitalizations and similar events affecting the Common Stock and (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. “FDA” shall have the meaning ascribed to such term in Section 3.1(gg). “FDCA” shall have the meaning ascribed to such term in Section 3.1(gg). “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).   2 --------------------------------------------------------------------------------   “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(z). “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o). “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, other than restrictions imposed by securities laws. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(m). “Per Share Purchase Price” equals $7.1525, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. “Pharmaceutical Product” shall have the meaning ascribed to such term in Section 3.1(gg). “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened. “Prospectus” means the base prospectus filed with the Registration Statement. “Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser prior to or at the Closing. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.6. “Registration Statement” means the effective registration statement with Commission file No. 333-150260 which registers the sale of the Shares, the Warrants and the Warrant Shares to the Purchasers. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.   3 --------------------------------------------------------------------------------   “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h). “Securities” means the Shares, the Warrants and the Warrant Shares. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds. “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE Amex Equities Market, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing). “Transaction Documents” means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder. “Transfer Agent” means Computershare Trust Company, N.A., the current transfer agent of the Company, with a mailing address of 250 Royall Street, Canton, MA 02021, and any successor transfer agent of the Company.   4 --------------------------------------------------------------------------------   “Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which shall be exercisable commencing 181 days following the Closing Date and have a term of exercise equal to 90 days in the form of Exhibit A attached hereto. “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. “WS” means Weinstein Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002. ARTICLE II. PURCHASE AND SALE 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $21,000,000.00 of Shares and a number of Warrants determined in accordance with Section 2.2(a). Each Purchaser shall deliver to the Company, via wire transfer of immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of WS or such other location as the parties shall mutually agree. 2.2 Deliveries. (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following: (i) this Agreement duly executed by the Company; (ii) a legal opinion of Company Counsel, in substantially the form of Exhibit B hereto; (iii) a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via the Depository Trust Company Deposit Withdrawal Agent Commission System (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser; (iv) a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50% of the Shares issuable to the Purchaser on the Closing Date, with an exercise price equal to $7.10, subject to adjustment therein (such Warrant certificate may be delivered within three Trading Days of the Closing Date); and   5 --------------------------------------------------------------------------------   (v) the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act). (b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following: (i) this Agreement duly executed by such Purchaser; and (ii) such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company. 2.3 Closing Conditions. (a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met: (i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein); (ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed in all material respects; and (iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement. (b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met: (i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein); (ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed in all material respects; (iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; (iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and   6 --------------------------------------------------------------------------------   (v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser: (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. Except as set forth in the SEC Reports, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and, except as set forth in the SEC Reports, all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. (b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.   7 --------------------------------------------------------------------------------   (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. (d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse Effect. (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the consent of the purchasers of the Company’s securities under those certain Securities Purchase Agreements, dated May 27, 2009 and June 15, 2009 (the “Prior Purchase Agreements”), (ii) the filings required pursuant to Section 4.2 of this Agreement, (iii) the filing with the Commission of the Prospectus Supplement, (iv) application(s) to each applicable Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby (v) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).   8 --------------------------------------------------------------------------------   (f) Issuance of the Securities; Registration. The Shares and Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement in material conformity with the requirements of the Securities Act, including the Prospectus, and such amendments and supplements thereto as may have been required prior to the date of this Agreement. The Registration Statement was declared effective under the Securities Act on May 5, 2008 (the “Effective Date”) and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the actual knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of the Commission, proposes to file the Prospectus Supplement, with the Commission pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) Capitalization. The capitalization of the Company is substantially as set forth in the Prospectus Supplement, as updated by the SEC Reports. As of the date of the Agreement, the Company has not issued any capital stock since it filed its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans, pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act and securities issued pursuant to the Prior Purchase Agreements. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as disclosed in the SEC Reports,   9 --------------------------------------------------------------------------------   as a result of the purchase and sale of the Securities or pursuant to equity compensation plans or agreements filed as exhibits to the SEC Reports, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is bound to issue additional shares of Common Stock or Common Stock Equivalents, in each case issued by the Company. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. Except as filed as an exhibit to the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the actual knowledge of the Company, between or among any of the Company’s stockholders. (h) SEC Reports; Financial Statements. The Company has complied in all material respects with requirements to file all reports, schedules, forms, statements and other documents filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to the disqualification provisions set forth in Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.   10 --------------------------------------------------------------------------------   (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not materially altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option or compensation plans. Except for the issuance of the Securities contemplated by this Agreement or as set forth in the SEC Reports, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed prior to the date that this representation is made. (j) Litigation. Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the actual knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the Company’s actual knowledge, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the actual knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or, to the Company’s actual knowledge, any director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.   11 --------------------------------------------------------------------------------   (k) Labor Relations. No material labor dispute exists or, to the actual knowledge of the Company, is imminent with respect to any of the employees of the Company, which would reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the actual knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and, to the Company’s actual knowledge, the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as would not reasonably be expected to result in a Material Adverse Effect. (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit, except where such potential revocation or modification would not reasonably be expected to result in a Material Adverse Effect. (n) Title to Assets. The Company does not own any real property. The Company and the Subsidiaries have good and marketable title in fee simple in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens created under license or collaboration agreements relating to the Company’s products or Intellectual Property Rights and Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance with the provisions thereof, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect.   12 --------------------------------------------------------------------------------   (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other similar intellectual property rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which the failure to so have would not reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). To the actual knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights of the Company which would reasonably be expected to have a Material Adverse Effect. To the actual knowledge of the Company, none of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person which would reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary for companies of similar size as the Company in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the actual knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.   13 --------------------------------------------------------------------------------   (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. (s) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due from the Company in connection with the transactions contemplated by the Transaction Documents. (t) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. (u) Registration Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. (v) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its actual knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the material listing or maintenance requirements of such Trading Market. The Company is, and currently believes that it will in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.   14 --------------------------------------------------------------------------------   (w) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers solely as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities. (x) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. (y) [Reserved] (z) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of   15 --------------------------------------------------------------------------------   its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company currently has no actual knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth as of the dates thereof all material outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $500,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $500,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness, except where such default would not reasonably be expected to have a Material Adverse Effect. (aa) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no actual knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. (bb) Foreign Corrupt Practices. Neither the Company, nor to the actual knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. (cc) Accountants. The Company’s accounting firm is Kelly and Company. To the actual knowledge of the Company, such accounting firm is a registered public accounting firm as required by the Exchange Act who the Company expects will express its opinion with respect to the financial statements to be included in the Company’s next Annual Report on Form 10-K for the year ending December 31, 2009.   16 --------------------------------------------------------------------------------   (dd) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. (ee) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.12 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents. (ff) Regulation M Compliance. The Company has not, and to its actual knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.   17 --------------------------------------------------------------------------------   (gg) FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company’s actual knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company other than normal investigational product correspondence between the Company and the FDA. Each Purchaser acknowledges and agrees that the Company does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.1. 3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein): (a) Organization; Authority. Such Purchaser is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited   18 --------------------------------------------------------------------------------   liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. (b) No Conflicts. The execution, delivery and performance by the Purchaser of the Agreement and the consummation by it of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Purchaser’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected. (c) Own Account. Such Purchaser is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. (d) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. (e) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.   19 --------------------------------------------------------------------------------   (f) Information. Such Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company, and materials relating to the offer and sale of the Securities, that have been requested by the Purchaser or its advisors, if any. The Purchaser acknowledges and understands that its investment in the Securities involves a significant degree of risk. (g) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first became aware of the proposed transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future. The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. ARTICLE IV. OTHER AGREEMENTS OF THE PARTIES 4.1 Warrant Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws). The Company shall use reasonable best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants. Additionally, until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.   20 --------------------------------------------------------------------------------   4.2 Securities Laws Disclosure; Publicity. The Company shall, by 9:15 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby. The Company shall, within four (4) Business Days following the date hereof, file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and including the Transaction Documents as exhibits thereto. From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law, by Trading Market regulations or pursuant to an investigation conducted by the Financial Industry Regulatory Authority, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b). 4.3 Shareholder Rights Plan. No claim will be enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, solely by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers. 4.4 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.   21 --------------------------------------------------------------------------------   4.5 Use of Proceeds. Except as set forth in the Prospectus Supplement, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes. 4.6 Indemnification of Purchasers. Subject to the provisions of this Section 4.6 and to the extent permitted by law, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur due to a claim by a third party as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The Company will have the exclusive right to settle any claim or proceeding, provided that the Company will not settle any such claim, action or proceeding without the prior written consent of the Purchaser Party, which will not be unreasonably withheld or delayed; provided, however, that such consent shall not be required if the settlement includes a full and unconditional release satisfactory to the Purchaser Party from all liability arising or that may arise out of such claim or proceeding and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Purchaser Party.   22 --------------------------------------------------------------------------------   4.7 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants. 4.8 Listing of Common Stock. The Company hereby agrees to use reasonable best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and the Company shall promptly apply to list or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will use its reasonable best efforts to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 4.9 RESERVED. 4.10 Subsequent Equity Sales. From the date hereof until 60 days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents. Notwithstanding the foregoing, this Section 4.10 shall not apply in respect of an Exempt Issuance. 4.11 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.   23 --------------------------------------------------------------------------------   4.12 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.2. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.2, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.2, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.2 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.2. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. 4.13 Delivery of Warrants After Closing; Buy-In in Respect of the Share. The Company shall deliver, or cause to be delivered, the respective Warrant certificates purchased by each Purchaser to such Purchaser within 3 Trading Days of the Closing Date. In addition to any other rights available to a Purchaser, if the Company fails to cause the Transfer Agent to transmit to such Purchaser its Shares within 3 Trading Days of the date required under this Agreement, and if after such date the Purchaser is required by its broker to purchase (in an open market transaction or otherwise) or the Purchaser’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of the Shares which the Purchaser was entitled to receive hereunder (a “Buy-In”), then the Company shall (A) pay in cash to the Purchaser the amount, if any, by which (x) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Shares that the Company was required to deliver to the Purchaser times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) deliver to the Purchaser the number of shares of Common Stock that would have been issued had the Company timely complied with its obligations hereunder. Nothing herein shall limit a Purchaser’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock as required pursuant to the terms hereof.   24 --------------------------------------------------------------------------------   ARTICLE V. MISCELLANEOUS 5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before July 8, 2009; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. 5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 50% in interest of the Shares then outstanding (which amendment shall be binding on all Purchasers) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.   25 --------------------------------------------------------------------------------   5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger, consolidation or sale of all or substantially all of the Company’s assets). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.” 5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8. 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby 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 connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ”.pdf” signature page were an original thereof.   26 --------------------------------------------------------------------------------   5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right). 5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity or security, if requested. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.   27 --------------------------------------------------------------------------------   5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through WS. WS does not represent any of the Purchasers and only represents Rodman & Renshaw, LLC, the placement agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. 5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. 5.19 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. 5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. ****************   28 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.       SPECTRUM PHARMACEUTICALS, INC.   Address for Notice: 157 Technology Drive Irvine, CA 92618 Attn: Legal Department Fax: (949) 788-6700               By:                           Name:                           Title:                         With a copy to (which shall not constitute notice): Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attn: Michael A. Hedge Tel: (949) 725-4000 Fax: (949) 725-4100     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR PURCHASER FOLLOWS]   29 --------------------------------------------------------------------------------   [PURCHASER SIGNATURE PAGES TO SPPI SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.               Name of Purchaser:                                 Signature of Authorized Signatory of Purchaser:                                 Name of Authorized Signatory:                                 Title of Authorized Signatory:                                 Email Address of Authorized Signatory:                                 Facsimile Number of Authorized Signatory:                                 Address for Notice of Purchaser:       Address for Delivery of certificated Securities for Purchaser (if not same as address for notice): Information for Delivery of uncertificated Securities by DWAC:       Account Number:                                            Account Name:                                            DTC Number:                                              Subscription Amount:   $                                       Shares:                      Warrant Shares:                      EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] [SIGNATURE PAGES CONTINUE]   30
The Board of Directors WaferGen Bio-systems, Inc. Ladies and Gentlemen: Please be advised that I hereby resign as an officer and director of WaferGen Bio-systems, Inc., effective as of the date written below. Please be further advised that my resignation does not arise from any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Very truly yours,           /s/ Matthew Markin     -------------------------------------------------------------------------------- Matthew Markin         Date:  May 31, 2007      --------------------------------------------------------------------------------
Exhibit 10.1       REGENERX BIOPHARMACEUTICALS, INC.         ______________________________           CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT       OCTOBER 19, 2012             Table of Contents         Page         SECTION 1.   DEFINITIONS 1         SECTION 2.   ISSUANCE AND SALE OF THE SECURITIES 3         SECTION 3.   THE CLOSING 3         3.1   Closing 3 3.2   Deliveries by the Company 4 3.3   Deliveries by the Investor 4         SECTION 4.   REPRESENTATIONS, WARRANTIES AND COVENANTS 4         4.1   Representations and Warranties of the Company 4 4.2   Representations and Warranties of the Investor 6         SECTION 5.   CONDITIONS TO CLOSING 8         5.1   Conditions to Closing by the Investor 8 5.2   Conditions to Closing by the Company 8         SECTION 6.   MISCELLANEOUS 9         6.1   Waivers and Amendments 9 6.2   Costs and Expenses 9 6.3   Remedies Cumulative 9 6.4   Remedies Not Waived 9 6.5   Entire Agreement 10 6.6   Specific Performance 10 6.7   Governing Law 10 6.8   Notices 10 6.9   Counterparts 11 6.10   Successors and Assigns 11 6.11   Third Parties 11 6.12   Schedules and Exhibits 11 6.13   Headings 11      -i-      CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT   THIS CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”), dated as of October 19, 2012, is entered into by and between RegeneRx Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), and ______________________ (the “Investor”).   RECITALS   Whereas, the Company has authorized the sale and issuance of (i) convertible promissory notes in the form attached hereto as Exhibit A the aggregate principal amount of $300,000 (the “Notes”) (the securities issuable on conversion of the Notes, the “Conversion Shares”) and (ii) warrants, in substantially the form attached hereto as Exhibit B (the “Warrant”), to purchase an aggregate of 400,000 shares of its Common Stock (the “Warrant Shares” and, along with the Conversion Shares, the Warrants and the Notes, the “Securities”) for an aggregate purchase amount of $300,000, pursuant to the terms of a series of Agreements on substantially identical terms to this Agreement;   Whereas, the Investor desires to purchase the Securities on the terms and conditions set forth herein; and   Whereas, the Company desires to issue and sell the Securities to the Investor on the terms and conditions set forth herein.   Agreement   Now, Therefore, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:   SECTION 1. DEFINITIONS   The following terms when used in this Agreement shall have the following respective meanings:   “Applicable Laws” has the meaning set forth in Section 4.1(f) hereof.   “Board of Directors” means the Board of Directors of the Company.   “Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting and whether common or preferred) of such corporation and (ii) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person; and in each case, any and all warrants, rights or options to purchase any of the foregoing.   1       “Certificate of Incorporation” means the Certificate of Incorporation of the Company, as in effect and on file with the Secretary of State of the State of Delaware on the date of this Agreement.   “Closing” has the meaning set forth in Section 3.1 hereof.   “Closing Date” has the meaning set forth in Section 3.1 hereof.   “Common Stock” means the Common Stock of the Company, par value $0.001 per share.   “Conversion Shares” has the meaning set forth in the Preamble.   “Exchange Act” means the Securities Exchange Act of 1934, as amended.   “Governmental Authority” means the United States, any state, county or municipality, the government of any foreign country, any subdivision of any of the foregoing or any authority, department, commission, board, bureau, agency, court or instrumentality of any of the foregoing.    “Knowledge of the Company,” including the terms “Know,” “Known” and other derivatives thereof, means, with respect to the Company, the actual knowledge, after reasonable investigation, of any Responsible Officer.   “Lien” means any mortgage, lien, pledge, security interest, easement, conditional sale or other title retention agreement or other encumbrance of any kind except for liens relating to taxes that have accrued but are not yet payable which do not have a Material Adverse Effect.   “Material Adverse Effect” means a material adverse effect upon (i) the condition (financial or otherwise), operations, business, properties or assets of the Company, (ii) the ability of the Company to perform its obligations under this Agreement or any of the other agreements or documents contemplated hereby to which it is a party or (iii) the legality, validity or enforceability of this Agreement or any of the other agreements or documents contemplated hereby or the rights and remedies of the Investor and the other parties hereunder and thereunder.   “Material Agreements” has the meaning set forth in Section 4.1(e) hereof.   “Notes” has the meaning set forth in the Preamble.   “Parties” refers collectively to the Company and the Investor.   “Person” means an individual, corporation, partnership, joint venture, trust, unincorporated organization, or Governmental Authority.   “Purchase Price” has the meaning set forth in Section 2 hereof.   “Regulation D” has the meaning set forth in Section 4.2(c) hereof.   2       “Responsible Officer” means, with respect to the Company, the President and Chief Executive Officer, the Vice President of Clinical and Regulatory Affairs or the Chairman of the Board of Directors.   “Returns” has the meaning set forth in Section 4.1(i) hereof.   “SEC” means the U.S. Securities and Exchange Commission.   “SEC Reports” has the meaning set forth in Section 4.1(h)(i) hereof.   “Securities” has the meaning set forth in the Preamble.   “Securities Act” means the Securities Act of 1933, as amended.     “Stockholders” has the meaning set forth in Section 4.1(b) hereof.   “Tax” or “Taxes” refers to any and all federal, state, national, local, foreign and other taxes, assessments and other governmental charges, duties, levies, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.   “Warrant” has the meaning set forth in the Preamble.   “Warrant Shares” has the meaning set forth in the Preamble.   SECTION 2.ISSUANCE AND SALE OF THE SECURITIES   At the Closing, the Company shall issue and sell to the Investor, and such Investor shall purchase, for an aggregate purchase price of $[_________] (the “Purchase Price”), from the Company, (i) a Note in the principal amount of $[_____] and (ii) a Warrant to purchase ________ Warrant Shares at an exercise price of $0.__ per share (the number of Warrant Shares is determined by the dividing the Purchase Price by the exercise price per share of the Warrant, and multiplying the resulting quotient by 20%).   SECTION 3.THE CLOSING   3.1              Closing    The closing of the issuance and sale of the Securities pursuant to Section 2 hereof and certain of the other transactions contemplated hereby (the “Closing”) shall take place at the offices of Cooley LLP, One Freedom Square, Reston Town Center, 11951 Freedom Drive, Reston, Virginia 20190, within one business day following the satisfaction of the conditions specified in Section 8 below, or at such other time or place as the Parties shall mutually agree (the actual date being referred to herein as the “Closing Date”). The Parties agree that the Closing may occur by facsimile signature and delivery and that the Parties need not appear in person at the Closing.   3       3.2              Deliveries by the Company   At or prior to the Closing, the Company shall deliver or cause to be delivered to the Investor the following items:   (a)                The Note purchased by the Investor hereunder, registered in the name of the Investor and subject to the legends and other restrictions set forth herein;   (b)               a Warrant, executed by the Company and registered in the name of the Investor, pursuant to which the Investor shall have the right to acquire the Warrant Shares issuable to the Investor pursuant to Section 2 on the terms set forth therein;   (c)                a certificate of the Secretary or Assistant Secretary of the Company, in form and substance satisfactory to counsel for the Investor, certifying that attached thereto are true and correct copies of (i) the bylaws of the Company, and (ii) resolutions duly and validly adopted by the Board of Directors authorizing the allotment and issuance of the Securities to the Investor, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; and   (d)               a counterpart of this Agreement duly executed by the Company.    3.3              Deliveries by the Investor   At or prior to the Closing, the Investor shall deliver or cause to be delivered to the Company the following items:   (a)                payment of the Purchase Price in immediately available funds by wire transfer to an account designated in writing by the Company prior to the Closing Date;   (b)               a fully completed and duly executed Accredited Investor Certification in the form attached hereto as Exhibit C; and   (c)                a counterpart of this Agreement duly executed by the Investor.   SECTION 4.REPRESENTATIONS, WARRANTIES AND COVENANTS   4.1              Representations and Warranties of the Company   In order to induce the Investor to purchase the Securities it is purchasing hereunder, the Company represents and warrants to the Investor as of the date hereof that:   (a)                Organization and Standing. The Company is duly incorporated and validly existing under the laws of the State of Delaware and has all requisite corporate power and authority to own or lease its properties and assets and to conduct its business as it is presently being conducted.   4       (b)               Capitalization. Immediately subsequent to the consummation of the transactions contemplated by this Agreement, the authorized Capital Stock of the Company shall be as set forth on Schedule 4.1(b) hereto. The outstanding shares of Capital Stock are all duly and validly authorized and issued, fully paid and nonassessable, and based in part on the representations of the stockholders of the Company (the “Stockholders”) made in connection with the issuance thereof, were issued in compliance with all applicable federal and state securities laws.   (c)                Capacity of the Company; Consents; Execution of Agreements. The Company has all requisite power, authority and capacity to enter into this Agreement and to perform the transactions and obligations to be performed by it hereunder. The execution and delivery of this Agreement and any agreements contemplated hereby by the Company, and the performance by the Company of the transactions and obligations contemplated hereby and thereby, including, without limitation, the issuance and delivery of the Securities to the Investor, has been duly authorized by all requisite action of the Company and Stockholders. This Agreement has been duly executed and delivered by a duly authorized officer of the Company and constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States (both state and federal), affecting the enforcement of creditors’ rights or remedies in general and general equity principles.   (d)               Status of the Conversion Shares and Warrant Shares; Reservation of Common Stock. The Conversion Shares and Warrant Shares to be issued and purchased hereunder, when issued by the Company to the Investor and paid for by the Investor pursuant to the terms of this Agreement and the Note and Warrant, respectively, will (i) be duly authorized, validly issued, fully paid and nonassessable, (ii) based on the Investor’s representations in Section 4.2, have been issued in compliance with all applicable United States federal and state securities laws and (iii) be free and clear of all Liens. The Company has available sufficient shares of Common Stock for issuance pursuant to the terms of this Agreement.   (e)                Conflicts; Defaults. The execution and delivery of this Agreement by the Company and the performance by the Company of the transactions and obligations contemplated hereby to be performed by it will not (i) materially violate, conflict with, or constitute a default under any of the terms or provisions of, the Certificate of Incorporation, the bylaws, or any provisions of, or result in the acceleration of any obligation under, any material contract, note, debt instrument, security agreement, or other instrument to which the Company is a party or by which the Company, or any of their assets is bound (collectively, the “Material Agreements”); (ii) result in the creation or imposition of any Liens or claims upon the Company’s assets or upon the Company’s Common Stock; (iii) assuming the accuracy of the Investor’s representations in Section 4.2, constitute a material violation of any law, statute, judgment, decree, order, rule, or regulation of a Governmental Authority applicable to the Company; or (iv) constitute an event which, after notice or lapse of time or both, would result in any of the foregoing. The Company is not presently in violation of its Certificate of Incorporation or bylaws.   5       (f)                Compliance with Laws. The Company is not in violation of, nor do any of its respective operations violate in any respect, any statute, law, or regulation of any Governmental Authority applicable to the Company (“Applicable Laws”), which violation would have a Material Adverse Effect.   (g)               Litigation. As of the date hereof: (i) the Company is not subject to any order of, or written agreement or memorandum of understanding with, any Governmental Authority which would have a Material Adverse Effect; (ii) there are no material actions, suits, claims, investigations, or proceedings pending at law or in equity or before or by any Governmental Authority, or, to the Knowledge of the Company, threatened, against the Company or any of its assets or properties or the transactions contemplated by this Agreement, and to the Knowledge of the Company, there exist no facts or circumstances which reasonably could be anticipated to result in any such action, suit, claim, investigation, or proceeding; and (iii) no Person has asserted, and, to the Knowledge of the Company, no Person has a valid basis upon which to assert, any claims against the Company that would materially adversely affect the transactions contemplated by this Agreement or result in or form the basis of any such action, suit, claim, investigation or proceeding. There is no material action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.   (h)               Securities Laws.   (i)                 The Company has filed all forms, reports and documents with the SEC required to be filed by it pursuant to the federal securities laws and the SEC rules and regulations thereunder, all of which complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act (collectively, the “SEC Reports”). None of the SEC Reports, including, without limitation, any financial statements or schedules included therein, at the time filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they were made, not misleading.   (ii)               Based on the Investor’s representations in Section 4.2, no consent, authorization, approval, permit, or order of or filing with any Governmental Authority is required in order for the Company to execute and deliver this Agreement or in order for the Company to offer, issue, sell, or deliver the Securities. Based in part on the representations of the Investor and under the circumstances contemplated hereby and under current laws and regulations, the offer, issuance, sale and delivery of the Securities to the Investor is exempt from the registration requirements of the Securities Act.   (i)                 Taxes. The Company has timely filed or caused to be filed with the appropriate taxing authority all federal, state, national, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by the Company on or prior to the Closing Date. The Returns have accurately reflected in all material respects and will accurately reflect in all material respects all liability for Taxes of the Company for the periods covered thereby.   4.2              Representations and Warranties of the Investor   The Investor hereby represents and warrants to the Company that as of the date hereof:   6       (a)                Investment Intent. The Securities to be purchased by the Investor hereunder are being purchased for its own account and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act. The Investor understands that the Securities have not been registered under the Securities Act by reason of their issuance in transactions exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(a)(2) thereof. The Investor further understands that the certificates representing the Conversion Shares and any Warrant Shares that may be issued pursuant to the conversion of the Note and exercise of the Warrant, respectively, will bear the following legend and the Investor agrees that it will hold such shares subject thereto:   “THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.”   (b)               Capacity of the Investor; Execution of Agreement. The Investor has all requisite power, authority and capacity to enter into this Agreement, deliver the Purchase Price, and to perform the transactions and obligations to be performed by it hereunder. This Agreement has been duly authorized, executed and delivered by them and constitutes its valid and legally binding obligation, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws, both state and federal, affecting the enforcement of creditors’ rights or remedies in general from time to time in effect and the exercise by courts of equity powers or their application of principles of public policy.   (c)                Accredited Investor. The Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act (“Regulation D”).   (d)               Suitability and Sophistication. (i) The Investor has such knowledge and experience in financial and business matters that it is capable of independently evaluating the risks and merits of purchasing the Securities; (ii) the Investor has independently evaluated the risks and merits of purchasing the Securities and has independently determined that the Securities are a suitable investment for it; and (iii) the Investor has sufficient financial resources to bear the loss of their entire investment in the Securities.   7       (e)                Receipt of Information. The Investor believes, after due inquiry and investigation, that it has received all of the information that it considers necessary or appropriate for deciding whether to purchase the Securities. The Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business, properties, prospects and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to the Investor. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 4 of this Agreement or the right of the Investor to rely thereon.   (f)                Independent Existence. The Investor was not formed for the specific purpose of purchasing the Securities.   SECTION 5.CONDITIONS TO CLOSING   5.1              Conditions to Closing by the Investor   The obligations of the Investor to consummate the purchase of the Securities pursuant to Section 2 hereof and certain of the transactions contemplated by this Agreement are subject to the satisfaction on or prior to the Closing Date of the following conditions, any of which may be waived in whole or in part in writing by the Investor:    (a)                all representations and warranties of the Company contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made anew as of such date (unless another date is specified);   (b)               the Company shall have delivered to the Investor the items required by Section 3.2 of this Agreement;   (c)                the Company shall have performed and complied with all agreements and conditions required by this Agreement to be performed and complied with by it prior to or as of the Closing Date; and   (d)               all pre-issuance registrations, qualifications, permits and approvals required, if any, under applicable state securities laws or stock exchange listing rules for the lawful execution and delivery of this Agreement and the offer, sale, issuance and delivery of the Securities shall have been obtained.   5.2              Conditions to Closing by the Company   The obligations of the Company to consummate the issuance and sale of the Securities pursuant to Section 2 hereof and certain of the transactions contemplated by this Agreement are subject to the satisfaction on or prior to the Closing Date of the following conditions, any of which may be waived in whole or in part in writing by the Company:   (a)                all representations and warranties of the Investor contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made anew as of such date;   8       (b)               the Investor shall have delivered to the Company the items required by Section 3.3 of this Agreement;   (c)                all pre-issuance registrations, qualifications, permits and approvals required, if any, under applicable state securities laws or stock exchange listing rules for the lawful execution and delivery of this Agreement and the offer, sale, issuance and delivery of the Securities shall have been obtained; and   (d)               the Investor shall have performed and complied with all agreements and conditions required by this Agreement to be performed and complied with by it prior to or as of the Closing Date.   SECTION 6.MISCELLANEOUS   6.1              Waivers and Amendments   This Agreement may be amended or modified in whole or in part only by a writing which makes reference to this Agreement that is executed by the Investor and the Company. The obligations of any Party hereunder may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the party claimed to have given the waiver; provided, however, that any waiver by any party of any violation of, breach of, or default under any provision of this Agreement or any other agreement provided for herein shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement or any other agreement provided for herein.   6.2              Costs and Expenses   Each party agrees to pay its own costs and expenses in connection with the preparation, execution and delivery of this Agreement and other instruments and documents to be delivered hereunder and thereunder.   6.3              Remedies Cumulative   No specific right, power, or remedy conferred by this Agreement shall be exclusive, and each such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy, whether conferred hereby or by any security of the Company or now or hereafter available, at law or in equity, by statute or otherwise.   6.4              Remedies Not Waived   No course of dealing between the Company and the Investor, and no delay in exercising any right, power, or remedy conferred hereby or by any security issued by the Company, or now or hereafter available at law or in equity, by statute or otherwise, shall operate as a waiver of or otherwise prejudice any such right, power, or remedy.   9       6.5              Entire Agreement   This Agreement and the other agreements and instruments expressly provided for herein, together set forth the entire understanding of the parties hereto and supersede in their entirety all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, among the parties with respect to the subject matter hereof.   6.6              Specific Performance   The Company and the Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached. It is accordingly agreed that, to the fullest extent permitted by law or equity, each of the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which the parties may be entitled by law or equity.   6.7              Governing Law   This Agreement shall in all respects be governed by and construed in accordance with the internal substantive laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.   6.8              Notices   Any notice, request or other communication required or permitted hereunder shall be in writing and be deemed to have been duly given (a) when personally delivered or sent by facsimile transmission (the receipt of which is confirmed in writing), (b) one business day after being sent by a nationally recognized overnight courier service or (c) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid, to the parties at their respective addresses set forth below.   If to the Company:   RegeneRx Biopharmaceuticals, Inc. 15245 Shady Grove Road Suite 470 Rockville, MD 20850 Attention: J.J. Finkelstein Facsimile: 301-208-9194   With a copy, which shall not constitute notice, to: Cooley LLP One Freedom Square, Reston Town Center 11951 Freedom Drive Reston, VA 20190 Attention: Darren K. DeStefano, Esq. Facsimile: 703-456-8100   10       If to the Investor:   To the address set forth below the Investor’s name on the signature page of this Agreement   Any party by written notice to the others may change the address or the persons to whom notices or copies thereof shall be directed.   6.9              Counterparts   This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument.   6.10          Successors and Assigns   This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.   6.11          Third Parties   Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto any rights or remedies under or by reason of this Agreement.   6.12          Schedules and Exhibits   The schedules and exhibits attached to this Agreement are incorporated herein and shall be part of this Agreement for all purposes.   6.13          Headings   The headings in this Agreement are solely for convenience of reference and shall not be given any effect in the construction or interpretation of this Agreement.     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]    11     IN WITNESS WHEREOF, the parties have duly executed, or have caused their duly authorized officer or representative to execute, this Securities Purchase Agreement as of the date first above written.   REGENERX BIOPHARMACEUTICALS, INC.   By: ______________________________ Name: J.J. Finkelstein Title: President and Chief Executive Officer   12       IN WITNESS WHEREOF, the parties have duly executed, or have caused their duly authorized officer or representative to execute, this Securities Purchase Agreement as of the date first above written.     Name of Purchaser: __________________________   Signature of Authorized Signatory of Purchaser: _________________________________   Name of Authorized Signatory: _________________   Title of Authorized Signatory: _______   Email Address of Authorized Signatory: __________________   Facsimile Number of Authorized Signatory: __________________________   Address for Notice of Purchaser:   ___________________________________________   Address for Delivery of Securities for Purchaser (if not same as address for notice):   ____________________________________________   13       Exhibit A   FORM OF NOTE   See Exhibit 4.1   14       EXHIBIT B   FORM OF WARRANT   See Exhibit 4.2   15       Exhibit C   ACCREDITED INVESTOR CERTIFICATION   The undersigned represents and warrants to RegeneRx Biopharmaceuticals, Inc. (the “Company”) that the undersigned fits within each category marked below, and that for any category marked, he, she or it has truthfully set forth any description required as provided for below. ALL INFORMATION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish any additional information that the Company deems necessary in order to verify the answers set forth below.   (PLEASE MARK EACH CATEGORY APPLICABLE TO YOU)   ¨The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.   Explanation. In calculating net worth you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property minus debt secured by such property.   ¨The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case, including foreign income, tax exempt income and full amount of capital gains and losses, but excluding any income of other family members and any unrealized capital appreciation), and has a reasonable expectation of reaching the same income level in the current year.   ¨The undersigned is a director or executive officer of the Company.   ¨The undersigned is either: (a) a bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Act”); (b) a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; (c) a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; (d) an insurance company as defined in Section 2(13) of the Act; (e) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Act; (f) a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; (g) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such a plan has total assets in excess of $5,000,000; or (h) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors, as defined in Rule (501)(a) promulgated under the Act.   -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- (describe entity)   16      ¨The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (describe entity)   ¨The undersigned is an organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, a corporation, a business trust, or a partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000.   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (describe entity)   ¨The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose investments are directed by a “sophisticated person” as described in Rule 506(b)(2)(ii) promulgated under the Act.   ¨The undersigned is an entity, all the equity owners of which are “accredited investors” within one or more of the above categories. If relying upon this category alone, each equity owner must complete a separate copy of this Certificate.   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (describe entity)   ¨The undersigned does not meet the criteria of any of the categories listed above.     THE UNDERSIGNED UNDERSTANDS THAT THE COMPANY WILL RELY ON THE FOREGOING REPRESENTATIONS TO, AMONG OTHER THINGS, MAINTAIN THE EXEMPTION FOR THE ISSUANCE OF THE SECURITIES FROM THE REQUIREMENT TO REGISTER SUCH SECURITIES UNDER THE ACT.   The answers to the foregoing questions are correctly stated to the best of my knowledge, information and belief. I hereby agree to notify the Company promptly of any changes in the foregoing information.   Dated: ________________ Name of Purchaser: __________________________________   Signature of Authorized Signatory of Purchaser: _________________________________   Name of Authorized Signatory: ____________________   Title of Authorized Signatory: ________   17
Nicor Inc. Form 8-K Exhibit 10.01   MEMORANDUM OF AGREEMENT REACHED (Corrected 3/17/09) IN COLLECTIVE BARGAINING – MARCH 11, 2009 As a result of collective bargaining, the following agreement has been reached. I.          Term of Agreement The term of the new agreement will be from March 1, 2009 through February 28, 2014.   II.        General Wage Increase Members of Local 19 will receive a general wage increase of 3.00% effective March 1, 2009, 3.00% effective March 1, 2010, 3.50% effective March 1, 2011, 3.00% effective March 1, 2012, and 3.25% effective March 1, 2013.   Present Maximum Rate   Effective 3/1/2009 Effective 3/1/2010 Effective 3/1/2011 Effective 3/1/2012 Effective 3/1/2013 $32.22   $0.97 $0.99 $1.19 $1.06 $1.18 $32.07   $0.95 $0.98 $1.18 $1.05 $1.17 $31.69   $0.95 $0.98 $1.18 $1.04 $1.16 $31.35   $0.94 $0.97 $1.16 $1.03 $1.15 $30.55   $0.91 $0.94 $1.13 $1.00 $1.12 $30.54   $0.91 $0.94 $1.13 $1.00 $1.12 $30.48   $0.91 $0.94 $1.13 $1.00 $1.12 $30.01   $0.90 $0.93 $1.11 $0.99 $1.10 $28.93   $0.87 $0.89 $1.07 $0.95 $1.06 $28.46   $0.84 $0.86 $1.04 $0.92 $1.03 $28.30   $0.85 $0.87 $1.05 $0.93 $1.04 $27.57   $0.83 $0.85 $1.02 $0.91 $1.01 $27.35   $0.82 $0.84 $1.01 $0.90 $1.00 $27.20   $0.82 $0.84 $1.01 $0.90 $1.00 $26.92   $0.81 $0.83 $1.00 $0.89 $0.99 $26.33   $0.79 $0.81 $0.98 $0.87 $0.97 $25.69   $0.77 $0.79 $0.95 $0.85 $0.94 $25.66   $0.71 $0.73 $0.88 $0.78 $0.87 $24.35   $0.73 $0.75 $0.90 $0.80 $0.90 $24.30   $0.73 $0.75 $0.90 $0.80 $0.89 $23.12   $0.69 $0.71 $0.86 $0.76 $0.85 $23.10   $0.69 $0.71 $0.86 $0.76 $0.85 $22.90   $0.68 $0.70 $0.84 $0.75 $0.83 $22.59   $0.68 $0.70 $0.84 $0.74 $0.83 $21.56   $0.65 $0.67 $0.80 $0.71 $0.79 $20.98   $0.63 $0.65 $0.78 $0.69 $0.77 $20.26   $0.61 $0.63 $0.75 $0.67 $0.74 $20.13   $0.60 $0.62 $0.74 $0.66 $0.73 $19.46   $0.57 $0.59 $0.71 $0.63 $0.70 $19.44   $0.57 $0.59 $0.71 $0.63 $0.70 $18.33   $0.55 $0.57 $0.68 $0.60 $0.67 $17.92   $0.54 $0.55 $0.67 $0.59 $0.66 $16.87   $0.51 $0.52 $0.63 $0.56 $0.62 $16.72   $0.50 $0.52 $0.62 $0.55 $0.61 $16.52   $0.50 $0.51 $0.61 $0.54 $0.61 $15.99   $0.48 $0.49 $0.59 $0.53 $0.59 $15.82   $0.46 $0.47 $0.56 $0.50 $0.56 $15.37   $0.46 $0.47 $0.57 $0.51 $0.56 $15.35   $0.45 $0.47 $0.56 $0.50 $0.55 $14.33   $0.43 $0.44 $0.53 $0.47 $0.53 $13.16   $0.39 $0.40 $0.49 $0.43 $0.48 $12.47   $0.37 $0.38 $0.46 $0.41 $0.46 1    --------------------------------------------------------------------------------   All general wage increases will be placed into effect in the same manner as, and the conditions applicable to, the last general wage increase. General Contract Items Article IV, Section 4 Night shift premium has been increased from $1.35 to $1.50 per hour.   Sections 4(c) and 4(d) have been eliminated. Article IV, Section 13 An exception has been added to exclude employee hours reported on disability and/or workers compensation from the forty (40) paid hours of the basic work week.  This Article will not apply to employees “called out” to perform work per prior agreement in 2000. Article IV, Section 18 Paragraph 3 of Article IV, Section 18 has been revised as follows:   The first sentence “An employee who operates a Company-owned vehicle which is kept at his/her home shall, in case of a call-back, be paid a call-back allowance of two hours at straight time.”  has been eliminated. Article IV, Section 23 Has been revised to increase the meal money allowance from $7.50 to $8.00. Article VI Has been revised to eliminate language regarding “banked” vacation hours.   Has been revised to use vacation in half hour increments for authorized Family Medical Leave absences only.   Section 8 has been revised as follows:  An employee’s eligibility for earned vacation shall not be affected by a prolonged absence while they are on Short Term Disability.   However, employees will not accrue vacation while on Long Term Disability.   Section 12 has been revised that employees on Short Term Disability or Workers Compensation at the end of the calendar year will not be allowed to defer vacation into the next year. Article VII, Section 3 Has been revised that “Assignments of four hours in an eight hour day and five hours in a ten hour day shall be considered a full day under this section.  No payment will be made for such temporary assignments if they amount to less than four hours in an eight hour day and five hours in a ten hour day.”   2    --------------------------------------------------------------------------------   Article VII, Section 5(b) Has been revised as follows:  “The hourly rate of pay of an employee who is less than 55 years of age will be reduced by $1.50 per hour immediately after the date of the transfer to the lower job classification.  On the first anniversary date following the transfer and on every succeeding anniversary date the employee’s hourly rate will be reduced by $1.50 per hour.  This reduction will continue until the hourly rate of the employee is equal to the maximum hourly rate of the job the employee is performing.   During this period, the employee will not be eligible to receive general wage increases.  Employees administered under Article VII, Section 5 prior to ratification will not be affected by this change.   Article VIII The Company and the Union have agreed to discuss the language of Article VIII for revisions to the grievance procedure that would best meet the needs of the Union and the Company.   Article IX The sentence (4d) has been eliminated as the Employee Benefit Association Plan will be replaced with a third party administrator to manage the Short Term Disability, Long Term Disability and Workers Compensation Cases. The details of the short term and long term disability plan provisions will be updated and contained in the summary plan description.   Exhibit C – Memorandums of Agreement   The Company and the Union have agreed to add the following language to the memorandum, “Statements Covering Items of Understanding, Re:  Two persons on Steel and Promotional Sequence (Dated February 15, 1994 and revised March 1, 2000) as follows:  “During daylight savings time, call out for replacement of services less than 2” will be a proper work assignment for two persons during day or night.  If daylight savings time goes away, it will revert to the same period of time described in months which currently is March through October.   The Memorandum of Agreement dealing with the installation of mains and services by contractors will be made part of Exhibit C.  (See Exhibit I)   The Company and the Union have agreed to review certain Memorandums of Agreement for inclusion in the Collective Bargaining Agreement.   General Items 1.   Assistant Vice-President secretarial stenographer positions will no longer be part of the bargaining unit.  Employees currently in these positions will be given a one time option to remain as a bargaining unit employee.     3   --------------------------------------------------------------------------------   2.   Non-analytical Hi/Lows and Step Down reads to the last actual bill will be a proper assignment for a Level 3 clerical employee.  (Hi/Lows involving cancel and rebills greater than 90 days, write-offs and factor refinements will still be considered level 4 work.)  The Company will fill six General Office Clerk positions (Level 3) in BQA.   3.   The Company will maintain ten Service Clerks (Level 4) and five Level 5 positions in BQA for the term of this contract. 4.   The Company will fill one Accounting Record Clerk Position (Level 5) and two Service Representative (Level 6) positions in BQA. 5.   The Company will maintain ten Sr. Customer Care Specialists for the term of this Contract. 6.   The Company will fill five Sr. Customer Care Specialists positions in Sycamore and one Sr. Customer Care Specialist in Bloomington. 7.   The Company will have right of selection for the Sr. Customer Care Specialist positions, from applicants within the Customer Care Specialist classification, within six months of the senior applicant.  The selection of an employee, made according to the criteria set forth in this agreement, will not be subject to the grievance procedure.  An employee passed up under the bidding process outlined in this agreement will, upon inquiry, be informed by the company of the reason why she/he was not promoted. 8.   Correspondence work related to Deferred Payment Arrangements, deposits, address/name/spelling corrections, customer readings, Gas Line Comfort Guard/Heating, Ventilation and Air Conditioning, missed appointments, multiples and telephone collection compliance will be a proper assignment for a Customer Care Specialist (Level 2A). 9.   The Company agrees to fill one Accounting Records Clerk (Level 5) and one Lead Accounting Clerk (Level 6) in the Correspondence Department. 10.   The 2000 Selection Agreement pertaining to Service Clerks in the BQA and Correspondence Departments has been eliminated and replaced with a training/certification process for employees who do not come from the Call Center or do not have Customer Care and Billing experience. 11.   The Company agrees to fill a General Analysis Clerk (Level 7) in G.O. and the Memorandum of Understanding, General Accounting Level 7 Positions – Restructuring of Duties effective February 22, 2005 has been eliminated. 12.   The excess clerical employee ground rules have been revised to include Sycamore.  (See Exhibit II)   4    --------------------------------------------------------------------------------   13.   The Collector job classification has been eliminated.  Incumbent employees will be grandfathered and offered a lateral option within Credit & Collections or Service Clerk positions within BQA.  The employees in Bloomington and Joliet will not be forced from their current work locations. If unable to pass Level 4 BQA certification, the employees will remain in Credit & Collections.  All other Collectors will report to Aurora, Yorkville or G.O. 14.   Pre-requisites for the Construction Clerk job classification have been eliminated. 15.   The Company will fill a Construction Clerk position (Level 5) in Bellwood and a Service Representative position (Level 6) in Field Operations Construction. 16.   The Company will fill a Service Clerk position (Level 4) in either Credit/Collections or BQA. (Collectors will be eligible to lateral to this position.) 17.   Clerical employees in levels 1, 2, 2A and 3 will have the opportunity to accept open positions in Meter Reading.  (See Exhibit III) 18.   Employees accepting promotions will receive an increase at the time of the promotion based on 70% of the difference of the maximum rate of the current job classification and the minimum rate of the promotional job classification.  After successful completion of their qualifying period, the employee will receive 100% of the promotional increase. 19.   A Sr. Distribution Plastic Operator in the Field Operations Construction department has been created which will require testing and certification as part of the selection process. The hourly rate of pay will be $31.12 to $31.35.  (See Exhibit IV) 20.   The Utility Inspector Selection Memorandum of Agreement has been extended and the Company has agreed to maintain 18 Sr. Specialists in the System Operations Department for the term of the contract. 21.   The Arc Welder job classification has been added to the promotional sequence in the Storage Department. 22.   The Company has agreed to maintain 200 employees in the Operations Mechanic and Sr. Operations Mechanic job classification for the term of the agreement. 23.   The Company and the Union have agreed to add Leak Investigation and Leak Grading to the certification process for the Distribution Mechanic, Controller and Sr. Controller job classifications.  The training time for certification will be adjusted to account for the additional courses, if necessary.  Employees currently in the Distribution Mechanic, Controller and Sr. Controller job classifications will be trained and qualified as business conditions permit. 24.   The Company and the Union have agreed to implement a modular training and certification process for the Operations Mechanic job classification.        25.   There is an agreement to add a test for meter reader/helper (hired after 2007) promoting to mechanic level job classification or equivalent.  Mutual agreement will be obtained between the company and union before implementation of the testing program.     5 --------------------------------------------------------------------------------         26.   The Company will fill the following positions upon ratification of the Contract. (1) Distribution Crewleader – (1) Joliet   (4) Distribution Technicians – (2) Glen Ellyn, (1) Joliet, (1) Bloomington   (7) Distribution Mechanics – (4) Bellwood, (1) Park Ridge, (2) Schaumburg   (1) Operations Mechanic – (1) Rockford   (2) Leak Survey Specialists (1) Park Ridge, (1) Joliet   (1) Sr. Distribution Plastic Operator Benefit Items Short Term Disability Plan 1.   The Company and the Union have agreed to eliminate the EBA Board and engage a third party administrator to case manage all STD, LTD, and Worker’s Compensation cases. 2.   Employee premiums for Short Term Disability benefits will be deducted on a pre-tax basis. 3.   The length of the Short Term Disability benefit has been reduced from 39 weeks to 26 weeks. 4.   Short Term Disability benefits will be paid according to years of service:  Years of Service Percentage of Base Pay  20+ years 75%  11 – 19 years 65%  6 months – 10 years 60% This schedule will be effective the pay period following the employee’s service anniversary date. 5.   Employees will be eligible to enroll in the Short Term Disability program without evidence of insurability after completing six months of service.   The Company and the Union have agreed to modify the Short Term Disability Election Form to ensure an eligible employee understands the repercussions of their decision not to participate in the plan.  The repercussion can include termination of employment.  The Union President will be notified of such elections. 6.   Employees who do not initially enroll in the Short Term Disability benefit at completion of six months of service may enroll in the program during the annual open enrollment period with evidence of insurability.   7.   Disability absences either, full or partial day, will be counted as an incident and a full day absence.   8.   Time incurred on the Short or Long Term disability program will not be counted towards reinstating the 4 incident and/or 8 day absence program when they return to work.     6 --------------------------------------------------------------------------------       9.   Following ratification of the contract, a four pay period moratorium suspending short term disability premiums will be implemented. Flexible Spending Account The Company will implement a debit card effective with the 2010 plan year rollout. Retirement Growth Account Effective with the 2009 award the annual Company contribution to the Retirement Growth Account for eligible employees hired on and after January 1, 1998 will be increased to 1.4%. The 2009 award will be contributed to employee accounts in the first quarter of 2010. Thrift Plan The Company will add the following new options to the 401(k) plan: ·   Roth 401(k) contribution ·   Catch up contribution ·   Roll-ins from previous employer plans ·   Increase pre-tax deferral percentage to 50%. The date of implementation will be coordinated with the third party provider and communicated to eligible employees in a timely manner. Pension and Insurance Plans The Supplemental Agreement with respect to the Pension Plan, and the Supplemental Agreement with respect to the Group Life Insurance Plan, Dependent Life Insurance Plan, Group Accidental and Dismemberment Plan, Group Medical Expense Insurance Plan and Dental Plan, to which the Company and the Union are parties, will terminate in accordance with their terms after February 28, 2009.  These supplemental agreements will be amended as follows:   1. The Supplemental Agreement with respect to the Pension Plan will be effective March 1, 2009 through February 28, 2014.  Changes to the Pension Band are noted in Exhibit V.   2. The Supplemental Agreement with respect to the Group Life Insurance Plan, Dependent Life Insurance Plan, Group Accidental and Dismemberment Plan, Group Medical Expense Insurance Plan and Dental Plan will be effective March 1, 2009 through February 28, 2014 and will contain the following changes: a.             Gift Life Insurance will be increased from $9,500.00 to $10,000.00.   b. Non-Contributory Life Insurance provision will be increased from 1.5 times base pay to 1.6 times base pay.   c. The lifetime maximum benefit per active employee participant under the Group Medical Expense Insurance Plan will be reinstated to $1,500,000 effective March 1, 2009.   d. The Group Medical Insurance Plan will be revised to allow legal dependents of active employees to participate in both the PPO and HMO medical plans to age 26 per the recent regulations passed in the State of     7 --------------------------------------------------------------------------------         Illinois.  In the event this legislation is revoked the company and the union will discuss and agree on any future terms. Retiree Medical Insurance Caps for retiree medical coverage for eligible employees hired prior to February 28, 1997 and with less than 15 years of service as of January 1, 1998 and employees hired on and after March 1, 1997 has been improved as follows:           Maximum Annual Amount           Paid by Company Toward   Employee Category     Coverage Type   Retiree Medical Premium                   Employees hired on or            Pre-65                     Post-65   before February 28, 1997   Single     $  6,500   $  3,090   on the payroll as of               January 1, 1998 with      Family        $ 12,200   $  5,740   less than 15 years service                               Employees hired on and           Single            $  4,120   $  1,730   after March 1, 1997        Family                                                         $  7,700                $  3,250                                                                                                                 8    --------------------------------------------------------------------------------   Exhibit I   Memorandum of Agreement Dated March 1, 2009 This document will supersede any prior agreements or memorandums pertaining to the installation of mains and services by contractors. The Company will notify the Union President regarding plans to work contractors on overtime installing mains and services. The Company and the Union agree to the following when contractors work overtime installing gas mains and services that our employees normally perform. ·   In situations where the contractor works overtime and the contractor performs work that normally is performed by our employees, the Company will offer employees from the reporting center where the work is being performed the opportunity to work.  The work will be offered as designated below until an equal number of employees have accepted the work or all employees have been asked to work. ·   Reporting Center is defined as the area covered for emergency or scheduled overtime by employees assigned to a specific company headquarters. ·   Overtime will be defined as scheduled days of work after the contractor has worked 40 hours in a calendar week and will not include hours during extended days as a result of necessities on the job or additional days to make up for inclement weather. ·   The work will be offered to our employees within a week after the contractor works and will be offered to the Nicor employee group most aligned with business needs as follows: The overtime will be offered to Field Operations Construction employees when contractors install new P.E. mains and new P.E. services and then Field Operations Delivery employees if additional resources are required.  In areas with no Field Operations Construction employees, the overtime would be offered to Field Operations Delivery employees. The overtime will be offered to Field Operations Delivery employees when contractors are performing public improvement, system improvement and revision mains and services.   9 --------------------------------------------------------------------------------   Exhibit II     Excess Clerical Employee Ground Rules Dated July 12, 1984 Revised July 19, 1991 Revised March 1, 2009 It has been agreed between the company and union that excess clerical employees will not be forced from their previous reporting headquarters beyond the reasonable distances as set forth below.   G.O.      Park Ridge         Crystal Lake   Bellwood   Bellwood    Glen Ellyn    Elgin    Park Ridge    Joliet     Aurora/Yorkville    Schaumburg    Schaumburg    Glen Ellyn    Crystal Lake    Sycamore    Glenwood    Aurora/Yorkville    Schaumburg    Rockford    Crestwood    Sycamore    Elgin    Park Ridge    G.O.                                    Glenwood    Kankaee   Bloomington    Paxton    Crestwood    Glenwood        Paxton    Bloomington    Joliet     Crestwood     Hudson     Kankakee    Kankakee     Joliet     Pontiac        G.O.                Bellwood                                                Ottawa    Joliet    Glen Ellyn    Sycamore    Joliet     Kankakee      G.O.     Crystal Lake   Yorkville          G.O.     Bellwood    Dixon    Ancona           Ottawa      Park Ridge    G.O.    Troy Grove     Glenwood     Schaumburg     Glen Ellyn        Crestwood       Sycamore                                    Aurora/Yorkville        Glen Ellyn    Elgin    Elgin        Aurora/Yorkville                                            Dixon    Rockford            Rockford       Crystal Lake            Sycamore    Elgin               Dixon                                                                                                           Employees promoted to a 3 level position or higher prior to December 31, 1985 will not be forced into the Call Center should they become excess.   10    --------------------------------------------------------------------------------       Exhibit III     AGREEMENT REGARDING TRANSFERS FROM CLERICAL TO METER READING Employees from clerical levels 1, 2, 2A and 3 may accept positions in meter reading under the following conditions: ·   Employees must have 1 ½ years in current position. ·   If employee’s current rate of pay is greater than current meter reader rate of pay, the employee’s rate of pay will be reduced to the maximum of the meter reader job classification which currently is $15.35. ·   Employee’s whose rate of pay is below the maximum of the meter reader job will be slotted into the appropriate time and rate step (down) of the meter reader job classification. ·   Employees will have a one time opportunity to transfer to the meter reader job classification. ·   Employees will be required to pass meter pro training.  If an employee is unsuccessful in passing meter pro training the employee will not be eligible to return to the clerical bargaining unit and employment may be terminated. ·   Employees will be required to complete a 120 day qualifying period after successful completion of meter pro.  Employees who are unsuccessful will not be eligible to return to the clerical bargaining unit and employment may be terminated. ·   The discharge of an employee in their qualifying period will not be subject to the provisions of Article VIII. ·   Employees will not be eligible for time or mileage reimbursements. This program will expire on July 1, 2011 unless extended by mutual agreement by the Company and the Union. 11    --------------------------------------------------------------------------------                                     Exhibit IV     Senior Distribution Plastic Operator Certification Procedure Phase I General Information Phase I of the Senior Distribution Plastic Operator position consists of six parts:   SECTION TYPE POINT VALUE I  Prerequisite – Distribution Plastic Laborer or   Distribution/Operations Mechanic or Leak  Survey Specialist  Valid Driver’s License Proper Classification DOT   Card   None II  Demonstrative Test – Use of Tools   III  Demonstrative Test – Electrofusion   IV  Demonstrative Test – Locating   V  Demonstrative Test  Service Installation and Equipment Operation –    Electrofusion   VI  Written Test  Policies, Practices, Specifications and Problems   Total Points   Note: Personnel promoting from the Leak Survey Specialists and Operations Mechanic positions will be required to complete sections I-V.       Personnel promoting from the Watch & Protect Locator, and Senior Operations Mechanic will have a training schedule based on their prior job classification.        Personnel promoting from Distribution Plastic Laborer, Distribution Mechanic, Distribution Plastic Operator, Distribution Technician and Distribution Plastic Operators will be required to completed sections IV and V.  Proposed training time for Phase I up to 10 weeks – Leak Survey Specialist, Distribution Plastic Laborer, Operations Mechanic, or Distribution Mechanics       10 days – Distribution Plastic Operator and Distribution Technician      Proposed certification time  45 days – Leak Survey Specialist, Distribution Plastic Laborer, Distribution Operations Mechanic,      10 days – Distribution Plastic Operator and Distribution Technician      Weighting of each criteria to be determined          12    --------------------------------------------------------------------------------   Exhibit IV (Cont.)     Senior Distribution Plastic Operator Certification Procedure   Phase II   General Information Phase II of the Senior Distribution Plastic Operator position consists of eight parts: SECTION TYPE POINT VALUE I  Prerequisite – Successful Completion of Phase I   None II  Prerequisite – Electrofusion/Heat Fusion  Qualification   III  Demonstrative Test – Plastic Fusion   IV  Written Assessment – GCS Specifications   V  Demonstrative Test – New Business Main  Installation     VI  Demonstrative Test – Work Order Completion   VII  Demonstrative Test – Daily Progress Reports   VIII  Leadership Competencies (method to be determined   and agreed upon by the Company and the Union)             Proposed training time for Phase II – up to 12 weeks Propose certification time – 45 days Weighting of each criteria to be determined 13    --------------------------------------------------------------------------------   Exhibit V     Nicor Gas Pension Plan Effective March 1, 2009 The pension band increases are 2.0% in 2009, 2.0% in 2010, 2.0% in 2011, 2.0% in 2012, and 2.0% in 2013. The pension bands effective March 1, 2009 through February 28, 2014 will be as follows: DOLLARS PER MONTH PER YEAR OF SERVICE Pension Bands     03/01/2009 thru 2/28/2010     03/01/2010 thru 2/28/2011     03/01/2011 thru 2/29/2012     03/01/2012 thru 2/28/2013     03/01/2013 thru 2/28/2014         Thru 30 Years Service     Over 30 Years Service     Thru 30 Years Service     Over 30 Years Service     Thru 30 Years Service     Over 30 Years Service     Thru 30 Years Service     Over 30 Years Service     Thru 30 Years Service     Over 30 Years Service     1     $ 30.70     $ 36.84     $ 31.32     $ 37.58     $ 31.94     $ 38.33     $ 32.58     $ 39.10     $ 33.23     $ 39.88     2     $ 36.84     $ 42.95     $ 37.58     $ 43.81     $ 38.33     $ 44.69     $ 39.10     $ 45.58     $ 39.88     $ 46.49     3     $ 39.88     $ 46.05     $ 40.68     $ 46.97     $ 41.49     $ 47.91     $ 42.32     $ 48.87     $ 43.17     $ 49.85     4     $ 49.16     $ 55.26     $ 50.15     $ 56.37     $ 51.15     $ 57.50     $ 52.17     $ 58.65     $ 53.22     $ 59.82     5     $ 52.17     $ 58.32     $ 53.22     $ 59.49     $ 54.28     $ 60.68     $ 55.37     $ 61.89     $ 56.47     $ 63.13     6     $ 58.32     $ 64.49     $ 59.49     $ 65.78     $ 60.68     $ 67.10     $ 61.89     $ 68.44     $ 63.13     $ 69.81     7     $ 61.43     $ 67.55     $ 62.66     $ 68.91     $ 63.92     $ 70.28     $ 65.19     $ 71.69     $ 66.50     $ 73.12     8     $ 67.55     $ 73.68     $ 68.91     $ 75.16     $ 70.28     $ 76.66     $ 71.69     $ 78.19     $ 73.12     $ 79.76     9     $ 70.64     $ 76.72     $ 72.05     $ 78.26     $ 73.49     $ 79.82     $ 74.96     $ 81.42     $ 76.46     $ 83.05     10     $ 73.68     $ 79.83     $ 75.16     $ 81.42     $ 76.66     $ 83.05     $ 78.19     $ 84.71     $ 79.76     $ 86.41   The early retirement supplements between ages 55 and 60 will be as follows: DOLLARS PER MONTH PER YEAR OF SERVICE Age at Retirement     03/01/2009 thru 2/28/2010     03/01/2010 thru 2/28/2011     03/01/2011 thru 2/29/2012     03/01/2012 thru 2/28/2013     03/01/2013 thru 2/28/2014                                       55     $ 23.09     $ 23.55     $ 24.03     $ 24.51     $ 25.00     56     $ 23.91     $ 24.39     $ 24.87     $ 25.37     $ 25.88     57     $ 24.66     $ 25.16     $ 25.66     $ 26.17     $ 26.70     58     $ 25.49     $ 26.00     $ 26.52     $ 27.05     $ 27.59     59     $ 26.30     $ 26.82     $ 27.36     $ 27.91     $ 28.46   The early retirement supplement between ages 60 and 62 will be as follows:   60 - 62     $ 1,314.13     $ 1,340.41     $ 1,367.22     $ 1,394.56     $ 1,422.45     14 --------------------------------------------------------------------------------   Dated:  March 12, 2009 For Nicor Gas /s/ PAT LOFTUS -------------------------------------------------------------------------------- Pat Loftus General Manager Labor Relations For Union Local 19 /s/ ROB WYRWICKI -------------------------------------------------------------------------------- Rob Wyrwicki President, Business Manager, Financial Secretary /s/ AL TALKINGTON -------------------------------------------------------------------------------- Al Talkington Senior Assistant Business Manager     15
CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST. SUCH OMITTED PORTIONS, WHICH ARE MARKED WITH BRACKETS [ ] AND AN ASTERISK*, HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. Exhibit 10.1 EXECUTION COPY   COOPERATION AGREEMENT   This AGREEMENT, dated as of June 27, 2017 (this “Agreement”), is made and entered into by The Meet Group, Inc., a Delaware corporation (the “Company”), and each of the persons set forth on the signature page hereto (each, an “Investor” and collectively, the “Investors” or, with their respective affiliates and associates, the “Investor Group”), which presently are or may be deemed to be members of a “group” with respect to the common stock of the Company, $0.001 par value per share (the “Common Stock”), pursuant to Rule 13d-5 promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);   WHEREAS, the Investor Group is deemed to beneficially own shares of the Common Stock totaling, in the aggregate, 4,425,000 shares of the Common Stock outstanding as of the date hereof; and   WHEREAS, the Company has agreed, at the request of the Investor Group, to cause Jim Parmelee (“New Director A”) and a person to be selected from the Director Candidate Pool (as defined herein) (“New Director B”) (collectively, the “New Directors”) to be appointed to the Company’s Board of Directors (the “Board”), and to come to an agreement with respect to certain other matters as provided in this Agreement.   NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:   1.         Board Composition Matters.   (a)       Appointment of New Director A. The Company agrees that it shall take all action as is necessary (including, without limitation, calling a special meeting of the Board to approve all actions contemplated hereby), effective immediately following the execution of this Agreement, to (i) cause the Board to increase the size of its membership from six (6) to seven (7) members; (ii) accept the resignation of one existing member of the Board to become effective immediately prior to the appointment of New Director A; and (iii) appoint New Director A to the Board with a term on the Board expiring at the Company’s 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”) and until his successor is duly elected and qualified. The Company further agrees that without the unanimous approval of the Board, during the period from the execution of this Agreement until the expiration of the Standstill Period (as defined below), the size of the Board shall not be increased beyond seven (7) members.       --------------------------------------------------------------------------------     (i)   Identification and Appointment of New Director B. No later than ninety (90) calendar days from the date of execution of this Agreement (the “New Director B Appointment Deadline”), the Company shall take the necessary steps to cause the Board to appoint one of the candidates set forth on Exhibit A (as the same may be supplemented or otherwise amended from time to time by the mutual constent of the Company and the Investor Group, the “Director Candidate Pool”) as New Director B with a term on the Board expiring at the 2018 Annual Meeting and until his or her successor is duly elected and qualified. The Company agrees that, if New Director B is not appointed to the Board prior to the New Director B Appointment Deadline and none of the candidates included in the Director Candidate Pool are willing to serve on the Board by the New Director B Appointment Deadline, (1) the Company and Investor Group will discuss in good faith the identification and selection of a mutually agreed upon substitute person to be added to the Director Candidate Pool following the same process that they would follow pursuant to Section 1(f) hereof if either of the New Directors, following their appointment to the Board, is unable to serve as a director for any reason, resigns as a director, or is removed as a director prior to the end of the term of office; and (2) the New Director B Appointment Deadline shall no longer apply and, in lieu thereof, shall be replaced by the time periods set forth in Section 1(f) hereof.   (b)       Board’s Review of Qualifications and Determination of Independence. Prior to the execution of this Agreement (i) the Nominating and Governance Committee of the Board (the “Nominating Committee”) has reviewed the qualifications of New Director A and each of the individuals included within the Director Candidate Pool to serve as members of the Board and has determined that they are so qualified, and (ii) the Board has determined that each of the New Directors and each of the individuals included within the Director Candidate Pool are “independent” as defined by the listing standards of NASDAQ.   (c)       Committees. The Company agrees that, concurrent with the appointment of the New Directors to the Board, the Board shall take such action as is necessary such that each of the New Directors is appointed to at least one (1) of the three (3) standing committees of the Board that the Company is required to maintain in accordance with the NASDAQ listing standards; provided that, with respect to each such committee appointment, the New Director is and continues to remain eligible to serve as a member of such committee pursuant to applicable law and the rules of NASDAQ that are applicable to the composition of such committee.   (d)       Board Policies and Procedures. The Investor Group acknowledges that each of the New Directors shall be required to comply with all policies, processes, procedures, codes, rules, standards, and guidelines applicable to members of the Board, as in effect from time to time, including, but not limited to, the Company’s Code of Conduct, and policies on confidentiality, ethics, hedging and pledging of Company securities, public disclosures, stock trading, and stock ownership, and that each of the New Directors shall be required to strictly preserve the confidentiality of Company business and information, including the discussion of any matters considered in meetings of the Board whether or not the matters relate to material non-public information, unless previously publicly disclosed by the Company. Further, the Investor Group acknowledges that the New Directors will be requested to provide the Company with such information as is reasonably requested by the Company concerning the New Directors as is required to be disclosed under applicable law or stock exchange regulations, including the completion of the Company’s standard director and officer questionnaire, in each case as promptly as necessary to enable the timely filing of the Company’s proxy statement and other periodic reports with the SEC.     2 --------------------------------------------------------------------------------     (e)       Rights and Benefits of the New Directors. The Company agrees that each of the New Directors shall receive (i) the same benefits of director and officer insurance, and any indemnity and exculpation arrangements available generally to the directors on the Board, (ii) the same compensation for his service as a director as the compensation received by other non-management directors on the Board, and (iii) such other benefits on the same basis as all other non-management directors on the Board.   (f)       Replacements. The Company agrees that, during the Standstill Period (as defined below), if any of the New Directors is unable to serve as a director for any reason, resigns as a director, or is removed as a director prior to the end of the term of office, and at such time the Investor Group beneficially owns in the aggregate at least three percent (3.0%) of the Company’s then outstanding Common Stock (subject to adjustment for share issuances, stock splits, reclassifications, combinations and similar actions by the Company that increase the number of outstanding shares of Common Stock), then the Company and the Investor Group shall work together in good faith to identify and select a replacement director candidate to be appointed to the Board which shall only be appointed to the Board after having been mutually agreed upon by both the Company and the Investor Group. Any such mutually agreed upon replacement director candidate shall qualify as “independent” pursuant to NASDAQ’s listing standards and have the relevant financial and business experience to fill the resulting vacancy. Each of the Investor Group and the Company shall determine, and inform the other party of its determination, whether any proposed replacement director candidate is acceptable and meets the foregoing criteria, within ten (10) business days after such party has conducted interview(s) of such proposed replacement director candidate. Each of the Company and the Investor Group shall use their respective reasonable best efforts to cause any interview(s) contemplated by this Section 1(f) to be conducted as promptly as practicable, but in any case, assuming reasonable availability of the proposed replacement director candidate, within ten (10) business days after the receipt of such director candidate’s credentials, including, but not limited to, a completed copy of the Company’s standard director and officer questionnaire. Upon acceptance of a replacement director candidate by both the Company and the Investor Group, the Board shall take such actions as to appoint such replacement director candidate to the Board no later than ten (10) business days after both parties have confirmed in writing that they have mutually agreed upon such candidate. Following the appointment of any director to replace a New Director in accordance with this Section 1(f), any reference to New Directors herein shall be deemed to include such replacement director.     3 --------------------------------------------------------------------------------     2.         Actions by the Investor Group.   (a)        Voting Agreement.   (i)       Stockholders Meetings. At each annual and special meeting of stockholders held prior to the expiration of the Standstill Period (as defined below), each of the Investors agrees to (A) appear at such stockholders’ meeting or otherwise cause all shares of Common Stock beneficially owned by each Investor and their respective Affiliates and Associates (as defined below) to be counted as present thereat for purposes of establishing a quorum; (B) vote, or cause to be voted, all shares of Common Stock beneficially owned by each Investor and their respective Affiliates and Associates on the Company’s proxy card or voting instruction form in favor of each of the nominees for election as directors nominated by the Board and recommended by the Board (and not in favor of any other nominees to serve on the Board); and, except in connection with any Opposition Matter (as defined below) or Other Voting Recommendation (as defined below), each of the proposals listed on the Company’s proxy card or voting instruction form as identified in the Company’s definitive proxy statement or supplement thereto in accordance with the Board’s recommendations, including in favor of all matters recommended by the Board for stockholder approval and against all matters which the Board recommends against stockholder approval; provided, however, in the event that Institutional Shareholder Services Inc. (“ISS”) issues a recommendation with respect to any matter (other than with respect to the election of nominees as directors to the Board or the removal of directors from the Board) that is different from the recommendation of the Board, each of the Investors shall have the right to vote on the Company’s proxy card or voting instruction form in accordance with the ISS recommendation (the “Other Voting Recommendation”); and (C) not execute any proxy card or voting instruction form in respect of such stockholders’ meeting other than the proxy card and related voting instruction form being solicited by or on behalf of the Company or the Board. No later than five (5) business days prior to each annual or special meeting of stockholders held prior to the expiration of the Standstill Period, each Investor shall, and shall cause each of its Associates and Affiliates to, vote any shares of Common Stock beneficially owned by such Investors in accordance with this Section 2. No Investor nor any of its Affiliates or Associates nor any person under its direction or control shall take any position, make any statement or take any action inconsistent with this Section 2(a)(i). For purposes of this Agreement, “Opposition Matter” shall mean any of the following transactions but only to the extent submitted by the Board to the Company’s stockholders for approval: (A) the sale or transfer of all or substantially all of the Company’s assets in one or a series of transactions; (B) the sale or transfer of a majority of the outstanding shares of the Company’s Common Stock (through a merger, stock purchase, or otherwise); (C) any merger, consolidation, acquisition of control or other business combination that results in a Change of Control (as defined below) of the Company; (D) any tender or exchange offer; (E) any dissolution, liquidation, or reorganization; (F) any changes in the Company’s capital structure (but excluding any proposal regarding the adoption or amendment of equity plans, all of which shall not be deemed an Opposition Matter for purposes of this Agreement); or (G) any other transactions that would result in a Change of Control of the Company.   (ii)       Actions By Written Consent. In connection with any action by written consent that is sought to be taken by any party, other than the Company or the Board, prior to the expiration of the Standstill Period (as defined below), each of the Investors agrees not to vote and to take all necessary action, including, without limitation, the execution and completion of any consent revocation card solicited by the Company or the Board, in accordance with the recommendation of the Board, to cause not to be voted, any of their shares of Common Stock beneficially owned by each Investor and/or their respective Affiliates and Associates on any consent card related to or affecting the removal, replacement or election of Board members and solicited by any party, other than the Company or the Board. No Investor nor any of its Affiliates or Associates nor any person under its direction or control shall take any position, make any statement or take any action inconsistent with this Section 2(a)(ii).   (iii)      Special Meeting Demands. In connection with any demand by a stockholder of the Company that the Company call a special meeting of stockholders, made prior to the expiration of the Standstill Period (as defined below), each of the Investors agrees not to vote and shall take all necessary action, including, but not limited to, the execution and completion of any consent revocation card solicited by the Company or the Board in accordance with the recommendation of the Board, to cause not to be voted, any of their shares of Common Stock beneficially owned by each Investor and/or their respective Affiliates and Associates for any special meeting demand proposed or sought to be made by any party. No Investor nor any of its Affiliates or Associates nor any person under its direction or control shall take any position, make any statement or take any action inconsistent with this Section 2(a)(iii).     4 --------------------------------------------------------------------------------     3.         Standstill.   (a)         Each Investor agrees that, from the date of this Agreement until the expiration of the Standstill Period (as defined below), without the prior written consent of a majority of the Board specifically expressed in a written resolution, neither it nor any of its Related Persons (as defined herein) will, and it will cause each of its Related Persons not to, directly or indirectly, alone or with others, in any manner:   (i)        propose or publicly announce or otherwise publicly disclose an intent to propose or enter into or agree to enter into, singly or with any other person, directly or indirectly, (x) any form of business combination or acquisition or other transaction relating to a material amount of assets or securities of the Company or any of its subsidiaries, (y) any form of restructuring, recapitalization or similar transaction with respect to the Company or any of its subsidiaries or (z) any form of tender or exchange offer for the Common Stock, whether or not such transaction involves a change of control of the Company;   (ii)       engage in any solicitation of proxies or written consents to vote any voting securities of the Company, or conduct any non-binding referendum with respect to any voting securities of the Company, or assist or participate in any other way, directly or indirectly, in any solicitation of proxies or written consents with respect to any voting securities of the Company, or otherwise become a “participant” in a “solicitation,” as such terms are defined in Instruction 3 of Item 4 of Schedule 14A and Rule 14a-1 of Regulation 14A, respectively, under the Exchange Act, to vote any securities of the Company in opposition to any recommendation or proposal of the Board;   (iii)      acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a partnership, limited partnership, syndicate or other group (including any group of persons that would be treated as a single “person” under Section 13(d) of the Exchange Act), through swap or hedging transactions or otherwise, any additional securities (including common and preferred equity interests and debt that is convertible into any equity interests) of the Company or any rights decoupled from the underlying securities of the Company, that would result, or could result, in the Investor Group owning, in the aggregate (amongst all of the Investors and any Affiliate or Associate thereof), in excess of 10% of the shares of Common Stock outstanding;   (iv)      seek to advise, encourage or influence any person with respect to the voting of (or execution of a written consent in respect of) or disposition of any securities of the Company, other than in a manner in accordance with Section 2;   (v)       sell, offer or agree to sell directly or indirectly, through swap or hedging transactions or otherwise, any securities (including common and preferred equity interests and debt that is convertible into any equity interests) of the Company or any rights decoupled from the underlying securities held by the Investors to any person or entity that would knowingly result in any third party, together with its Affiliates and Associates, owning, controlling or otherwise having any, beneficial, economic or other ownership interest representing in the aggregate 5% or more of the shares of Common Stock outstanding at such time;     5 --------------------------------------------------------------------------------     (vi)      sell, offer or agree to sell directly or indirectly, through swap or hedging transactions or otherwise, any securities (including common and preferred equity interests and debt that is convertible into any equity interests) of the Company or any rights decoupled from the underlying securities held by the Investors to any Affiliate or Associate of the Investors not a party to this Agreement;   (vii)     except as otherwise set forth in this Agreement, take any action in support of or make any proposal or request that constitutes: (A) advising, controlling, changing or influencing the Board or management of the Company, including any plans or proposals to change the number or term of directors or to fill any vacancies on the Board, (B) any material change in the capitalization, stock repurchase programs and practices or dividend policy of the Company, (C) any other material change in the Company’s management, governance, policies, strategic direction, business or corporate structure, (D) seeking to have the Company waive or make amendments or modifications to the Company’s Amended and Restated Certificate of Incorporation or Bylaws, or other actions that may impede or facilitate the acquisition of control of the Company by any person, (E) causing a class of securities of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange, or (F) causing a class of securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act;   (viii)    call or seek to call, or request the call of, alone or in concert with others, any meeting of stockholders, whether or not such a meeting is permitted by the Company’s Amended and Restated Certificate of Incorporation or Bylaws, including, but not limited to, a “town hall meeting;”   (ix)       seek, alone or in concert with others, representation on the Board, except as expressly permitted by this Agreement;   (x)        initiate, encourage or participate in any “vote no,” “withhold” or similar campaign;   (xi)       deposit any Common Stock in any voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of any Common Stock (other than any such voting trust, arrangement or agreement solely among the members of the Investor Group that is otherwise in accordance with this Agreement);   (xii)      seek, or encourage any person, to submit nominations in furtherance of a “contested solicitation” for the election or removal of directors with respect to the Company or seek, encourage or take any other action with respect to the election or removal of any directors of the Company or with respect to the submission of any stockholder proposals (including any submission of stockholder proposals pursuant to Rule 14a-8 under the Exchange Act);     6 --------------------------------------------------------------------------------     (xiii)      form, join or in any other way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Common Stock (other than the Investor Group);   (xiv)     demand a copy of the Company’s list of stockholders or its other books and records, whether pursuant to Section 220 of the Delaware General Corporation Law (the “DGCL”) or pursuant to any other statutory right;   (xv)      commence, encourage, or support any derivative action in the name of the Company, or any class action against the Company or any of its officers or directors in order to, directly or indirectly, effect any of the actions expressly prohibited by this Agreement or cause the Company to amend or waive any of the provisions of this Agreement; provided, however, that for the avoidance of doubt, the foregoing shall not prevent any Investor from (A) bringing litigation to enforce the provisions of this Agreement, (B) making counterclaims with respect to any proceeding initiated by, or on behalf of, the Company against an Investor, or (C) exercising statutory dissenters, appraisal or similar rights under the DGCL; provided, further, that the foregoing shall also not prevent the Investors from responding to or complying with a validly issued legal process in connection with litigation that it did not initiate, invite, facilitate or encourage, except as otherwise permitted in this Section (3)(a)(xv);   (xvi)     disclose publicly or privately, in a manner that could reasonably be expected to become public any intent, purpose, plan or proposal with respect to the Board, the Company, its management, policies or affairs, any of its securities or assets or this Agreement that is inconsistent with the provisions of this Agreement; provided, however, that nothing herein shall prohibit the Investor Group from engaging in private discussions with the Company concerning the Investor Group’s views or suggestions concerning the Company;   (xvii)    enter into any negotiations, agreements or understandings with any person or entity with respect to any of the foregoing, or advise, assist, knowingly encourage or seek to persuade any person or entity to take any action or make any statement with respect to any of the foregoing, or otherwise take or cause any action or make any statement inconsistent with any of the foregoing;   (xviii)    make any request or submit any proposal to amend the terms of this Agreement other than through non-public communications with the Company that would not be reasonably determined to trigger public disclosure obligations for any party;   (xix)      take any action challenging the validity or enforceability of any of the provisions of this Section 3 or publicly disclose, or cause or facilitate the public disclosure (including, without limitation, the filing of any document with the SEC or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to either (A) obtain any waiver or consent under, or any amendment of, any provision of this Agreement, or (B) take any action challenging the validity or enforceability of any provisions of this Section 3; or   (xx)       otherwise take, or solicit, cause or encourage others to take, any action inconsistent with the foregoing.     7 --------------------------------------------------------------------------------     (b)          Notwithstanding the foregoing, the provisions of this Section 3 shall not limit in any respect the actions of any director of the Company (including, but not limited to, the New Directors) in their capacity as such, recognizing that such actions are subject to such director’s fiduciary duties to the Company and its stockholders (it being understood and agreed that neither the Investors nor any of their Affiliates or Associates shall seek to do indirectly through the New Directors anything that would be prohibited if done by any of the Investors or their Affiliates and Associates directly). For the avoidance of doubt, no provision in this Section 3 or elsewhere in this Agreement shall prohibit privately-negotiated transactions in the Common Stock solely between or among the Investors.   (c)          As of the date of this Agreement, none of the Investors are engaged in any discussions or negotiations with any person, and do not have any agreements, arrangements, or understandings, written or oral, formal or informal, and whether or not legally enforceable with any person concerning the acquisition of economic ownership of any securities of the Company, and have no actual and non-public knowledge that any other stockholders of the Company have any present or future intention of taking any actions that if taken by the Investors would violate any of the terms of this Agreement. The Investors agree to refrain from taking any actions during the Standstill Period to intentionally encourage other stockholders of the Company, or any other persons to engage in any of the actions referred to in the previous sentence.   (d)          As used in this Agreement, the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act; the terms “beneficial owner” and “beneficial ownership” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act; the terms “economic owner” and “economically own” shall have the same meanings as “beneficial owner” and “beneficially own,” except that a person will also be deemed to economically own and to be the economic owner of (i) all shares of Common Stock which such person has the right to acquire pursuant to the exercise of any rights in connection with any securities or any agreement, regardless of when such rights may be exercised and whether they are conditional, and (ii) all shares of Common Stock in which such person has any economic interest, including, without limitation, pursuant to a cash settled call option or other derivative security, contract or instrument in any way related to the price of shares of Common Stock; the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature; and the term “Related Person” shall mean, as to any person, any Affiliates or Associates of such person.   (e)           Notwithstanding anything contained in this Agreement to the contrary:   (i)      The provisions of Sections 1, 2, and 3 of this Agreement shall automatically terminate upon the occurrence of a Change of Control transaction (as defined below) involving the Company if the acquiring or counter-party to the Change of Control transaction has conditioned the closing of the transaction on the termination of such sections; provided, however, that the Company shall not directly or indirectly, propose, seek, encourage or otherwise influence such acquiring or counter-party to the Change of Control transaction to condition the closing of such transaction on the termination of Sections 1, 2, and 3 of this Agreement; and     8 --------------------------------------------------------------------------------     (ii)  For purposes of this Agreement, a “Change of Control” transaction shall be deemed to have taken place if (1) any person is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing more than 50% of the equity interests and voting power of the Company’s then outstanding equity securities or (2) the Company enters into a stock-for-stock transaction whereby immediately after the consummation of the transaction the Company’s stockholders retain less than 50% of the equity interests and voting power of the surviving entity’s then outstanding equity securities.   (f)      For purposes of this Agreement, “Standstill Period” shall mean the period commencing on the date of this Agreement and ending at 11:59 p.m. Eastern Time on the date of the certification of the vote of stockholders at the 2018 Annual Meeting.   4.        Expenses. Each of the Company and the Investors shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution, and effectuation of this Agreement and the transactions contemplated hereby, including, but not limited to attorneys’ fees incurred in connection with the negotiation and execution of this Agreement and all other activities related to the foregoing.   5.        Representations and Warranties of the Company. The Company represents and warrants to the Investors that (a) the Company has the corporate power and authority to execute this Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, or any material agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.   6.        Representations and Warranties of the Investors. Each Investor, on behalf of itself, severally represents and warrants to the Company that (a) as of the date hereof, such Investor beneficially owns, directly or indirectly, only the number of shares of Common Stock as described opposite its name on Exhibit B and Exhibit B includes all Affiliates and Associates of any Investors that own any securities of the Company beneficially or of record and reflects all shares of Common Stock in which the Investors have any interest or right to acquire, whether through derivative securities, voting agreements or otherwise, (b) this Agreement has been duly and validly authorized, executed and delivered by such Investor, and constitutes a valid and binding obligation and agreement of such Investor, enforceable against such Investor in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles, (c) such Investor has the authority to execute this Agreement on behalf of itself and the applicable Investor associated with that signatory’s name, and to bind such Investor to the terms hereof, (d) each of the Investors shall use its commercially reasonable efforts to cause its respective Affiliates and Associates to comply with the terms of this Agreement and (e) the execution, delivery and performance of this Agreement by such Investor does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it, or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which such member is a party or by which it is bound.     9 --------------------------------------------------------------------------------     7.         Mutual Non-Disparagement.   (a) Each Investor agrees that, until the earlier of (i) the expiration of the Standstill Period or (ii) any material breach of this Agreement by the Company (provided that the Company shall have three (3) business days following written notice from such Investor of any material breach to remedy such material breach if capable of remedy), neither it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates not to, directly or indirectly, publicly make, express, transmit, speak, write, verbalize or otherwise publicly communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal or in writing, that might reasonably be construed to be derogatory or critical of, or negative toward, the Company or any of its directors, officers, Affiliates, Associates, subsidiaries, employees, agents or representatives (collectively, the “Company Representatives”), or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of the Company or its subsidiaries or Affiliates or Associates, or to malign, harm, disparage, defame or damage the reputation or good name of the Company, its business or any of the Company Representatives.   (b) The Company hereby agrees that, until the earlier of (i) the expiration of the Standstill Period or (ii) any material breach of this Agreement by an Investor (provided that such Investor shall have three (3) business days following written notice from the Company of any material breach to remedy such material breach if capable of remedy), neither it nor any of its Affiliates will, and it will cause each of its Affiliates not to, directly or indirectly, publicly make, express, transmit, speak, write, verbalize or otherwise publicly communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal or in writing, that might reasonably be construed to be derogatory or critical of, or negative toward, the Investors or their Affiliates or Associates or any of their agents or representatives (collectively, the “Investor Agents”), or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of any Investor or its Affiliates or Associates, or to malign, harm, disparage, defame or damage the reputation or good name of any Investor, its business or any of the Investor Agents.   (c) Notwithstanding the foregoing, nothing in this Section 7 or elsewhere in this Agreement shall prohibit any party from making any statement or disclosure required under the federal securities laws or other applicable laws.   (d) The limitations set forth in Section 7(a) and 7(b) shall not prevent any party from responding to any public statement made by the other party of the nature described in Section 7(a) and 7(b) if such statement by the other party was made in breach of this Agreement.     10 --------------------------------------------------------------------------------     8.       Public Announcements. Promptly following the execution of this Agreement, the Company and the Investor Group shall issue a mutually agreeable press release (the “Mutual Press Release”), announcing certain terms of this Agreement, substantially in the form attached hereto as Exhibit C. Prior to the issuance of the Mutual Press Release, neither the Company nor any of the Investors shall issue any press release or make any public announcement regarding this Agreement or take any action that would require public disclosure thereof without the prior written consent of the other party. During the Standstill Period, neither the Company nor the Investor Group or any of its Affiliates or Associates shall make any public announcement or statement that is inconsistent with or contrary to the statements made in the Mutual Press Release, except as required by law or the rules of any stock exchange (and, in any event, each party will provide the other party, prior to making any such public announcement or statement, a reasonable opportunity to review and comment on such disclosure, to the extent reasonably practicable under the circumstances, and each party will consider any comments from the other in good faith) or with the prior written consent of the other party, and otherwise in accordance with this Agreement.   9.        SEC Filings.   (a)     No later than two (2) business days following the execution of this Agreement, the Company shall file a Current Report on Form 8-K with the SEC reporting the entry into this Agreement and appending or incorporating by reference this Agreement as an exhibit thereto. The Company shall provide the Investor Group and its counsel a reasonable opportunity to review and comment on the Form 8-K prior to such filing, which comments shall be considered in good faith.   (b)     No later than two (2) business days following the execution of this Agreement, the Investor Group shall file an amendment to its Schedule 13D with respect to the Company that has been filed with the SEC, reporting the entry into this Agreement, amending applicable items to conform to their obligations hereunder and appending or incorporating by reference this Agreement as an exhibit thereto. The Investor Group shall provide the Company and its counsel a reasonable opportunity to review and comment on the Schedule 13D prior to such filing, which comments shall be considered in good faith.   10.      Specific Performance. Each of the Investors, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other party hereto may occur in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately compensable in monetary damages. It is accordingly agreed that the Investors or any Investor, on the one hand, and the Company, on the other hand (the “Moving Party”), shall each be entitled to seek specific enforcement of, and injunctive or other equitable relief to prevent any violation of, the terms hereof, and the other party hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity.     11 --------------------------------------------------------------------------------     11.         Notice. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon confirmation of receipt, when sent by email (provided such confirmation is not automatically generated) or (iv) one (1) business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:   If to the Company:   The Meet Group, Inc. 100 Union Square Drive New Hope, PA 18938 Fax No.: (215) 862.7825 Email: fred@themeetgroup.com Attention: Frederic A. Beckley, Esq., General Counsel and Executive Vice President, Business Affairs   With copies (which shall not constitute notice) to:   Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, N.W. Washington, DC 20004 Fax No.: (202) 739-3001 Email: keith.gottfried@morganlewis.com Attention: Keith E. Gottfried, Esq.   If to any Investor:   Harvest Capital Strategies LLC 600 Montgomery Street, Suite 1700 San Francisco, CA 94111 Fax No.: (415) 869-4433 Email: investments@harvestcaps.com Attention: Jeffrey B. Osher, Managing Director   With copies (which shall not constitute notice) to:   Olshan Frome Wolosky LLP 1325 Avenue of the Americas New York, NY 10019 Fax No.: (212) 451-2222 E-mail: swolosky@olshanlaw.com              afreedman@olshanlaw.com Attention: Steve Wolosky, Esq.                    Andrew Freedman, Esq.     12 --------------------------------------------------------------------------------     12.     Governing Law. This Agreement shall be governed in all respects, including validity, interpretation, and effect, by, and construed in accordance with, the laws of the State of Delaware executed and to be performed wholly within the State of Delaware, without giving effect to the choice of law or conflict of law principles thereof or of any other jurisdiction to the extent that such principles would require or permit the application of the laws of another jurisdiction.   13.     Jurisdiction. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of federal or state courts of the State of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the federal or state courts of the State of Delaware, and each of the parties irrevocably waives the right to trial by jury, (c) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief, and (d) irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address of such party’s principal place of business or as otherwise provided by applicable law. Each of the parties hereto irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action, suit or other legal proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment before judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) such action, suit or other legal proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such action, suit or other legal proceeding is improper or (iii) this agreement, or the subject matter hereof, may not be enforced in or by such court.   14.     Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.   15.     Representative. Each Investor hereby irrevocably appoints Jeffrey B. Osher as its attorney-in-fact and representative (the “Investor Group Representative”), in such Investor’s place and stead, to do any and all things and to execute any and all documents and give and receive any and all notices or instructions in connection with this Agreement and the transactions contemplated hereby. The Company shall be entitled to rely, as being binding on each Investor, upon any action taken by the Investor Group Representative or upon any document, notice, instruction or other writing given or executed by the Investor Group Representative.     13 --------------------------------------------------------------------------------     16.     Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings and representations, whether oral or written, of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings, oral or written, between the parties other than those expressly set forth herein.   17.    Headings. The section headings contained in this Agreement are for reference purposes only and shall not effect in any way the meaning or interpretation of this Agreement.   18.     Waiver. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.   19.     Remedies. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law or equity.   20.     Receipt of Adequate Information; No Reliance; Representation by Counsel. Each party acknowledges that it has received adequate information to enter into this Agreement, that it has had adequate opportunity to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of this Agreement prior to the execution hereof, and that it has not relied on any promise, representation or warranty, express or implied not contained in this Agreement. Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent counsel. Each party cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regards to events of drafting or preparation. Further, 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 shall have no application and is expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of the parties.   21.     Construction. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement, unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” and “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “will” shall be construed to have the same meaning as the word “shall.” The words “dates hereof” will refer to the date of this Agreement. The word “or” is not exclusive. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement, instrument, law, rule or statute defined or referred to herein means, unless otherwise indicated, such agreement, instrument, law, rule or statute as from time to time amended, modified or supplemented.     14 --------------------------------------------------------------------------------     22.     Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes of such invalid or unenforceable provision.   23.     Amendment. This Agreement may be modified, amended or otherwise changed only in a writing signed by all of the parties hereto, or in the case of the Investors, the Investor Group Representative, or their respective successors or assigns.   24.    Successors and Assigns. The terms and conditions of this Agreement shall be binding upon and be enforceable by the parties hereto and the respective successors, heirs, executors, legal representatives and permitted assigns of the parties, and inure to the benefit of any successor, heir, executor, legal representative or permitted assign of any of the parties; provided, however, that no party may assign this Agreement or any rights or obligations hereunder without, with respect to any Investor, the express prior written consent of the Company (with such consent specifically authorized in a written resolution adopted and approved by the unanimous vote of the entire membership of the Board), and with respect to the Company, the prior written consent of the Investor Group Representative.   25.     No Third-Party Beneficiaries. The representations, warranties and agreements of the parties contained herein are intended solely for the benefit of the party to whom such representations, warranties or agreements are made, and shall confer no rights, benefits, remedies, obligations, or liabilities hereunder, whether legal or equitable, in any other person or entity, and no other person or entity shall be entitled to rely thereon.   26.     Counterparts; Facsimile / PDF Signatures. This Agreement and any amendments hereto may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a portable document format (.pdf or similar format) data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   [SIGNATURE PAGE FOLLOWS]     15 --------------------------------------------------------------------------------     [SIGNATURE PAGE TO COOPERATION AGREEMENT]   IN WITNESS WHEREOF the parties have duly executed and delivered this Agreement as of the date first above written.     THE MEET GROUP, INC.     By: /s/ Frederic Beckley                                        Name: Frederic Beckley Title: General Counsel & EVP Business Affairs   HARVEST SMALL CAP PARTNERS MASTER, LTD. By: Harvest Capital Strategies LLC Investment Manager   By: /s/ Jeffrey B. Osher                                         Name: Jeffrey B. Osher Title: Managing Director   HARVEST SMALL CAP PARTNERS, L.P. By: Harvest Capital Strategies LLC Investment Manager   By: /s/ Jeffrey B. Osher                                         Name: Jeffrey B. Osher Title: Managing Director   HARVEST SMALL CAP PARTNERS GP, LLC By: Harvest Capital Strategies LLC Investment Manager of the Limited Partner   By: /s/ Jeffrey B. Osher                                         Name: Jeffrey B. Osher Title: Managing Director   HARVEST CAPITAL STRATEGIES LLC   By: /s/ Jeffrey B. Osher                                         Name: Jeffrey B. Osher Title: Managing Director   /s/ Jeffrey B. Osher                                                JEFFREY B. OSHER     16 --------------------------------------------------------------------------------     CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST. SUCH OMITTED PORTIONS, WHICH ARE MARKED WITH BRACKETS [ ] AND AN ASTERISK*, HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.     EXHIBIT A   DIRECTOR CANDIDATE POOL   [***]     17 --------------------------------------------------------------------------------     EXHIBIT B   STOCKHOLDERS, AFFILIATES, AND OWNERSHIP   Investor Shares of Common Stock Beneficially Owned     Harvest Small Cap Partners Master, Ltd.   2,763,182 Harvest Small Cap Partners, L.P.   1,661,818                         Aggregate total beneficially owned by the Investor Group:   4,425,000     18 --------------------------------------------------------------------------------     EXHIBIT C   FORM OF PRESS RELEASE   THE MEET GROUP reaches agreement with harvest capital   Agrees to Appoint Two New Independent Directors to The Meet Group’s Board   NEW HOPE, PA, June 27, 2017 – The Meet Group, Inc. (NASDAQ: MEET), a public market leader in the mobile meeting space, today announced that it has entered into a cooperation agreement with Harvest Capital Strategies LLC and its affiliates, which, in the aggregate, beneficially owns approximately 6.3% of The Meet Group’s outstanding shares, regarding the composition of The Meet Group’s Board of Directors. Under the terms of the agreement, The Meet Group has agreed to appoint to its Board two new independent directors: Jim Parmelee, who has agreed to join the Meet Group Board effective immediately, and a second director mutually acceptable to The Meet Group and Harvest Capital to be identified within the next ninety days.   Spencer G. Rhodes, The Meet Group’s Chairman of the Board, stated, “We are pleased to have reached this cooperation agreement with Harvest Capital, as we believe this outcome serves the best interests of The Meet Group and its stockholders. We are also pleased to welcome Jim Parmelee to our Board and look forward to the insights and experience he will bring.”   Jeffrey B. Osher, the Managing Director of Harvest Capital, stated, “We have spent considerable time with The Meet Group’s senior management team and strongly support their strategy of creating a compelling portfolio of mobile meeting apps. Under Geoff Cook’s leadership, The Meet Group has methodically grown its global platform while delivering consistent profitability and cash flow. We look forward to continuing our collaboration with The Meet Group’s Board and senior management team as they execute on their long-term growth initiatives and focus on shareholder value creation.”   Pursuant to the cooperation agreement, Harvest Capital has agreed that, until the certification of the shareholder vote at The Meet Group’s 2018 Annual Meeting of Stockholders, it will abide by certain customary standstill provisions.   The cooperation agreement between The Meet Group and Harvest Capital will be included as an exhibit to a Current Report on Form 8-K that The Meet Group will file with the Securities and Exchange Commission.   Morgan, Lewis & Bockius LLP served as legal counsel to The Meet Group. Olshan Frome Wolosky LLP served as legal advisor to Harvest Capital.   The Meet Group also announced today that it has appointed The Blueshirt Group to lead its investor relations communications and strategy. The Blueshirt Group is a leading tech-focused investor relations firm that specializes in investor relations, IPO advisory, financial communications, financial media relations and crisis management.    About Jim Parmelee   Mr. Parmelee brings over 25 years of technology industry experience.  He is currently an advisor to Hamilton Robinson Capital Partners, a middle market focused private equity firm.  Jim was previously a Managing Director in Peak Ten Management LLC, where he was responsible for the firm's investments in the software, Internet and technology infrastructure verticals.  Before Peak Ten, Jim was a Partner in Union Square Advisors, an M&A advisory firm focused on the technology sector, where he led the firm's global Information Technology infrastructure practice.  Jim was previously a leading data networking and telecom equipment equity research analyst at Credit Suisse First Boston (now Credit Suisse).  Jim was highly ranked by external polls throughout his research career including being named six times to Institutional Investor Magazine's All America Research Team.     19 --------------------------------------------------------------------------------     About The Meet Group The Meet Group (NASDAQ: MEET) is a fast-growing portfolio of mobile apps designed to meet the universal need for human connection. Using innovative products and sophisticated data science, The Meet Group keeps its approximately 2.8 million mobile daily active users engaged and originates untold numbers of casual chats, friendships, dates, and marriages. The Meet Group offers advertisers the opportunity to reach customers on a global scale with hundreds of millions of daily mobile ad impressions. The Meet Group utilizes high user density, economies of scale, and leading monetization strategies with the goal of maximizing adjusted EBITDA. Our apps – currently MeetMe®, Skout®, Tagged®, and Hi5® – let users in more than 100 countries chat, share photos, stream live video, and discuss topics of interest, and are available on iPhone, iPad, and Android in multiple languages. For more information, please visit themeetgroup.com.   MEET Investor Contact:   The Blueshirt Group Allise Furlani allise@blueshirtgroup.com     20
Exhibit 10.4 Assignment and Assumption Agreement This Assignment and Assumption Agreement (this “Agreement”) dated as of July 10, 2020 (the “Effective Date”), is entered into by and between Isaac Capital Fund I, a Georgia limited liability company (“Assigning Party”), Isaac Capital Group, LLC, a Delaware limited liability company (“Assuming Party”). WHEREAS, Assigning Party desires to assign to Assuming Party all of its rights and delegate to Assuming Party all of its obligations under certain contracts as described on Schedule 1 attached hereto (collectively “Assigned Contracts”); and WHEREAS, Assuming Party desires to accept such assignment of rights and delegation of obligations under the Assigned Contracts. NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set out herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1.Assignment and Assumption. 1.1Assignment. Assigning Party irrevocably sells, assigns, grants, conveys, and transfers to Assuming Party all of Assigning Party’s right, title, and interest in and to the Assigned Contracts. 1.2Assumption. Assuming Party unconditionally accepts such assignment and assumes all of Assigning Party’s duties, liabilities, and obligations under the Assigned Contracts, and agrees to pay, perform, and discharge, as and when due, all of the obligations of Assigning Party under the Assigned Contracts accruing on and after the Effective Date. 2.Representations and Warranties. 2.1Assigning Party’s Representations and Warranties. Assigning Party represents and warrants as follows: (a)It is duly organized, validly existing, and in good standing under the laws of the State of Georgia. (b)It has the full right, limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder. (c)When executed and delivered by it, this Agreement will constitute the legal, valid, and binding obligation of Assigning Party, enforceable against it in accordance with its terms and not subject to defenses. 2.2Assuming Party’s Representations and Warranties. Assuming Party represents and warrants as follows: (a)It is duly organized, validly existing, and in good standing under the laws of the State of Delaware. -------------------------------------------------------------------------------- (b)It has the full right, limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder. (c)When executed and delivered by it, this Agreement will constitute the legal, valid, and binding obligation of Assuming Party, enforceable against it in accordance with its terms. 3.Miscellaneous. 3.1Further Assurances. On the other party’s reasonable request, each party shall, at its sole cost and expense, execute and deliver all such further instruments, documents, and agreeements, and take all such further acts, necessary to give full effect to this Agreement. 3.2Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability does not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. On such determination that any term or other provision is invalid, illegal, or unenforceable, the parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. 3.3Entire Agreement. This Agreement, together with all related exhibits and schedules, is the sole and entire agreement of the parties to this Agreement regarding the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, regarding such subject matter. 3.4Amendment and Modification. No amendment to or rescission, termination, or discharge of this Agreement is effective unless it is in writing and signed by each party to this Agreement. 3.5Waiver. No waiver under this Agreement is effective unless it is in writing and signed by the party waiving its right.  Any waiver authorized on one occasion is effective only in that instance and only for the purpose stated and does not operate as a waiver on any future occasion.  None of the following is a waiver or estoppel of any right, remedy, power, privilege, or condition arising from this Agreement: (i) any failure or delay in exercising any right, remedy, power, or privilege or in enforcing any condition under this Agreement; or (ii) any act, omission, or course of dealing between the parties. 3.6Cumulative Remedies. All rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity, by statute, in any other agreement between the parties or otherwise. Despite the previous sentence, the parties intend that Indemnified Party’s rights under Section 6 are its exclusive remedies for the events specified therein. -------------------------------------------------------------------------------- 3.7No Third-Party Beneficiaries. This Agreement benefits solely the parties to this Agreement and their respective successors and assigns and nothing in this Agreement, express or implied, confers on any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement. 3.8Choice of Law. This Agreement and exhibits and schedules attached hereto, and all matters arising out of or relating to this Agreement, are governed by, and construed in accordance with, the laws of the State of State of Nevada, without regard to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Nevada. 3.9Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together is deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.   ISAAC CAPITAL FUND I, LLC     By:___/s/ Jon Isaac__________________ Name:  Jon Isaac Title:  President and Chief Executive Officer     ISAAC CAPITAL GROUP LLC     By:  __/s/ Jon Isaac___________________ Name:  Jon Isaac Title:  President and Chief Executive Officer     -------------------------------------------------------------------------------- Schedule 1 Assigned Contracts     1. Loan and Security Agreement dated as of July 6, 2015 (the “Loan and Security Agreement”) among Marquis Affiliated Holdings LLC, Marquis Industries, Inc., Isaac Capital Fund I, LLC, and the other parties thereto   2. Consent, Joinder and First Amendment to Loan and Security Agreement dated January 31, 2020   3. Second Amendment to Loan and Security Agreement dated July 10, 2020
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     EXHIBIT 10.2           LICENSE AND COLLABORATION AGREEMENT       BETWEEN       VISTAGEN THERAPEUTICS, INC.     AND    EVERINSIGHT THERAPEUTICS INC.             CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -1-     LICENSE AND COLLABORATION AGREEMENT   This LICENSE AND COLLABORATION AGREEMENT (this “Agreement”) is made as of June 24, 2020 (“Effective Date”), by and among VistaGen Therapeutics, Inc., a company organized under the laws Nevada (“VistaGen”), and having an Affiliate of the same name, and EverInsight Therapeutics Inc., a company incorporated under the laws of the British Virgin Islands (“EverInsight”) and having a registered address at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. VistaGen and EverInsight are referred to individually as a “Party” and collectively as the “Parties.”   RECITALS   WHEREAS, VistaGen owns or controls certain intellectual property and associated data and materials relating to a pharmaceutical compound known as PH94B, which is an intranasal synthetic neuroactive steroid product being developed for the treatment of social anxiety disorder and other anxiety-related disorders;   WHEREAS, VistaGen wishes to grant a license to EverInsight, and EverInsight wishes to take a license, under such intellectual property and associated items to develop, manufacture and commercialize PH94B in certain territories in accordance with the terms and conditions set forth below;   NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the receipt and sufficiency which are hereby acknowledged, the Parties hereby agree as follows.   ARTICLE 1 DEFINITIONS   Unless the context otherwise requires, the terms in this Agreement with initial letters capitalized, shall have the meanings set forth below, or the meaning as designated in the indicated places throughout this Agreement.   1.1             “Active Pharmaceutical Ingredient” or “API” means any substance intended to be used in a pharmaceutical product that when used becomes an active ingredient of that product intended to exert a pharmacological, immunological or metabolic action with a view to restoring, correcting or modifying physiological functions in man or animal; but excluding formulation components such as coatings, stabilizers, excipients or solvents, adjuvants or controlled release technologies.   1.2             “Affiliate” means, with respect to a Party, any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with that Party, but for only so long as such control exists. For the purpose of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control”) means (a) to possess, directly or indirectly, the power to direct the management or policies of an entity, whether through ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise; or (b) direct or indirect beneficial ownership of more than fifty percent (50%), or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction, of the voting share capital or other equity interest in such entity; provided however that, notwithstanding the foregoing, EverInsight’s Affiliates shall not include CBC Group or any of its portfolio companies.   1.3             “Applicable Laws” means the applicable provisions of any and all national, supranational, regional, federal, state and local laws, treaties, statutes, rules, regulations, administrative codes, guidance, ordinances, judgments, decrees, directives, injunctions, orders, permits (including MAAs) of or from any court, arbitrator, Regulatory Authority or Government Authority having jurisdiction over or related to the subject item, including the FFDCA, DAL, and the Provisions for Drug Registration of NMPA.   1.4             “Auditor” has the meaning set forth in Section 8.10 (Audit Dispute).   1.5             “Business Day” means a day other than a Saturday, Sunday or a bank or other public holiday in Mainland China, Hong Kong or the State of California in the United States.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -2-     1.6             “Calendar Quarter” means each respective period of three (3) consecutive months ending on 31 March, 30 June, 30 September, and 31 December, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first 1 January, 1 April, 1 July or 1 October to occur after the Effective Date, and the last Calendar Quarter shall end on the last day of the Term.   1.7             “Calendar Year” means each successive period of 12 calendar months commencing on 1 January and ending on 31 December except that the first Calendar Year of the Term shall commence on the Effective Date and end on 31 December of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on 1 January of the year in which the Term ends and end on the last day of the Term.   1.8             “CFR” means the U.S. Code of Federal Regulations.   1.9             “Challenge” means to contest or assist, directly or indirectly, in the contesting of the validity or enforceability of any of the VistaGen Patents or EverInsight Patents (as applicable), in whole or in part, in any court, arbitration proceeding or other tribunal, including the United States Patent and Trademark Office and the United States International Trade Commission. For the avoidance of doubt, the term “contest” includes: (a) filing an action under 28 U.S.C. §§ 2201-2202 seeking a declaration of invalidity or unenforceability of any such Patents; (b) citation to the United States Patent and Trademark Office pursuant to 35 U.S.C. § 301 of prior art patents or printed publications or statements of the patent owner concerning the scope of any such Patents; (c) filing a request under 35 U.S.C. § 302 for re-examination of any such Patents; (d) filing, or joining in, a petition under 35 U.S.C. § 311 to institute inter parties review of any such Patents or any portion thereof; (e) filing, or joining in, a petition under 35 U.S.C. § 321 to institute post-grant review of such Patents or any portion thereof; (f) provoking or becoming a party to an interference or a derivation proceeding with an application for any such Patents pursuant to 35 U.S.C. § 135; (g) filing or commencing any re-examination, opposition, cancellation, nullity or similar proceedings against any such Patents in any country; or (h) any foreign equivalents of subsection (a) through (g) applicable in the Territory; provided however, notwithstanding the foregoing, “Challenge” shall not include (i) any action taken by a Party in response to an action by the other Party to enforce such Patents against such Party, or (ii) any argument made by a Party in the course of patent prosecution that distinguish the inventions claimed in such Party’s Patents from those inventions claimed in the other Party’s Patent.   1.10             “Claims” means all Third Party demands, claims, actions, proceedings and liabilities (whether criminal or civil, in contract, tort or otherwise) for losses, damages, legal costs and other expenses of any nature.   1.11             “CMC” means chemistry, manufacturing, and controls.   1.12             “Combination Product” means any Licensed Product comprised of the following, either formulated together (i.e., a fixed dose combination), packaged together and sold for a single price, or co-administered or jointly provided to patients, whether or not packaged together: (a) the Compound, and (b) at least one other API.   1.13             “Commercialization” means the conduct of all activities undertaken before and after Regulatory Approval has been obtained relating to the promotion, marketing, sale and distribution (including importing, exporting, transporting for commercial sales, customs clearance, warehousing, invoicing, handling and delivering the Licensed Product to customers) of the Compound or the Licensed Product, including: (a) sales force efforts, detailing, advertising, medical education, planning, marketing, sales force training, and sales and distribution; and (b) scientific and medical affairs. For clarity, Commercialization does not include any Development activities, whether conducted before or after Regulatory Approval. “Commercialize” and “Commercializing” have correlative meanings.   1.14             “Commercialization Plan” has the meaning set forth in Section 7.2 (Commercialization Plan).     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -3-     1.15             “Commercially Reasonable Efforts” means, with respect to each Party’s obligations under this Agreement relating to the Development, Manufacturing, and Commercialization activities with respect to the Compound or the Licensed Product, the carrying out of such activities using efforts and resources that are consistent with the exercise of customary scientific and business practices as applied in the biopharmaceutical industry for a company of a similar stage and size as the entity and having similar resources, for development, regulatory, manufacturing and commercialization activities conducted with respect to products at a similar stage of development or commercialization and having similar commercial potential, taking into account relative safety and efficacy, product profile, the regulatory environment, payers’ policies and regulations, competitiveness of the marketplace and the market potential of such products, the nature and extent of market exclusivity, including patent coverage and regulatory data protection, and price and reimbursement status. The Parties hereby agree that the level of effort may be different for different markets and may change over time, reflecting changes in the status of the aforementioned attributes and potential of the Compound and the Licensed Product. When used regarding obligations under this Agreement other than the Development, Manufacturing, and Commercialization activities with respect to the Compound or the Licensed Product, the term “Commercially Reasonable Efforts” shall mean the carrying out of such activities using commercially reasonable efforts and financial, personnel and other resources that are consistent with the exercise of customary business practices as applied in the carrying out of such activities generally by and on behalf of biopharmaceutical companies of a similar stage and size and having similar resources.   1.16             “Compound” means PH94B, and all salt, free acid/base, solvate, hydrate, prodrug, metabolite, stereoisomer, and enantiomer thereof, and polymorphic forms thereof.   1.17             “Confidential Information” of a Party means all Know-How, Inventions, unpublished patent applications and other information and data of a financial, commercial, business, operational or technical nature of such Party that is disclosed or made available by or on behalf of such Party or any of its Affiliates to the other Party or any of its Affiliates, whether made available orally, in writing or in electronic or other form. The terms of this Agreement are the Confidential Information of both Parties.   1.18             “Control” or “Controlled” means, with respect to any Know-How, Patents, Regulatory Documentation or other intellectual property rights, that a Party has the legal authority or right (whether by ownership, license or otherwise, other than by virtue of any license granted to such Party by the other Party pursuant to this Agreement) to grant a license, sublicense, access or other right (as applicable) under such Know-How, Patents, Regulatory Documentation or other intellectual property rights to the other Party on the terms and conditions set forth herein, in each case without breaching the terms of any agreement with a Third Party, infringing third party intellectual property, or misappropriating third party trade secrets.   1.19             “Controlling Party” has the meaning set forth in Section 9.6 (Invalidity or Unenforceability Defenses or Actions).   1.20             “Corporate Names” has the meaning set forth in Section 1.81 (Licensed Trademarks).   1.21             “Cost of Goods” means, with respect to any Compound or any Licensed Product, [*****].   1.22             “CTA” means a Clinical Trial Application that is required to initiate a clinical trial for registering a drug product under the Drug Administration Law of the People’s Republic of China and the Provisions for Drug Registration of NMPA, and equivalents thereof under future Chinese laws and regulations, and the laws and regulations of other countries and jurisdictions in the Territory, in each as the same may be amended from time to time.   1.23             “DAL” means the Drug Administration Law of the People’s Republic of China and the equivalent laws of other countries and jurisdictions in the Territory, in each as the same may be amended from time to time.   1.24             “Develop” or “Development” means to develop (including clinical, non-clinical and CMC development), analyze, test and conduct preclinical, clinical and all other regulatory trials for the Compound or Licensed Product, including all post-approval clinical trials, as well as all related regulatory activities and any and all activities pertaining to new Indications, pharmacokinetic studies and all related activities including work on new formulations, new methods of treatment and CMC activities including new manufacturing methods. “Developing” and “Development” have correlative meanings.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -4-     1.25             “Development Plan” has the meaning set forth in Section 4.2 (Development Plan).   1.26             “Disclosing Party” has the meaning set forth in Section 10.1(a) (Duty of Confidence - subsection (a)).   1.27             “Dispute” has the meaning set forth in Section 14.10(a) (Dispute Resolution - subsection (a)).   1.28             “Dollars” means U.S. dollars, and “$” shall be interpreted accordingly.   1.29             “EverInsight Development Data” means any non-clinical or clinical data that are generated by EverInsight through the Development, Manufacture and Commercialization of the Compound and Licensed Product under this Agreement, Controlled by EverInsight, and related to the Compound or any Licensed Product or otherwise included in, or filed in support of, the Regulatory Documentation filed by EverInsight, its Affiliates or Sublicensees in the Territory.   1.30             “EverInsight Know-How” means all Know-How that is generated by EverInsight through the Development, Manufacture and Commercialization of the Compound and Licensed Product under this Agreement, Controlled by EverInsight as of the Effective Date or during the Term, and necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of any Compound or Licensed Product in the Licensed Field, including EverInsight Sole Inventions, EverInsight’s interest in any Joint Inventions, EverInsight Development Data and EverInsight’s Regulatory Documentation.   1.31             “EverInsight Indemnitees” has the meaning set forth in Section 13.1 (Indemnification by VistaGen).   1.32             “EverInsight Patents” means EverInsight Sole Invention Patents and EverInsight’s interest in the Joint Patents, in each case necessary or reasonably useful for the Development, Manufacture, Commercialization, or other Exploitation of the Compound or any Licensed Product for use in the Licensed Field.   1.33             “EverInsight Sole Inventions” means any Inventions that are conceived and reduced to practice solely by employees of, or consultants or service providers to, EverInsight and its Affiliates, at any time during the Term of this Agreement.   1.34             “EverInsight Sole Invention Patents” means any Patents that contain one or more claims that cover EverInsight Sole Inventions.   1.35             “EverInsight Technology” means the EverInsight Patents and the EverInsight Know-How.   1.36             “Excluded Claim” has the meaning set forth in Section 14.10(g) (Dispute Resolution - subsection (g)).   1.37             “Executive Officers” has the meaning set forth in Section 3.3(a) (JSC Decision Making - subsection (a)).   1.38             “Exploit” means to make, have made, import, use, sell or offer for sale, including to research, Develop, Commercialize, register, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of.   1.39             “Exploitation” means the act of Exploiting the Compound, product or process.   1.40             “FDA” means the United States Food and Drug Administration or any successor entity thereto.   1.41             “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).   1.42             “First Commercial Sale” means, with respect to any Licensed Product in any jurisdiction in the Territory, the first arm’s length sale of such Licensed Product by EverInsight, its Affiliates or Sublicensees to a Third Party for monetary value for use or consumption of such Licensed Product by the end user in the general public after Regulatory Approval for such Licensed Product in such jurisdiction has been granted. Sales prior to receipt of Regulatory Approval for such Licensed Product, such as so-called “treatment IND sales,” “named patient sales,” and “compassionate use sales,” shall not be construed as a First Commercial Sale.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -5-     1.43             “GAAP” means the then-current Generally Accepted Accounting Principles or International Financial Reporting Standards (IFRS), whichever is adopted as the standard financial accounting guideline in the United States for public companies, as consistently applied.   1.44             “Generic Competition” means [*****].   1.45             “Generic Product” means, with respect to a Licensed Product, any product that contains the same Compound as such Licensed Product and that is sold under an approved Marketing Authorization Application granted by a Regulatory Authority to a Third Party that is not a Sublicensee of EverInsight or its Affiliates and did not obtain such product in a chain of distribution that includes any of EverInsight, its Affiliates, or its Sublicensees.   1.46             “Good Manufacturing Practices” or “GMP” shall mean all applicable Good Manufacturing Practices standards, including, as applicable, those standards required by any Regulatory Authority in the Territory.   1.47             “Government Authority” means any federal, state, national, state, provincial or local government, or political subdivision thereof, or any multinational organization or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof, or any governmental arbitrator or arbitral body).   1.48             “Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.   1.49             “IND” means a CTA or any other investigational new drug application, clinical trial application, clinical trial exemption or similar or equivalent application or submission for approval to conduct human clinical investigation filed with or submitted to the Regulatory Authority in the relevant jurisdiction in conformance with the requirements of such Regulatory Authority, including the FDA in the US and NMPA in Mainland China.   1.50             “Indemnification Claim Notice” has the meaning set forth in Section 13.3(a) (Notice of Claim).   1.51             “Indemnified Party” has the meaning set forth in Section 13.3(a) (Notice of Claim).   1.52             “Indemnifying Party” has the meaning set forth in Section 13.3(a) (Notice of Claim).   1.53             “Indication” means a separate and distinct disease, disorder, illness or health condition for which a separate MAA approval is required.   1.54             “Indirect Costs” means, with respect to a multi-regional clinical trial, all Third Party costs and expenses incurred by VistaGen or EverInsight to conduct such multi-regional clinical trial that are not directly allocable to a Party’s territory (or to clinical sites within a Party’s territory), including, without limitation, fees, costs and expenses for data management, clinical evaluation committees, data safety monitoring boards, physician consulting, investigator meetings, travel, document translation and other technology solutions and services that are not specific to a territory or a clinical site within a territory.   1.55             “Initiation” means, with respect to a clinical trial, the first dosing (whether with investigational drug, comparator drug or placebo) of the first subject in such clinical trial.   1.56             “Initial Supply Agreement” has the meaning set forth in Section 6.3 (Supply Agreement).   1.57             “In-License Agreement” has the meaning set forth in Section 2.4(b) (In-License Agreements).   1.58             “Invention” means any technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and information, including study designs and protocols, assays and biological methodology process, composition of matter, article of manufacture, discovery or finding, that is or may be patentable, that is made, generated, conceived or otherwise invented as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors, including all rights, title and interest in and to the intellectual property rights therein. For clarity, “Invention” does not include VistaGen Development Data or EverInsight Development Data.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -6-     1.59             “Joint Steering Committee” or “JSC” has the meaning set forth in Section 3.1 (Joint Steering Committee).   1.60             “Joint Inventions” means any Inventions that are conceived and reduced to practice by employees of, or consultants or service providers to, VistaGen or its Affiliates, on the one hand, jointly with employees of, or consultants or service providers to, EverInsight or its Affiliates, on the other hand, at any time during the Term of this Agreement and that are made, generated, conceived or otherwise invented as a result of VistaGen and EverInsight exercising their rights or carrying out their obligations under this Agreement, whether directly or via their Affiliates, agents or independent contractors.   1.61             “Joint Patents” means any Patents that contain one or more claims that cover Joint Inventions.   1.62             “Know-How” means any information, including discoveries, improvements, modifications, processes, methods, techniques, protocols, formulas, data, inventions, know-how, trade secrets and results, patentable or otherwise, including physical, chemical, biological, toxicological, pharmacological, safety, and preclinical and clinical data, dosage regimens, control assays, and product specifications, but excluding any Patents.   1.63             “Licensed Field” means all uses in humans.   1.64             “Licensed Know-How” means all Know-How that VistaGen (or its Affiliates) Controls as of the Effective Date or during the Term that is necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product for use in the Licensed Field in the Territory, including all VistaGen Sole Inventions, VistaGen’s interest in any VistaGen Joint Inventions in the Territory, VistaGen Development Data and VistaGen’s Regulatory Documentation (with respect to Compound or a Licensed Product).   1.65             “Licensed Manufacturing Know-How” has the meaning set forth in Section 6.4 (Manufacturing Technology Transfer).   1.66             “Licensed Patents” means all Patents Controlled by VistaGen or its Affiliates as of the Effective Date or during the Term that are necessary or reasonably useful for the Development, Manufacture, Commercialization, or other Exploitation of the Compound or any Licensed Product for use in the Licensed Field in the Territory, including any VistaGen Sole Invention Patents and VistaGen’s interest in the Joint Patents in the Territory. [*****].   1.67             “Licensed Product” means any pharmaceutical product that contains the Compound, alone or in combination with one or more other molecules or agents in any dosage form or formulation. For purposes of this Agreement, with respect to a Licensed Product that has been approved for an initial Indication, the approval of such License Product for one or more additional Indications shall not constitute a new and separate Licensed Product.   1.68             “Licensed Technology” means the Licensed Patents and the Licensed Know-How.   1.69             “Licensed Trademarks” means any corporate name or corporate logo (“Corporate Names”) of VistaGen or its or Affiliates, and any Trademark that consists of or includes any Corporate Name of VistaGen or its Affiliates, including the Trademarks, names and logos identified on Exhibit B hereto and such other Trademarks, names and logos as VistaGen may designate for Licensed Product in a writing sent to EverInsight from time to time during the Term.   1.70             “MAA” or “Marketing Authorization Application” means an application to the appropriate Regulatory Authority for approval to market a Licensed Product (but excluding Pricing Approval) in any particular jurisdiction, and all amendments, renewals and supplements thereto, including, without limitation, an NDA filed with the FDA in the U.S. and an NDA (or any future equivalent thereto as defined in the DAL and the Provisions for Drug Registration) filed with the NMPA in Mainland China.   1.71             “Mainland China” means the People’s Republic of China, including Hainan Island, but excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -7-     1.72             “Manufacture” and “Manufacturing” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, in-process and finished testing, shipping, storing, or release of a product or any ingredient or intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, test method development and stability testing, formulation, quality assurance and quality control of the any compound, product or intermediate, and regulatory affairs with respect to the foregoing.   1.73             “Manufacturing Transfer Period” has the meaning set forth in Section 6.2.   1.74             “Milestone Event” has the meaning set forth in Section 8.2(a) - (8.2 Development and Regulatory Milestone Payments - clause (a)).   1.75             “Milestone Payment” has the meaning set forth in Section 8.2(a) - (8.2 Development and Regulatory Milestone Payments - clause (a)).   1.76             “NDA” means a New Drug Application (as more fully defined in 21 C.F.R. §314.5 et seq. or successor regulation) and all amendments and supplements thereto filed with the FDA and any other equivalent filing(s) in the Territory.   1.77             “Net Sales” means, [*****]   1.78             “NMPA” means the National Medical Products Administration of the People’s Republic of China, formerly known as the China Food and Drug Administration, or its successor.   1.79             “Patent” means all patents and patent applications, including all provisionals, divisionals, reissues, reexaminations, renewals, continuations, continuations-in-part, substitute applications, priority applications and inventors’ certificates, extensions and supplemental certificates and any and all foreign equivalents of the foregoing.   1.80             “Payment” has the meaning set forth in Section 8.8(b).   1.81             “Person” means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity.   1.82             “PH94B” means the compound known as PH94B and having the chemical structure shown in Exhibit C.   1.83             “Phase 1 Clinical Trial” means a human clinical trial that would satisfy the requirements for a Phase 1 study as defined in 21 CFR § 312.21(a) (or any amended or successor regulations) or any equivalent regulations in jurisdictions in the Territory, regardless of where such clinical trial is conducted.   1.84             “Phase 3 Clinical Trial” means a human clinical trial that would satisfy the requirements for a Phase 3 study as defined in 21 CFR § 312.21(c) (or any amended or successor regulations) or any equivalent regulations in jurisdictions in the Territory, regardless of where such clinical trial is conducted.   1.85             “Pricing Approval” means such governmental approval, agreement, determination or decision establishing prices for a Licensed Product that can be charged and/or reimbursed in a regulatory jurisdiction where the applicable Government Authority approves or determines the price and/or reimbursement of pharmaceutical products and where such approval or determination is necessary for the commercial sale of such Licensed Product in such jurisdiction.   1.86             “Product Infringement” has the meaning set forth in Section 9.4(a) (Notice).   1.87             “Product Trademarks” means the Trademark(s) used or to be used by EverInsight or its Affiliates or its or their Sublicensees for the Commercialization of Licensed Product in the Licensed Field in the Territory and any registrations thereof or any pending applications relating thereto in the Territory (excluding, in any event, any Corporate Names of EverInsight, its Affiliates or its or their Sublicensees and any Licensed Trademarks that consist of or include any Corporate Name of VistaGen or its Affiliates or (sub)licensees).     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -8-     1.88             “Receiving Party” has the meaning set forth in Section 10.1(a) (Duty of Confidence - subsection (a)).   1.89             “Regulatory Approval” means, with respect to a jurisdiction in the Territory, any and all approvals (including approvals of Marketing Authorization Applications), licenses, registrations or authorizations of any Regulatory Authority necessary to commercially distribute, sell or market a Licensed Product in such jurisdiction, including, where applicable: (a) pricing or reimbursement approval in such jurisdiction; (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto); and (c) labelling approval.   1.90             “Regulatory Authority” means any applicable Government Authority responsible for granting Regulatory Approvals for any Licensed Product, including the FDA, the NMPA, and any corresponding national or regional regulatory authorities.   1.91             “Regulatory Documentation” means: all (a) applications (including all Regulatory Filings, INDs, CTAs and Marketing Authorization Applications), registrations, licenses, authorizations and approvals (including Regulatory Approvals); (b) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents with respect thereto, including all adverse event files and complaint files; and (c) clinical and other data contained or relied upon in any of the foregoing; in each case (a), (b) and (c)) relating to the Compound or a Licensed Product.   1.92             “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a pharmaceutical product other than Patents, and including, without limitation, orphan drug exclusivity, new chemical entity exclusivity, data exclusivity or pediatric exclusivity.   1.93             “Regulatory Filings” means, with respect to the Compound or Licensed Product, any submission to a Regulatory Authority of any appropriate regulatory application specific to the Compound or Licensed Product, and shall include, without limitation, any submission to a regulatory advisory board and any supplement or amendment thereto. For the avoidance of doubt, Regulatory Filings shall include any IND, CTA, NDA, MAA, Regulatory Approval or the corresponding application in any other country or jurisdiction.   1.94             “Representative” has the meaning set forth in Section 10.1(c) (Duty of Confidence - Subsection (c)).   1.95             “Respective Territory” means, in the case of EverInsight, the Territory, and in the case of VistaGen, all countries of the world outside the Territory.   1.96             “Retained Rights” means, with respect to the Compound and Licensed Product, the rights of VistaGen, its Affiliates and its and their licensors, (sub)licensees and contractors to:   (a)           perform VistaGen’s obligations under this Agreement;   (b)           Manufacture and have Manufactured (including CMC and manufacturing process development work) the Compound or Licensed Product within the Territory solely for Exploitation outside the Territory;   (c)           Develop and have Developed the Compound and Licensed Product in the Territory but only as part of a global Phase 3 Clinical Trial that EverInsight elects to participate in pursuant to Section 4.4(b); and   (d)           Develop, Manufacture, Commercialize and otherwise Exploit the Compound and Licensed Product for any and all purposes outside the Territory.   1.97             “Royalty Term” has the meaning set forth in Section 8.4(b) (Royalty Term).   1.98             “SEC” has the meaning set forth in Section 10.5 (Publicity/Use of Names - subsection (a)).     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -9-     1.99             “Sublicense” means a license or sublicense granted by EverInsight (or a Sublicensee) to Develop, make, use, import, promote, offer for sale or sell the Compound or any Licensed Product, including any license given to any of the rights granted to EverInsight under Section 2.1(Licenses to EverInsight).   1.100             “Subcontractor” has the meaning set forth in Section 2.8 (Subcontracting).   1.101             “Sublicensee” means a Third Party to whom EverInsight or its Affiliate has granted a Sublicense in accordance with the terms of this Agreement.   1.102             “Tax” or “Taxes” means any (a) all federal, provincial, territorial, state, municipal, local, foreign or other taxes, imposts, rates, levies, assessments and other charges in the nature of a tax (and all interest and penalties thereon and additions thereto imposed by any Government Authority), including without limitation all income, excise, franchise, gains, capital, real property, goods and services, transfer, value added, gross receipts, windfall profits, severance, ad valorem, personal property, production, sales, use, license, stamp, documentary stamp, mortgage recording, employment, payroll, social security, unemployment, disability, escheat, estimated or withholding taxes, and all customs and import duties, together with all interest, penalties and additions thereto imposed with respect to such amounts, in each case whether disputed or not; (b) any liability for the payment of any amounts of the type described in subsection (a) as a result of being or having been a member of an affiliated, consolidated, combined or unitary group; and (c) any liability for the payment of any amounts as a result of being party to any tax sharing agreement or arrangement or as a result of any express or implied obligation to indemnify any other person with respect to the payment of any amounts of the type described in subsection (a) or (b).   1.103             “Term” has the meaning set forth in Section 11.1 (Term).   1.104             “Territory” means Greater China (Mainland China, Taiwan, Hong Kong and Macau), South Korea, Southeast Asia (Singapore, Malaysia, Thailand, Indonesia, Philippines, and Vietnam).   1.105             “Third Party” means any Person other than a Party or an Affiliate of a Party.   1.106             “Third Party Infringement Claim” has the meaning set forth in Section 9.5 (Infringement claims by Third Parties).   1.107             “Trademark” means any word, name, symbol, color, shape, designation or any combination thereof, including any trademark, service mark, trade name, brand name, sub-brand name, trade dress, product configuration rights, program name, delivery form name, certification mark, collective mark, logo, tagline, slogan, design or business symbol, that functions as an identifier of source, origin or quality, whether or not registered, and all statutory and common law rights therein and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the foregoing.   1.108             “Transfer Tax” has the meaning set forth in Section 8.8(c) (Transfer Tax).   1.109             “United States” or “U.S.” means the United States of America including its territories and possessions.   1.110             “Valid Claim” means, with respect to any jurisdiction in the Territory, a claim of an issued and unexpired Licensed Patent (as may be extended through supplementary protection certificate or patent term extension or the like) that has not been cancelled, revoked, held invalid or unenforceable by a decision of a patent office or other Government Authority of competent jurisdiction from which no appeal can be taken (or from which no appeal was taken within the allowable time period) and which claim has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise; provided that in any jurisdiction in the Territory, a Valid Claim shall cease to be a Valid Claim in such jurisdiction if its scope is such that it does not reasonably block or prevent the entry, or Commercialization, of Generic Products.   1.111             “VistaGen CMO” has the meaning set forth in Section 6.2 (Manufacturing Technology Transfer)     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -10-     1.112             “VistaGen Development Data” means any nonclinical or clinical data that are Controlled by VistaGen and related to the Compound or any Licensed Product or otherwise included in, or filed in support of, the Regulatory Documentation filed by VistaGen, its Affiliates, licensees or sublicensees outside of the Territory.   1.113             “VistaGen Indemnitees” has the meaning set forth in Section 13.2 (Indemnification by EverInsight).   1.114             “VistaGen Sole Inventions” means any Inventions that are conceived and reduced to practice solely by employees of, or consultants or service providers to, VistaGen, at any time during the Term of this Agreement and that are made, generated, conceived or otherwise invented as a result of a Party exercising its rights or carrying out its obligations under this Agreement, whether directly or via its Affiliates, agents or independent contractors.   1.115             “VistaGen Sole Invention Patents” means any Patents that contain one or more claims that cover VistaGen Sole Inventions.   1.116             Interpretation. In this Agreement, unless otherwise specified:   (a)             “includes” and “including” shall mean, respectively, includes without limitation and including without limitation;   (b)             words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders;   (c)             words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear; and   (d)             the Exhibits and other attachments form part of the operative provision of this Agreement and references to this Agreement shall include references to the Exhibits and attachments.   ARTICLE 2 LICENSES   2.1             License to EverInsight.   (a)             Subject to the terms and conditions of this Agreement, VistaGen hereby grants to EverInsight an exclusive (even as to VistaGen), royalty-bearing license and sublicense, as the case may be, under the Licensed Technology solely to Exploit Licensed Product in the Licensed Field in the Territory, with the right to grant sublicenses in accordance with Section 2.3 (Sublicense Rights).   (b)             In addition, VistaGen hereby grants to EverInsight a non-exclusive license and sublicense, as the case may be, under the Licensed Technology to Manufacture and have Manufactured the Compound and Licensed Product outside the Territory solely for Exploitation in the Territory, with the right to grant sublicenses in accordance with Section 2.3 (Sublicense Rights).   2.2             License to VistaGen. Subject to the terms and conditions of this Agreement, EverInsight hereby grants to VistaGen an exclusive (even as to EverInsight), royalty-free license under the EverInsight Technology solely to Exploit Licensed Product in the Licensed Field outside the Territory, with the right to grant sublicenses in accordance with Section 2.3 (Sublicense Rights).   2.3             Sublicense Rights.   (a)             Affiliates. Subject to the terms of this Section 2.3 (Sublicense Rights), EverInsight may grant a sublicense of the license granted in Section 2.1 (License to EverInsight) through multiple tiers to Affiliates of EverInsight without prior notice to or the prior consent of VistaGen; provided that (i) Licensed Know-How may only be sublicensed along with the Licensed Patents; (ii) EverInsight shall cause each Affiliate to comply with the applicable terms and conditions of this Agreement, as if such Affiliate were a Party to this Agreement; and (iii) EverInsight shall be responsible for all actions, activities and obligations to VistaGen of such Affiliate. Subject to the terms of this Section 2.3 (Sublicense Rights), VistaGen may grant a sublicense of the license granted in Section 2.2 (License to VistaGen) through multiple tiers to Affiliates of VistaGen without prior notice to or the prior consent of EverInsight; provided that (i) EverInsight Know-How may only be sublicensed along with the EverInsight Patents; (ii) VistaGen shall cause each Affiliate to comply with the applicable terms and conditions of this Agreement, as if such Affiliate were a Party to this Agreement; and (iii) VistaGen shall be responsible for all actions, activities and obligations to EverInsight of such Affiliate.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -11-     (b)             Third Parties. Upon the prior written consent of VistaGen, such consent not to be unreasonably withheld, conditioned, or delayed, EverInsight may grant a sublicense of the rights granted under the license in Section 2.1 (License to EverInsight) through multiple tiers to any Third Party; provided that (i) Licensed Know-How may only be sublicensed along with the Licensed Patents (other than in the case of a sublicense to a fee-for-service Subcontractor in the context of subcontracting pursuant to Section 2.8 (Subcontracting)); (ii) each sublicense granted to a Third Party shall be in writing, and shall incorporate terms and conditions that are consistent with, and expressly made subject to, the terms and conditions of this Agreement; (iii) VistaGen shall be provided by EverInsight with a copy of such sublicense agreement within thirty (30) days of execution, which copy may redact any financial or other proprietary terms; and (iv) EverInsight shall be responsible to VistaGen for a breach of this Agreement due to the breach by such Third Party of such sublicense agreement. EverInsight hereby waives any requirement that VistaGen exhaust any right, power or remedy, or proceed against any such sublicensee for any obligation or performance under this Agreement prior to proceeding directly against EverInsight. Upon the prior written consent of EverInsight, such consent not to be unreasonably withheld, conditioned, or delayed, VistaGen may grant a sublicense of the rights granted under the license in Section 2.2 (License to VistaGen) through multiple tiers to any Third Party; provided that (i) EverInsight Know-How may only be sublicensed along with the EverInsight Patents (other than in the case of a sublicense to a fee-for-service Subcontractor pursuant to Section 2.8 (Subcontracting)); (ii) each sublicense granted to a Third Party shall be in writing, and shall incorporate terms and conditions that are consistent with, and expressly made subject to, the terms and conditions of this Agreement; (iii) EverInsight shall be provided by VistaGen with a copy of such sublicense agreement within thirty (30) days of execution, which copy may redact any financial or other priority terms; and (iv) VistaGen shall be responsible to EverInsight for a breach of this Agreement due to the breach by such Third Party of such sublicense agreement. VistaGen hereby waives any requirement that EverInsight exhaust any right, power or remedy, or proceed against any sublicensee for any obligation or performance under this Agreement prior to proceeding directly against VistaGen.   2.4             VistaGen’s Retained Rights; Limitations of License Grants.   (a)             Retained Rights.   (i)             Notwithstanding anything to the contrary in this Agreement and without limitation of any rights granted by or reserved to VistaGen pursuant to any other term or condition of this Agreement, VistaGen hereby expressly retains, on behalf of itself and its Affiliates (and on behalf of its and their direct and indirect Third Party licensors under any In-License Agreement, (sub)licensees and contractors) all right, title and interest in and to the Licensed Patents, the Licensed Know-How, VistaGen Development Data, VistaGen’s interests in and to Joint Patents and Joint Know-How, Regulatory Documentation of VistaGen and the Corporate Names of VistaGen and their Affiliates, in each case, for purposes of performing or exercising the Retained Rights.   (ii)             Notwithstanding anything to the contrary in this Agreement and without limitation of any rights granted by or reserved to EverInsight pursuant to any other term or condition of this Agreement, EverInsight hereby expressly retains, on behalf of itself and its Affiliates (and on behalf of its and their direct and indirect Third Party licensors under any In-License Agreement, (sub)licensees and contractors) all right, title and interest in and to the EverInsight Patents, the EverInsight Know-How, EverInsight Development Data, EverInsight’s interests in and to Joint Patents and Joint Know-How, Regulatory Documentation of EverInsight and the Corporate Names of EverInsight and their Affiliates, in each case, for purposes of performing its obligations or exercising its rights under this Agreement, and also for purposes of Manufacturing or having Manufactured the Compound and Licensed Product outside the Territory solely for Exploitation in the Territory.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -12-     (b)             In-License Agreements.   (1)             If VistaGen or any of its Affiliates negotiates with a Third Party at arms’ length to obtain a license to any Know-How or Patent that are necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product (such Know-How or Patent, “VistaGen Third Party IP”, such license, an “In-License Agreement”), then VistaGen shall promptly notify EverInsight and identify the relevant VistaGen Third Party IP, with a copy to the JSC. The applicable VistaGen Third Party IP shall be included in the license granted to EverInsight under Section 2.1 (License to EverInsight) and considered VistaGen Patents and VistaGen Know-How, respectively, only if VistaGen discloses the substantive terms of the In-License Agreement to EverInsight, which VistaGen hereby agrees to do, and EverInsight agrees in writing to (A) comply with all the relevant obligations of such In-License Agreement, and (B) pay [*****] of the portion of all upfront, milestone, royalty and other payments under the In-License Agreement that are allocable to the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in the Territory; provided, however, that, such upfront, milestone, royalty and other payments should be (x) at fair market value for such a license in the Territory; and (y) directly attributable to the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in the Territory by EverInsight or any of its Affiliates or any Sublicensees; and (z) for any such payment that is applicable to the Respective Territories of both Parties (such as upfront payment), such payment shall be allocated between the Parties’ Respective Territories based on the relative value of the market for the Licensed Product in each Party’s Respective Territory, and EverInsight shall pay [*****] of the portion allocable to the Territory (for clarity, VistaGen shall be solely responsible for, and EverInsight shall have no obligation to pay any portion of, all such payment that is not allocable to the Territory, such as royalty payment for the sale of Licensed Product outside the Territory). For the avoidance of doubt, if EverInsight reasonably determines that such VistaGen Third Party IP under the In-License Agreement is not necessary for the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in the Territory, EverInsight has the right not to pay any costs associated with such In-License Agreement, in which case such VistaGen Third Party IP shall not be included in the license granted to EverInsight under Section 2.1 (License to EverInsight) and shall not be considered to be VistaGen Patents and VistaGen Know-How.   (2)             If EverInsight or any of its Affiliates or Sublicensees negotiates with a Third Party at arms’ length to obtain a license to any Know-How or Patent that are necessary or reasonably useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product and actually applies such Know-How or Patent in the Development, Manufacture, Commercialization or other Exploitation of the Compound or any Licensed Product (such Know-How or Patent, “EverInsight Third Party IP”, such license, an “EverInsight In-License Agreement”), then EverInsight shall promptly notify VistaGen and identify the relevant EverInsight Third Party IP, with a copy to the JSC. The applicable EverInsight Third Party IP shall be included in the license granted by EverInsight to VistaGen under Section 2.2 (License to VistaGen) and considered EverInsight Patents and EverInsight Know-How, respectively, only if EverInsight discloses the substantive terms of such EverInsight In-License Agreement to VistaGen, which EverInsight hereby agrees to do, and VistaGen agrees in writing to (A) comply with all the relevant obligations of such EverInsight In-License Agreement; (B) pay [*****] of the portion of all upfront, milestone, royalty and other payments under the EverInsight In-License Agreement that are allocable to the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in the Territory, which VistaGen hereby agrees to do; and (C) pay [*****] of the portion of all upfront, milestone, royalty and other payments applicable to the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field outside the Territory; provided, however, that, such upfront, milestone, royalty and other payments under clause (B) above should be (x) at fair market value for such a license in the Territory; and (y) directly attributable to the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field in the Territory by EverInsight or any of its Affiliates or any Sublicensees; and (z) for any such payment that is applicable to the Respective Territories of both Parties (such as upfront payment), such payment shall be allocated between the Parties’ Respective Territories based on the relative value of the market for the Licensed Product in each Party’s Respective Territory, and VistaGen shall pay [*****] of the portion allocable to the Territory (for clarity, pursuant to clause (C) above, VistaGen shall be solely responsible for, and shall reimburse EverInsight for, all such payment that is not allocable to the Territory, such as royalty payment for the sale of Licensed Product outside the Territory). For the avoidance of doubt, if VistaGen reasonably determines that such EverInsight Third Party IP is not necessary for the Development, Manufacture or Commercialization of the Compound or any Licensed Product in the Licensed Field outside the Territory, VistaGen has the right not to pay the costs associated with such EverInsight In-License Agreement outside the Territory under clause (C) above (for further clarity, VistaGen shall remain obligated to pay its share of the costs associated with such EverInsight In-License Agreement in the Territory under clause (B) above), in which case such EverInsight Third-Party IP shall not be included in the license granted to VistaGen under Section 2.2 (License to VistaGen) and shall not be considered to be EverInsight Patents and EverInsight Know-How. In the event that VistaGen does agree to accept such Third-Party license outside of the Territory, the provisions of clauses (3), (4) and (5) of this Section 2.4(b) (In-License Agreements) shall apply, mutatis mutandis, to any such Third Party license.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -13-     (3)             Subject to this Section 2.4(b) (In-License Agreements), the licenses granted by VistaGen in Section 2.1 (License to EverInsight) include sublicenses solely under the applicable license rights granted to VistaGen or its Affiliates by Third Parties under the In-License Agreements. Any Sublicense with respect to Know-How or Patents of a Third Party hereunder and any right of EverInsight (if any) to grant a further sublicense thereunder, shall be subject and subordinate to the terms and conditions of the In-License Agreement under which such sublicense is granted and shall be effective solely to the extent permitted under the terms of such agreement. Without limitation of the foregoing, in the event and to the extent that any In-License Agreement requires that particular terms or conditions of such In-License Agreement be contained or incorporated in any agreement granting a sublicense thereunder, such terms and conditions are hereby deemed to be incorporated herein by reference and made applicable to the sublicense granted herein under such In-License Agreement.   (4)             The Parties shall cooperate with each other in good faith to support each other in negotiating rights under EverInsight Third Party IP in order for VistaGen to obtain such rights outside of the Territory and in complying with VistaGen’s and its Affiliates’ obligations under each In-License Agreement. Without limitation to the foregoing, (A) the Parties shall, from time to time, upon the reasonable request of either Party, discuss the terms of an In-License Agreement and agree upon, to the extent reasonably possible, a consistent interpretation of the terms of such In-License Agreement in order to, as fully as possible, allow VistaGen and its Affiliates to comply with the terms of such In-License Agreement; (B) to the extent there is a conflict between any terms of this Agreement and any terms of any In-License Agreement (including with respect to sublicensing rights, diligence obligations, prosecution, maintenance, enforcement, defense, any obligations for a counterparty to such In-License Agreement to maintain a Party’s information as confidential and any obligations for a Party to maintain as confidential the information of a counterparty to such In-License Agreement), the terms of such In-License Agreement shall control with respect to the relevant Know-How, Patents or other rights granted to EverInsight hereunder; and (C) EverInsight and its Affiliates and Sublicensees shall comply with any applicable reporting and other requirements under the In-License Agreements, and the provisions regarding currency conversion, international payments and late payments, and any other relevant definitions and provisions, of the relevant In-License Agreements shall apply to the calculation of the payments due under the relevant In-License Agreements.   (5)             On an In-License Agreement-by-In-License Agreement basis, from and after the date on which EverInsight agrees in writing pursuant to Section 2.4(b)(1) to accept the Patents and Know-How covered by such In-License Agreement as Licensed Technology under this Agreement, VistaGen shall maintain such In-License Agreement in full force and effect, shall not enter into any subsequent agreement with any other party to such In-License Agreement that modifies or amends such In-License Agreement in any way that would materially adversely affect EverInsight’s rights or interest under this Agreement without EverInsight’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, and shall provide EverInsight with a copy of all modifications to or amendments of such In-License Agreement, regardless of whether EverInsight’s consent was required with respect thereto.   2.5             Transfer of Know-How. Within [*****] days following the Effective Date, VistaGen shall commence disclosing and making available to EverInsight the Licensed Know-How (including the VistaGen Development Data therein) necessary or reasonably required for EverInsight to file a CTA covering a Licensed Product and to Develop the Compound and Licensed Product in the Licensed Field in the Territory. In addition, throughout the Term of this Agreement, VistaGen shall promptly disclose and make available to EverInsight any Licensed Know-How (including the VistaGen Development Data therein) that has not previously been provided to EverInsight, or is developed or generated or otherwise comes into VistaGen’s Control after the Effective Date. Such disclosure and transfer shall be made at no additional cost to EverInsight and according to a timeline mutually agreed by EverInsight and VistaGen, each of which shall cooperate with each other in good faith to enable a smooth transfer of the Licensed Know-How from VistaGen to EverInsight. Upon EverInsight’s reasonable request during such transfer, VistaGen shall provide reasonable technical assistance, at no additional cost to EverInsight, including making appropriate employees available to EverInsight at reasonable times, places and frequency, and upon reasonable prior notice, for the purpose of assisting EverInsight to understand and use the Licensed Know-How in connection with EverInsight’s filing of such CTA covering such Licensed Product and the Development of the Compound and Licensed Product in the Licensed Field in the Territory.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -14-     2.6             No Implied Licenses; Negative Covenant. Except as set forth herein, no Party shall acquire any license or other intellectual property interest, by implication or otherwise, under any Know-How, Patents, trademarks or other intellectual property rights owned or Controlled by any other Party. EverInsight hereby covenants not to practice, and not to permit or cause any of its Affiliates or any Third Party to practice, any Licensed Technology for any purpose other than as expressly authorized in this Agreement.   2.7             Non-Diversion. (a)             EverInsight hereby covenants and agrees that it will not, and will ensure that its Affiliates will not, and will ensure its Sublicensees and subcontractors are bound by contractual obligations not to, either directly or indirectly, promote, market, solicit, distribute, import, sell or have sold Licensed Product outside the Territory. In furtherance of the foregoing, EverInsight shall not and will ensure that its Affiliates do not, and shall use Commercially Reasonable Efforts to ensure that its or their Sublicensees or distributors do not knowingly distribute, market, promote, offer for sale or sell the Compound or any Licensed Product directly or indirectly to any Person outside the Territory or to any Person inside the Territory that EverInsight or any of its Affiliates or any of its or their Sublicensees or distributors knows has directly or indirectly distributed, marketed, promoted, offered for sale or sold, or has reasonable grounds to believe intends to directly or indirectly distribute, market, promote, offer for sale or sell, the Compound or any Licensed Product for use outside the Territory. If EverInsight or any of its Affiliates receives or becomes aware of the receipt by it or any Sublicensee or distributor of any orders for the Compound or any Licensed Product for use outside the Territory, such Person shall refer such orders to VistaGen.   (b)             VistaGen hereby covenants and agrees that it will not, and shall ensure that its Affiliates will not, and will ensure its licensees and sublicensees (other than EverInsight, its Affiliates and Sublicensees) and subcontractors are bound by contractual obligations not to, either directly or indirectly, promote, market, solicit, distribute, import, sell or have sold Licensed Product in the Territory. In furtherance of the foregoing, VistaGen shall not and will ensure that its Affiliates do not, and shall use Commercially Reasonable Efforts to ensure that its or their licensees and sublicensees (other than EverInsight, its Affiliates and Sublicensees) or distributors do not knowingly distribute, market, promote, offer for sale or sell the Compound or any Licensed Product directly or indirectly to any Person in the Territory or to any Person outside the Territory that VistaGen or any of its Affiliates or any of its or their licensees or sublicensees (other than EverInsight, its Affiliates and Sublicensees) or distributors knows has directly or indirectly distributed, marketed, promoted, offered for sale or sold, or has reasonable grounds to believe intends to directly or indirectly distribute, market, promote, offer for sale or sell, the Compound or any Licensed Product for use in the Territory. If VistaGen or any of its Affiliates receives or becomes aware of the receipt by it or any licensees, sublicensee (other than EverInsight, its Affiliates and Sublicensees) or distributor of any orders for the Compound or any Licensed Product for use in the Territory, such Person shall refer such orders to EverInsight.   2.8             Non-Compete. During the Term of this Agreement, neither Party shall, and each Party shall cause its Affiliates and their respective Sublicensees not to, directly or indirectly, enable or assist any Person that is not a Party to this Agreement to, Develop, Manufacture or Commercialize any intra-nasal formulation of Androstadienol in the Territory for the treatment of social anxiety disorder, other than the Compound and the Licensed Product in accordance with this Agreement (the “Competing Product”). If EverInsight requests a waiver of this Section with regard to a particular product and/or a particular transaction, VistaGen will in good faith give due consideration to such request. Notwithstanding the foregoing, if EverInsight is acquired by or merges or consolidates with a Third Party that, at the time of such acquisition, is actively Developing, Manufacturing and/or Commercializing a Competing Product in the Territory, then the activities of EverInsight, its Affiliates and their respective Sublicensees under and in accordance with the terms of such license agreement and the activities of such Third Party acquirer for the continued development, manufacturing and/or commercialization of the Competing Product, respectively, shall not be deemed to breach this Section 2.8.   2.9             Subcontracting. Notwithstanding Section 2.3 (Sublicense Rights), each Party may, without the other Party’s consent, subcontract on a fee-for-service basis with a Third Party to perform any or all of its obligations hereunder (a “Subcontractor”), including by appointing one or more distributors, and grant a sublicense to the Subcontractor solely to the extent necessary to perform such subcontracted obligations; provided that (a) no such permitted subcontracting shall relieve the subcontracting Party of any obligation hereunder (except to the extent satisfactorily performed by such Subcontractor) or any liability and the subcontracting Party shall be and remain fully responsible and liable therefor; (b) the agreement pursuant to which the subcontracting Party engages any Subcontractor must be consistent in all material respects with this Agreement, including terms consistent with the confidentiality, restrictions on use and intellectual property provisions of this Agreement, and (c) the subcontracting Party shall be responsible to the other Party for the breach of this Agreement due to breach of any subcontracting agreement by its Subcontractors. The subcontracting Party hereby waives any requirement that the other Party exhaust any right, power or remedy, or proceed against any Subcontractor for any obligation or performance under this Agreement prior to proceeding directly against the subcontracting Party.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -15-     2.10             Statements and Compliance with Applicable Laws. Each Party shall and shall cause its Affiliates and its and their respective licensees and Sublicensees to comply with all Applicable Laws with respect to the Exploitation of Licensed Product, including the extranational application of U.S. laws and regulations as related, for example, to regulatory matters, export controls and transfer of technology to certain countries and to foreign corrupt practices. Each Party shall, and shall cause its Affiliates to, and shall use Commercially Reasonable Efforts to cause its and their licensees, Sublicensees, employees, representatives, agents, and distributors to avoid taking, or failing to take, any actions that such Party knows or reasonably should know would jeopardize the goodwill or reputation of the other Party or its Affiliates or the Licensed Product or any Trademark associated therewith. Without limitation to the foregoing, each Party shall in all material respects conform its practices and procedures relating to the Commercialization of the Licensed Product and educating the medical community in its Respective Territory with respect to the Licensed Product to any applicable industry association regulations, policies and guidelines, as the same may be amended from time to time, and Applicable Laws. Each Party agrees that in performing its obligations under this Agreement, it will not employ or engage any Person who has been debarred or disqualified by any Regulatory Authority, or, to its knowledge, is the subject of debarment or disqualification proceedings by a Regulatory Authority.   2.11             Section 365(n). All rights and licenses granted under or pursuant to this Agreement by VistaGen or EverInsight are, and will otherwise be deemed to be, for the purposes of Section 365(n) of the U.S. Bankruptcy Code, and any similar law in the Territory, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or any similar law in the Territory. The Parties agree that each Party, as licensees of such rights under this Agreement, will retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code or any similar law in the Territory. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any similar law in the Territory, the Party that is not a party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, will be promptly delivered to them (a) upon any such commencement of a bankruptcy proceeding upon their written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under (a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject party.   2.12             Technology Escrow. Promptly after the Effective Date, VistaGen shall deposit all existing Licensed Know-How (for clarity, including all Licensed Manufacturing Know-How) with an escrow agent selected by EverInsight and reasonably acceptable to VistaGen and pursuant to an escrow agreement that requires the escrow agent to release the Licensed Know-How to EverInsight upon the commencement of a bankruptcy proceeding by or against VistaGen under the U.S. Bankruptcy Code or any similar law in the Territory. Throughout the term of this Agreement, VistaGen shall periodically (no less than annually) update such technology escrow to include any new Licensed Know-How that is developed or generated or otherwise comes into VistaGen’s Control after the Effective Date. The Parties shall share equally the cost of establishing and maintaining such technology escrow.   ARTICLE 3 GOVERNANCE   3.1             Joint Steering Committee. As soon as practicable after the Effective Date, the Parties shall establish a joint steering committee (the “Joint Steering Committee” or the “JSC”), composed of equal number of representatives of VistaGen and representatives of EverInsight, to coordinate the Development and Commercialization of the Compound and Licensed Product in the Licensed Field in the Territory. Each JSC representative shall have appropriate knowledge and expertise and sufficient seniority within the applicable Party to make decisions arising within the scope of the JSC’s responsibilities. The JSC shall:   (a)             serve as a forum for discussing Development of the Compound and Licensed Product in the Licensed Field in the Territory, including by reviewing the Development Plan and coordinating the conduct of the Development activities;   (b)             serve as a forum for discussing the Manufacture and supply of Compound and Licensed Product in the Licensed Field in the Territory, including by reviewing the Development strategy and Commercialization strategy for the Territory and coordinating the conduct of the Manufacturing and supply activities;       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -16-     (c)             serve as a forum for discussing Development of the Compound and Licensed Product in the Licensed Field in the Territory, including by (i) providing EverInsight with a forum at each meeting to disclose EverInsight’s, or its Affiliates’ or Sublicensees’ activities with respect to achieving Regulatory Approvals of Licensed Product in the Territory; material clinical study results; and the Marketing Authorization Applications that EverInsight or any of its Affiliates reasonably expect to make, seek or attempt to obtain in the Territory; (ii) reviewing the current Development Plan and, with the JSC’s approval, making any amendments or updates to the Development Plan; and (iii) coordinating the conduct of the Development activities;   (d)             serve as a forum to keep EverInsight updated on the Development of the Compound and Licensed Product in the Licensed Field outside the Territory, including material clinical study results and any Marketing Authorization Application for the Licensed Product filed outside the Territory;   (e)             coordinate the activities of VistaGen and EverInsight under this Agreement;   (f)             establish a Joint Manufacturing Committee to enable regular information exchange on CMC issues, discuss possible costs reductions and review potential CMOs and prepare joint manufacturing plans, transfers and selections of joint manufacturing partners, and a Joint Commercialization Committee for discussing and coordinating the launch activities for the Licensed Product (for clarity, neither such subcommittee nor the JSC shall have any decision making authority over commercialization of the Licensed Product anywhere in the Territory); and   (h)             perform such other functions as are set forth herein or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.   The JSC shall have only such powers as are expressly assigned to it in this Agreement, and such powers shall be subject to the terms and conditions of this Agreement. For clarity, the JSC shall not have any right, power or authority: (i) to determine any issue in a manner that would conflict with the express terms and conditions of this Agreement; or (ii) to modify or amend the terms and conditions of this Agreement. 3.2             JSC Membership and Meetings.   (a)             JSC Members. Each Party will designate equal number (at least two) of representatives to the JSC within thirty (30) days after the Effective Date. Each Party may replace its JSC representatives on written notice to the other Party, but each Party shall strive to maintain continuity. The Alliance Managers shall jointly prepare and circulate the meeting agenda at least five (5) Business Days in advance of each meeting, and shall also promptly, but in no event later than thirty (30) days after such meeting, prepare and circulate for review and approval of the Parties the minutes of such meeting.   (b)             JSC Meetings. The JSC will hold its first meeting within thirty (30) days of establishment of the JSC pursuant to Section 3.1 (Joint Steering Committee). At this first meeting, the JSC will address the initial transfer of Licensed Know-How provided for in Section 2.5 (Transfer of Know-How) and any other topics the Parties deem appropriate. Thereafter, the JSC shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once per Calendar Quarter. Meetings may be held in person, or by audio or video teleconference; provided, that unless otherwise agreed by VistaGen and EverInsight, at least one (1) meeting per year shall be held in person, and all in-person JSC meetings shall be held at locations mutually agreed upon by VistaGen and EverInsight. Each Party shall be responsible for all of its own expenses of participating in JSC meetings.   (c)             Non-Member Attendance. Each of VistaGen and EverInsight may from time to time invite a reasonable number of participants, in addition to its representatives, to attend JSC meetings in a non‑voting capacity; provided, that if either VistaGen or EverInsight intends to have any Third Party (including any consultant) attend such a meeting, such Party shall provide at least five (5) Business Days’ prior written notice to the other Party and obtain the other Party’s approval for such Third Party to attend such meeting, which approval shall not be unreasonably withheld or delayed. Such Party shall ensure that such Third Party is bound by confidentiality and non-use obligations consistent with the terms of this Agreement. The Party inviting any such Third Party shall be responsible for all of such Third Party’s costs and expenses of participating in JSC meetings, unless such invitation is mutually made by VistaGen and EverInsight, in which case they shall equally share such costs and expenses.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -17-     3.3             JSC Decision-Making. All decisions of the JSC shall be made by unanimous vote, with VistaGen’s representatives and EverInsight’s representatives each collectively having one (1) vote. If after reasonable discussion and good faith consideration of each of their views on a particular matter before the JSC, the representatives of VistaGen and EverInsight cannot reach an agreement as to such matter within thirty (30) calendar days after such matter was brought to the JSC for resolution, such disagreement shall:   (a)             be referred to the Chief Executive Officer of VistaGen (or his or her designee) and the Chief Executive Officer of EverInsight (or his or her designee) (collectively, the “Executive Officers”) for resolution, who shall use good faith efforts to resolve such matter within forty-five (45) calendar days after it is referred to them and, if such matter is resolved by the Executive Officers, such resolution shall be implemented by and binding on the Parties.   (b)             If the Executive Officers are unable to reach consensus on any such matter during such forty-five (45) calendar day period, then   (i) the Chief Executive Officer of EverInsight shall have the right to make the final decision if such matter (A) involves the Development of, Regulatory Approval for, Commercialization or other Exploitation of the Compound or a Licensed Product in the Territory and (B) is not reasonably expected to have a material adverse effect on the Development of, Regulatory Approval for, Commercialization or Exploitation of the Compound or a Licensed Product outside the Territory;   (ii) the Chief Executive Officer of VistaGen shall have the right to make the final decision if such matter (A) involves the Development of, Regulatory Approval for, Commercialization or other Exploitation of the Compound or a Licensed Product outside the Territory, and (B) is not reasonably expected to have a material adverse effect on the Development of, Regulatory Approval for, or Commercialization or Exploitation of the Compound or a Licensed Product in the Territory; or   (iii) in all other cases, such matter will be resolved in accordance with Section 14.10 (Dispute Resolution).   (c)             If the Parties dispute whether a matter subject to the decision making mechanism set forth above is reasonably expected to have a material adverse effect on the Development of, Regulatory Approval for, or Commercialization or Exploitation of the Compound or a Licensed Product in a Party’s Respective Territory, such dispute shall be resolved by an independent, impartial and conflicts-free Third Party expert, who shall be experienced in the global aspects of the development, manufacture and commercialization of pharmaceutical products similar to the Licensed Product (the “Expert”). For clarity, such dispute shall not be subject to the dispute resolution mechanism set forth in Section 14.10. Within fifteen (15) days after a Party alleges material adverse impact in its Respective Territory as set forth above and the other Party disagrees with such allegation, the Parties shall mutually agree upon the Expert and, as promptly as possible thereafter, the Parties shall jointly retain the Expert. If the Parties are unable to agree on a mutually acceptable Expert within such fifteen (15) day period, each Party will select one (1) Expert and those two (2) Party selected Experts will select a third Expert within ten (10) days thereafter, and such third Expert shall be the sole Expert to resolve such dispute in accordance with this Section 3.3(c). Each Party shall bear its own costs associated such Expert decision and share the costs of the Expert equally. The determination of the Expert shall be binding on the Parties and the Parties shall act in accordance with the Expert’s decision.   3.4             Alliance Manager. Each Party will assign an Alliance Manager, who will be a non-voting member of the JSC and the primary contact for all non-technical matters of governance, who will organize JSC meetings as reasonably necessary and lead the drafting of minutes. Either Alliance Manager may also call for ad-hoc meetings if one of the Parties deems that necessary.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -18-     ARTICLE 4 DEVELOPMENT   4.1             General. Subject to the terms and conditions of this Agreement (including without limitation the Retained Rights), EverInsight shall be solely responsible for the Development of the Compound and Licensed Product in the Licensed Field in the Territory, including the performance of preclinical and clinical studies of any Compound or any Licensed Product in the Licensed Field in the Territory. Notwithstanding the foregoing, VistaGen shall be solely responsible for conducting a six (6) month rat toxicology study in China, which study will be conducted by [*****] at VistaGen’s own cost and expense.   4.2             Development Plan. EverInsight’s initial plan for the Development of the Compound and Licensed Product (the “Development Plan”) is attached hereto as Exhibit D. The Development Plan will include, among other things, critical activities to be undertaken, certain timelines, go/no go decision points and relevant decision criteria and certain allocations of responsibilities between the Parties to facilitate the registration, launch, and Commercialization of the Compound and Licensed Product in the Territory. The Development Plan will be focused on efficiently obtaining Regulatory Approval for a Licensed Product in the Licensed Field in the Territory, with an emphasis on Mainland China and South Korea. EverInsight shall conduct all Development of the Compound and Licensed Product in the Licensed Field in the Territory in accordance with the Development Plan. The Development Plan also shall take into consideration Development, Regulatory Approval, or commercial impacts on the Licensed Product outside the Licensed Field and Territory. From time to time, but at least once per Calendar Year, EverInsight will, with the assistance of the JSC, update the Development Plan and submit such updated plan to the JSC for review, discussion, and approval. Any disagreement or dispute in the JSC regarding the Development Plan shall be resolved in the manner set forth in Section 3.3 (JSC Decision-Making). If any updated or new terms of the Development Plan contradict, or create inconsistencies or ambiguities with, the terms of this Agreement, then the terms of this Agreement shall govern.   4.3             Diligence.   (a)             Commercially Reasonable Efforts by EverInsight. EverInsight, directly and/or with or through its Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to Develop and obtain Regulatory Approval for the Compound and the Licensed Product in the Licensed Field in Mainland China and South Korea in accordance with the Development Plan.   (b)             Commercially Reasonable Efforts by VistaGen. VistaGen, directly and/or with or through its Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to Develop and obtain Regulatory Approval for the Compound and the Licensed Product in the Licensed Field in the U.S.   4.4             Development Costs.   (a)             As between the Parties, EverInsight shall be solely responsible for the cost for the Development of the Compound and the Licensed Product in the Licensed Field in the Territory and VistaGen shall be solely responsible for the cost for the Development of the Compound and the Licensed Product in the Licensed Field outside the Territory, except as otherwise provided in Section 4.1 and 4.4(b). For clarity, VistaGen shall be responsible for the cost of the toxicology study to be conducted in China as described in Section 4.1. (b)             EverInsight shall have the option, but not the obligation, to participate in global Phase 3 Clinical Trial and long-term safety study in social anxiety disorder conducted by VistaGen (or its Affiliates or (sub)licensees) to support Regulatory Approval in the Territory. VistaGen shall keep EverInsight informed on its global development plan for the Compound and Licensed Product. Before initiating any global Phase 3 Clinical Trial and long-term safety study for the Licensed Product, VistaGen shall notify EverInsight and provide EverInsight with relevant study plan and protocol for review and consideration. If EverInsight elects to participate in such global Phase 3 Clinical Trial or long-term safety study, then the Parties shall ensure that sufficient number of subjects in the Territory are enrolled in such clinical trial in order to support Regulatory Approval in the Territory, and EverInsight shall (i) be responsible for the conduct of, and all direct costs and expenses of conducting, such clinical trial in the Territory (provided however that if VistaGen requests in writing that EverInsight enrolls in the Territory more subjects than the minimum number required for Regulatory Approval in the Territory, then the Parties shall discuss such request in good faith, and if EverInsight agrees to enroll such excess subjects, VistaGen shall reimburse EverInsight for the clinical trial cost for such excess subjects); and (ii) pay or reimburse VistaGen for a pro rata portion (based on the number of subject enrolled in the Territory vs worldwide in such clinical trial) of all of the Indirect Costs of such global clinical trial outside of the Territory, not to exceed [*****] of the total Indirect Costs of such global clinical trial. VistaGen shall provide EverInsight with reasonable supporting documents (including Third Party invoices) for the Indirect Costs of such global clinical trial. For clarity and notwithstanding the foregoing, the cost sharing in this subsection (b) shall not apply to the first U.S. Phase 3 Clinical Trial, the cost of which shall be solely born by VistaGen.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -19-     4.5             Development Records and Reports.   (a)             EverInsight shall, and shall cause its Affiliates and its and their Sublicensees to, maintain, in good scientific manner, complete and accurate records and reports pertaining to Development of Licensed Product hereunder, in sufficient detail for VistaGen to verify EverInsight’s compliance with its obligations under this Agreement. Such records and reports shall (i) be summarized in English in sufficient detail for VistaGen to verify EverInsight’s compliance with its obligations under this Agreement and for VistaGen to properly use such records and reports for patent and regulatory purposes, (ii) be appropriate for patent and regulatory purposes; (iii) be in compliance with Applicable Laws; (iv) properly reflect all work done and results achieved in the performance of its Development activities hereunder; (v) record only such activities and not include or be commingled with records of activities outside the scope of this Agreement; and (vi) be retained by EverInsight for at least five (5) years after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Laws.   (b)             Starting on [*****], EverInsight shall provide VistaGen with an annual written report summarizing in sufficient detail for VistaGen to verify EverInsight’s compliance with its obligations under this Agreement (i) the Development activities conducted in the preceding Calendar Year by it and its Affiliates and Sublicensees, and (ii) the Development activities planned to be conducted in such Calendar Year by it and its Affiliates and Sublicensees. If at any time VistaGen’s representatives on the JSC are not fully able to perform their rights and duties on the JSC in the absence of a review of any of such books and records, EverInsight shall, upon reasonable written request from such JSC representative, provide a copy of such records to the JSC.   ARTICLE 5 REGULATORY   5.1             Regulatory Responsibilities. EverInsight shall be responsible, at its cost and subject to the Retained Rights and except as set forth in this ARTICLE 5, for all regulatory activities necessary to prepare, obtain and maintain Marketing Authorization Applications, Regulatory Filings and other Regulatory Approvals for the Compound and Licensed Product in the Licensed Field in the Territory. EverInsight shall keep VistaGen informed of regulatory developments related to the Compound or Licensed Product in the Licensed Field in the Territory via the JSC.   5.2             Regulatory Reports. Starting on [*****], EverInsight shall provide VistaGen with an annual written report summarizing the clinical data and safety results generated from the regulatory activities performed in the preceding Calendar Year by it and its Affiliates and Sublicensees, in sufficient detail for VistaGen to verify EverInsight’s compliance with its obligations under this Agreement and for VistaGen to properly use data and results for patent and regulatory purposes.   5.3             Regulatory Cooperation.   (a)             EverInsight. EverInsight shall notify VistaGen of all material Regulatory Documentation submitted or received by EverInsight or its Affiliates or Sublicensees that are related to any Licensed Product in the Territory reasonably prior to such submission or reasonably after receipt. Moreover, with respect to Regulatory Filings in the Territory, EverInsight will provide VistaGen with the draft of such Regulatory Filings and an English summary thereof reasonably prior to submission so that VistaGen may have reasonable opportunity to review and comment on them. EverInsight shall consider all comments of VistaGen in good faith, taking into account the best interests of the Development, Regulatory Approval and/or Commercialization of the Licensed Product, but has no obligation to accept any comments of VistaGen, except to the extent that ignoring such comment could reasonably be expected to have a material adverse effect on the Development of, Regulatory Approval for, or Commercialization or Exploitation of the Compound or a Licensed Product outside the Territory. Material submissions made by EverInsight to, or correspondence with, Regulatory Authorities will be provided to VistaGen reasonably in advance to enable translation by VistaGen, if any such submissions or correspondence are not available in English. VistaGen shall not provide any Regulatory Documentation of EverInsight, its Affiliates, or Sublicensees to any of VistaGen’s sublicensees who does not agree pursuant to Section 5.3(b) (VistaGen) to permit its Regulatory Documentation to be shared with EverInsight, its Affiliates, and its Sublicensees.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -20-     (b)             VistaGen. VistaGen shall provide or make available to EverInsight copies of all material Regulatory Documentation submitted or received by VistaGen or its Affiliates that are related to any Licensed Product outside the Territory reasonably after such submission or receipt. VistaGen shall use Commercially Reasonable Efforts to negotiate an agreement with each sublicensee to make available to EverInsight copies of all material Regulatory Documentation that are related to any Licensed Product outside the Territory that are Controlled by its such sublicensee. Upon reasonable request, VistaGen will support EverInsight’s regulatory filing efforts, as necessary, and in alignment with VistaGen’s formal role as the global study sponsor. This may include participation in certain meetings with regulatory authorities, if requested by EverInsight, and signing or co-signing the clinical study site contracts, if global sponsor’s signature is required by the study site in the Territory. Due to requirement by many leading clinical trial hospitals in China that the global sponsor listed on the protocol is a party to the site contracts, VistaGen agrees to accept this responsibility. EverInsight shall indemnify VistaGen for such contractual liabilities in the Territory.   (c)             Confidentiality. Any information of a Party to which the other Party obtains access pursuant to this Section 5.3 (Regulatory Cooperation) shall, subject to ARTICLE 10 (Confidentiality; Publication), be deemed the Confidential Information of such first Party.   5.4             Rights of Reference.   (a)             Without any additional consideration to VistaGen, VistaGen hereby grants to EverInsight and its Affiliates and Sublicensees a Right of Reference and Use, as that term is defined in 21 C.F.R. § 314.3(b) and any foreign counterpart to such regulation, to all VistaGen Regulatory Documentation and the VistaGen Development Data to the extent necessary or reasonably useful for EverInsight to Exploit the Compound or Licensed Product in the Licensed Field in the Territory.   (b)             Without any additional consideration to EverInsight, EverInsight hereby grants to VistaGen and its Affiliates, and any current or future direct or indirect (sub)licensee of VistaGen with respect to the Compound or a Licensed Product, a Right of Reference and Use, as that term is defined in 21 C.F.R. § 314.3(b) and any foreign counterpart to such regulation, to the EverInsight Development Data to the extent necessary or reasonably useful for VistaGen to Exploit the Compound, Licensed Product(s) in the Licensed Field outside of the Territory.   (c)             Promptly after a Party, its Affiliate or its or their licensees or Sublicensees generate(s) any VistaGen Development Data or EverInsight Development Data (as applicable), such Party shall provide the other Party with copies of such data, and the other Party may use such data pursuant to the license granted to it under Section 2.1 or 2.2 (as applicable).   (d)             Each Party will provide a signed statement to this effect, if requested by the other Party, that is consistent with the requirements of 21 C.F.R. § 314.50(g)(3) or any foreign counterpart to such regulation, in the case of a request by either Party, for the limited purpose described in this Section 5.4 (Rights of Reference).   (e)             Other than as expressly set forth in this Section 5.4 (Rights of Reference), nothing in this Section 5.4 shall require either Party to take, or forbear to take, any action.   (f)             Any information of a Party to which the other Party obtains access pursuant to this Section 5.4 (Rights of Reference) shall, subject to Sections 10.1 (Duty of Confidence) and 10.2 (Exceptions), be deemed the Confidential Information of such first Party. For avoidance of doubt, a Party’s submission of information of the other Party to which such Party obtains access pursuant to this Section 5.4 (Rights of Reference) to a Regulatory Authority shall be governed by and subject to the terms of ARTICLE 10 (Confidentiality; Publication).     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -21-     5.5             Recalls, Suspensions or Withdrawals. Each Party shall notify the other Party promptly following its determination that any event, incident or circumstance has occurred that would reasonably be expected to result in the need for a recall, market suspension or market withdrawal of a Licensed Product in the Licensed Field and shall include in such notice the reasoning behind such determination and any supporting facts. As between the Parties, EverInsight shall have the right to make the final determination whether to voluntarily implement any such recall, market suspension or market withdrawal in the Licensed Field in the Territory; provided that prior to any implementation of such a recall, market suspension or market withdrawal, EverInsight shall consult with VistaGen and shall consider VistaGen’s comments in good faith. If a recall, market suspension or market withdrawal is mandated by a Regulatory Authority in the Territory, as between the Parties, EverInsight shall initiate such a recall, market suspension or market withdrawal in compliance with Applicable Laws. For all recalls, market suspensions or market withdrawals undertaken pursuant to this Section 5.5 (Recalls, Suspensions or Withdrawals), as between the Parties, EverInsight shall be solely responsible for the execution thereof. Subject to ARTICLE 13 (Indemnification; Liability), EverInsight shall be responsible for all costs and expenses of any such recall, market suspension or market withdrawal. Notwithstanding the foregoing, any recall, market suspension or market withdrawal that relates to the Manufacture and supply of a Compound or Licensed Product by VistaGen to EverInsight shall be governed by the terms and conditions of the Initial Supply Agreement.   5.6             Pharmacovigilance Agreement; Global Safety Database. The Parties shall enter into a pharmacovigilance agreement at least [*****] days prior to the Initiation of any Clinical Trial of Licensed Product(s) by EverInsight in the Territory providing for the terms pursuant to which (i) VistaGen shall establish, hold and maintain (at VistaGen’s sole cost and expense) the global safety database for Licensed Product and (ii) the Parties will establish a mutually agreed procedure for safety data sharing, adverse event reporting and prescription events monitoring related to the Licensed Product(s), which procedure shall be in accordance with, and enable the Parties to fulfill, their respective regulatory reporting obligations under, all applicable laws. Each Party shall be responsible for reporting safety data, adverse events, quality complaints related to the Products to the global safety database and to the applicable Regulatory Authorities in its Respective Territory, as well as responding to safety issues and to all requests of Regulatory Authorities related to the Licensed Product in its Respective Territory, in each case at its own cost. VistaGen shall provide EverInsight with access to the global safety database to allow EverInsight to comply with its regulatory reporting obligations under applicable laws in the Territory.   5.7             Regulatory Inspections. If any Regulatory Authority (i) contacts a Party, its Affiliates or their respective licensees or Sublicensees with respect to the alleged improper Development, Manufacture or Commercialization of any Licensed Product; (ii) conducts, or gives notice of its intent to conduct, an inspection at such Party’s, its Affiliate’s or licensee’s or Sublicensee’s facilities used in the Development or Manufacturing of Licensed Product or (iii) takes, or gives notice of its intent to take, any other regulatory action with respect to any activity of such Party, its Affiliates or licensees or Sublicensees that could reasonably be expected to materially adversely affect any Development, Manufacture or Commercialization activities with respect to the Licensed Product, whether in or outside the Territory, then such will promptly notify the other Party of such contact, inspection or notice and shall provide the other Party with copies of all materials, correspondence, statements, forms and records filed with or received from the Regulatory Authority in connection therewith.     ARTICLE 6 SUPPLY   6.1             Supply. Subject to the first sentence of Section 6.2(a), before the completion of the manufacturing technology transfer under Section 6.2(b), EverInsight shall exclusively obtain its supply of Licensed Product from VistaGen, and VistaGen shall supply to EverInsight all the Licensed Product requested by EverInsight for Development in the Territory [*****]. Nothing will prevent VistaGen from manufacturing or having manufactured all or any portion of the Licensed Product in the Territory.   6.2             Potential Alternative Suppliers.   (a)             The Parties will collaborate and jointly explore opportunities for identification and qualification of alternative suppliers of the Licensed Product with the mutual intent of reducing substantially the Cost of Goods for the supply of the Licensed Product, for EverInsight, its Affiliates, licensees and sublicensees after Regulatory Approval in the Territory and for VistaGen and its Affiliates, licensees and sublicensees outside the Territory after Regulatory Approval. Upon mutual identification and qualification of such alternative supplier(s) capable of reducing substantially the Cost of Goods for the supply of the Licensed Product, VistaGen shall, pursuant to Section 6.4, conduct a technology transfer of all relevant manufacturing process it possesses to such alternative supplier(s) to allow the Parties to obtain supply of Licensed Product from such alternative supplier(s) at reduced Cost of Goods.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -22-     (b)             If the Parties are unable to agree on the alternative supplier(s) under Section 6.2(a) before the [*****], then, at EverInsight’s option and at no additional cost, VistaGen will, pursuant to Section 6.4, conduct a technology transfer of all relevant manufacturing processes it possesses to EverInsight or a Third Party manufacturer(s) that has been chosen by EverInsight for commercial supply in the Territory. VistaGen shall make a good faith effort to complete such technology transfer within [*****] days of EverInsight’s selection of the manufacturer(s) (“Manufacturing Transfer Period”). The Parties agree on a timely and proactive sharing of manufacturing data to facilitate such manufacture technology transfer. This data sharing might be done through the JSC or through a Joint Manufacturing Committee that may be established by the Parties.   6.3             Supply Agreement.   (a)             Initial Supply Agreement. VistaGen and EverInsight agree to negotiate in good faith within [*****] days after the Effective Date a separate agreement concerning the short-term supply of the Compound and Licensed Product for EverInsight’s Development use (including preclinical and/or clinical use) (the “Initial Supply Agreement”), [*****]. Under this Initial Supply Agreement, EverInsight shall provide written notice to VistaGen with rolling forecasts (at least quarterly) promptly following its decision on initiating preclinical experiments or clinical trials. Notwithstanding the foregoing, nothing in this Agreement nor the Initial Supply Agreement shall restrict, impair or otherwise limit VistaGen’s ability to manufacture the Compound or Licensed Product in the Territory for use outside the Territory. The Initial Supply Agreement shall include language on VistaGen’s Commercially Reasonable Efforts to reduce the manufacturing costs and an audit right for EverInsight to review such manufacturing costs   (b)             Commercial Supply Agreement. Upon EverInsight’s request, VistaGen shall introduce EverInsight to VistaGen’s contract manufacturer(s) and reasonably cooperate with EverInsight in its negotiation of a commercial supply agreement for the Licensed Product directly with such contract manufacturer(s).   (c)             Quality Agreement. In connection with negotiation of the Initial Supply Agreement, VistaGen and EverInsight agree to negotiate in good faith a separate agreement concerning the quality of the Compound and Licensed Product supplied by VistaGen to EverInsight (the “Quality Agreement”). The Quality Agreement might either be an attachment of the Initial Supply Agreement or a stand-alone-agreement. Such Quality Agreement will include language about the acceptance criteria and ways to handle failures of the quality criteria among other terms.   6.4             Manufacturing Technology Transfer. In order to enable the Parties to have Manufactured the Compound and Licensed Product by the mutually-designated Third-Party manufacturer(s) consistent with the terms of Section 6.2(a) (Potential Alternative Suppliers), or if such mutually agreed Third-Party manufacturer cannot be found by the [*****], to enable EverInsight to Manufacture or have Manufactured the Compound and Licensed Product for the Territory pursuant to Section 6.2(b), VistaGen shall (a) perform or facilitate technology transfer to such mutually-designated Third Party manufacturer, EverInsight or the Third Party manufacturer selected by EverInsight (the “Designated Manufacturer(s)”) as is necessary or reasonably useful in the Manufacture of the Compound and Licensed Product and as of such date are being used by VistaGen or VistaGen CMO (as defined below) to Manufacture the Compound and Licensed Product (the “Licensed Manufacturing Know-How”) solely for the Designated Manufacturer(s) to Manufacture the Compound and Licensed Products in accordance with the terms and conditions of this Agreement; (b) identify in writing all Subcontractors who Manufacture Compounds or Licensed Product for VistaGen (each, an “VistaGen CMO”); and (c) provide technical assistance (both on site and otherwise) in the transfer and demonstration of the Licensed Manufacturing Know-How that is necessary to Manufacture the Compound and Licensed Product. To the extent that any Licensed Manufacturing Know-How is in the Control of VistaGen but is in the possession of a VistaGen CMO (and is not in VistaGen’s possession), then during the Manufacturing Transfer Period, VistaGen will use Commercially Reasonable Efforts to facilitate the transfer of such Licensed Manufacturing Know-How from such VistaGen CMO to the Designated Manufacturer(s), and/or cause such VistaGen CMO to make such Licensed Manufacturing Know-How available to the Designated Manufacturer(s). VistaGen shall be solely responsible for the cost and expense of such technology transfer and no payment shall be due from EverInsight to VistaGen or any Third Party (including VistaGen CMO) for such technology transfer.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -23-     ARTICLE 7 COMMERCIALIZATION   7.1             General. Subject to the terms and conditions of this Agreement and the Commercialization Plan, EverInsight shall be responsible for all aspects of the Commercialization of the Licensed Product in the Licensed Field in the Territory, including: (a) developing and executing a commercial launch and pre-launch plan, (b) negotiating with applicable Government Authorities regarding the price and reimbursement status of the Licensed Product and obtaining and maintaining Pricing Approvals; (c) marketing, medical affairs, and promotion; (d) booking sales and distribution and performance of related services; (e) subject to the provisions of Section 5.5 (Recalls, Suspensions or Withdrawals) handling all aspects of order processing, invoicing and collection, inventory and receivables; (f) providing customer support, including handling medical queries, and performing other related functions; and (g) conforming its practices and procedures to Applicable Laws relating to the marketing, detailing and promotion of Licensed Product in the Licensed Field in the Territory. As between the Parties, EverInsight shall be solely responsible for the costs and expenses of Commercialization of the Licensed Product in the Licensed Field in the Territory.   7.2             Commercialization Plan. EverInsight shall conduct all Commercialization of Compound and Licensed Product in the Licensed Field in the Territory in accordance with a commercialization plan (as amended from time to time in accordance with this Agreement, the “Commercialization Plan”), the initial version of which EverInsight will prepare and provide to the JSC no later than [*****] prior to the anticipated First Commercial Sale of Licensed Product in the Licensed Field in the Territory and which initial Commercialization Plan shall be subject to the review (but not approval) of the Parties through the JSC. From time to time, but at least once every Calendar Year, EverInsight will update the Commercialization Plan and submit such updated plan to the JSC for review and discussion. If any updated Commercialization Plan omits details that a VistaGen representative reasonably believes is necessary for (i) the proper functioning of the JSC or (ii) to verify EverInsight’s compliance with its obligations under this Agreement, then EverInsight shall take into reasonable consideration such comments and, if necessary, further update such Commercialize Plan. If the terms of the Commercialization Plan contradict, or create inconsistencies or ambiguities with, the terms of this Agreement, then the terms of this Agreement shall govern.   7.3             Commercial Diligence. Upon Regulatory Approval of a Licensed Product in mainland China or South Korea, EverInsight, directly and/or with or through Affiliates or Sublicensees, shall use Commercially Reasonable Efforts to Commercialize such Licensed Product in the Licensed Field in such jurisdiction.   ARTICLE 8 FINANCIAL PROVISIONS   8.1             Upfront Payment.   (a)             As partial consideration of the rights granted by VistaGen to EverInsight hereunder, within thirty (30) Business Days after the Effective Date, EverInsight shall pay to VistaGen a one-time, non-refundable and non-creditable upfront payment of five million Dollars ($5,000,000).   8.2             Regulatory Milestone Payments.   (a)             As additional consideration of the rights granted by VistaGen to EverInsight hereunder, within [*****] calendar days after the first achievement of the regulatory milestone events below (“Regulatory Milestone Events”) by or on behalf of EverInsight or any of its Affiliates or Sublicensees, EverInsight or its Affiliate or Sublicensee shall notify VistaGen of the achievement of such Regulatory Milestone Event. The Regulatory Milestone Event triggers the corresponding milestone payment due to VistaGen (“Milestone Payment”) and VistaGen shall invoice EverInsight for the applicable non-refundable, non-creditable Milestone Payment corresponding to the Regulatory Milestone Event as shown below, and EverInsight shall remit payment within [*****] Business Days of the receipt of such invoice, as described in Section 8.6 (Currency; Exchange Rate; Payments). For clarity, each Regulatory Milestone Payment set forth above shall be due and payable only once upon the first achievement of the corresponding Regulatory Milestone Event, regardless of how many times such Regulatory Milestone Event is achieved in the Territory.   ● Regulatory Milestone Event for Licensed Product Regulatory Milestone Payment (in U.S. Dollars):   (1) [*****].   (2) [*****].     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -24-     8.3             Commercial Milestones.   (a)             Within [*****] calendar days after the end of the first Calendar Year in which aggregate annual Net Sales for that Calendar Year for the Licensed Product in the Territory reach any threshold indicated in the Commercial Milestone Events listed below, EverInsight shall notify VistaGen of the achievement of such Commercial Milestone Event and VistaGen shall invoice EverInsight for the corresponding non-refundable, non-creditable Milestone Payment set forth below and EverInsight shall remit payment to VistaGen within [*****] Business Days after the receipt of the invoice, as described in Section 8.6 (Currency; Exchange Rate; Payments).   Annual Net Sales Milestones for Licensed Product Milestone Payments (in Dollars) (each a “Commercial Milestone Event”):   (1). [*****]   (2). [*****]   (3). [*****]   (4). [*****]   (5). [*****]   (b)             For the purposes of determining whether a Net Sales Milestone Event has been achieved, Net Sales of Licensed Product(s) in the Territory shall be aggregated. For clarity, the annual Net Sales Milestone Payments set forth in this Section 8.3 (Commercial Milestones) shall be payable only once, upon the first achievement of the applicable Commercial Milestone Event, regardless of how many times such Commercial Milestone Event is achieved.   (c)             If a Commercial Milestone Event in Section 8.3 (Commercial Milestones) is achieved and payment with respect to any previous Commercial Milestone Event in Section 8.3 has not been made, then such previous Commercial Milestone Event shall be deemed achieved and EverInsight shall notify VistaGen within fifteen (15) calendar days of such achievement. VistaGen shall then invoice EverInsight for such unpaid previous Commercial Milestone Event(s) and EverInsight shall pay VistaGen such unpaid previous milestone payment(s) within thirty (30) Business Days of receipt of such invoice.   (d)             In the event that, VistaGen believes any Commercial Milestone Event under Section 8.3(a) has occurred but EverInsight has not given VistaGen the notice of the achievement of such Commercial Milestone Event, it shall so notify EverInsight in writing and shall provide to EverInsight data, documentation or other information that supports its belief. Any dispute under this Section 8.3(d) (Commercial Milestones - subsection (d)) that relates to whether or not a Commercial Milestone Event has occurred shall be referred to the JSC to be resolved in accordance with ARTICLE 3 (Governance) and shall be subject to resolution in accordance with Section 14.10 (Dispute Resolution). The Milestone Payments made for each Commercial Milestone Event shall be non-creditable and non-refundable.   8.4             Royalty Payments.   (a)             Royalty Rate. Subject to the terms and conditions of this Agreement (including Section 8.5), in partial consideration of the rights granted by VistaGen to EverInsight hereunder, EverInsight shall pay to VistaGen non-refundable, non-creditable royalties based on the aggregate Net Sales of all Licensed Product sold by EverInsight, its Affiliates and/or its or their respective Sublicensees in the Territory during a Calendar Year at the rates set forth in the table below. The obligation to pay royalties will be imposed only once with respect to the same unit of a Licensed Product.   Calendar Year Net Sales (in Dollars) for all Licensed Product in the Territory Royalty Rates as a Percentage (%) of Net Sales   (1). [*****]   (2). [*****]     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -25-     (b)             Royalty Term. Royalties under this Section 8.4 (Royalty Payments) shall be payable on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis from the First Commercial Sale of a Licensed Product in a jurisdiction until the latest to occur of: (i) expiration of the last‑to‑expire Valid Claim that effectively provides market exclusivity of such Licensed Product in such jurisdiction in the Territory; (ii) expiration of Regulatory Exclusivity for such Licensed Product in such Jurisdiction in the Territory; and (iii) ten (10) years after the First Commercial Sale of the Licensed Product in such jurisdiction in the Territory (the “Royalty Term” for the Licensed Product in the relevant jurisdiction). After expiration of the Royalty Term for a particular Licensed Product in a particular jurisdiction, the license granted by VistaGen to EverInsight hereunder shall continue and shall become fully paid-up, royalty free, perpetual and irrevocable with respect to such Licensed Product in such jurisdiction.   (c)             Royalty Reports and Payment. Within ninety (90) calendar days after each Calendar Quarter of each Calendar Year, commencing with the Calendar Quarter during which the First Commercial Sale of any Licensed Product is made anywhere in the Territory, EverInsight shall provide VistaGen with a report that contains the following information for the applicable Calendar Quarter, on a jurisdiction-by-jurisdiction basis: (A) Net Sales in the Territory; (B) a calculation of the royalty payment due on Net Sales in the Territory; and (C) the exchange rates used. After the receipt of such royalty report, VistaGen shall invoice EverInsight for the royalty payment set forth in such royalty report. Within thirty (30) Business Days after the receipt of the invoice, EverInsight will pay VistaGen all royalties owed with respect to Net Sales for such Calendar Quarter. If, during the following Calendar Quarter, EverInsight discovers that it reported an incorrect amount of Net Sales in the Territory and/or the amounts payment due on such Net Sales in the immediately preceding Calendar Quarter, then EverInsight may, subject to review by VistaGen, adjust and reconcile any such calculation of Net Sales and/or any such underpayment or overpayment of royalty payments due, and shall timely report the same within thirty (30) calendar days after such following Calendar Quarter.   8.5             Royalty Adjustments. Except as otherwise set forth in this Agreement, royalties due hereunder are subject to adjustment as set forth below (such adjustments to be prorated for the Calendar Quarter in which the adjustment becomes applicable):   (a)             Royalty Adjustment for Patent Expiration. In the event that in any jurisdiction in the Territory in any Calendar Quarter during the Royalty Term for a Licensed Product, there is no Valid Claim that provides effective market exclusivity for such Licensed Product (or the Compound contained in such Licensed Product) in such jurisdiction in such Calendar Quarter, then the royalty rate set forth in Section 8.4(a) (Royalty Rate) with respect to such Licensed Product in such jurisdiction in such Calendar Quarter shall be reduced by [*****];   (b)             Royalty Adjustment for Generic Competition. In the event that in any jurisdiction in the Territory in any Calendar Quarter during the Royalty Term for a Licensed Product, there is Generic Competition for such Licensed Product in such jurisdiction in such Calendar Quarter, then the royalty rate set forth in Section 8.4(a) (Royalty Rate) with respect to such Licensed Product in such jurisdiction in such Calendar Quarter shall be reduced by [*****] (provided however that the royalty reduction under Section 8.5(a) shall not apply to such Licensed Product in such jurisdiction in such Calendar Quarter if the royalty reduction under Section 8.5(b) applies).   8.6             Currency; Exchange Rate; Payments. All payments required to be made by EverInsight under this Agreement shall be made in Dollars. All payments payable to, or invoiced from or on behalf of, VistaGen shall be paid bank wire transfer in immediately available funds to one or more bank accounts of VistaGen as designated in written notice from VistaGen. If any currency conversion shall be required in connection with any payment hereunder, such conversion shall be made by using the exchange rates at the closing on the last Business Day of the Calendar Quarter to which such payment relates as reported in The Wall Street Journal on the following day.   8.7             Late Payments. Any payments or portions thereof due hereunder that are not paid on the date such payments are due under this Agreement shall bear interest at an annual rate equal to two (2) percentage points above the prime rate as published by The Wall Street Journal or any successor thereto on the first day of each Calendar Quarter in which such payments are overdue calculated on the number of days such payment is delinquent.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -26-     8.8             Taxes.   (a)             Taxes on Income. Notwithstanding anything else set forth in this Section 8.8 (Taxes), each Party shall solely bear and pay all Taxes imposed on such Party’s net income or gain (however denominated) arising directly or indirectly from the activities of the Parties under this Agreement.   (b)             Tax Payments. The upfront payment, milestone payments, royalties, and any other payment payable by EverInsight to VistaGen pursuant to this Agreement (each, a “Payment”) shall be paid free and clear of any and all Taxes (which, for clarity, shall be the responsibility of EverInsight), except for any Taxes required by Applicable Laws to be withheld or deducted. The Parties agree to cooperate with one another and use reasonable efforts to avoid or reduce Tax withholding or similar obligations in respect of the payments made under this Agreement. To the extent EverInsight is required to deduct and withhold Taxes on any payment to VistaGen, EverInsight shall deduct those Taxes from the remittable payment, pay the Taxes to the proper tax authority in a timely manner, and promptly send proof of payment to VistaGen. VistaGen shall provide EverInsight any tax forms that may be reasonably necessary in order for EverInsight to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. VistaGen shall use reasonable efforts to provide any such tax forms to EverInsight in advance of the due date.   8.9             Financial Records and Audit. EverInsight shall (and shall ensure that its Affiliates and Sublicensees will) maintain complete and accurate books and records pertaining to the Commercialization of Licensed Product hereunder, including books and records of invoiced sales and Net Sales of Licensed Product, in sufficient detail to calculate and verify all amounts payable hereunder and in sufficient detail to permit VistaGen to confirm the accuracy of any royalty payments, other amounts paid or payable under this Agreement and to verify the achievement of Milestone Events under this Agreement. EverInsight shall and shall cause its Affiliates and its and their Sublicensees to, retain such books and records until the later of (a) three (3) years after the end of the period to which such books and records pertain; (b) the expiration of the applicable tax statute of limitations (or any extensions thereof); and (c) for such period as may be required by Applicable Laws. Upon at least thirty (30) Business Days’ prior notice, such records shall be open for examination, during regular business hours, for a period of three (3) Calendar Years from the end of the Calendar Year to which such records pertain, and not more often than once each Calendar Year, by an independent and internationally recognized certified public accountant selected by VistaGen and reasonably acceptable to EverInsight, for the sole purpose of verifying for VistaGen the accuracy of the financial reports furnished by EverInsight under this Agreement or of any payments made, or required to be made, by EverInsight to VistaGen pursuant to this Agreement. The independent public accountant shall disclose to VistaGen only (x) the accuracy of Net Sales reported and the basis for royalty, Milestone Payments and any other payments made to VistaGen under this Agreement and (y) the difference, if any, by which such reported and paid amounts vary from amounts determined as a result of the audit and the details concerning such difference. Except as required by Applicable Laws, no other information shall be provided to VistaGen. No record may be audited more than once. VistaGen shall bear the full cost of such audit unless such audit reveals an underpayment by EverInsight of more than one hundred thousand Dollars ($100,000) or five percent (5%) of the amount actually due (whichever is greater) for any Calendar Year being audited, in which case EverInsight shall reimburse VistaGen for the reasonable costs and expenses for such audit. Unless disputed pursuant to Section 8.10 (Audit Dispute), EverInsight shall pay to VistaGen any underpayment discovered by such audit within thirty (30) days after the accountant’s report, plus interest (as set forth in Section 8.7 (Late Payments)) from the original due date. If the audit reveals an overpayment by EverInsight, then EverInsight may take a credit for such overpayment against any future payments due to VistaGen and, if there will be no future payment due, VistaGen shall promptly refund such overpayment to EverInsight.   8.10             Audit Dispute. If EverInsight disputes the results of any audit conducted pursuant to Section 8.9 (Financial Records and Audit), the Parties shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within thirty (30) days, the dispute shall be submitted for resolution to a certified public accounting firm jointly selected by each Party’s certified public accountants or to such other Person as the Parties shall mutually agree (the “Auditor”). The decision of the Auditor shall be final and the costs of such procedure shall be borne between the Parties in such manner as the Auditor shall determine. If the Auditor determines that there has been an underpayment by EverInsight, EverInsight shall pay to VistaGen the underpayment within thirty (30) days after the Auditor’s decision, plus interest (as set forth in Section 8.7 (Late Payments)) from the original due date. If the Auditor determines that there has been an overpayment by EverInsight, then EverInsight may take a credit for such overpayment against any future payments due to VistaGen and, if there will be no future payment due, VistaGen shall promptly refund such overpayment to EverInsight.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -27-     ARTICLE 9 INTELLECTUAL PROPERTY RIGHTS   9.1             Ownership of Intellectual Property   (a)             Ownership of Technology. As between the Parties:   (1)             VistaGen shall solely own on a worldwide basis all right, title and interest in and to any and all VistaGen Sole Inventions, whether or not patented or patentable, and any and all VistaGen Sole Invention Patents; and   (2)             EverInsight shall solely own on a worldwide basis all right, title and interest in and to any and all EverInsight Sole Inventions, whether or not patented or patentable, and any and all EverInsight Sole Invention Patents.   For clarity, each Party shall own on a worldwide basis and retain all right, title and interest in and to any and all Know-How, Inventions, Patents and other intellectual property rights that are owned or otherwise Controlled (other than pursuant to the license grants set forth in Section 2.1 (Licenses to EverInsight) and 2.2 (License to VistaGen)) by such Party or its Affiliates or its or their (sub)licensees (or Sublicensees) (as applicable) outside of this Agreement.   (b)             Ownership of Joint Patents and Joint Inventions. As between the Parties:   (1)             Each of VistaGen and EverInsight shall own an equal, undivided interest in any and all Joint Inventions and Joint Invention Patents; and   (2)             Each of VistaGen and EverInsight shall promptly disclose to the other in writing, and shall cause its Affiliates and its and their respective Sublicensees to so disclose, the development, making, conception or reduction to practice of any Joint Inventions. Subject to the licenses granted under Section 2.1 (License to EverInsight) and Section 2.2 (License to VistaGen), each of VistaGen and EverInsight shall have the right to Exploit the Joint Inventions and Joint Invention Patents without the duty of accounting or seeking consent from the other Party.   (c)             United States Law. The determination of whether Inventions, Know-How and other intellectual property rights are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Laws in the United States as such law exists as of the Effective Date irrespective of where or when such conception, discovery, development or making occurs; provided that if the application of such United States Applicable Laws prevents or materially impairs the proper prosecution or maintenance of Patent Rights in any jurisdiction in the Territory, then the Parties shall mutually agree to the application of an appropriate Applicable Laws in order to best advance and maintain the prosecution and maintenance of such Patents in such jurisdiction in the Territory. Each of VistaGen and EverInsight shall, and does hereby, assign, and shall cause its Affiliates and its and their (sub)licensees and Sublicensees to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Inventions, Know-How, Patents and other intellectual property rights with respect thereto, as is necessary to fully effect, as applicable, the sole or joint ownership as provided for in Section 9.1(a) (Ownership of Technology) or 9.1(b) (Ownership of Joint Patents and Joint Inventions); subject to the license granted under this Agreement.   (d)             Assignment Obligation. Each Party shall cause all Persons who perform Development activities, Manufacturing activities or regulatory activities for such Party under this Agreement or who conceive, discover, develop or otherwise make any Inventions, Know-How or other intellectual property rights by or on behalf of either Party or its Affiliates or its or their (sub)licensees (or Sublicensees) under or in connection with this Agreement to be under an obligation to assign to such Party their rights in any Inventions, Know-How, Patents and other intellectual property to the extent related to the Compound or Licensed Product, except where Applicable Laws requires otherwise and except in the case of governmental, not-for-profit and public institutions that have standard policies against such an assignment and except in the case of generally applicable (i.e., applicable generally to products other than the Licensed Product) Inventions, Know-How, Patents and other intellectual property (in each case, a suitable license or right to obtain such a license, shall be obtained).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -28-     (e)             Ownership of Product Trademarks. Subject to Section 11.3 (Effect of Termination), as between the Parties, (i) EverInsight shall own all right, title and interest in and to the Product Trademarks in the Territory, (ii) EverInsight shall have the right to market the Licensed Product in the Licensed Field in the Territory under the Product Trademarks and all goodwill associated therewith will inure to the benefit of EverInsight and (iii) VistaGen may not use the Product Trademarks without obtaining a proper trademark license from EverInsight (except to the extent necessary to perform its obligations under this Agreement).   (f)             Ownership of Corporate Names. As between the Parties, each Party shall retain all right, title and interest in and to its Corporate Names.   (g)             Ownership of Development Data. Subject to ARTICLE 2 (Licenses) and Section 11.3 (Effect of Termination), EverInsight shall own EverInsight Development Data and VistaGen shall own VistaGen Development Data.   9.2             Patent Prosecution and Maintenance.   (a)             VistaGen shall have the first right, but not the obligation, to control the preparation, filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all Licensed Patents and Joint Patents, both in and outside the Territory, by counsel of its own choice, except that such counsel in the Territory shall be reasonably acceptable to EverInsight (such acceptance not to be unreasonably withheld, delayed or conditioned). VistaGen shall consult with EverInsight and keep EverInsight informed of the status of such Patents in the Territory and also in the US and EU, and shall promptly provide EverInsight with all material correspondence received from any patent authority in the Territory and also in the US and EU in connection therewith. In addition, VistaGen shall promptly provide EverInsight with drafts of all proposed material filings and correspondence to any patent authority in the Territory and also in the US and EU with respect to such Patents for EverInsight’s review and comment at least thirty (30) days prior to the submission of such proposed filings and correspondence. VistaGen shall confer with EverInsight and consider in good faith EverInsight’s comments prior to submitting such filings and correspondence, provided that EverInsight provides such comments within fifteen (15) days (or a shorter period reasonably designated by VistaGen if fifteen (15) days is not practicable given the filing deadline) of receiving the draft filings and correspondence from VistaGen. VistaGen shall also keep EverInsight informed as to the payment schedule for patent maintenance fee for the Licensed Patents and Joint Patents. VistaGen shall be responsible for the costs and expenses incurred by VistaGen for the preparation, filing, prosecution and maintenance of the Licensed Patents and Joint Patents both in and outside the Territory. For the avoidance of doubt, VistaGen shall be responsible for all costs incurred prior to the Effective Date with respect to the prosecution and maintenance of any Licensed Patents. If EverInsight reasonably determines that a Licensed Patent added after the Effective Date (other than Patent Rights added by an In-License Agreement that EverInsight has accepted pursuant to Section 2.4(b)(1) (In-License Agreements)) or Joint Patent that EverInsight subsequently determines is of low value to EverInsight, then EverInsight has the right upon at least sixty (60) days’ prior written notice to remove such Licensed Patent or Joint Patent from the Licensed Technology hereunder, in which case, following delivery of such notice to VistaGen, (1) the license of Licensed Technology to EverInsight under Section 2.1 (License to EverInsight) as to such Licensed Patent or Joint Patent shall be terminated; (2) the claims of such Licensed Patent or Joint Patent, as the case may be, shall be excluded from Valid Claim; and (3) if requested by VistaGen, EverInsight shall assign, and shall cause its Affiliates and its and their (sub)licensees and Sublicensees to so assign, to VistaGen, without additional compensation, EverInsight’s right, title and interest in and to the relevant Joint Patent (provided that EverInsight shall retain a non-exclusive, fully paid, royalty free, sublicenseable (through multiple tiers), perpetual and irrevocable license and right under the Joint Patent assigned to VistaGen).   (b)             In the event that VistaGen desires to abandon or cease prosecution or maintenance of any Licensed Patent in the Territory (or any jurisdiction therein) or any Joint Patent anywhere in the world, VistaGen shall provide reasonable prior written notice to EverInsight of such intention to abandon (which notice shall, to the extent possible, be given no later than thirty (30) days prior to the next deadline for any action that must be taken with respect to any such Patent in the relevant patent office). In such case, upon EverInsight’s written election provided no later than twenty (20) days after such notice from VistaGen, EverInsight shall have the right to assume prosecution and maintenance of such Licensed Patent or Joint Patent at EverInsight’s sole cost and expense. If EverInsight does not provide such election within twenty (20) days after such notice from VistaGen, VistaGen may, in its sole discretion, abandon or cease prosecution and maintenance of such Patent in the Territory (or the relevant jurisdiction).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -29-     (c)             EverInsight shall have the sole right, but not the obligation, to control the preparation, filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all EverInsight Patents throughout the world, at EverInsight’s own cost and expense.   9.3             Cooperation of the Parties. Each Party agrees to cooperate fully in the preparation, filing, prosecution and maintenance of Patents under Section 9.2 (Patent Prosecution and Maintenance), at its own cost. Such cooperation includes: (a) executing all papers and instruments, or requiring its employees or contractors, to execute such papers and instruments, so as enable the applicable Party to apply for and to prosecute patent applications in any country as permitted by Section 9.2 (Patent Prosecution and Maintenance); and (b) promptly informing the other Party of any matters coming to such Party’s attention that may affect the preparation, filing, prosecution or maintenance of any such patent applications.   9.4             Infringement by Third Parties.   (a)             Notice. In the event that either VistaGen or EverInsight becomes aware of any infringement or threatened infringement by a Third Party of any Licensed Patent or Joint Patent in and/or outside the Territory, which infringing activity involves the using, making, importing, offering for sale and/or selling of a Licensed Product or any product that falls within the scope of the Licensed Patents (regardless of whether or not EverInsight and/or VistaGen is currently Developing using, making, importing, offering for sale, selling, and/or otherwise Commercializing the same Licensed Product), or the submission to a Party or a Regulatory Authority in and/or outside the Territory of an application for a product referencing a Licensed Product, or any declaratory judgment or equivalent action challenging any Licensed Patent or Joint Patent in and/or inside the Territory in connection with any such infringement (each, a “Product Infringement”), it will promptly notify the other Party in writing to that effect. Any such notice shall include evidence to support an allegation of infringement or threatened infringement, or declaratory judgment or equivalent action, by such Third Party.   (b)             Enforcement of Licensed Patents and Joint Patents. To the extent permitted by the Pherin License, EverInsight shall have the first right, as between VistaGen and EverInsight, but not the obligation, to bring an appropriate suit or take other action against any Person or entity engaged in, or to defend against, such Product Infringement in the Territory of any Licensed Patent or Joint Patent, at its own expense and by counsel of its own choice. VistaGen shall have the right, at its own expense, to be represented in any such action in the Territory by counsel of its own choice, and EverInsight and its counsel will reasonably cooperate with VistaGen and its counsel in strategizing, preparing and prosecuting any such action or proceeding. If EverInsight fails to bring an action or proceeding in the Territory with respect to such Product Infringement of any Licensed Patent or Joint Patent within (A) ninety (90) days following the notice of alleged infringement or declaratory judgment or (B) sixty (60) days before the time limit, if any, set forth in the Applicable Laws for the filing of such actions, whichever comes first, VistaGen shall have the right, but not the obligation, to bring and control any such action in the Territory at its own expense and by counsel of its own choice, and EverInsight shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Except as otherwise agreed by the Parties as part of a cost-sharing arrangement, any recovery or damages realized as a result of such action or proceeding with respect to Product Infringement of any Licensed Patent or Joint Patent, or settlement of the same, shall be used (A) first, to reimburse the Parties’ documented out-of-pocket legal expenses relating to the action or proceeding; and (B) any remainder after such reimbursement is made shall be retained by the enforcing Party, provided, that if EverInsight is the enforcing Party, then to the extent that any award or settlement (whether by judgment or otherwise) with respect to any Licensed Patent or Joint Patent is attributable to loss of sales or profits with respect to a Licensed Product in the Licensed Field in the Territory, such amounts (except punitive damages) that may be recovered or realized by EverInsight after reimbursement of enforcement cost shall be considered Net Sales and subject to the royalty obligations under Section 8.4 (Royalty Payments) and the commercial Milestone Payment obligations under Section 8.3 (Commercial Milestones) (provided that such amount shall be evenly spread (on Calendar Quarterly basis) over the time period during which the lost sales or profits occurred for the purpose of determine aggregate annual Net Sales, royalty tiers and achievement of commercial milestones). Notwithstanding anything to the contrary in this Article 9, in the event that patent enforcement or patent defense litigation regarding the Licensed Patents occurs in multiple countries, within or outside the Territory, then VistaGen shall have the first right but not the obligation to bring an appropriate suit or take other appropriate action.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -30-     (c)             Cooperation. In the event a Party brings an action in accordance with this Section 9.4 (Infringement by Third Parties), the other Party shall cooperate fully at its own expense, including, if required to bring such action, and providing access to relevant documents and other evidence including, without limitation, making its employees available at reasonable business hours to the Party’s counsel for all pre-trial and trial proceedings, as well as the furnishing of a power of attorney or being named as a party to such action as may reasonably be necessary.   (d)             Other Infringement. VistaGen shall have the sole right, but not the obligation, to bring and control, at its own cost and expense, any legal action in connection with any Product Infringement of any Licensed Patent or Joint Patent outside the Territory and any legal action in connection with any infringement of any Licensed Patent that is not a Product Infringement; provided, however, that such legal action is not combined with a legal action involving a Product Infringement. The Parties shall jointly control any legal action in connection with any infringement of any Joint Patent anywhere in the world that is not a Product Infringement and is not combined with a Product Infringement legal action. Any recovery or damages realized as a result of such action or proceeding with respect to Product Infringement of any Licensed Patent or Joint Patent shall be used (A) first, but only if a Joint Patent was the subject of such legal action, to reimburse the Parties’ documented out-of-pocket legal expenses relating to such action or proceeding; and (B) any remainder after such reimbursement, if applicable, shall be retained by the Party initiating such action or proceeding (or, in the case of Joint Patent, shared by the Parties equally).   (e)             Effect of Pherin License. The Parties acknowledge that provisions of the Pherin License may affect the standing and ability of a Party to bring and control infringement litigation, notwithstanding the contemplated allocation of litigation-related enforcement rights as between the Parties in this Agreement.   9.5             Infringement Claims by Third Parties. If the Exploitation of a Licensed Product in the Licensed Field in the Territory pursuant to this Agreement results in, or is reasonably expected to result in, any claim, suit or proceeding by a Third Party against EverInsight or any of its Affiliates or Sublicensees alleging infringement by EverInsight or any of its Affiliates or its or their Sublicensees, distributors or customers (a “Third Party Infringement Claim”), including any defense or counterclaim in connection with a Product Infringement action initiated pursuant to Section 9.4(b) (Enforcement of Licensed Patents and Joint Patents), the Party first becoming aware of such alleged infringement shall promptly notify the other Party thereof in writing. As between the Parties, subject to ARTICLE 13 (Indemnification; Liability): (a) VistaGen shall be responsible for defending any such claim, suit or proceeding at its sole cost and expense, using counsel of VistaGen’s choice; (b) EverInsight may participate in any such claim, suit or proceeding with counsel of its choice at its sole cost and expense; provided that VistaGen shall retain the right to control such claim, suit or proceeding; (c)EverInsight shall, and shall cause its Affiliates to, assist and co-operate with VistaGen, as VistaGen may reasonably request from time to time, in connection with its activities set forth in this Section 9.5 (Infringement Claims by Third Parties), including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that VistaGen shall reimburse EverInsight for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith; (d) VistaGen shall keep EverInsight reasonably informed of all material developments in connection with any such claim, suit or proceeding; (e) VistaGen agrees to provide EverInsight with copies of all material pleadings filed in such action and to allow EverInsight reasonable opportunity to participate in the defense of the Claims; and (f) any damages, or awards, including royalties, incurred or awarded in connection with any Third Party Infringement Claim defended under this Section 9.5 (Infringement Claims by Third Parties) shall be borne by VistaGen, and VistaGen shall indemnify and hold EverInsight Indemnitee harmless from such Third Party Infringement Claim pursuant Section 13.1(d).     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -31-     9.6             Invalidity or Unenforceability Defenses or Actions. Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of invalidity or unenforceability of any of the Licensed Patents, Joint Patents or EverInsight Patents worldwide, by a Third Party and of which such Party becomes aware. As between the Parties: (a) VistaGen and EverInsight shall coordinate with each other to defend and control the defense of the validity and enforceability of any Joint Patents in the Territory and share the cost and expense thereof; (b) VistaGen shall have the first right, but not the obligation, to defend and control the defense of the validity and enforceability of any Licensed Patents, at its sole cost and expense, using counsel of VistaGen’s choice; (c) EverInsight shall have the first right, but not the obligation, to defend and control the defense of the validity and enforceability of any EverInsight Patents, at its sole cost and expense, using counsel of EverInsight’s choice; provided however that, notwithstanding the foregoing, Section 9.4 shall control with respect to any such claim that is a Product Infringement or is a counter claim in an enforcement action against a Project Infringement. For purposes of this Section 9.6 (Invalidity or Unenforceability Defenses or Actions), the Party defending and controlling the defense of the validity and enforceability pursuant to the foregoing sentence with respect to a Patent shall be the “Controlling Party”. With respect to any such claim, suit or proceeding in the Territory under this Section 9.6 (Invalidity or Unenforceability Defenses or Actions), the non-Controlling Party may participate in such claim, suit or proceeding with counsel of its choice at its sole cost and expense; provided that the Controlling Party shall retain control of the defense in such claim, suit or proceeding. If the Controlling Party elects not to defend the applicable Patents in a suit, then the Controlling Party shall notify the non-Controlling Party of such election at least sixty (60) days before the time limit, if any, set forth in Applicable Laws for defending such actions, with the proviso that if the Controlling Party is VistaGen, then, to the extent permitted under the Pherin License, EverInsight shall have the right, but not the obligation, for any such Invalidity or Unenforceability Defenses or Actions, to assume control of the defense of any such claim, suit or proceeding at its sole cost and expense. The non-Controlling Party in such an action shall, and shall cause its Affiliates to, assist and co-operate with the Controlling Party, as such Controlling Party may reasonably request from time to time. in connection with its activities set forth in this Section 9.6 (Invalidity or Unenforceability Defenses or Actions), including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that the Controlling Party shall reimburse the non-Controlling Party for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith. In connection with any activities with respect to a defense, claim or counterclaim relating to the Licensed Patents, EverInsight Patents or Joint Patents licensed under Section 2.1 (License to EverInsight) or Section 2.2 (License to VistaGen), the Controlling Party shall (i) consult with the non-Controlling Party as to the strategy for such activities, (ii) consider in good faith any comments from the non-Controlling Party and (iii) keep the non-Controlling Party reasonably informed of any material steps taken and provide copies of all material documents filed, in connection with such defense, claim or counterclaim.   9.7             Consent for Settlement. Neither Party shall unilaterally enter into any settlement or compromise of any action or proceeding under this ARTICLE 9 (Intellectual Property Rights) that would in any manner alter, diminish, or be in derogation of the other Party’s rights under this Agreement or otherwise without the prior written consent of such other Party, which shall not be unreasonably withheld, conditioned or delayed.   9.8             Common Ownership under Joint Research Agreement. Notwithstanding anything to the contrary in this ARTICLE 9, no Party shall have the right to make an election under 35 U.S.C. 102(c) when exercising its rights under this ARTICLE 9 without the prior written consent of the other Party. With respect to any such permitted election, the Parties shall co-ordinate their activities with respect to any submissions, filings or other activities in support thereof. The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in 35 U.S.C. 100(h).   9.9             Patent Extensions. VistaGen and EverInsight shall jointly, following consultation with each other, have decision making authority regarding, and they shall cooperate with each other, in obtaining, patent term restoration, supplemental protection certificates or their equivalents, and patent term extensions with respect to the Licensed Patents, Joint Patents, and EverInsight Patents in the Territory where applicable. If mutually agreed, EverInsight shall file for such extensions at the Parties’ shared cost and expense. If the Parties cannot agree, the matter will be referred to the JSC for decision pursuant to Section 3.3 (JSC Decision Making).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -32-     9.10             Trademarks. VistaGen and EverInsight shall provide to the other Party prompt written notice of any actual or threatened infringement of the Product Trademarks or Licensed Trademarks in the Territory and of any actual or threatened Claim that the use of the Product Trademarks or Licensed Trademarks in the Territory violates the rights of any Third Party, in each case, of which such Party becomes aware. EverInsight shall have the right to select and register, and shall own and be responsible for, at its expense, all Product Trademarks, trade names, branding or logos related to the Compound or Licensed Product in the Licensed Field in the Territory. EverInsight shall have the sole right to take such action as EverInsight deems necessary against a Third Party based on any alleged, threatened or actual infringement, dilution, misappropriation or other violation of or unfair trade practices or any other like offense relating to, the Product Trademarks by a Third Party in the Territory at its sole cost and expense and using counsel of its own choice and EverInsight shall retain any damages or other amounts collected in connection therewith.   9.11             Licensed Trademarks. If EverInsight is lawfully required by any Regulatory Authority or otherwise desires to use any of the Licensed Trademarks or any other Trademark used by VistaGen (either in connection with or in lieu of Product Trademarks selected by EverInsight) to market, promote, distribute and/or sell any Licensed Product in the Licensed Field outside the Territory for the purpose of Commercialization of the relevant Licensed Product in a jurisdiction in the Territory, EverInsight shall promptly notify VistaGen, and VistaGen shall immediately grant EverInsight an exclusive, fully-paid, royalty-free and sublicensable license to use such Licensed Trademark or such other Trademark solely in connection with the Commercialization of the relevant Licensed Product in the Licensed Field in such jurisdiction in the Territory; provided that any such license shall automatically terminate upon the expiration or termination of this Agreement with respect to such Licensed Product in such jurisdiction.   ARTICLE 10 CONFIDENTIALITY; PUBLICATION   10.1             Duty of Confidence. Subject to the other provisions of this ARTICLE 10 (Confidentiality; Publication):   (a)             all Confidential Information disclosed by a Party (the “Disclosing Party”) or its Affiliates under this Agreement will be maintained in confidence and otherwise safeguarded by the recipient Party (the “Receiving Party”) and its Affiliates using at least the same standard of care as the Receiving Party uses to protect its own proprietary or Confidential Information (but in no event less than reasonable care);   (b)             the Receiving Party, its Affiliates and Representatives may only use any such Confidential Information for the purposes of performing its obligations or exercising its rights under this Agreement; and   (c)             the Receiving Party may disclose Confidential Information of the Disclosing Party only to: (i) the Receiving Party’s Affiliates; and (ii) employees, directors, agents, contractors, Subcontractors, consultants and advisers of the Receiving Party and its Affiliates and, in the case of EverInsight as the Receiving Party, its Sublicensees, in each case to the extent reasonably necessary for the purposes of, and for those matters undertaken pursuant to, this Agreement (collectively, the “Representatives”); provided, that such Representatives are bound to maintain the confidentiality, and not to make any unauthorized use, of the Confidential Information in a manner consistent with this ARTICLE 10 (Confidentiality; Publication).   10.2             Exceptions. The foregoing obligations as to particular Confidential Information of a Disclosing Party shall not apply to the extent that the Receiving Party can demonstrate by competent evidence that such Confidential Information:   (a)             is known by the Receiving Party at the time of its receipt, and not through a prior disclosure by the Disclosing Party, as demonstrated by documentation or other competent proof of the Receiving Party, but excluding Joint Inventions or the terms of this Agreement;   (b)             is in the public domain by use and/or publication before its receipt from the Disclosing Party, or thereafter enters the public domain through no fault of, or breach of this Agreement by, the Receiving Party;       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -33-     (c)             is subsequently disclosed to the Receiving Party on a non-confidential basis by a Third Party who, to the Receiving Party’s knowledge after reasonable inquiry, may lawfully do so and is not under an obligation of confidentiality to the Disclosing Party; or   (d)             is developed by the Receiving Party independently and without use of or reference to any Confidential Information disclosed to, or materials provided to, it by or on behalf of the Disclosing Party, as shown by contemporaneous written documents of the Receiving Party.   10.3             Authorized Disclosures. Notwithstanding the obligations set forth in Section 10.1 (Duty of Confidence), the Receiving Party may disclose Confidential Information of the Disclosing Party and the terms of this Agreement to the extent such disclosure is reasonably necessary for such Disclosing Party to perform its obligations or exercise its rights under this Agreement, in the following instances:   (a)             filing or prosecuting of Patents as permitted by this Agreement;   (b)             enforcing the Receiving Party’s rights under this Agreement or performing the Receiving Party’s obligations under this Agreement;   (c)             in Regulatory Filings for Licensed Product that such Party has the right to file under this Agreement;   (d)             prosecuting or defending litigation as permitted by this Agreement;   (e)             to the Receiving Party’s Representatives and actual or potential Sublicensees (in the case of EverInsight), in each case, who have a need to know such Confidential Information in order for the Receiving Party to exercise its rights or fulfill its obligations under this Agreement; provided, in each case, that any such Person agrees to be bound by terms of confidentiality and non-use (or, in the case of the Receiving Party’s attorneys and independent accountants, such Person is obligated by applicable professional or ethical obligations) at least as restrictive as those set forth in this ARTICLE 10 (Confidentiality; Publication);   (f)             to actual or potential investors, investment bankers, lenders, other financing sources or acquirers (and attorneys and independent accountants thereof) in connection with potential investment, acquisition, collaboration, merger, public offering, due diligence or similar investigations by such Third Parties or in confidential financing documents; provided, in each case, that any such Third Party agrees to be bound by terms of confidentiality and non-use (or, in the case of the Receiving Party’s attorneys and independent accountants, such Third Party is obligated by applicable professional or ethical obligations) that are no less stringent than those contained in this Agreement (except to the extent that a shorter confidentiality period is customary in the industry); and   (g)             such disclosure is required by court order, judicial or administrative process or Applicable Laws; provided that in such event the Receiving Party shall promptly inform the Disclosing Party of such required disclosure and provide the Disclosing Party an opportunity to challenge or limit the disclosure obligations. Confidential Information that is disclosed as required by court order, judicial or administrative process or Applicable Laws shall remain otherwise subject to the confidentiality and non-use provisions of this ARTICLE 10 (Confidentiality; Publication), and the Receiving Party shall take all steps reasonably necessary, including seeking of confidential treatment or a protective order, to ensure the continued confidential treatment of such Confidential Information.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -34-     10.4             Publication. Prior to publishing or presenting the results of any studies carried out under this Agreement or otherwise related to the Compound or Licensed Product, the publishing or presenting Party shall submit the draft of the publication or presentation to the other Party no later than forty-five (45) calendar days prior to the planned submission for publication or presentation for the other Party’s review and comment. The publishing or presenting Party shall: (a) consider in good faith any comments thereto provided by the other Party within such review period; and (b) remove any Confidential Information of the other Party if requested by the other Party. The other Party shall be deemed to have consented to such publication or presentation if it has not sent any response to the publishing or presenting Party’s request within thirty (30) calendar days of receipt of the draft publication or presentation from the publishing or presenting Party. The other Party may reasonably request a reasonable delay in publication or presentation in order to protect patentable information. If the other Party reasonably requests a delay, then the publishing or presenting Party shall, and shall ensure that its Affiliate(s) or the Sublicensee(s) shall, delay submission or presentation for a period of sixty (60) calendar days (or such shorter period as may be mutually agreed by the Parties) to enable the other Party to file patent applications protecting the other Party’s rights in such information.   10.5             Publicity/Use of Names. The Parties intend to agree upon the content of one (1) or more press releases, the release of which the Parties shall coordinate in order to accomplish such release promptly upon execution of this Agreement. Other than as set forth in the prior sentence, no other disclosure of the existence, or the terms, of this Agreement may be made by either Party or its Affiliates, and neither Party shall use the name, trademark, trade name or logo of the other Party, its Affiliates or their respective employee(s) in any publicity, promotion, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by Applicable Laws. Notwithstanding the above, each Party and its Affiliates may disclose on its website, in news releases, its promotional materials and other disclosures relating to this Agreement that the other Party is a development and commercialization partner of such Party for the Licensed Product in the Territory and may use the other Party’s name and logo in conjunction with such disclosure. Notwithstanding the foregoing:   (a)             A Party may disclose this Agreement and its terms, and material developments or material information generated under this Agreement, in news releases and securities filings with the U.S. Securities and Exchange Commission (“SEC”) (or equivalent foreign agency) to the extent required by Applicable Laws after complying with the procedure set forth in this Section 10.5 (Publicity/Use of Names). In such event, the Party seeking to make such disclosure will prepare a draft of such disclosure together with, if applicable, a confidential treatment request to request confidential treatment for this Agreement and proposed redacted version of this Agreement, and the other Party agrees to promptly (and in any event, no less than three (3) Business Days after receipt of such request for disclosure required for 8-K and no less than five (5) Business Days for other disclosure, including, if applicable, proposed redactions) give its input in a reasonable manner in order to allow the Party seeking disclosure to file its request within the time lines prescribed by applicable SEC regulations. The Party seeking such disclosure shall exercise Commercially Reasonable Efforts to obtain confidential treatment of this Agreement from the SEC as represented by the redacted version reviewed and agreed upon in good faith by the other Party.   (b)             Further, each Party acknowledges that the other Party may be legally required, or may be required by the listing rules of any exchange on which the other Party’s or its Affiliate’s securities are traded or advised by its counsel, to make public disclosures (including in filings with the SEC or other agency) of certain material developments or material information generated under this Agreement and agrees that each Party may make such disclosures as required by law, listing rules or advice; provided that the Party seeking such disclosure shall provide the other Party with a copy of the proposed text of such disclosure sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment thereon.   (c)             If either Party desires to issue a press release or make a public announcement concerning the material terms of this Agreement or the Development, Commercialization or Exploitation of the Compound or the Licensed Product under this Agreement, such as the achievement of Regulatory Approvals of the Licensed Product or data from a clinical trial, such Party shall provide the other Party with the proposed text of such announcement for prior review and, except to the extent such press release or public announcement is permitted by subsection (a) or (b) above, approval by such other Party.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -35-     (d)             The Parties agree that after a public disclosure has been made or a press release or other public announcement has been issued in compliance with subsection (a), (b) or (c) hereof, each Party may make subsequent public disclosures or issue press releases or other public announcements disclosing the same content without having to obtain the other Party’s prior consent and approval.   10.6             Reporting of Financial Information. From and after the Effective Date, to the extent required by the SEC (or equivalent foreign agency) in connection with EverInsight or an Affiliate of EverInsight registering securities in a public offering, VistaGen shall (a) cooperate with EverInsight or its Affiliates and their respective accountants and auditors by providing copies of books, and records related to the Licensed Product as EverInsight may reasonably request in connection with the preparation by EverInsight or its Affiliates of historical and pro forma financial statements related to the Licensed Product as may be required to be included in any filing made by EverInsight or any of its Affiliates under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder, including Regulation S-X (or equivalent foreign laws and regulations) and (b) without limiting the foregoing, shall provide EverInsight with such information as is required for EverInsight or its Affiliates to prepare audited “carve out” financial statements related to the Licensed Product, for the three (3) Calendar Years prior to the Effective Date (or such shorter period as agreed to by EverInsight) and information requested by EverInsight and reasonably necessary to prepare any applicable pro forma financial information required to be filed by EverInsight with the SEC (or equivalent foreign agency). EverInsight may also derive such “carve out” financial statements from VistaGen’s historical financial statements and accurately present in all material respects the financial position of the Licensed Product in the Licensed Field in the Territory as of the dates thereof. EverInsight shall (i) submit to VistaGen any proposed filing containing or incorporating by reference any financial statements provided to EverInsight under this Section 10.6 (Reporting of Financial Information) as far in advance as reasonably practicable (and in no event, unless inconsistent with Applicable Laws, less than fifteen (15) days prior to the anticipated date of filing) so as to provide VistaGen a reasonable opportunity to comment thereon and (ii) in good faith consider incorporating such comments. All information of VistaGen obtained by or on behalf of EverInsight under this Section 10.6 (Reporting of Financial Information) shall be deemed Confidential Information of VistaGen.   10.7             Privileged Communications. In furtherance of this Agreement, it is expected that the Parties may, from time to time, disclose to one another privileged communications with counsel, including opinions, memoranda, letters and other written, electronic and verbal communications. Such disclosures are made with the understanding that they shall remain confidential in accordance with this ARTICLE 10 (Confidentiality; Publication), that they will not be deemed to waive any applicable attorney-client or attorney work product or other privilege and that they are made in connection with the shared community of legal interests existing between VistaGen and EverInsight, including the community of legal interests in avoiding infringement of any valid, enforceable patents of Third Parties and maintaining the validity of the Licensed Patents, EverInsight Patents and Joint Patents. In the event of any litigation (or potential litigation) with a Third Party related to this Agreement or the subject matter hereof, the Parties shall, upon either Party’s request, enter into a reasonable and customary joint defense or common interest agreement. In any event, each Party shall consult in a timely manner with the other Party before engaging in any conduct (e.g., producing Information or documents) in connection with litigation or other proceedings that could conceivably implicate privileges maintained by the other Party. Notwithstanding anything contained in this Section 10.7 (Privileged Communications), nothing in this Agreement shall prejudice a Party’s ability to take discovery of the other Party in disputes between them relating to the Agreement and no information otherwise admissible or discoverable by a Party shall become inadmissible or immune from discovery solely by this Section 10.7 (Privileged Communications).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -36-     ARTICLE 11 TERM AND TERMINATION   11.1             Term. Unless earlier terminated as permitted by this Agreement, the term of this Agreement will commence upon the Effective Date and continue in full force and effect, on a jurisdiction-by-jurisdiction and Licensed Product-by-Licensed Product basis, until expiration of the Royalty Term for such Licensed Product in such jurisdiction the Territory (the “Term”). Following the expiration (but not the earlier termination) of the Royalty Term for a Licensed Product in a jurisdiction in the Territory, the grants in Section 2.1 (Licenses to EverInsight) shall continue and become exclusive, fully-paid, royalty-free, and irrevocable for such Licensed Product (existing at the time of such expiration) in such jurisdiction. For clarity, (a) upon the expiration (but not the earlier termination) of the Term, the grants in Section 2.1 (Licenses to EverInsight) shall become exclusive, fully-paid, royalty-free, and irrevocable in their entirety solely as to the Licensed Product in the Territory at the time of such expiration and (b) upon the expiration (but not the earlier termination) of the Term, the grant in Section 2.2 (License to VistaGen) shall become an exclusive, perpetual, fully- paid, royalty-free and irrevocable license under the EverInsight Technology to Exploit the Licensed Product (existing at the time of such expiration) in the Licensed Field outside the Territory, in each case with the right to grant sublicenses.   11.2             Termination.   (a)             Automatic Termination for Nonpayment of Upfront Payment. If EverInsight fails to pay VistaGen the upfront payment set forth in Section 8.1 (Upfront Payment) within thirty (30) Business Days after the Effective Date; then, in any such case, this Agreement will automatically and immediately terminate.   (b)             Termination by EverInsight for Convenience. At any time, EverInsight may terminate this Agreement (either in its entirety or on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis), at its sole discretion and for any reason or no reason, by providing written notice of termination to VistaGen, which notice includes an effective date of termination at least [*****] after the date of the notice.   (c)             Termination for Cause. If either VistaGen or EverInsight believes that the other Party is in material breach of its obligations hereunder, then the non-breaching Party may deliver notice of such breach to the other Party. The allegedly breaching Party shall have (i) [*****] Business Days in the case of a payment breach and or (ii) [*****] Business Days in the case of a non-payment breach, to cure such breach from the receipt of the notice. If the allegedly breaching Party fails to cure that breach within the applicable period set forth above, or has not undertaken reasonable steps to cure the breach if a complete cure is not reasonably to be expected within such period, then the Party originally delivering the notice of breach may terminate this Agreement on written notice of termination. Any right to terminate this Agreement under this Section 11.2(c) (Termination for Cause) shall be stayed and the applicable cure period tolled in the event that, during such cure period, the Party alleged to have been in material breach shall have initiated dispute resolution in accordance with Section 14.10 (Dispute Resolution) with respect to the alleged breach, which stay and tolling shall continue until such dispute has been resolved in accordance with Section 14.10 (Dispute Resolution). If a Party is determined to be in material breach of this Agreement, the other Party may terminate this Agreement if the breaching Party fails to cure the breach within thirty (30) Business Days after the conclusion of the dispute resolution procedure (and such termination shall then be effective upon written notification from the notifying Party to the breaching Party).   (d)             Termination for Patent Challenge. VistaGen may terminate this Agreement immediately upon prior written notice to EverInsight if EverInsight or its Affiliates or its or their Sublicensees, individually or in association with any other person or entity, directly or indirectly, commences or participates in a Challenge to the validity or enforceability of any Licensed Patents, unless EverInsight, such Affiliate or Sublicensee dismisses or withdraws such Challenge within [*****] days, or in the case of a Challenge by a Sublicensee, EverInsight terminates the sublicense agreement with such Sublicensee within [*****] days. EverInsight may terminate the license granted by EverInsight to VistaGen this Agreement (but retain the license granted by VistaGen to EverInsight hereunder) immediately upon prior written notice to VistaGen if VistaGen or its Affiliates or its or their Sublicensees, individually or in association with any other person or entity, directly or indirectly, commences or participates in a Challenge to the validity or enforceability of any EverInsight Patents, unless VistaGen, such Affiliate or Sublicensee dismisses or withdraws such Challenge within [*****] days, or in the case of a Challenge by a Sublicensee, VistaGen terminates the sublicense agreement with such Sublicensee within [*****] days.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -37-     (e)             Termination for Bankruptcy. This Agreement may be terminated at any time during the Term by either Party upon the other Party’s filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided that in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within [*****] days after the filing thereof.   11.3             Effect of Termination. Upon termination of this Agreement by either Party, the following consequences shall apply and shall be effective as of the effective date of such termination (if this Agreement is terminated on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, then this Section 11.3 shall only apply to the terminated Licensed Product in the terminated jurisdiction):   (a)             EverInsight’s license under Section 2.1 (License to EverInsight) shall terminate and all milestone and any other payments accruing prior to the effective date of termination will be paid by EverInsight on or before the termination date and all reports and accountings that are due prior to the effective date of termination shall be submitted by EverInsight on or before the termination date.   (b)             If this Agreement is terminated in its entirety by VistaGen pursuant to Section 11.2(c) (Termination for Cause), 11.2(d) (Termination for Patent Challenge), or 11.2(e) (Termination for Bankruptcy), or if this Agreement is terminated by EverInsight in its entirety pursuant to Section 11.2(b) (Termination by EverInsight for Convenience), then EverInsight hereby grants to VistaGen, effective only upon such termination, an exclusive (even as to EverInsight), royalty-free, fully-paid, perpetual and irrevocable license, with the right to grant sublicenses through multiple tiers, under the EverInsight Technology, EverInsight Development Data and EverInsight Regulatory Documentation, to Develop, make, have made, use, import, offer for sale, sell and otherwise Commercialize or Exploit the Compound and any product containing the Compound anywhere in the world in all fields of use. During a reasonable period of time (but no more than six (6) months) after termination, EverInsight shall reasonably cooperate with VistaGen to facility the transfer of the Development and regulatory activities for the Compound and Licensed Product to VistaGen.   (c)             If this Agreement is terminated by EverInsight pursuant to Section 11.2(c) (Termination for Cause), or 11.2(e) (Termination for Bankruptcy), then VistaGen may request, within [*****] days of such termination, that EverInsight enter into good faith negotiations for no more than [*****] days concerning the terms of an agreement with EverInsight granting to VistaGen an exclusive (even as to EverInsight) license under the EverInsight Technology, EverInsight Development Data and EverInsight Regulatory Documentation. If no agreement is reached, then the license to VistaGen under Section 2.2 (License to VistaGen) shall terminate.   (d)             If this Agreement is terminated in its entirety, VistaGen shall be solely responsible for all future worldwide Development, Manufacture and Commercialization of the Compound and Licensed Product in the Licensed Field, at its sole cost and expense.   (e)             If this Agreement is terminated in its entirety, each Party shall return to the other Party or destroy, at the other Party’s election, all Confidential Information of the other Party, including all copies thereof and all materials, substances and compositions delivered or provided by or on behalf of the other Party; except that (i) each Party may retain one copy of the other Party’s Confidential Information for legal archival purpose, and neither Party shall be required to delete or destroy any electronic back-up tapes or other electronic back-up files that have been created solely by automatic or routine archiving and back-up procedures; and (ii) if the Parties reach agreement with respect to a license grant by EverInsight to VistaGen under clause (c) or VistaGen has license rights under clause (b), then VistaGen shall not be required to return or destroy EverInsight’s Confidential Information to the extent VistaGen has the right to use such Confidential Information solely as necessary to practice such license.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -38-     (f)             If VistaGen automatically has license rights under clause 11.3(b) or the Parties reach agreement with respect to a license grant by EverInsight to VistaGen under clause 11.3(c) then:   (i)             EverInsight shall deliver to VistaGen all Regulatory Filings and Regulatory Approvals for the Compound and any Licensed Product, all EverInsight Development Data and all EverInsight Know-How.   (ii)             EverInsight shall (1) disclose to VistaGen all EverInsight Know-How, EverInsight Development Data and all Joint Inventions to the extent not already known to VistaGen, which may be necessary or reasonably useful for VistaGen to continue to Develop, Manufacture and Commercialize the Compound and Licensed Product in the Licensed Field; and (2), at VistaGen’s request, provide reasonable technical assistance and transfer all EverInsight Know-How, EverInsight Development Data and Joint Inventions necessary to Manufacture the Compound or Licensed Product to VistaGen or its designee; provided that VistaGen shall reimburse EverInsight for the reasonable cost and expense of such technical assistance.   (iii)             EverInsight shall, at VistaGen’s request and election, introduce VistaGen to EverInsight’s Third Party providers of clinical research, manufacturing and/or distribution services and assign any contracts with such entities to VistaGen to the extent such contracts (or portions thereof, such as a work order under a master services agreement) relate solely to the Licensed Product and are assignable to VistaGen.   (iv)             EverInsight shall transfer to VistaGen all units of the Compound and the Licensed Product in its possession, provided that VistaGen shall reimburse EverInsight for the Cost of Goods of such units.   (v)             EverInsight shall, and hereby does, effective on such termination, assign to VistaGen all of EverInsight’s and its Affiliates’ right, title and interest in and to any and all Product Trademarks and other trademarks used by EverInsight and its Affiliates in the Territory in connection with its Development, Manufacture or Commercialization of Licensed Product (excluding any such trademarks that include, in whole or part, any corporate name or logo of EverInsight or its Affiliates), including all goodwill therein, and EverInsight shall promptly take such actions and execute such instruments, assignments and documents as may be necessary to effect, evidence, register and record such assignment.   11.4             Survival. Expiration or termination of this Agreement shall not relieve any Party of any obligation accruing prior to such expiration or termination, nor shall expiration or any termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, at law or in equity, with respect to breach of this Agreement. In addition, the provisions of ARTICLE 1 (Definitions), subclauses (b) through (d) of Section 5.4 (Rights of Reference), Section 8.8 (Taxes), Section 8.9 (Financial Records and Audit), Section 8.10 (Audit Dispute), Section 9.1 (Ownership of Intellectual Property); ARTICLE 10 (Confidentiality; Publicity), Section 11.3 (Effect of Termination), this Section 11.4 (Survival), ARTICLE 13 (Indemnification; Liability), and ARTICLE 14 (General Provisions) hereof shall survive the expiration or termination of this Agreement. In addition, in the event that the this Agreement is terminated by EverInsight pursuant to Section 11.2(c) (Termination for Cause) and, pursuant to Section 11.3 (Effect of Termination), either VistaGen does not timely request that EverInsight enter into good faith negotiations concerning the terms of an agreement with VistaGen granting VistaGen a license under the EverInsight Technology and EverInsight Development Data, or if no agreement is timely reached, then the provisions of Sections 9.2 through 9.9 of ARTICLE 9 (Intellectual Property), solely with respect to Joint Inventions, shall also survive the expiration or termination of this Agreement.   11.5             Termination Not Sole Remedy. Termination is not the sole remedy under this Agreement and, whether or not termination is effected, and notwithstanding anything contained in this Agreement to the contrary, all other remedies will remain available except as agreed to otherwise herein.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -39-     11.6             Alternative Remedy for VistaGen’s Breach. In the event EverInsight would be entitled to terminate this Agreement pursuant Section 11.2(c) for VistaGen’s uncured material breach, but if EverInsight does not desire to exercise such termination right, then, EverInsight may, in its sole discretion and without waiving or releasing any right, claim or remedy for such breach, elect to maintain this Agreement in full force and effect and reduce all future payments due to VistaGen hereunder by [*****].   ARTICLE 12 REPRESENTATIONS AND WARRANTIES   12.1             Representations and Warranties of Each Party. Each Party represents and warrants to each other Parties as of the Effective Date that:   (a)             it has the full right, power and authority to enter into this Agreement, to perform its obligations hereunder;   (b)             this Agreement has been duly executed by it and is legally binding upon it, enforceable in accordance with its terms, and does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it;   (c)             this Agreement is a legal, valid and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);   (d)             it is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations hereunder; and   12.2             Mutual Covenants.   (a)             Employees, Consultants and Contractors. Each Party covenants that it has obtained or will obtain written agreements from each of its employees, consultants and contractors who perform Development activities pursuant to this Agreement, which agreements will obligate such persons to obligations of confidentiality and non-use and to assign Inventions in a manner consistent with the provisions of this Agreement.   (b)             Debarment. Each Party represents, warrants and covenants to the other Parties that it is not debarred or disqualified under the FFDCA, as may be amended, or comparable laws in any country or jurisdiction other than the U.S., and it has not employed or used, does not, and will not during the Term, employ or use the services of any person who is debarred or disqualified, in connection with activities relating to the Compound or any Licensed Product. In the event that any Party becomes aware of the debarment or disqualification or threatened debarment or disqualification of any person providing services to such Party, including the Party itself or its Affiliates, that directly or indirectly relate to activities contemplated by this Agreement, such Party shall immediately notify the other Parties in writing and such Party shall cease employing, contracting with, or retaining any such person to perform any such services.   (c)             Compliance. Each Party covenants as follows:   (1)             In the performance of its obligations under this Agreement, such Party shall comply and shall cause its and its Affiliates’ employees and contractors to comply with all Applicable Laws, including all export control, anti-corruption and anti-bribery laws and regulations, and shall not cause such other Party to be in violation of any Applicable Laws.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -40-     (2)             Such Party and its and its Affiliates’ employees and contractors shall not, in connection with the performance of their respective obligations under this Agreement, directly or indirectly through Third Parties, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value to a Public Official or Entity or other person for purpose of obtaining or retaining business for or with, or directing business to, any person, including, without limitation, either Party. Each Party represents and warrants that as of the Effective Date, such Party, and to its knowledge, its and its Affiliates’ employees and contractors, have not directly or indirectly promised, offered or provided any corrupt payment, gratuity, emolument, bribe, kickback, illicit gift or hospitality or other illegal or unethical benefit to a Public Official or Entity or any other person in connection with the performance of such Party’s obligations under this Agreement, and each Party covenants that it and its Affiliates’ employees and contractors shall not, directly or indirectly, engage in any of the foregoing.   (3)             Each Party shall have the right to suspend or terminate this Agreement in its entirety where there is a credible finding, after a reasonable investigation, that the other Party, in connection with performance of such other Party’s obligations under this Agreement, has materially violated any anti-corruption or anti-bribery laws or regulations.   (4)             Each Party shall not, during the Term, assign, transfer, convey or otherwise encumber its right, title and interest in (A) Licensed Technology, in the case of VistaGen, in a manner that is inconsistent with the exclusive license granted to EverInsight under Section 2.1 (Licenses to EverInsight) or (B) EverInsight Technology, in the case of EverInsight, in a manner that is inconsistent with the exclusive license granted to VistaGen under Section 2.2 (License to VistaGen), in each case without the prior written consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed)   (5)             Each Party shall not grant any right to any Third Party under the (A) Licensed Technology (in the case of VistaGen) that would conflict with the rights granted to EverInsight hereunder, or (B) EverInsight Technology (in the case of EverInsight) that would conflict with the rights granted to VistaGen hereunder.   12.3             Representations and Warranties by VistaGen. VistaGen represents and warrants to EverInsight as of the Effective Date that:   (a)             The patents and patent applications listed on Exhibit A constitute all Licensed Patents existing as of the Effective Date (the “Existing Licensed Patents”);   (b)             Except for [*****], VistaGen is the sole and exclusive owner of all Licensed Technology, free and clear from any mortgages, pledges, liens, security interests, conditional and installment sales agreements, encumbrances, charges or claims of any kind, and has the right to grant the license to EverInsight as purported to be granted under this Agreement;   (c)             The Licensed Technology is complete, accurate, effective and capable of achieving the Development and Manufacturing of the Compound and the Licensed Product. The Parties hereby irrevocably agree that the Licensed Technology shall be deemed to be complete, accurate, effective and capable of achieving the Development and Manufacturing of the Compound and the Licensed Product (and the foregoing representation and warranty shall be satisfied) if, after the completion of relevant technology transfer, EverInsight (or its contractor) is able to produce the Compound or the Licensed Products (as the case may be) in a manner that (1) complies with the specifications contained in (i) the technical documents VistaGen provided to EverInsight for evaluation and (ii) IND(s) submitted to the applicable Regulatory Authority(ies) and (2) does not infringe or misappropriate any intellectual property of any Third Party.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -41-     (d)             VistaGen has not received any notice from a Third Party that the Development or Manufacture of the Compound or any Licensed Product conducted by or on behalf of VistaGen prior to the Effective Date has infringed any Patents of any Third Party or infringed or misappropriated any other intellectual property of any Third Party. Based on VistaGen’s understanding as of the Effective Date of the Compound and the Licensed Product and their intended use as disclosed to EverInsight as of the Effective Date, the Development, Manufacture, use or sale of any Compound or any Licensed Product pursuant to this Agreement does not and will not, to the knowledge of VistaGen, (y) infringe any Patents of any Third Party or (z) infringe or misappropriate any other intellectual property of any Third Party.   (e)             To the knowledge of VistaGen, the use of Licensed Trademark in connection with Commercialization of the Licensed Product will not violate the rights of any Third Party. No claim or action has been brought or, to VistaGen’s knowledge, threatened in writing, by any Governmental Authority or Third Party (i) that any Licensed Trademark violates the rights of a Third Party or (ii) currently challenging the enforceability or validity of any Licensed Trademark;   (f)             VistaGen has not as of the Effective Date granted any right to any Third Party under the Licensed Technology or Licensed Trademark that would conflict with the rights granted to EverInsight hereunder;   (g)             VistaGen has no knowledge as of the Effective Date of any Third Party that is infringing or misappropriating any of the Licensed Technology or Licensed Trademark;   (h)             no claim or action has been brought or, to VistaGen’s knowledge, threatened in writing by any Third Party involving any Compound, Licensed Product and/or Licensed Technology, including any claim or action alleging that the issued patents in the Licensed Patent Rights are invalid or unenforceable, and any interference, opposition, cancellation or other protest proceeding involving any Licensed Patents anywhere in the world;   (i)             to VistaGen’s knowledge, as of the Effective Date, there is no Know-How owned or controlled by VistaGen that is necessary for the Development of the Compound that is not within the Licensed Know-How; and   (j)             to VistaGen’s knowledge, (x) all development works for the Compound and Licensed Product, including clinical trials, conducted by VistaGen or its Affiliates (including their contractors) prior to the Effective Date have been in compliance in all material respects with all Applicable Laws, and (y) no data or other information generated or otherwise received from such clinical trials conducted up to the Effective Date has, or is reasonably expected to have, any materially negative impact on the Exploitation of any Licensed Product in the Territory.   (k)             To the knowledge of VistaGen, VistaGen has obtained all necessary government approvals required for the grant of the license and the transfer of the Licensed Know-How to EverInsight, including such approvals required by applicable technology export control laws, and VistaGen will do and execute or procure to be done and executed all such further acts, things, agreements and other documents as may be necessary to give effect to the terms of this Agreement, including to comply with the applicable technology import and export laws and regulations in the United States and the Territory;   (l)             Except for the Pherin License, there is no agreement between VistaGen or its Affiliates and any Third Party pursuant to which VistaGen or its Affiliates have obtained any right or license to the Compound, Licensed Product or Licensed Technology. VistaGen has provided EverInsight with a copy of the Pherin License that is complete with regard to the relevant provisions of this Agreement. The Pherin License is in full force and effect. No notice of default or termination has been received or given under the Pherin License. There is no act or omission by VistaGen that would provide a right to terminate the Pherin License;       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -42-     (m)             During the Term of this Agreement, VistaGen shall maintain [*****] each In-License Agreement in full force and effect and shall not terminate, amend, waive or otherwise modify (or consent to any of the foregoing) its rights under [*****] any In-License Agreement in any manner that materially diminishes the rights or licenses granted to EverInsight hereunder, without EverInsight’s express written consent, which shall not be unreasonably withheld, conditioned or delayed, and VistaGen shall provide EverInsight with a copy of all modifications to or amendments thereto, regardless of whether EverInsight’s consent was required with respect thereto. In the event of any notice of breach of [*****] any In-License Agreement by VistaGen, VistaGen shall immediately notify EverInsight in writing, and if VistaGen fails to cure such breach in a timely manner, EverInsight shall have the right, but not the obligation, to cure such breach and to seek reimbursement of or offset any reasonable amount incurred or paid by EverInsight in connection with the cure against amount payable to VistaGen hereunder. In the event of any notice of breach of [*****] any In-License Agreement by the applicable Third Party in a manner that will or is likely to materially affect EverInsight’s rights or obligations under this Agreement, VistaGen shall immediately notify EverInsight in writing and take such actions as reasonably requested by EverInsight to enforce the [*****] In-License Agreement; and   (n)             All information provided by VistaGen to EverInsight for due diligence purposes in relation to this Agreement is complete and accurate in all material respects. Without limiting the foregoing, VistaGen has disclosed or made available to EverInsight for review all material non-clinical and clinical data for the Compound and Licensed Product, and all other material information (including relevant correspondence with the FDA and other Regulatory Authorities) relating to the Compound and Licensed Product, in each case that would be material for EverInsight to assess the safety and efficacy of the Compound and Licensed Product.   12.4             Representations and Warranties by EverInsight. EverInsight represents and warrants to VistaGen as of the Effective Date that:   (a)             EverInsight has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in EverInsight Technology in a manner that is inconsistent with the exclusive license granted to VistaGen under Section 2.2 (License to VistaGen);   (b)             EverInsight has not as of the Effective Date, and will not during the Term, grant any right to any Third Party under the EverInsight Technology that would conflict with the rights granted to VistaGen hereunder;   (c)             EverInsight has no knowledge as of the Effective Date of any Third Party that is infringing or misappropriating any of the EverInsight Technology;   (d)             no claim or action has been brought or, to EverInsight’s knowledge, threatened in writing by any Third Party alleging that the EverInsight Patents are invalid or unenforceable, and no EverInsight Patent is the subject of any interference, opposition, cancellation or other protest proceeding; and   (e)             as of the Effective Date, EverInsight reasonably believes it has or will have the capability and sufficient access to the financial resources necessary to perform its obligations under this Agreement, including without limitation, its obligations to (i) use Commercially Reasonable Efforts to Develop, Exploit, Commercialize and obtain Regulatory Approval for the Compounds and each Licensed Product in the Licensed Field in the Territory and (ii) make the required payments to VistaGen hereunder.   12.5             No Other Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENTS, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -43-     ARTICLE 13 INDEMNIFICATION; LIABILITY   13.1             Indemnification by VistaGen. VistaGen shall indemnify, defend and hold EverInsight, its Affiliates, and their respective officers, directors, agents and employees (“EverInsight Indemnitees”) harmless from and against any Claims against them to the extent arising or resulting from:   (a)             the material breach by VistaGen of this Agreement;   (b)             the gross negligence or willful misconduct on the part of VistaGen or its Affiliates or its or their respective officers, directors, agents or employees in performing its obligations under this Agreement; or   (c)             the Exploitation by VistaGen or any of its Affiliates or its or their sublicensees or its or their distributors or contractors of the Compound or the Licensed Product outside the Territory; or   (d)             any Third Party Infringement Claim that VistaGen is responsible for defending pursuant to Section 9.5;   except, in each case (a), (b) and (c) above, for those Claims for which EverInsight has an obligation to indemnify VistaGen pursuant to Section 13.2 (Indemnification by EverInsight) hereof or, to the extent such Claims result from the material breach by EverInsight of any covenant, representation, warranty or other agreement made by EverInsight in this Agreement or the negligence or willful misconduct of any EverInsight Indemnitee. Notwithstanding the above, VistaGen will have no obligation to defend or indemnify EverInsight or its Affiliates for any claim brought by a shareholder or a class of shareholders of EverInsight or its Affiliates including, but not limited to, securities fraud claims, shareholder direct claims, and shareholder derivative claims, except to the extent resulting from the gross negligence or willful misconduct on the part of VistaGen or any Affiliate.   13.2             Indemnification by EverInsight. EverInsight shall indemnify, defend and hold VistaGen, its Affiliates, and their respective officers, directors, agents and employees (“VistaGen Indemnities”) harmless from and against any Claims arising under or related to this Agreement against them to the extent arising or resulting from:   (a)             the material breach by EverInsight of this Agreement;   (b)             the gross negligence or willful misconduct on the part of EverInsight or its Affiliates or its or their respective officers, directors, agents or employees in performing its obligations under this Agreement; or   (c)             the Exploitation by EverInsight or any of its Affiliates or its or their Sublicensees or its or their distributors or contractors of the Compound or the Licensed Product in the Territory;   except, in each case (a), (b) and (c) above, those Claims for which VistaGen has an obligation to indemnify EverInsight pursuant to Section 13.1 (Indemnification by VistaGen) hereof or, to the extent such Claims result from the material breach by VistaGen of any covenant, representation (other than the representation set forth in Section 12.3(d), warranty or other agreement made by VistaGen in this Agreement or the negligence or willful misconduct of any VistaGen Indemnitee. Notwithstanding the above, EverInsight will have no obligation to defend or indemnify VistaGen or its Affiliates for any claim brought by a shareholder or a class of shareholders of VistaGen or its Affiliates including, but not limited to, securities fraud claims, shareholder direct claims, and shareholder derivative claims, except to the extent resulting from the gross negligence or willful misconduct on the part of EverInsight or any Affiliate.   13.3             Indemnification Procedure.   (a)             Notice of Claim. All indemnification claims in respect of a Party, its Affiliates or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “Indemnified Party”). The Indemnified Party shall give the other Party (the “Indemnifying Party”) a prompt written notice (an “Indemnification Claim Notice”) of any Claims or discovery of fact upon which such Indemnified Party intends to base a request for indemnification under this ARTICLE 13 (Indemnification; Liability) within [*****] days from written receipt of such Claim or discovery of facts that that might give rise to such Claim. Each Indemnification Claim Notice must contain a description of the Claim and the nature and amount of such Claim (to the extent that the nature and amount of such Claim is known at such time).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -44-     (b)             Control of Defense. The Indemnifying Party shall have the right to assume the defense of any Claim by giving written notice to the Indemnified Party within [*****] days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Claim by the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify the Indemnified Party in respect of the Claim, nor shall it constitute a waiver by the Indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defense of a Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Claim any legal counsel selected by the Indemnifying Party; provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). In the event the Indemnifying Party assumes the defense of a Claim, upon the Indemnifying Party’s relevant notice the Indemnified Party shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Claim. Should the Indemnifying Party assume the defense of a Claim, except as provided in Section 13.3(c) (Right to Participate in Defense), the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Claim unless specifically requested and approved in writing by the Indemnifying Party. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all reasonable and verifiable out-of-pocket costs and expenses (including attorneys’ fees and costs of suit) incurred by the Indemnifying Party in accordance with this ARTICLE 13 (Indemnification; Liability) in its defense of the Claim.   (c)             Right to Participate in Defense. Any Indemnified Party shall be entitled to participate in the defense of such Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s sole cost and expense unless (i) the employment thereof has been specifically authorized in writing in advance by the Indemnifying Party (in which case, the defense shall be controlled as provided in Section 13.3(b) (Control of Defense), with such provisions applying mutatis mutandis; (ii) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 13.3(b) (Control of Defense) (in which case the Indemnified Party shall control the defense, with the reasonable out-of-pocket expense with respect thereto borne by the Indemnifying Party); or (iii) the interests of the indemnitee and the Indemnifying Party with respect to such Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under Applicable Laws, ethical rules or equitable principles (in which case, the Indemnified Party shall control its defense, with the reasonable out-of-pocket expense with respect thereto borne by the indemnifying Party).   (d)             Settlement. With respect to any Claims relating solely to the payment of money damages in connection with a Claim that shall not result in the applicable indemnitee(s) becoming subject to injunctive or other relief or otherwise adversely affect the business or interests of the Indemnified Party in any manner and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify the applicable indemnitee hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Claim, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Claims in connection with Claims, where the Indemnifying Party has assumed the defense of the Claim in accordance with Section 13.3(b) (Control of Defense), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Claim; provided, it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). If the Indemnifying Party does not assume and conduct the defense of a Claim as provided above, the Indemnified Party may defend against such Claim; provided, that the Indemnified Party shall not settle any Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -45-     (e)             Cooperation. If the Indemnifying Party chooses to defend or prosecute any Claim, the Indemnified Party shall and shall cause each indemnitee to, cooperate in the defense or prosecution thereof and furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the indemnifying Party in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim and making the Indemnified Party, the indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and the Indemnifying Party shall reimburse the Indemnified Party for all of its, its Affiliates’ and its and their sublicensees’ or their respective directors’, officers’, employees’ and agents’, as applicable, reasonable and verifiable out-of-pocket expenses in connection therewith.   (f)             Expenses. Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party and its Affiliates and its and their sublicensees and their respective directors, officers, employees and agents, as applicable, in connection with any Claim shall be reimbursed on a Calendar Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.   13.4             Mitigation of Loss. Each Indemnified Party will take and will procure that its Affiliates take all such reasonable steps and actions as are reasonably necessary or as the Indemnifying Party may reasonably require in order to mitigate any Claims (or potential losses or damages) under this ARTICLE 13 (Indemnification; Liability). Nothing in this Agreement shall or shall be deemed to relieve any Party of any common law or other duty to mitigate any losses incurred by it.   13.5             Special, Indirect and Other Losses. EXCEPT IN THE EVENT OF A BREACH OF SECTION 2.7 (NON-DIVERSION), SECTION 2.8 (NON-COMPETE) OR ARTICLE 10 (CONFIDENTIALITY; PUBLICATION), NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided, however, that this Section 13.5 shall not be construed to limit either Party’s indemnification obligations under Section 13.1 (Indemnification by VistaGen) or Section 13.2 (Indemnification by EverInsight), as applicable.   13.6             Insurance. Each Party, at its own expense, shall maintain product liability and other appropriate insurance in an amount consistent with sound business practice and reasonable in light of its obligations under this Agreement during the Term. Each Party shall provide a certificate of insurance evidencing such coverage to the other Party upon request.   ARTICLE 14 GENERAL PROVISIONS   14.1             Governing Law. This Agreement shall be governed by and construed in accordance with the law of Hong Kong without reference to its conflicts of laws principles.   14.2             Assignment.   (a)             Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either Party without the prior written consent of the other Party (which consent shall not be unreasonably withheld); provided that either Party may assign or otherwise transfer this Agreement and its rights and obligations hereunder without the other Party’s consent: (a) in connection with the transfer or sale of all or substantially all of the business or assets of such Party to which this Agreement relates to a Third Party, whether by merger, consolidation, divesture, restructure, sale of stock, sale of assets or otherwise; provided that in the event of any such transaction (whether this Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)), intellectual property rights of the acquiring party to such transaction (if other than one of the Parties to this Agreement) and its Affiliates existing prior to the transaction shall not be included in the technology licensed hereunder; or (b) to an Affiliate, provided that the assigning Party shall remain liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate; and provided, further, that in any such case the assigning Party shall provide written notice to the other Party within five (5) calendar days after such assignment or transfer. The rights and obligations of the Parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the Parties, and the name of a Party appearing herein will be deemed to include the name of such Party’s successors and permitted assigns to the extent necessary to carry out the intent of this section. Any assignment not in accordance with this Section 14.2 (Assignment) shall be null and void.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -46-     (b)             The rights to Information, materials and intellectual property, shall, in each of cases (1) and (2) below, be automatically excluded from the rights licensed or granted to the other Party under this Agreement:   (1)             Rights to Information, materials and intellectual property controlled by a Third Party permitted assignee of a Party that immediately prior to such assignment (other than as a result of a license or other grant of rights, covenant or assignment by such Party or its Affiliates to, or for the benefit of, such Third Party); or   (2)             Rights to Information, materials and intellectual property controlled by an Affiliate of a Party that becomes an Affiliate through any Change of Control of such Party that was Controlled by such Affiliate (and not such Party) immediately prior to such Change of Control (other than as a result of a license or other grant of rights, covenant or assignment by such Party or its other Affiliates to, or for the benefit of, such Affiliate).   14.3             Entire Agreement; Modification. This Agreement is both a final expression of the Parties’ agreement and a complete and exclusive statement with respect to all of its terms. This Agreement supersedes all prior and contemporaneous agreements and communications, whether oral, written or otherwise, concerning any and all matters contained herein. No amendment, modification, release or discharge shall be binding on the Parties unless in writing and duly executed by authorized representatives of each of VistaGen and EverInsight; provided that, pursuant to the definition of “Licensed Trademarks” herein, VistaGen may designate in a writing to EverInsight from time to time such other Trademarks, names and logos as VistaGen may reasonably determine. In the event of any inconsistencies between this Agreement and any schedules or other attachments hereto, the terms of this Agreement shall control.   14.4             Relationship among the Parties. The Parties’ relationship with one another, as established by this Agreement, is solely that of independent contractors. This Agreement does not create any partnership, joint venture or similar business relationship between the Parties. Neither Party is a legal representative of the other Party. Neither Party can assume or create any obligation, representation, warranty or guarantee, express or implied, on behalf of the other Party for any purpose whatsoever. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such first Party.   14.5             Non-Waiver. The failure of a Party to insist upon strict performance of any provision of this Agreement or to exercise any right arising out of this Agreement shall neither impair that provision or right nor constitute a waiver of that provision or right, in whole or in part, in that instance or in any other instance. Any waiver by a Party of a particular provision or right shall be in writing, shall be as to a particular matter and, if applicable, for a particular period of time and shall be signed by such Party. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.   14.6             Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than an obligation to make payments unless the force majeure event affects the payment process itself, such as bank closure or government closure that affects the review and approval of the payment) when such failure or delay is caused by or results from events beyond the reasonable control of the non- performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority (including expropriation, seizure of works, requisition, nationalization, exercise of march-in rights or compulsory licensing, except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement) and any material change in the Applicable Laws of a Regulatory Authority that results in a development, clinical or regulatory delay [*****]. The non-performing Party shall notify the other Party of such force majeure within thirty (30) days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use Commercially Reasonable Efforts to remedy its inability to perform.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -47-     14.7             Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Laws. VistaGen hereby undertakes to use Commercially Reasonable Efforts to obtain necessary licenses (if required) for exporting the Compound, the Licensed Product and the Licensed Technology from the United States or other countries.   14.8             Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby: (a) such provision shall be fully severable; (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 effect and shall not be affected by the illegal, invalid or unenforceable 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 in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by Applicable Laws, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.   14.9             Notices. Any notice to be given under this Agreement must be in writing and delivered either (a) in person or (b) by overnight courier, to the Party to be notified at its address(es) given below for convenience, or at any address such Party may designate by prior written notice to the other. Notice shall be deemed sufficiently given for all purposes upon the date of actual receipt.   If to VistaGen:   VistaGen Therapeutics, Inc. 343 Allerton Avenue South San Francisco, CA 94080 United States of America   Attention: CEO   with a mandatory copy (which shall not constitute notice) to:   Reid Adler, J.D. Capital Technology Law Group 5335 Wisconsin Ave., N.W., Suite 440 Washington, DC 20015 United States of America   If to EverInsight:   EverInsight Therapeutics Inc. Vistra Corporate Services Centre Wickhams Cay II, Road Town Tortola, VG1110 British Virgin Islands ATTN: CEO / General Counsel       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -48-     with a mandatory copy to (which shall not constitute notice) to:   Cooley LLP 3175 Hanover Street Palo Alto, CA  94304-1130 ATTN:                        Lila Hope, Ph.D.   14.10             Dispute Resolution.   (a)             Except as provided in Section 3.3(b)(i), (b)(ii), (c) or Excluded Claims as set forth in subsection 14.10(g) below, if a dispute arises within the JSC with respect to any decision under the jurisdiction of the JSC that remains unresolved pursuant to Section 3.3 (JSC Decision-Making) or otherwise between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (collectively, a “Dispute”), then either Party shall have the right to refer such Dispute to the Executive Officers for attempted resolution by good faith negotiations during a period of forty-five (45) days. Any final decision mutually agreed to in writing by the Executive Officers shall be conclusive and binding on the Parties.   (b)             The Executive Officers shall negotiate in good faith and use reasonable efforts to settle any Dispute arising from or related to this Agreement or the breach thereof within such forty-five (45) day period. Subject to Section 14.10(h) (Dispute Resolution - subsection (h)), in the event the Executive Officers cannot fully resolve or settle such Dispute within such period, and a Party wishes to pursue the matter further, each such Dispute that is not an Excluded Claim (defined in Section 14.10(g) (Dispute Resolution - subsection (g)) below) shall be finally resolved by binding arbitration administered by the Hong Kong International Arbitration Centre (“HKIAC”) in accordance with its arbitration rules then in effect.   (c)             The arbitration shall be conducted by a panel of three (3) neutral arbitrators experienced in the pharmaceutical business, none of whom shall be a current or former employee or director, or a current stockholder, of either Party or any of their respective Affiliates or any Sublicensee. Within thirty (30) days after initiation of arbitration, each Party shall select one (1) person to act as arbitrator and the two (2) Party-selected arbitrators shall select a third arbitrator within thirty (30) days of their appointment. If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the HKIAC (or its successor entity) in accordance with the then-current HKIAC arbitration rules, except as modified in this Agreement. The place of arbitration shall be in Hong Kong, and all proceedings and communications shall be in English. The procedures for the taking of evidence shall be governed by the HKIAC. The decision or award rendered by the arbitrators shall be final, binding, conclusive and non-appealable, and judgment may be entered upon it in accordance with Applicable Laws in the Hong Kong or any other court of competent jurisdiction.   (d)             Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. The arbitrators’ authority to award punitive or any other type of damages not measured by a Party’s compensatory damages shall be subject to the limitation set forth in Section 13.5 (Special, Indirect and Other Losses). Each Party shall bear its own costs and expenses and attorneys’ fees and an equal share of the arbitrators’ fees and any administrative fees of arbitration.   (e)             Except to the extent necessary to confirm or enforce an award or as may be required by law, neither Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of the other Party. In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable Hong Kong statute of limitations.       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -49-     (f)             The Parties agree that, in the event of a dispute over the nature or quality of performance under this Agreement, neither Party may terminate this Agreement until final resolution of the dispute through arbitration or other judicial determination. The Parties further agree that any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due.   (g)             As used in this Section, the term “Excluded Claim” means a dispute, controversy or claim that concerns the construction, scope, validity, enforceability, inventorship or infringement of a patent, patent application, trademark or copyright.   (h)             Nothing contained in this Agreement shall deny either Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing discussions between the Parties or any ongoing arbitration proceeding. In addition, either Party may bring an action in any court of competent jurisdiction to resolve disputes pertaining to the construction, scope, validity, enforceability, inventorship or infringement of a patent, patent application, trademark or copyright, and no such claim shall be subject to arbitration pursuant to subsections (b) and (c) of this Section 14.10 (Dispute Resolution). Both Parties agree to waive any requirement that the other (i) post a bond or other security as a condition for obtaining any such relief; or (ii) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy.   14.11             Performance by Affiliates. Each Party may discharge any obligations and exercise any rights hereunder through any of its Affiliates. Each Party hereby guarantees the performance by its Affiliates of such Party’s obligations under this Agreement and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement shall be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.   14.12             Headings. The captions to the several Articles, Sections and subsections hereof are not a part of this Agreement but are merely for convenience to assist in locating and reading the several Articles and Sections hereof.   14.13             Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.   14.14             Business Day Requirements. In the event that any notice or other action or omission is required to be taken by a Party under this Agreement on a day that is not a Business Day then such notice or other action or omission shall be deemed to require to be taken on the next occurring Business Day.   14.15             English Language. This Agreement has been prepared in the English language, and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the Parties regarding this Agreement shall be in the English language   14.16             No Benefit to Third Parties. Except as provided in ARTICLE 13 (Indemnification; Liability), the covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns and they shall not be construed as conferring any rights on any other Persons.   14.17             Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -50-     14.18             Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.   IN WITNESS WHEREOF, the Parties intending to be bound have caused this License Agreement to be executed by their duly authorized representatives.    EverInsight Therapeutics Inc.         VistaGen Therapeutics, Inc.       By: /s/ Wei Fu   By: /s/ Shawn K. Singh Name: Wei Fu  Name: Shawn K. Singh, J.D. Title: Director of EverInsight Therapeutics Inc.  Title Chief Executive Officer         CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -51-    LIST OF EXHIBITS   Exhibit A:            Licensed Patents Existing as of the Effective Date   Exhibit B:          Licensed Trademarks   Exhibit C:          PH94B Chemical Structure   Exhibit D:            Initial Development Plan       CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -52-     Exhibit A: Licensed Patents in the Territory as of the Effective Date     [*****]             CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -53-     Exhibit B: Licensed Trademarks as of the Effective Date     VISTAGEN®, United States Registration # 2787886 and international counterparts in the Territory to be obtained in due course               CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -54-       Exhibit C: PH94B Chemical Structure       (3b)-androsta-4,16-dien-3-ol       [ex10-2000000.jpg]     CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -55-     Exhibit D Initial Development Plan for Acute Treatment of SAD in the Territory   [*****]         CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*****], HAS BEEN OMITTED BECAUSE VISTAGEN THERAPEUTICS, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO VISTAGEN THERAPEUTICS, INC. IF PUBLICLY DISCLOSED.     -56-
QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.46 CHANGE OF CONTROL AGREEMENT         This Change of Control Agreement (the "Agreement") is made effective as of March 28, 2005, between Wireless Facilities, Inc. ("WFI") and William E. Clift ("Clift"), subject to WFI's Board of Directors' approval.         A.    Clift is presently employed as WFI's President of its WNS-US Division pursuant to an offer letter dated November 5, 2004 (the "Offer Letter").         B.    Clift and WFI desire to memorialize in writing their understanding regarding vesting of stock options and stock appreciation rights granted to Clift under WFI's equity incentive plans in the event of a Change of Control.         Therefore, in consideration of the promises and the mutual covenants contained below, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows:         1.    Vesting Upon Change of Control.    Upon the closing of a transaction the constitutes a Change of Control (as defined in paragraph 3(a) below), the vesting of 50% of all stock options and stock appreciation rights granted to Clift under WFI's equity incentive plans that as of the date of such Change of Control remain unvested shall accelerate, to the extent permissible by law, notwithstanding and in addition to any existing vesting provisions set forth in such stock option, stock appreciation right and/or WFI equity incentive plan. Upon a Triggering Event (as defined in paragraph 2(b) below), the remaining unvested portion of any stock options and stock appreciation rights shall immediately vest.         2.    Definition of Change of Control and Triggering Event.             (a)   A Change of Control means: (i) the acquisition by an individual person or entity or a group of individuals or entities acting in concert, directly or indirectly, through one transaction or a series of transactions, of more than 50% of the outstanding voting securities of WFI; (ii) a merger or consolidation of WFI with or into another entity after which the stockholders of WFI immediately prior to such transaction hold less than 50% of the voting securities of the surviving entity; (iii) any action or event that results in the Board of Directors consisting of fewer than a majority of Incumbent Directors ("Incumbent Directors" shall mean directors who either (A) are directors of WFI as of the date hereof, or (B) are elected or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination); or (iv) a sale of all or substantially all of the assets of WFI.         (b)   A Triggering Event means (i) Clift's termination from employment; (ii) a material change in the nature of Clift's role or job responsibilities so that Clift's job duties and responsibilities after the Change of Control, when considered in their totality as a whole, are substantially different in nature from the job duties Clift performed immediately prior to the Change of Control; or (iii) the relocation of Clift's principal place of work to a location of more that thirty (30) miles from the location Clift was assigned to immediately prior to the Change of Control, subject to his current travel and relocation agreement with WFI.         (c)   "Cause" means (i) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of Clift with respect to Clift's obligations or otherwise relating to the business of WFI; (ii) Clift's material breach of this Agreement or WFI's standard form of confidentially agreement; (iii) Clift's conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or any felony or crime of moral turpitude; or (iv) Clift's willful neglect of duties or poor performance. Notwithstanding the foregoing, a termination under subsection iv shall not constitute a termination for "Cause" unless WFI has first given Clift written notice of the offending conduct (such notice shall include a description of remedial actions that WFI reasonably deems appropriate to cure such offending conduct) and a thirty (30) opportunity to cure such offending conduct. In the event WFI terminates Clift' employment under subsection iv, WFI agrees to participate in binding arbitration, if -------------------------------------------------------------------------------- requested by Clift, to determine whether the cause for termination was willful neglect of duties or poor performance as opposed to some other reason that does not constitute Cause under this Agreement.         3.    General Provisions.    Except as set forth in this Agreement, the terms of the Offer Letter remain unchanged. Nothing in this Agreement is intended to change the at-will nature of Clift's employment with WFI. This Agreement and the Offer Letter, including the Additional Terms and Conditions attached thereto and the Proprietary Information and Innovations Agreement signed by Clift, constitute the entire agreement between Clift and WFI with respect to Clift's employment with WFI. No amendment or modification of the terms or conditions of this Agreement shall be valid unless in writing and signed by the parties.         WILLIAM E. CLIFT Dated:        --------------------------------------------------------------------------------   /s/  WILLIAM E. CLIFT       --------------------------------------------------------------------------------         WIRELESS FACILITIES, INC. Dated:        --------------------------------------------------------------------------------   By: /s/  ERIC DEMARCO       -------------------------------------------------------------------------------- Eric DeMarco, Chief Executive Officer -------------------------------------------------------------------------------- QuickLinks Exhibit 10.46 CHANGE OF CONTROL AGREEMENT
Exhibit 10.4 PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT PURSUANT TO THE GENERAL DYNAMICS CORPORATION 2012 EQUITY COMPENSATION PLAN This Performance Restricted Stock Unit Award Agreement (the "Agreement") is entered into as of [DATE], (the "Grant Date"), by and between General Dynamics Corporation (the "Company") and [NAME] (the "Grantee"). WHEREAS, the Company sponsors the General Dynamics Corporation 2012 Equity Compensation Plan (the "Plan") and pursuant to Section 7 of the Plan the Company may grant performance-based restricted stock units ("Performance RSUs"); and WHEREAS, the Company desires to grant to the Grantee an award of Performance RSUs. NOW, THEREFORE, in consideration of the recitals and the mutual agreements herein contained, the parties hereto agree as follows: 1.Number of Performance RSUs. The Grantee is hereby granted [NUMBER] Performance RSUs (the “Target Performance RSUs”). Each Performance RSU represents an unfunded, unsecured promise by the Company to deliver one share of the Company's common stock ("Common Stock"), subject to certain restrictions, terms and conditions. The number of shares of Common Stock actually required to be delivered to the Grantee (the “Earned Performance RSUs”) may vary from the number represented by the Target Performance RSUs, based on performance as described in Section 2(b) hereof. 2.Terms of Performance RSUs. The Performance RSUs will be subject to the following terms, conditions and restrictions: (a)No Shareholder Rights. The grant of Performance RSUs does not entitle the Grantee to any rights of a shareholder of Common Stock, including dividends or voting rights. (b)Performance Feature. The number of Earned Performance RSUs will range from 0% to 150% of the number of Target Performance RSUs, as determined by the extent to which the Performance Goal set forth on Schedule A to this Agreement is achieved in accordance with the formula described on Schedule A. (c)Performance Period and Vesting. Except as otherwise provided in Section 3 below, attainment of the Performance Goal will be measured over the period commencing on [INSERT THE THREE-YEAR PERIOD BEGINNING JANUARY 1 OF THE CALENDAR YEAR IN WHICH THE GRANT OCCURS AND ENDING ON DECEMBER 31 OF THE CALENDAR YEAR THAT IS TWO YEARS FOLLOWING THE YEAR OF THE GRANT DATE] (the “Performance Period”), and the number of Earned Performance RSUs will be fixed as of the end of the Performance Period (the “Scheduled Vesting Date”), subject to the Committee certifying the level of attainment of the Performance Goal within two and one-half (2.5) months following the Scheduled Vesting Date. Except as may otherwise be provided in Section 3 below, the Earned Performance RSUs and the Total Dividend Equivalent RSUs (as defined below) will vest on the Scheduled Vesting Date, but only if the Grantee’s Termination Date (as defined below) has not occurred, and does not occur, prior to or on the Scheduled Vesting Date. -------------------------------------------------------------------------------- (d)Settlement of Awards. Except as set forth in Section 3(b), settlement of vested Earned Performance RSUs and vested Dividend Equivalent RSUs shall occur within two and one-half (2.5) months following the Scheduled Vesting Date. (The actual date of settlement is hereinafter referred to as the “Settlement Date”). The Company, in its sole discretion, may settle the vested Earned Performance RSUs and vested Dividend Equivalent RSUs by either (i) issuing to the Grantee or the Grantee's personal representative a stock certificate representing one share of Common Stock for each Earned Performance RSU that has vested and one share of Common Stock for each Dividend Equivalent RSU that has vested or (ii) depositing in such Grantee's or the Grantee's personal representative's brokerage account via electronic transfer one share of Common Stock for each Earned Performance RSU that has vested and one share of Common Stock for each Dividend Equivalent RSU that has vested. (e)Dividend Equivalents. Dividend equivalents will accrue on the Performance RSUs and will be notionally credited in the form of additional Performance RSUs (“Dividend Equivalent RSUs”) to the Grantee's bookkeeping account. During the Performance Period, dividend equivalents will accrue on the Target Performance RSUs and on the Dividend Equivalent RSUs outstanding on each dividend equivalent determination date. At the end of the Performance Period the number of outstanding Dividend Equivalent RSUs will be adjusted to reflect the attainment of the Performance Goal in the same manner as the Target Performance RSUs (such adjusted number, the “Earned Dividend Equivalent RSUs”). During the period beginning on the Scheduled Vesting Date and ending on the Settlement Date (the “Crediting Period”), Dividend Equivalent RSUs will accrue on the Earned Performance RSUs and on the Earned Dividend Equivalent RSUs (the Earned Dividend Equivalent RSUs together with any additional Dividend Equivalent RSUs credited thereon and credited on the Earned Performance RSUs during the Crediting Period being referred to herein as the “Total Dividend Equivalent RSUs”). The Company will round down to the nearest whole share in settling any vested Dividend Equivalent RSUs and no fractional shares will be issued. Dividend Equivalent RSUs will in all cases be subject to the same terms and conditions, including but not limited to those related to vesting, transferability, and payment, that apply to the Performance RSUs. (f)Transfer Restrictions. Neither the Performance RSUs, the Dividend Equivalent RSUs, nor any interest therein may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by the Grantee, except by will or the laws of descent and distribution, and any such purported sale, assignment, transfer, pledge, hypothecation or other disposition shall be void and unenforceable against the Company. (g)    Incorporation of Plan by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement will be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement will have the definitions set forth in the Plan. The Committee will have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decisions will be binding and conclusive upon the Grantee and the Grantee's legal representative in respect of any questions arising under the Plan or this Agreement. If there exists any inconsistency between the terms of this Agreement and the Plan, the terms contained in the Plan will govern. If there exists any inconsistency between the terms of the Performance RSUs and Dividend Equivalent RSUs as provided for herein (including terms relating to the number of Performance RSUs or Dividend Equivalent RSUs) and the terms as indicated in the records maintained by Company, the terms as indicated in the records of the Company will govern. -------------------------------------------------------------------------------- 3.Termination of Employment or Service as a Director. (a)General. Except as set forth in Section 3(b), in the event that the Grantee ceases to be employed by the Company or ceases to be a director of the Company for any reason (the date of such cessation, the “Termination Date”) prior to the Scheduled Vesting Date, the Performance RSUs and any Dividend Equivalent RSUs credited as of the Termination Date will be automatically forfeited by the Grantee as of the Termination Date. For purposes of this Agreement, the Termination Date will in all cases without exception (notwithstanding, for example, any failure under local labor laws) be deemed to occur as of the date that the Grantee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of "garden leave" or similar period pursuant to local law). For purposes of this Agreement, "Retirement" means, (A) with respect to an employee who is not an elected officer of the Company on the Termination Date, the termination of employment after the attainment of age 55 with at least five (5) or more years of continuous service and (B) with respect to an employee who is an elected officer of the Company on the Termination Date, termination of employment after attaining age 55 with the consent of the Chief Executive Officer of the Company (or for the Chief Executive Officer, with the consent of the Committee). (b)Certain Terminations. This Section 3(b) provides for special vesting and settlement rules in certain circumstances. (i)Disability, Retirement or Divestiture Prior to the Scheduled Vesting Date. In the event that the Grantee ceases to be employed by the Company due to total and permanent disability, Retirement, divestiture or discontinued operation of a Subsidiary or division with which the Grantee was associated or ceases to be a director of the Company due to total and permanent disability, in each case prior to the Scheduled Vesting Date, then the award of Performance RSUs will vest on the Termination Date, subject to Sections 2(b) and 2(e), with respect to a number of Performance RSUs equal to the product of (A) the sum of (x) the total number of Earned Performance RSUs and (y) the total number of Earned Dividend Equivalent RSUs and (B) a fraction, the numerator of which will be the number of days from January 1 of the year in which the Grant Date occurs to the last day of the month in which the Termination Date occurs and the denominator of which will be 1,095, and the remaining Earned Performance RSUs and Earned Dividend Equivalent RSUs will be automatically forfeited by the Grantee as of the Termination Date. The Earned Performance RSUs and Earned Dividend Equivalent RSUs that vest pursuant to this Section 3(b)(i) shall be settled as provided in Section 2(d). (ii)Cause After the Scheduled Vesting Date. In the event that the Grantee ceases to be employed by the Company for Cause on or after the Scheduled Vesting Date but prior to the Settlement Date, then the Earned Performance RSUs and the Total Dividend Equivalent RSUs that have been credited as of the Termination Date will be automatically forfeited. (iii)Death. In the event of the Grantee ceases to be employed by the Company due to the Grantee’s death on or prior to the Scheduled Vesting Date, then a number of Performance RSUs equal to the sum of (x) the number of Earned Performance RSUs and (y) the number of Earned Dividend Equivalent RSUs, in each of (x) and (y), determined based on the achievement of the Performance Goal through the last day of the Company’s quarter in which the Grantee’s death occurs (the “Death Vesting Date)”, will become immediately vested on the Death Vesting Date, subject to certification by an appropriate executive of the Company with authority to make a determination of the level of attainment of the Performance Goal through the Death Vesting Date, or, solely with respect to the Company’ executive officers, subject to certification of the level of attainment of the Performance Goal through the Death Vesting Date by the Committee. The Earned Performance RSUs and Earned Dividend Equivalent RSUs -------------------------------------------------------------------------------- that vest pursuant to this Section 3(b)(iii) shall be settled within two and one-half (2.5) months after the Death Vesting Date. (iv)Change in Control. Prior to a Change in Control, the Committee will specify how the Performance Goal will be adjusted for the remainder of the Performance Period following the Change in Control. Notwithstanding the foregoing, in the event that within two (2) years following a Change in Control, the Grantee’s employment with the Company and its affiliates is terminated (i) by the Company or any of its affiliates for any reason other than for Cause or (ii) by the Grantee for Good Reason, the Earned Performance RSUs and the Earned Dividend Equivalent RSUs, each determined based on achievement of the Performance Goal through the date of the Change in Control, will become immediately vested. The Earned Performance RSUs and Earned Dividend Equivalent RSUs that vest pursuant to this Section 3(b)(iii) shall be settled within two and one-half (2.5) months after the end of the calendar year in which the termination date occurs. (c)Harm. Notwithstanding anything to the contrary herein, all of the Performance RSUs and Dividend Equivalent RSUs will be automatically forfeited by the Grantee if the Grantee causes Harm (as defined below) to the Company prior to the Settlement Date. For purposes of this Agreement, "Harm" includes, any actions that adversely affect the Company's financial standing, reputation, or products, or any actions involving personal dishonesty, a felony conviction related to the Company, or any material violation of any confidentiality or non-competition agreement with the Company. 4.Tax Withholding. Regardless of any action the Company or the Grantee's actual employer (the "Employer") takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding ("Tax-Related Items"), the Grantee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee's responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance RSUs and the Dividend Equivalent RSUs, including the grant of the Performance RSUs and crediting of the Dividend Equivalent RSUs, the vesting of the Performance RSUs and Dividend Equivalent RSUs, the settlement of the Performance RSUs and Dividend Equivalent RSUs, and the subsequent sale of any shares acquired at settlement; and (ii) do not commit to structure the terms of the grant or any aspect of the Performance RSUs and Dividend Equivalent RSUs to reduce or eliminate the Grantee's liability for Tax-Related Items. Prior to the issuance of shares pursuant to this award of Performance RSUs, the Grantee shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all withholding and payment on account obligations of the Company and/or Employer. In this regard, the Grantee authorizes the Company or the Employer to withhold all applicable Tax-Related Items legally payable by the Grantee from the Grantee's wages or other cash compensation payable to the Grantee by the Company or the Employer. Alternatively, or in addition, if permissible under local law, the Company or the Employer may, in their sole discretion, (i) sell or arrange for the sale of shares of Common Stock to be issued on the settlement of the Performance RSUs and/or the Dividend Equivalent RSUs to satisfy the withholding or payment on account obligation, and/or (ii) withhold from the shares to be delivered upon settlement of the Performance RSUs and/or the Dividend Equivalent RSUs the amount of shares necessary to satisfy the minimum withholding amount (or such other rate that will not result in a negative accounting impact). The Grantee shall pay to the Company or to the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee's receipt of this award, the vesting of the Performance RSUs and the Dividend Equivalent RSUs, or the settlement of the Performance RSUs and the Dividend Equivalent RSUs that cannot be satisfied by the means previously described. The Company may refuse to deliver -------------------------------------------------------------------------------- shares pursuant to the Performance RSUs and the Dividend Equivalent RSUs to the Grantee if the Grantee fails to comply with the Grantee's obligation in connection with the Tax-Related Items as described herein. If the Grantee fails to pay or make satisfactory arrangements to satisfy all withholding and payment on account obligations by the Settlement Date, then the Performance RSUs and the Dividend Equivalent RSUs shall be forfeited. 5.Nature of Grant. In accepting the award of Performance RSUs, the Grantee acknowledges that: (a)the Plan is discretionary in nature and established voluntarily by the Company and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan, and the award of Performance RSUs is at the sole discretion of the Company and does not create any contractual or other right to receive future awards of Performance RSUs, or benefits in lieu of Performance RSUs even if Performance RSUs have been awarded repeatedly in the past; (b)the award of Performance RSUs is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or to the Employer, and the Performance RSUs are outside the scope of the Grantee's employment contract, if any; (c)the Performance RSUs and the Dividend Equivalent RSUs are not part of normal or expected compensation or salary for any purposes, including, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (d)neither the award of Performance RSUs nor any provision of this Agreement nor the Plan confer upon the Grantee any right with respect to employment or continuation of current employment, and in the event that the Grantee is not an employee of the Company, the Performance RSUs shall not be interpreted to form an employment contract or relationship with the Company; and (e)no claim or entitlement to compensation or damages arises from termination of the Performance RSUs or Dividend Equivalent RSUs, and no claim or entitlement to compensation or damages shall arise from any diminution in value of the Performance RSUs, Dividend Equivalent RSUs, or shares received upon settlement of the Performance RSUs or Dividend Equivalent RSUs resulting from termination of the Grantee's employment by the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Grantee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Grantee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim. 6.Data Privacy. The Grantee hereby explicitly and unambiguously consents to the collection, holding, use and transfer, in electronic or other form, of his or her personal data as described in this document by and among, as applicable, the Employer, and the Parent and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Grantee's participation in the Plan. The Grantee understands that the Company and the Employer may hold certain personal information about the Grantee, including his or her name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee's favor, for the purpose of implementing, administering and managing the Plan ("Data"). Data may be transferred to any third -------------------------------------------------------------------------------- parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Grantee's country or elsewhere and that the recipients' country may have different data privacy laws and protections than the Grantee's country. The Grantee may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Grantee may elect to deposit any shares acquired upon settlement of the Performance RSUs and Dividend Equivalent RSUs. Data will be held only as long as is necessary to implement, administer and manage the Grantee's participation in the Plan. The Grantee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Refusing or withdrawing his or her consent may affect the Grantee's ability to participate in the Plan. For more information on the consequences of a refusal to consent or withdrawal of consent, the Grantee may contact his or her local human resources representative. 7.[Compensation Recoupment Policy. This Agreement shall be subject to the Company’s Compensation Recoupment Policy. The Grantee acknowledges receipt of the Compensation Recoupment Policy and has read and understands the terms and conditions of the Compensation Recoupment Policy.][This provision IS INCLUDED ONLY IN AGREEMENTS FOR certain executive officers who are subject to the General Dynamics Compensation Recoupment Policy.] 8.Miscellaneous. (a)Modification; Entire Agreement; Waiver. No change or modification to any provision of this Agreement will be valid unless the same is agreed to in writing by the parties hereto. This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supercede all prior communications, representations and negotiations in respect thereof. The failure of the Company to enforce at any time any provision of this Agreement will in no way be construed to be a waiver of such provision or of any other provision hereof. The Company reserves the right, however, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally alter or modify the awards to ensure all Performance RSUs, Dividend Equivalent RSUs and the Agreements provided to Grantees are made in such a manner that either qualifies for exemption from or complies with Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended; provided, however that the Company makes no representations that the Performance RSUs and Dividend Equivalent RSUs will be exempt from or will comply with Section 409A and makes no undertaking to preclude Section 409A from applying to the Performance RSUs and Dividend Equivalent RSUs. (b)Bound by Plan and Other Related Documents. By accepting the award of Performance RSUs, the Grantee acknowledges that the Grantee has received a copy of the Plan and General Dynamics Corporate Policy regarding insider trading compliance (the "Trading Policy") and has had an opportunity to review the Plan and the Trading Policy and agrees to be bound by all the terms and provisions of the Plan and the Trading Policy. (c)Successors. The terms of this Agreement will be binding upon and inure to the benefit of the Company, its successors and assigns, and of the beneficiaries, executors, administrators, heirs and successors of the Grantee. -------------------------------------------------------------------------------- (d)Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. For purposes of litigating any dispute that arises under this Award or this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Virginia, and agree that such litigation shall be conducted exclusively in the courts of Virginia or the federal courts for the Eastern District of Virginia. (e)Section 409A Compliance . To the extent applicable, it is intended that the Plan and the Agreement comply with the requirements of Section 409A and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. Accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, Grantee shall not be considered to have terminated employment with the Company for purposes of this Agreement until Grantee would be considered to have incurred a "separation from service" from the Company within the meaning of Section 409A. For purposes of this Agreement, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Section 409A. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Grantee's separation from service shall instead be paid on the first business day after the date that is six months following Grantee's separation from service (or death, if earlier). (f)Severability. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of this Agreement, and this Agreement shall be construed and enforced as if such illegal or invalid provision had not been included. (g)Language. If the Grantee has received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.
Exhibit 10.2 May __, 2006 Hana Biosciences, Inc. 400 Oyster Point Boulevard, Suite 215 South San Francisco, California 94080 Ladies and Gentlemen:      The undersigned entity sets forth on Schedule I hereto (the “Investor”) hereby confirms and agrees with you as follows:      1. This Purchase Agreement (this “Agreement”) is made as of the date hereof between Hana Biosciences, Inc., a Delaware corporation (the “Company”), and the Investor that is a signatory to this Agreement.      2. The Company has authorized the sale and issuance of up to ___shares of common stock (the “Shares”) of the Company, par value $.001 per share (the “Common Stock”), to certain investors (the “Offering”), as more fully described in that certain Placement Agency Agreement (the “Placement Agency Agreement”) dated the date hereof by and between the Company and Lehman Brothers Inc., Jefferies & Company, Inc. and Oppenheimer Co. Inc. (the “Placement Agents”), a copy of which has been furnished to the Investor. All defined terms used herein and not otherwise defined shall have the same meanings ascribed to such terms in the Placement Agency Agreement.      3. Subject to execution by the Company and the Placement Agents of the Placement Agency Agreement, the Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor the number of shares of Common Stock set forth opposite the Investor’s name on Schedule I hereto, at a purchase price of $_____ per share, pursuant to the Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by reference as if fully set forth herein. The Investor acknowledges that the Offering is not being underwritten by the Placement Agents and that there is no minimum offering amount. Shares will be credited to the Investor using customary book-entry procedures.      4. The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three years with the Company or persons known to it to be affiliates of the Company, and (b) except as set forth on Annex II hereof, it is not an NYSE member, and it has no direct or indirect affiliation or association with any, NYSE member as of the date hereof.      5. The Investor confirms that it has received the Registration Statement and the Prospectus, and has reviewed the Registration Statement and the Prospectus before making its decision to purchase and invest in the Shares pursuant to this Agreement. The Investor further confirms that it has had full access to all other filings made by the Company with the Securities and Exchange Commission, and that it was able to read, review, download and print each such filing. 1 --------------------------------------------------------------------------------        Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.             AGREED AND ACCEPTED: Name of Investor:       By:           Name:           Title:         HANA BIOSCIENCES, INC. By:     Name: Title: 2 --------------------------------------------------------------------------------   SCHEDULE I INVESTOR SCHEDULE                       Investor Name,             Address and   Number of Shares to         Telephone Number   be Purchased   Price Per Share   Aggregate Price           $       $   3 --------------------------------------------------------------------------------   ANNEX I TERMS AND CONDITIONS FOR PURCHASE OF SHARES      1. Agreement to Sell and Purchase the Shares; Subscription Date.      1.1 Upon the terms and subject to the conditions hereinafter set forth, at the Closing (as defined in Section 2 below), the Company will sell to the Investor, and the Investor will purchase from the Company, the number of shares of Common Stock set forth on Schedule I of this Agreement at the purchase price set forth therein.      1.2 The Company may enter into agreements similar to this Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Shares to them. (Each Investor and the Other Investors hereinafter collectively are referred to as the “Investors,” and this Agreement and the agreements executed by the Other Investors are hereinafter collectively referred to as the “Agreements”). The Company may accept or reject any one or more Agreements in its sole discretion.      2. Delivery of the Shares at Closing. The completion of the purchase and sale of the Shares (the “Closing”) shall take place as provided in Section 2 of the Placement Agency Agreement and the Escrow Agreement.           The Company’s obligation to issue and sell the Shares to the Investor shall be subject to the accuracy of the representations and warranties made by the Investor and the fulfillment of those undertakings of the Investor to be fulfilled prior to the Closing.           The Investor’s obligation to purchase the Shares shall be subject to the condition that the Placement Agent shall not have (a) terminated the Placement Agency Agreement pursuant to the terms thereof or (b) determined that the conditions to closing in the Placement Agency Agreement have not been satisfied.      3. Representations, Warranties and Covenants of the Company.      3.1 The Company hereby represents and warrants to the Investor that this Agreement constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).      3.2 The representations, warranties and covenants of the Company set forth in Section 1 of the Placement Agency Agreement may be relied upon by the Investor, which shall be a third party beneficiary thereof.      3.3 The Company hereby covenants with the Investors that the Company shall, prior to market open on the day following the date hereof, issue a press release disclosing the material terms of the Offering. 4 --------------------------------------------------------------------------------        4. Representations, Warranties and Covenants of the Investor.      4.1 The Investor represents and warrants that it has received the Registration Statement and the Prospectus.      4.2 The Investor further represents and warrants to, and covenants with, the Company that (i) the Investor has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).      4.3 The Investor represents and warrants to, and covenants with, the Company that: (i) the Investor is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares; and (ii) the Investor has, in connection with its decision to purchase the number of Shares set forth on Schedule I to the Agreement, relied solely upon the Registration Statement, the Prospectus, and any amendments or supplements thereto and has not relied upon any information provided by the Placement Agents in their capacity as Placement Agents for the Company.      4.4 The Investor understands that nothing in the Prospectus and any supplement thereto, this Agreement or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares.      4.5 From and after obtaining knowledge of the sale of the Shares contemplated hereby, the Investor has not taken, and prior to the public announcement of the transaction the Investor shall not take, any action that has caused or will cause the Investor to have, directly or indirectly, sold or agreed to sell any Common Stock, effected any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derives any significant part of its value from the Common Stock, whether or not, directly or indirectly, in order to hedge its position in the Shares.      5. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company and the Investor herein shall survive the execution of this Agreement, the delivery to the Investor of the Shares being purchased and the payment therefor.      6. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by a nationally recognized overnight carrier, one business day after so mailed, (iii) if 5 --------------------------------------------------------------------------------   delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed as follows: (a) if to the Company, then as provided in Section 10 of the Placement Agency Agreement; and (b) if to the Investor, at its address on Schedule I hereto, or at such other address or addresses as may have been furnished to the Company in writing.      7. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.      8. Headings. The headings of the various sections of this Agreement have been inserted for convenience or reference only and shall not be deemed to be part of this Agreement.      9. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.      10. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts of law.      11. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 6
Exhibit 10.3   SETTLEMENT AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS   This Settlement Agreement and General Release of all Claims (“Agreement”) is entered into on December 30, 2007 (the “Effective Date”) by and between:   Etelos Incorporated (“Etelos”) a Washington corporation with its principal offices at 1900 O’Farrell Street Suite 320, San Mateo, CA  94403,   and the following natural persons:   Selma and Daniel A. Kolke, husband and wife 21717 S.E. Petrovitsky Maple Valley, WA 98038   Robyn and Daniel J. A. Kolke, husband and wife 45908 S.E. Edgewick Road North Bend, WA  98045   Kristin and Desmond D. Kolke, husband and wife 22604 S.E. 392d Street Enumclaw, WA  98022   And   Crystal and Raymond D. Kolke, husband and wife 2212 Camas Circle SE Renton, WA  98055   (sometimes collectively ‘the Kolke Family”)   (separately a “Party” or collectively, “the Parties”).   RECITALS   A.                                   Etelos was founded by members of the Kolke Family in May 1999.   B.                                     From time to time since May 1999, members of the Kolke Family made loans to Etelos (the “Loans”) in various amounts and forms.   C.                                     From time to time until the present, Etelos has made certain payments on the Loans.   D.                                    The Loans have balances owed to certain members of the Kolke Family.   E.                                      The Parties have resolved the balances owed to each member of the Kolke Family and wish to provide for the payment of these balances as provided in this Agreement.   AGREEMENT   In consideration of the mutual covenants in this Agreement it is agreed as follows:   1.                                       The balances owed to each member of the Kolke Family on the Loans as of the Effective Date are set forth in Exhibit A.   1 --------------------------------------------------------------------------------   2.                                       Etelos will pay the balances owed by execution and delivery of the Promissory Notes attached as Exhibits B1, B2, and B3 (the “Notes”).   3.                                       The members of the Kolke Family accept the Notes in full and final payment of the Loans.   4.                                       Any third party obligations incurred by any member of the Kolke Family in connection with the Loans, including any transactions between members of the Kolke Family, are and shall remain the sole responsibility of the affected members of the Kolke Family.   5.                                       The affected member(s) of the Kolke Family will defend and hold harmless Etelos from any such third party claims, and will pay the costs, damages, and reasonable attorneys fees attributable to any such claims that are finally awarded against Etelos or agreed to by the affected member(s) of the Kolke Family in settlement, provided that Etelos (a) promptly notifies the affected member(s) of the Kolke Family of such claims, (b) grants control of defense and settlement to the affected member(s) of the Kolke Family, and (c) provides all assistance, information, and authority required for the defense and settlement of such claims.   6.                                       The members of the Kolke Family, individually and each for their own part, represent and warrant to Etelos that they are signing this Agreement voluntarily and with a full understanding of and agreement with all its terms.   7.                                       Each member of the Kolke Family agrees to waive and release all claims relating to the Loans, known and unknown, suspected or unsuspected, which any of them has or might otherwise have had against Etelos, on behalf of itself and its parents, subsidiaries, and related entities, past and present officers, directors, shareholders, executives, managers, supervisors, insurers, attorneys, indemnities, agents, successors, and assigns (collectively, “the Released Parties”), arising prior to the Effective Date.   8.                                       Etelos, on behalf of itself and its parents, subsidiaries, and related entities, past and present officers, directors, shareholders, executives, managers, supervisors, insurers, attorneys, indemnities, agents, successors, and assigns (hereinafter collectively referred to as “the Etelos Parties”), agrees to waive and release all claims relating to the Loans, known and unknown, suspected or unsuspected, which they have or might otherwise have had against any member of the Kolke Family arising prior to the Effective Date, unless it is determined by a tribunal of competent jurisdiction that such claim is a proximate result of gross negligence or fraudulent misrepresentation by a member of the Kolke Family.   9.                                       It is expressly understood and agreed that the releases given in Sections 7 and 8 of this Agreement are applicable only to the Loans and are not intended in any way to apply to the Notes or to any other interests, including shares, options, other instruments, or employment, which any member of the Kolke Family has or may have in or in relation to Etelos.   2 --------------------------------------------------------------------------------   10.                                 It is further understood and agreed that as a condition of this Agreement, all rights under Section 1542 of the Civil Code of the State of California are expressly waived by the Parties. Such Section reads as follows:   “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”   Thus, for the purpose of implementing a full and complete mutual release and discharge of the Parties, the Parties expressly acknowledge that this Agreement is intended to include and does include in its effect, without limitation, all claims which either Party does not know or suspect to exist in his or her favor against the other Party at the time of execution of this Agreement, and that this Agreement expressly contemplates the extinguishment of all such claims.   11.                                 EACH MEMBER OF THE KOLKE FAMILY AGREES THAT THEY WILL NOT:   A.                                       PROSECUTE, OR ALLOW TO BE PROSECUTED ON THEIR BEHALF, IN ANY ADMINISTRATIVE AGENCY, WHETHER STATE OR FEDERAL, OR IN ANY COURT, WHETHER STATE OR FEDERAL, ANY CLAIM OR DEMAND OF ANY TYPE RELATED TO THE LOANS, IT BEING THE INTENTION OF THE PARTIES THAT WITH THE EXECUTION OF THIS AGREEMENT, EXCEPT AS OTHERWISE PROVIDED IN THE NOTES, THE RELEASED PARTIES WILL BE ABSOLUTELY, UNCONDITIONALLY AND FOREVER DISCHARGED OF AND FROM ALL OBLIGATIONS TO OR ON BEHALF OF THE KOLKE FAMILY RELATED IN ANY WAY TO LOANS; OR   b.                                      Issue any communication, written or otherwise, that disparages, criticizes or otherwise reflects adversely or encourages any adverse action against Etelos or the Released Parties except if testifying truthfully under oath pursuant to subpoena or otherwise.   12.                                 This Agreement may not be changed orally, and no modification, amendment or waiver of any provision of this Agreement or any future representation, promise or condition in connection with its subject matter, shall be binding upon any Party unless made in writing and signed by such Party.   13.                                 No member of the Kolke Family will have the right to assign any of their rights or obligations this Agreement, except to another member of the Kolke Family, without the prior written consent of Etelos. Except as otherwise provided, any such attempt to assign a right or obligation under this Agreement without such consent will be null and void. Etelos may assign or transfer any of its rights or obligations under this Agreement upon written notice to all members of the Kolke Family.   14.                                 This Agreement will be governed by and construed in accordance with the laws of the State of California without reference to its conflict of laws principles. Any legal action or proceeding arising will be brought exclusively in the federal or state courts of San Mateo County California.   15.                                 If for any reason a tribunal of competent jurisdiction finds any provision of this Agreement invalid or unenforceable, then that provision of this Agreement shall be enforced to the maximum extent permissible and the other provisions of this Agreement shall remain in full force and effect.   16.                                 The failure by any Party to enforce any provision of this Agreement will not constitute a waiver of future enforcement of that or any other provision.   3 --------------------------------------------------------------------------------   17.                                 All notices, demands or consents required or permitted shall be in writing. Notice shall be considered effective on the earlier of actual receipt or:  (a) the day following transmission if sent electronically followed by written confirmation; or (b) one day (two days for international addresses) after posting when sent via a commercial express courier. Notice shall be sent to the address for each Party set forth on the first page of this Agreement, or at such other address as shall be given by either Party to the other in writing. Notices to Etelos shall be addressed to the attention of “General Counsel” at the address listed above or as amended.   18.                                 This Agreement has been authorized by all necessary corporate action on the part of Etelos and, except as otherwise provided in the Notes, contains the entire agreement between the Parties and supersedes any and all prior and contemporaneous oral and written agreements with regard to the Loans.   19.                                 This Agreement may be executed in multiple counterparts, each of which shall be deemed an original.   20.                                 This Agreement shall benefit and is binding upon the Parties and their respective heirs and permitted successors and assigns.   - signatures follow -   4 --------------------------------------------------------------------------------   WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT EFFECTIVE ON THE DATE FIRST SET FORTH ABOVE.   SELMA and DANIEL A. KOLKE   ETELOS INCORPORATED             /s/ Daniel A. Kolke   By:   /s/ Jeffrey L. Garon     Jeffrey L. Garon     President & Chief Executive Officer /s/ Selma Kolke           ROBYN and DANIEL J. A. KOLKE                 /s/ Robyn Kolke                 /s/ Daniel J A. Kolke           KRISTIN and DESMOND D. KOLKE           /s/ Kristin Kolke                 /s/ Desmond D. Kolke           CRYSTAL and RAYMOND D. KOLKE                 /s/ Crystal Kolke                 /s/ Raymond D. Kolke       5 --------------------------------------------------------------------------------   EXHIBIT A   BALANCES OWED ON THE LOANS   Selma and Daniel A. Kolke   $ 644,000.00           Robyn and Daniel J. A. Kolke   $ 120,000.00           Kristin and Desmond D. Kolke   $ 51,827.42           Crystal and Raymond D. Kolke   $ 0.00 [Zero]   6 --------------------------------------------------------------------------------   EXHIBIT A1   7 --------------------------------------------------------------------------------   EXHIBIT A2   8 --------------------------------------------------------------------------------   EXHIBIT A3   9 --------------------------------------------------------------------------------
Exhibit 10.1 EIGHTH LEASE AMENDMENT This EIGHTH LEASE AMENDMENT (this “Eighth Amendment”) is made and entered into as of the 1st day of October 2014 by and between 233 S. WACKER LLC, a Delaware limited liability company (“Landlord”), and HEIDRICK & STRUGGLES, INC., a Delaware corporation (“Tenant”). W I T N E S S E T H: WHEREAS, Landlord’s predecessor in interest and Tenant entered into that certain Lease dated as of January 24, 1996 (the “Original Lease”) pursuant to which Tenant leased certain premises in the building (the “Building”) located on the real property commonly known as 233 South Wacker Drive, Chicago, Illinois; WHEREAS, the Original Lease was amended by that certain First Amendment to Lease dated as of January 28, 1998, that certain Second Amendment to Lease dated as of October 12, 2000, that certain Third Amendment to Lease dated as of January 18, 2001, that certain Fourth Amendment to Lease dated as of June 1, 2002, that certain Fifth Lease Amendment dated as of September 30, 2005, that certain Sixth Lease Amendment dated as of December 30, 2005 and that certain Seventh Lease Amendment dated as of February 28, 2011 (collectively the “Amendments”; the Amendments together with the Original Lease are collectively referred to herein as the “Amended Lease”; and the Amended Lease, together with this Eighth Amendment, shall be referred to herein as the “Lease”); WHEREAS, Tenant presently leases all of the 42nd floor (being 52,691 square feet of Rentable Area) and 27,921 square feet of Rentable Area on the 70th floor of the Building (together, the “Existing Premises”) as more particularly set forth in the Amended Lease, the Term of which presently expires as of September 30, 2015; and WHEREAS, Tenant desires to relocate from the Existing Premises to the entire 49th floor of the Building (being 53,894 square feet of Rentable Area) and to extend the Term of the Lease and Landlord desires to accommodate Tenant. NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between Landlord and Tenant as follows: 1. Recitals; Defined Terms. The preambles to this Eighth Amendment are hereby incorporated into the body of this Eighth Amendment as if restated herein. All capitalized terms used herein and not otherwise defined herein shall have the same meanings as are ascribed to such terms in the Amended Lease. 2. Extension of Term. The Term of the Lease is hereby extended to September 30, 2026 and accordingly, the defined term “Termination Date” as used in the Lease is amended to mean September 30, 2026. The period October 1, 2015 through September 30, 2026 is herein referred to as the “Extension Term”. -------------------------------------------------------------------------------- 3. Substitution of Premises; Condition of 49th Floor Premises. (a) Effective as of the Delivery Date (hereinafter defined), Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the 53,894 square feet of Rentable Area on the 49th floor of the Building depicted on Exhibit A attached hereto and made a part hereof (the “49th Floor Premises”) for the balance of the Term. Landlord represents and warrants that the square footage of the 49th Floor Premises has been determined in accordance with ANSI/BOMA Z65.1.1996 and shall not be remeasured during the Term. From and after the Delivery Date the 49th Floor Premises shall be governed by all of the terms of the Lease as if the 49th Floor Premises were originally set forth in the Lease and the defined term Premises as used in the Lease shall include the 49th Floor Premises; provided, however, that in no event shall Tenant be obligated to pay Rent for the 49th Floor Premises until required to do so pursuant to Section 5 below. (b) Landlord shall deliver the 49th Floor Premises in “as-is” condition, but with the work set forth on Exhibit C attached hereto and made a part hereof (the “Delivery Condition”) completed. As used herein, the term “Delivery Date” shall mean the date upon which the 49th Floor Premises are delivered to Tenant in the Delivery Condition, which date shall, subject to Unavoidable Delays (hereinafter defined), be November 1, 2014; provided, however, that at any time after the date on which this Eighth Amendment is fully executed and delivered by both Landlord and Tenant, Tenant may elect an earlier date by providing Landlord with at least sixty (60) days advance written notice (the “Early Delivery Notice”) of such earlier date. If Tenant so elects a date prior to November 1, 2014 as the Delivery Date, Landlord shall, subject to Unavoidable Delays, deliver the 49th Floor Premises to Tenant on the date which is the later to occur of (x) the date referenced in Tenant’s Early Delivery Notice and (y) the date which is sixty (60) days following Landlord’s receipt of Tenant’s Early Delivery Notice, but in no event later than November 1, 2014. Landlord shall deliver written notice (the “Delivery Date Notice”) to Tenant of the Delivery Date no later than five days prior to the Delivery Date. Tenant may, within five (5) days of the Delivery Date identify any punch list items in the Delivery Condition and Landlord shall complete/correct such punch list items within fifteen (15) days thereafter. Any items not on such punch list shall be deemed accepted by Tenant. The Tenant’s taking possession of any portion of the 49th Floor Premises shall be conclusive evidence that the 49th Floor Premises were in good order and satisfactory condition with the Delivery Condition completed when Tenant took possession, but for the aforesaid punchlist items. (c) No promise of the Landlord to construct, alter, remodel or improve the 49th Floor Premises for Tenant’s initial occupancy of the 49th Floor Premises and no representation by Landlord or its agents respecting the condition of the 49th Floor Premises have been made to Tenant or relied upon by Tenant other than as may be contained in this Eighth Amendment, including, without limitation, as set forth in Exhibit C and Exhibit D to this Eighth Amendment. Upon delivery of the 49th Floor Premises in the Delivery Condition, Tenant shall perform its obligations relating to the construction of the 49th Floor Premises described in the Tenant Work Letter attached hereto as Exhibit D and made a part hereof (the “Work Letter”). Tenant agrees that Tenant shall use commercially diligent efforts to complete Tenant’s Work (as such term is defined in the Work Letter) and move to the 49th Floor Premises in a timely expeditious manner. -------------------------------------------------------------------------------- (d) “Unavoidable Delays” shall mean delays or interruptions caused by strikes; labor, material or energy shortages not in effect as of the date of this Eighth Amendment; lockouts; failure of power; restrictive governmental laws or regulations not in effect as of the date of this Eighth Amendment; condemnations; riots; insurrections; war; fire or other casualty; acts of God; and other unforeseeable events or reasons not the fault or within the reasonable control of the party claiming the delay. Notwithstanding the foregoing, reasons such as and including lack of money, financial inability, economic uncertainty, failure to perform by any contractor, agent, vendor or consultant of such party claiming the delay (unless such failure to perform by such contractor, agent, vendor or consultant is the result of a delay described above), delays in applying for or obtaining permits for construction or occupancy, reasonably foreseeable governmental action or inaction, and failure to order long-lead items sufficiently in advance of the time needed shall not be Unavoidable Delays. Each party shall endeavor to provide notice to the other party once it is aware of an Unavoidable Delay affecting the first party’s obligations, provided, however, the failure of such party to do so shall have no impact whatsoever on whether an Unavoidable Delay has occurred. (e) Landlord shall allow Tenant reasonable access to the 49th Floor Premises prior to the Delivery Date for design and measurement purposes provided that Tenant gives Landlord reasonable advance notice and does not interfere with Landlord’s completion of the Delivery Condition. 4. Surrender of Premises. (a) Tenant shall surrender the Existing Premises in accordance with the terms hereof on or before thirty (30) days of its completion of Tenant’s Work, but in any event no later than 120 days following the Delivery Date (such date being herein referred to as the “Outside Delivery Date”). The Outside Delivery Date shall be extended day for day for Unavoidable Delays and Landlord Delays (hereinafter defined). The date upon which Tenant so surrenders the Existing Premises is herein referred to as the “Surrender Date”. From and after the Surrender Date, the term Premises as used in the Lease shall refer solely to the 49th Floor Premises. Notwithstanding anything in the Amended Lease to the contrary, including, without limitation, Section 16 thereof, in connection with such surrender of the Existing Premises Tenant shall have no obligation to remove any improvements or alterations in the Existing Premises, including, without limitation, any conduit or cable for voice and/or data, but Tenant shall be obligated to remove all furniture and equipment from the Existing Premises and shall surrender the Existing Premises in broom clean condition. During Tenant’s relocation from the Existing Premises to the 49th Floor Premises, Tenant’s agents, contractors, mechanics and movers shall work in harmony and not interfere with Landlord’s or another tenant’s agents, contractors, and mechanics. If at any time Tenant’s agents, contractors, mechanics or movers shall in the judgment of Landlord cause or threaten disharmony or interference, Landlord shall have the right to request that such agents, contractors, mechanics or movers immediately leave the Premises and the Building. (b) “Landlord Delays” shall mean the delay caused by Landlord’s failure to respond to a request for approval pursuant to Section 1 of Exhibit D, and shall be measured by the numbers of days from the date Landlord receives a request for second notice in accordance with the provisions of Section 1 of Exhibit D through the date on which Landlord responds to such request or is deemed to have approved such request in accordance with the terms of Section 1 of Exhibit D. (c) Section 16 of the Amended Lease is amended to provide that, notwithstanding anything contained therein to the contrary, in connection with the surrender of the 49th Floor Premises upon the expiration of the Term or upon the termination of Tenant’s right of possession, Tenant shall have no obligation to remove any conduit or cable for voice and/or data from the 49th Floor Premises -------------------------------------------------------------------------------- 5. Rent. (a) Notwithstanding anything in the Amended Lease to the contrary, Tenant shall pay to Landlord all Rent and all other sums due under the Lease by electronic wire transfer. Electronic wire transfer payments shall be made to Capital One Bank, 1407 Broadway, New York, New York 10018, for the benefit of 233 S. Wacker LLC, ABA #021407912, Account No. 2744061249 (FEIN #27-1175316). Landlord may from time to time designate in writing alternate payment directions and, in such event, payments shall be made at such other place as so directed. (b) Subject to the remainder of this Section 5 and other terms and conditions set forth in this Eighth Amendment, it is agreed that (i) through September 30, 2014, Tenant shall continue to pay Rent as set forth in the Amended Lease, (ii) from and after October 1, 2014, Tenant shall (x) pay Base Rent in accordance with Exhibit B attached hereto and made a part hereof (which Base Rent is calculated on 53,894 square feet of Rentable Area notwithstanding Tenant’s occupancy during a portion of such period of the Existing Premises (containing 80,612 square feet of Rentable Area)); and (y) pay Additional Rent in accordance with the terms of the Lease but Tenant’s Proportionate Share for purposes of determining Taxes payable by Tenant under the Lease shall be 1.5265%, and Tenant’s Proportionate Share for purposes of determining Operating Expense payable by Tenant under the Lease shall be 1.6406% (which calculations are calculated on 53,894 square feet of Rentable Area notwithstanding Tenant’s occupancy during a portion of such period of the Existing Premises (containing 80,612 square feet of Rentable Area)). (c) All Rent shall be paid in the same manner and time as set forth in Sections 2 and 3 of the Amended Lease. Landlord agrees that, subject to the remainder of this Section 5, Tenant’s Proportionate Share shall be adjusted proportionately, only if the number of square feet of Rentable Area in the Premises is increased or decreased following the Surrender Date or if the aggregate amount of office or retail space in the Building is either increased or decreased. (d) Notwithstanding anything herein or in the Amended Lease (including, without limitation, Section 17 of the Original Lease) to the contrary, but subject to the provisions of the remainder of this Section 5(d), in the event Tenant fails to surrender all or a portion of the Existing Premises as provided in Section 4 above on or before the Outside Delivery Date, Tenant shall pay Rent for both the total square footage in the entire Existing Premises (being 80,612 square feet) and the total square footage in the 49th Floor Premises (being 53,894 square feet) during the period commencing on the Outside Delivery Date and continuing during the period that Tenant retains possession of all or a portion of the Existing Premises and the 49th Floor Premises. In such case, (x) the Base Rent for both the Existing Premises and the 49th Floor Premises shall be computed at the per square foot rental rates set forth on Exhibit B attached -------------------------------------------------------------------------------- hereto (y) Additional Rent for the 49th Floor Premises shall be computed utilizing the Proportionate Shares set forth above and (z) Additional Rent for the Existing Premises shall be computed utilizing the Proportionate Shares for the Existing Premises set forth in the Amended Lease. In addition, if Landlord notifies Tenant in writing that Tenant’s failure to surrender the Existing Premises as provided in Section 4 above may, in Landlord’s good faith judgment, result in Landlord incurring damages, and Tenant fails to surrender all of the Existing Premises within ten (10) days of receipt of Landlord’s notice, then (x) the Base Rent and Additional Rent for all of the Existing Premises shall be charged at 200% of the amounts set forth above in this Section 5(d), and Tenant shall be liable to Landlord for all damages, costs and expenses (including, without limitation, consequential damages) incurred as a result of such holdover, including without limitation, any losses from Landlord’s inability to timely fulfill its obligations to any subsequent tenants of the Premises or portions thereof. The provisions of this Section shall not be deemed to be a waiver of Landlord’s right to re-entry or right to regain possession by actions at law or in equity, and any receipt of payment of the foregoing rent by Landlord shall not be deemed a consent by Landlord to Tenant’s remaining in possession or be construed as creating or renewing any lease term or right of tenancy. (e) If Tenant has surrendered the Existing Premises as provided herein, and if Tenant is not in Default under the Lease on the date any such installment is due, each of the monthly installments of Base Rent and Additional Rent due under the Lease for the months of October 2015, October 2016, October 2017, October 2018, October 2019 and October 2020 shall be abated in full and shall not be payable by Tenant (the “Extension Term Rent Abatement”). The unamortized portion of the Extension Term Rent Abatement shall become due and owing to Landlord in the event of a Default under the Lease. 6. Right of First Offer. All expansion rights, rights of first offer and rights of first refusal set forth in the Amended Lease are hereby deleted in their entirety. The following right of first offer (the “Right of First Offer”) is added to the Lease reading as follows: Subject to the preexisting rights of the existing tenants listed on Exhibit I attached hereto, if at any time during the Term, any space on the 50th floor of the Building (the “ROFO Space”) becomes available for lease and if Tenant is not then in Default under the Lease, then Landlord shall not lease the ROFO Space to any party without first giving Tenant (i) notice (the “ROFO Notice”) of the availability of the ROFO Space which shall include a description and depiction of the space, the proposed term, including the date such ROFO Space will be available, and rental rate (including escalations, if any), abatements and allowances, if any, and other economic concessions that Landlord believes that it would agree to with respect to the ROFO Space (collectively the “Offered Terms”) and such modifications to the Offered Terms which would be required if Tenant were to exercise the Right of First Offer (hereinafter defined) on account of the fact that the remaining Term may be longer or shorter than that proposed by Landlord in the Offered Terms (the “Modified Offered Terms”) and (ii) five (5) business days after the date of such notice in which to commit in writing to lease the ROFO Space on the Modified Offered Terms for the remainder of Term, and otherwise on the terms, covenants and conditions contained in this Lease (the “Right of First Offer”). If Tenant fails, refuses or is otherwise unable to commit to such a lease within the five (5) business day period, Landlord shall have the right to lease the ROFO Space to any third party or parties on such terms as are acceptable to Landlord, provided, however, Landlord shall not lease such space to a third party or parties if the -------------------------------------------------------------------------------- net effective rental rate offered to such third party or parties is less than ninety two and one-half percent (92.5%) of the net effective rental rate delivered to Tenant without providing another five (5) business day period for Tenant to commit in writing to lease such ROFO Space for the remainder of the Term upon the revised Modified Offered Terms reflecting the same net effective rental rate as offered to such third party or parties. If Tenant commits to such Modified Offered Terms, Landlord and Tenant shall promptly execute an amendment to the Lease incorporating the ROFO Space into the Premises on the revised Modified Offered Terms. The Right of First Offer is personal to the Tenant first named in the Lease and may not be exercised by any assignee (other than a Permitted Assignee), subtenant or transferee. 7. Option of Tenant to Terminate Lease. Subject to the conditions set forth below, Tenant shall have the right to terminate this Lease effective as of September 30, 2021 or as of September 30, 2022, which right must be exercised by written notice (the “Termination Notice”) given to Landlord no later than September 30, 2020, which Termination Notice must set forth the proposed date of termination, i.e. September 30, 2021 or September 30, 2022 (the “Date of Termination”). Tenant shall pay to Landlord a fee (the “Termination Fee”) equal to the unamortized Transaction Costs (hereinafter defined) as of the Termination Date (using an interest rate of eight percent (8%) per annum, compounded monthly in advance). The term “Transaction Costs” as used herein shall mean the Allowance(to the extent paid by Landlord to Tenant), the Extension Term Rent Abatement, brokerage commissions for this Eighth Amendment and the value of the rent savings due to the early reduction in Tenant’s square footage, plus any rent concessions, rent abatements, tenant improvement allowances and broker’s commissions which Landlord has incurred in connection with this Lease as a result of Tenant’s exercise of the Right of First Offer. Attached hereto as Exhibit F and made a part hereof is Landlord’s estimated calculation of the Termination Fee for each of the aforesaid, Dates of Termination. At any time upon Tenant’s request (but no more than once per calendar year) Landlord shall provide an updated calculation of the Termination Fee for each of the aforesaid Dates of Termination. The Termination Fee shall be payable fifty percent (50%) upon the delivery of Tenant’s Termination Notice and fifty percent (50%) on or before the date which is thirty (30) days prior to the Date of Termination. If on the date that Tenant exercises its termination option or the Date of Termination, Tenant is in Default under the Lease, then Landlord shall have the option, upon written notice to Tenant, to declare Tenant’s election to terminate the Lease void and of no effect. The Termination Right is personal to the Tenant first named in the Lease and may not be exercised by any assignee (other than a Permitted Assignee), subtenant or transferee. 8. Tenant’s Option To Renew. All options to renew the Amended Lease are hereby deleted in their entirety. The following renewal right is added to the Lease reading as follows: The Tenant is hereby granted two (2) five (5) year options to renew the Lease (“Renewal Option”). If the Tenant desires to exercise the Renewal Option, it shall so notify the Landlord, in writing, not later than twelve (12) months prior to the then current expiration date of the Term. Such notice shall only be effective if delivered at a time when the Tenant is not in Default hereunder. Within thirty (30) days following its receipt of Tenant’s notice of its desire to exercise the Renewal Option, given at the time and in the manner provided above, Landlord shall prepare and transmit to Tenant an appropriate amendment to this Lease extending the Term for -------------------------------------------------------------------------------- five (5) years (each a “Renewal Term”; the first such five (5) year period being herein referred to as the “First Renewal Term” and the second such five (5) year period being herein referred to as the “Second Renewal Term”) and specifying (i) the Base Rent for such extension, which shall be the base rental rate for tenants of comparable size and location renewing leases in first-class office buildings located in downtown Chicago, including, but not limited to, the Building taking into account any tenant improvement allowances, commissions, abatements and other concessions granted as reasonably determined by Landlord and evidenced by recent transactions which shall be disclosed to Tenant (“Market Rent”) and (ii) that all other terms and conditions during the Renewal Term are the same as those during the Term, except for any tenant improvement allowances, abatements, other concessions, rights of first offer, expansion rights, termination rights, reduction rights; and renewal rights (other than for Tenant’s right to exercise the Renewal Option for the Second Renewal Term if Tenant has exercised the Renewal Option for the First Renewal Term) unless reflected in the Market Rent. If Tenant disagrees with Landlord’s estimation of the Market Rent, it must so notify Landlord in writing within twenty (20) days after Tenant’s receipt of Landlord’s proposed Market Rent and Tenant shall specify Tenant’s estimation of the Market Rent in such notice. If the parties are unable to agree on the Market Rent for the Renewal Term within ten (10) days following Landlord’s receipt of Tenant’s estimation of the Market Rent (such ten (10) day period being herein referred to as the “Negotiation Period”), Tenant shall, within five (5) days following the expiration of the Negotiation Period, elect in writing to (x) promptly enter into binding arbitration in accordance with the provisions of Section 9 of this Eighth Amendment or (y) revoke its right to exercise the Renewal Option, in which case Tenant shall have no further rights under this Section 8 (and Tenant’s exercise of the Renewal Option and any subsequent Renewal Option shall be of no force or effect) and Landlord may lease the 49th Floor Premises to a third party free of the provisions of this Section 8. In the event Tenant fails to timely make such election, Tenant shall be deemed to have elected to enter into binding arbitration in accordance with the provisions of Section 9 of this Eighth Amendment. Once Tenant elects, or is deemed to have elected, to enter into binding arbitration in accordance with the provisions of Section 9 hereof, it may not revoke its exercise of the Renewal Option. Tenant shall execute and deliver the lease amendment extending the Term (x) within fifteen (15) days of the determination of the Market Rent, if the Market Rent is determined by arbitration in accordance with Section 9 below or (y) within fifteen (15) days of the determination of Market Rent, if the parties are able to reach agreement between themselves prior to arbitration. If Tenant shall be in Default hereunder at the commencement date of any Renewal Term, then, at Landlord’s option, Tenant’s purported exercise of its Renewal Option and any subsequent Renewal Option shall be of no force or effect and the Renewal Option shall become null and void. The Renewal Options are personal to the Tenant first named in the Lease and may not be exercised by any assignee (other than a Permitted Assignee), subtenant or transferee. 9. Arbitration. In the event of the failure of the parties to agree as to the Market Rent for the Renewal Term such matter shall be submitted to arbitration as hereinafter provided. Landlord and Tenant shall each appoint a fit and impartial person as arbitrator who shall have had at least ten (10) years’ experience in the commercial real estate industry and the downtown Chicago office market. Such an appointment shall be signified in writing by each party to the other. The arbitrators so appointed shall appoint a third arbitrator having at least ten (10) years experience in the commercial real estate industry in the downtown Chicago office market within -------------------------------------------------------------------------------- ten (10) days after the appointment of the second arbitrator. In the case of the failure of such arbitrators (or the arbitrators appointed as hereinafter provided) to agree upon a third arbitrator, such third arbitrator shall be appointed by the American Arbitration Association, or its successor, from its qualified panel of arbitrators, and shall be a person having at least ten (10) years’ experience in the commercial real estate industry in the downtown Chicago office market. In the case either party shall fail to appoint an arbitrator within a period of ten (10) days after written notice from the other party to make such appointment, then the American Arbitration Association shall appoint a second arbitrator having at least ten (10) years’ experience in the commercial real estate industry in the downtown Chicago office market. In determining Market Rent the arbitrators shall take into account all free rent periods, improvement allowances and other concessions and all other relevant factors. The third arbitrator shall proceed with all reasonable dispatch to select either Landlord’s estimate or Tenant’s estimate of the Market Rent and in no event shall the arbitrator have the right (i) to average the Market Rent estimates submitted by Landlord or Tenant or (ii) to choose another number The parties shall have the right to submit to the third party arbitrator the testimony of expert and other witnesses as well as written materials to support their position. The decision of the arbitrator shall in any event be rendered within thirty (30) days after his/her appointment, or within such other period as the parties shall agree, and such decision shall be in writing and in duplicate, one counterpart thereof to be delivered to each of the parties and shall state the reason for such decision. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association (or its successor) and applicable Illinois law, and the decision of the third arbitrator shall be binding, final and conclusive on the parties. The fees of the third arbitrator and the expenses incident to the proceedings shall be split by Landlord and Tenant, but each party shall bear the cost of the fees of the respective counsel and arbitrator engaged by such party, and the fees of expert witnesses and other witnesses called for by such party. 10. Modifications. The Amended Lease is hereby amended as follows:     (a) The second paragraph of Section 3(b) of the Original Lease is hereby amended to provide that any audit to be conducted by or on behalf of Tenant may not be performed by any auditors employed on a contingency basis.     (b) The first paragraph of Section 6(a)(i) of the Original Lease is hereby amended to read as follows: “(i) Heating and air conditioning in the Premises from Monday through Friday , from 8 a.m. to 6 p.m. and on any Saturday which is not a Holiday from 8 a.m. to 1 p.m. Landlord will operate the system of distribution ducts, supply registers and diffusers, return grilles and associated fixtures to provide in the Premises, heating and air conditioning with capacity to provide the following results during the business hours set forth above; which heating and air conditioning shall, within tolerances normal in first class office buildings, be capable of providing the following: (a) air conditioning which shall be capable of maintaining inside space conditions of seventy-eight degrees (78°) Fahrenheit dry bulb and fifty -------------------------------------------------------------------------------- percent (50%) relative humidity when outside conditions are ninety-two degrees (92°) Fahrenheit dry bulb and seventy-five degrees (75°) Fahrenheit wet bulb and (b) heating which shall be capable of maintaining inside space conditions of not less than seventy-two degrees (72°) Fahrenheit when outside air temperatures are not less than minus ten degrees (-10°) Fahrenheit and not more than sixty-five degrees (65°) Fahrenheit. The foregoing is based upon occupancy density of not more than one (1) person per hundred (100) square feet of floor area, and a maximum electric lighting and office machine load of five (5) watts per square foot of floor area.”     (c) Section 6(a)(ii) of the Original Lease is hereby amended to read as follows: “(ii) Electricity for the lighting fixtures and incidental use in the Premises of up to five (5) watts per square foot of rentable area within the Premises. Distribution within the Premises is at Tenant’s expense, although Tenant may use any existing conduit system within the Premises, not being used by a building system. All electricity used in the Premises other than for building standard lighting fixtures shall be separately metered by a meter or meters to be installed by ComEd, except that if a meter is currently in place Tenant may elect to use the same. Tenant must coordinate with ComEd for the installation of a new meter(s) or if a meter is currently in place for the necessary changes to the ComEd account (i.e. change in name, etc.), and Landlord shall cooperate (at no cost to Landlord) with Tenant in such coordination. Tenant agrees to pay for such electricity directly to the utility providing such electricity. As of the date hereof, the current electricity rate for Building standard lighting is $.52 per rentable square foot, which rate is based upon 260 hours of usage per month, and which rate is subject to change from time to time. Tenant shall bear the cost of providing all light fixtures and replacement of all lamps, tubes, ballasts and starters for lighting fixtures. If Tenant’s requirements for electricity for incidental uses exceed standard usage based on the 5 watts per square foot of rentable area within the Premises for lighting and incidental use, then Landlord reserves the right to require Tenant to install the conduit, wiring and other equipment necessary to supply electricity for such excess incidental use requirements at Tenant’s expense by arrangement with Commonwealth Edison Company or another approved local utility. If Tenant’s actual usage of electricity for lighting exceeds standard usage, based on the 5 watts per square foot of rentable area within the Premises for lighting and incidental use, then Landlord may charge and collect from Tenant a fee for such excess usage, the amount of such fee to be reasonably determined by Landlord. With respect to electricity for lighting, electricity for standard building hours per month will be provided by Landlord as part of Operating Expenses. Tenant shall be billed monthly for all overtime hours of lighting in excess of standard building hours per month.” --------------------------------------------------------------------------------   (d) The proviso to the penultimate sentence of Section 6(b) of the Original Lease is hereby deleted in its entirety and the following is inserted in lieu thereof: “provided, however, that if such services are so interrupted (not as a result of an act or omission of Tenant or fire or casualty), at least twenty-five percent (25%) of the Premises is rendered untenantable for a period of three (3) consecutive months, and Landlord is unable to substitute other space in the Building, then Tenant may terminate this Lease upon ten (10) business days prior written notice to Landlord and, unless such services are restored to the Premises during such ten (10) business day period, this Lease shall terminate and the parties shall have no further obligations hereunder.”     (e) Section 6(f) is hereby added to the Lease reading as follows: “(f) Security. Landlord and Tenant recognize the existence of certain societal problems which, depending on the circumstances at the time, may necessitate the employment of certain security measures in the day-to-day operation of the Premises and Building. Tenant hereby agrees to the exercise by Landlord and its agents of such security measures, including but not limited to, the search of all persons entering or leaving the Building, the evacuation of the Building for cause, suspected cause, or for drill purposes, the denial of any access to the Building, and other similarly related actions that Landlord deems necessary to prevent any threat of property damage or bodily injury. Notwithstanding anything herein to the contrary, the exercise of such security measures by Landlord and the resulting interruption of service and/or cessation of Tenant’s business, if any, shall never be deemed an eviction or disturbance of Tenant’s use and possession of the Premises, or any part thereof, or render Landlord liable to Tenant for any resulting damages, or relieve Tenant from paying Rent or performing any of its obligations under this Lease. Tenant agrees to cooperate with Landlord in complying with the obligations set forth in the City of Chicago High Rise Building Emergency Procedures Ordinance (the “Ordinance”) and any and all similar laws and ordinances and the rules and regulations promulgated pursuant thereto and Tenant agrees to make the necessary personnel of Tenant available to fulfill the “tenant” obligations under the aforesaid Ordinance, including, without limitation, those of the Fire Wardens and Emergency Evacuation Teams (as such terms are defined in the Ordinance).”     (f) Section 6(g) is hereby added to the Lease reading as follows: “Tenant may install, in accordance with the provisions of Article 8 of the Original Lease, supplementary air conditioning units in the Premises, and Tenant shall pay for the cost of installation and maintenance, repair and replacement thereof. Tenant may obtain condenser water in accordance -------------------------------------------------------------------------------- with the Condenser Water Addendum attached hereto as Exhibit G (and Exhibit G shall supersede Exhibit E to the Original Lease). The initial connection fee shall be waived. Tenant shall pay for all condenser water consumption used thereby within thirty (30) days after Tenant’s receipt of Landlord’s invoice therefor. The current charge for condenser water is $250 per ton, per year, but is subject to change.”     (g) Section 9 of the Original Lease is hereby amended to add a second paragraph thereto reading as follows: “Notwithstanding anything in this Lease to the contrary, Tenant covenants and agrees not to suffer or permit any equipment lien to attach to any of the fixtures or improvements in the Premises, whether installed and/or paid for by Landlord or Tenant.”     (h) Section 10(a) of the Original Lease is hereby amended to provide that the waiver of subrogation is applicable to the deductible under the insurance policies and accordingly the following is hereby added to the end of the first sentence thereof: “, it being understood and agreed that the foregoing waiver shall also apply to the deductible under any such policy.”     (i) Section 12 of the Original Lease is hereby amended to add the following last paragraph thereto: “The provisions of this Section 12 shall survive the expiration of the Term or earlier termination of this Lease or the termination of Tenant’s right to possession of the Premises.”     (j) Section 15 of the Original Lease is hereby amended to provide that notwithstanding anything contained in the Amended Lease to the contrary, all expansion rights, renewal rights, reduction rights, termination rights, and rights of first offer, shall be deemed personal to the Tenant first named in the Lease and may not be exercised by any assignee (other than a Permitted Assignee), subtenant or transferee.     (k) The reference to “fifty percent (50%) of either the 42nd Floor Premises or 70th Floor Premises” in Section 15(c) of the Original Lease is hereby amended to read “fifty percent of the 49th Floor Premises.”     (l) Section 26(i) of the Original Lease is hereby amended to read as follows: “(i) Transfer of Landlord’s Interest. Tenant agrees that Landlord has the right to transfer its interest in the Land and Building and in this Lease. If such a transfer occurs and such transferee assumes the obligations under this Lease, Landlord shall automatically be released from all liability under this Lease arising after the date of such transfer and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations hereunder arising after the date of such transfer. Tenant further acknowledges that the Landlord may assign its interest in this -------------------------------------------------------------------------------- Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.”     (m) Section 26(j) of the Original Lease is hereby amended to read as follows: “(j) Landlord’s Title. Nothing herein contained shall empower Tenant to commit or engage in any act which can, shall or may encumber the estate of Landlord.”     (n) Section 26(p) of the Original Lease is hereby amended to read as follows: “(p) Definition of Landlord. All indemnities of Tenant contained herein which inure to the benefit of Landlord shall be construed to also inure to the benefit of (i) Landlord’s beneficiaries if Landlord is a trust, (ii) Landlord’s partners if Landlord is a partnership, (iii) Landlord’s shareholders, officers and directors if Landlord is a corporation, (iv) Landlord’s members and managers if Landlord is a limited liability company, (v) any current or future mortgagees of the Land and/or Building, (vi) the successors and assigns of any of the foregoing, and (vii) the respective beneficiaries, shareholders, members, directors, officers, partners, agents and employees, agents, managers, affiliates and employees of any persons mentioned in clauses (i) through (vi) above.”     (o) Section 26(u) and (v) of the Original Lease are hereby deleted in their entirety.     (p) Section 28 of the Original Lease is hereby amended to read as follows: “LIMITATION OF LIABILITY. Tenant, and any person claiming an interest in the Premises through or under Tenant, each agree to look solely to the interests of Landlord, from time to time in the Land and Building, and no judgments against such persons may be satisfied out of any other assets. In no event shall Landlord, (or any of its members, officers, directors, agents, advisors, managers, shareholders, partners, beneficiaries, affiliates or successors and assigns) ever have any personal liability for any covenant, agreement, obligation, warranty, representation, indemnity or undertaking under this Lease or otherwise or be answerable or liable in any equitable, judicial or administrative proceeding or order.” 11. Patriot Act. As an inducement to Landlord to enter into this Eighth Amendment, Tenant hereby represents and warrants that: (i) Tenant is not a person, group, entity or nation named on any list issued by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) pursuant to Executive Order 13224 or any similar list or any law, order, rule or regulation or any Executive Order of the President of the United States as a terrorist, “Specially Designated National and Blocked Person” or other banned or blocked person (any such person, group, entity or nation being hereinafter referred to as a “Prohibited Person”); (ii) based solely on statements contained in Schedules 13D or 13G or Forms 3 or 4 -------------------------------------------------------------------------------- filed with the Securities and Exchange Commission, no more than 5% of Tenant’s equity securities are owned by any Prohibited Person, (iii) to Tenant’s Actual Knowledge (as hereinafter defined), Tenant is not owned by any person, group, entity or nation which is a Prohibited Person, (iv) Tenant is not, directly or indirectly, controlled by any person, group, entity or nation which is) acting directly or indirectly for or on behalf of any Prohibited Person; and (v) neither Tenant, nor any person, group, entity or nation which controls Tenant, directly or indirectly, has conducted or will conduct business or has engaged or will engage in any transaction or dealing with any Prohibited Person, including without limitation any assignment of this Lease or any subletting of all or any portion of the Premises or the making or receiving of any contribution of funds, goods or services to or for the benefit of a Prohibited Person. In connection with the foregoing, is expressly understood and agreed that (x) any breach by Tenant of the foregoing representations and warranties shall be deemed a Default by Tenant under Section 22 of the Lease and shall be covered by the indemnity provisions of Section 12 of the Lease, and (y) the representations and warranties contained in this subsection shall be continuing in nature and shall survive the expiration or earlier termination of the Lease. For purposes herein, “Tenant’s Actual Knowledge” shall mean the actual knowledge of Julie Creed, Vice President of Investor Relations, as of the date hereof and without any duty to investigate. 12. License Agreement. Landlord’s predecessor in interest and Tenant are parties to that certain License Agreement dated as of March 6, 2001, as amended by First Amendment to License Agreement dated as of November 17, 2009 (together, the “License Agreement”). Pursuant to the License Agreement, Landlord licensed to Tenant a path to interconnect Tenant’s data system located in Tenant’s Premises on the 42nd floor with Tenant’s Premises located on the 70th floor of the Building. The parties agree that, notwithstanding anything in the License Agreement to the contrary, the License Agreement (other than any indemnities contained therein) shall terminate as of Surrender Date. 13. Signage. Subject to Landlord’s reasonable review and approval, Tenant shall be permitted to install Building standard signage within the elevator lobby on any full floor leased by Tenant and at the entrance to its Premises on any floor on which it is then located and within fifteen (15) feet of the entry door to the 49th Floor Premises. Tenant will also have the right to non-exclusive Building standard signage on the 33rd transfer floor using Tenant’s corporate logo, but otherwise in accordance with the Building standards. Attached herto as Exhibit H is the approved layout and dimensions of Tenant’s signage for both the 49th Floor Premises and the 33rd transfer floor. 14. SNDA. Landlord shall obtain for Tenant a subordination non-disturbance and attornment agreement from Landlord’s Mortgagee on Mortgagee’s current form, but, specifically including Mortgagee’s obligation, in the event Mortgagee takes title to the Building, (i) to deliver the 49th Floor Premises in the Delivery Condition, and (ii) to recognize Tenant’s set-off right contained in Section 3(i) of the Work Letter. 15. Rules and Regulations. Without otherwise modifying the terms and conditions of Section 21 of the Original Lease, the Rules and Regulations attached hereto as Exhibit E hereby replace and supercede the Rules and Regulations attached to the Amended Lease. -------------------------------------------------------------------------------- 16. Riser Space. Landlord shall cause its riser management company to work with Tenant to reasonably accommodate Tenant’s reasonable requirements for riser space for its communications equipment. 17. Brokers. Tenant represents and warrants to Landlord that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker, other than U.S. Equities Asset Management, LLC (“US Equities”) and DTZ (“DTZ”) in the negotiation or making of this Eighth Amendment, and Tenant agrees to indemnify and hold harmless Landlord from any and all claims, liability, costs and expenses (including attorneys’ fees) incurred as a result of any inaccuracy in the foregoing representation and warranty. Landlord represents and warrants to Tenant that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker, other than US Equities and DTZ in the negotiation or making of this Amendment and Landlord agrees to indemnify and hold harmless Tenant from any and all claims, liability, costs and expenses (including attorneys’ fees) incurred as a result of any inaccuracy in the foregoing representation and warranty. Landlord shall pay all of the commissions due to US Equities and DTZ for the Extension Term pursuant to separate agreement dated May 19, 2014. Each party represents and warrants to the other that no other commissions are due and payable with respect to the Lease or this Eighth Amendment (including, without limitation, for the Renewal Options). 18. Section Headings. The various headings of this Eighth Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Eighth Amendment or the Amended Lease. 19. Successors and Assigns. This Eighth Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 20. Governing Law. Interpretation of this Eighth Amendment shall be governed by the laws of the State of Illinois. 21. No Other Consideration. The mutual obligations of the parties as provided herein are the sole consideration for this Eighth Amendment and no representations, promises or inducements have been made by the parties other than as appear in this Eighth Amendment. This Eighth Amendment may not be amended except in writing signed by both parties. 22. Counterparts. This Eighth Amendment may be executed in any number of counterparts and by each of the undersigned on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts put together shall constitute but one and the same Eighth Amendment. 23. Full Force and Effect. Except as modified herein the Lease is hereby ratified and confirmed and the terms, covenants, conditions and agreements therein contained remain in full force and effect. -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first above written.   LANDLORD 233 S. WACKER LLC, a Delaware limited liability company By:   /s/ unintelligible Name:     Its:     TENANT HEIDRICK & STRUGGLES, INC., a Delaware corporation By: /s/ Richard W. Pehlke Name: Richard W. Pehlke Its: Executive Vice President and Chief Financial Officer
Exhibit 10.2   Published CUSIP Number:                    $2,750,000,000   CREDIT AGREEMENT   Dated as of August 1, 2007   among   HEALTH CARE PROPERTY INVESTORS, INC., as Borrower   THE LENDERS PARTY HERETO FROM TIME TO TIME,   BANK OF AMERICA, N.A., as Administrative Agent,   BANC OF AMERICA SECURITIES LLC, BARCLAYS BANK PLC and UBS SECURITIES LLC, as Joint Lead Arrangers   BANC OF AMERICA SECURITIES LLC, BARCLAYS CAPITAL and UBS SECURITIES LLC, as Joint Bookrunners   UBS SECURITIES LLC, as Syndication Agent   and   BARCLAYS BANK PLC, JPMORGAN CHASE BANK, N.A. and WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agents   Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina  28202   --------------------------------------------------------------------------------   TABLE OF CONTENTS   Section     Page         ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1 1.01   Defined Terms 1 1.02   Other Interpretive Provisions 21 1.03   Accounting Terms 22 1.04   Rounding 22 1.05   Times of Day 23         ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS 23 2.01   Loans 23 2.02   Borrowings, Conversions and Continuations of Loans 23 2.03   [Intentionally Omitted] 24 2.04   [Intentionally Omitted] 24 2.05   [Intentionally Omitted] 24 2.06   Prepayments 24 2.07   Termination or Reduction of Commitments 25 2.08   Repayment 25 2.09   Interest 26 2.10   Fees 26 2.11   Computation of Interest and Fees 27 2.12   Evidence of Debt 27 2.13   Payments Generally; Administrative Agent’s Clawback 27 2.14   Sharing of Payments by Lenders 29 2.15   Extension of Maturity Date 30 2.16   [Intentionally Omitted]. 31         ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 31 3.01   Taxes 31 3.02   Illegality 33 3.03   Inability to Determine Rates 33 3.04   Increased Costs; Reserves on Eurodollar Rate Loans 34 3.05   Compensation for Losses 35 3.06   Mitigation Obligations; Replacement of Lenders 36 3.07   Survival 36         ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 36 4.01   Conditions of Initial Credit Extension 36         ARTICLE V REPRESENTATIONS AND WARRANTIES 38 5.01   Existence, Qualification and Power; Compliance with Laws 38 5.02   Authorization; No Contravention 39 5.03   Governmental Authorization; Other Consents 39 5.04   Binding Effect 39 5.05   Financial Statements; No Material Adverse Effect 39   i --------------------------------------------------------------------------------   5.06   Litigation 40 5.07   No Default 40 5.08   Ownership of Property; Liens; Leases 40 5.09   Environmental Compliance 41 5.10   Insurance 41 5.11   Taxes 41 5.12   ERISA Compliance 42 5.13   Margin Regulations; Investment Company Act; REIT Status 42 5.14   Disclosure 42 5.15   Compliance with Laws 43 5.16   Intellectual Property; Licenses, Etc. 43 5.17   Use of Proceeds 43 5.18   Taxpayer Identification Number. 43 5.19   Acquisition Documents. 44         ARTICLE VI AFFIRMATIVE COVENANTS 44 6.01   Financial Statements 44 6.02   Certificates; Other Information 45 6.03   Notices. 47 6.04   Payment of Obligations 47 6.05   Preservation of Existence, Etc. 48 6.06   Maintenance of Properties 48 6.07   Maintenance of Insurance. 48 6.08   Compliance with Laws. 49 6.09   Books and Records. 49 6.10   Inspection Rights. 49 6.11   Use of Proceeds. 49 6.12   REIT Status. 49 6.13   Employee Benefits. 50         ARTICLE VII NEGATIVE COVENANTS 50 7.02   Investments. 51 7.03   Indebtedness. 51 7.04   Fundamental Changes 52 7.05   Dispositions. 52 7.06   Restricted Payments. 52 7.07   Change in Nature of Business. 52 7.08   Transactions with Affiliates. 52 7.09   Burdensome Agreements. 53 7.10   Financial Covenants. 52         ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 54 8.01   Events of Default. 54 8.02   Remedies Upon Event of Default. 56 8.03   Application of Funds. 57   ii --------------------------------------------------------------------------------   ARTICLE IX ADMINISTRATIVE AGENT 58 9.01   Appointment and Authority. 58 9.02   Rights as a Lender. 58 9.03   Exculpatory Provisions. 58 9.04   Reliance by Administrative Agent. 59 9.05   Delegation of Duties. 59 9.06   Resignation of Administrative Agent. 60 9.07   Non-Reliance on Administrative Agent and Other Lenders. 60 9.08   No Other Duties, Etc. 61 9.09   Administrative Agent May File Proofs of Claim. 61         ARTICLE X MISCELLANEOUS 62 10.01   Amendments, Etc. 62 10.02   Notices; Effectiveness; Electronic Communication. 63 10.03   No Waiver; Cumulative Remedies. 64 10.04   Expenses; Indemnity; Damage Waiver. 65 10.05   Payments Set Aside. 66 10.06   Successors and Assigns. 67 10.07   Treatment of Certain Information; Confidentiality. 71 10.08   Right of Setoff. 71 10.09   Interest Rate Limitation. 72 10.10   Counterparts; Integration; Effectiveness. 72 10.11   Survival of Representations and Warranties. 72 10.12   Severability. 73 10.13   Replacement of Lenders. 73 10.14   Governing Law; Jurisdiction; Etc. 74 10.15   Waiver of Jury Trial. 75 10.16   No Advisory or Fiduciary Responsibility. 75 10.17   USA Patriot Act Notice. 76 10.18   Delivery of Signature Page. 76   iii --------------------------------------------------------------------------------   SCHEDULES   2.01 Commitments and Applicable Percentages   10.02 Administrative Agent’s Office; Certain Addresses for Notices         EXHIBITS     Form of   A Bridge Loan Notice   B Note   C Compliance Certificate   D Assignment and Assumption   E Opinions     iv --------------------------------------------------------------------------------   CREDIT AGREEMENT   This CREDIT AGREEMENT, dated as of August 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party hereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, BARCLAYS CAPITAL, as Joint Lead Arranger, Joint Bookrunner and Co-Documentation Agent, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, and WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent.   WHEREAS, the Borrower has requested that the Lenders provide a bridge loan facility, and the Lenders are willing to do so on the terms and conditions set forth herein.   NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:   ARTICLE I   DEFINITIONS AND ACCOUNTING TERMS   1.01                        Defined Terms.   As used in this Agreement, the following terms shall have the meanings set forth below:   “Acquired Business” means Slough Estates USA, Inc., a Delaware corporation.   “Acquisition” means the acquisition of all of the capital stock or other Equity Interests of the Acquired Business.   “Acquisition Documents” means the collective reference to the Purchase Agreement, each amendment or supplement thereto and each other agreement entered into in connection therewith relating to the Acquisition.   “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.   “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.   “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.   --------------------------------------------------------------------------------   “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.   “Agents” means the Administrative Agent, the Arrangers, the Bookrunners, the Syndication Agent and the Documentation Agents.   “Aggregate Commitments” means the Commitments of all Lenders.  The Aggregate Commitments on the Closing Date are $2,750,000,000.   “Agreement” means this Credit Agreement.   “Applicable Percentage” means, for each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of such Lender’s Commitment at such time and the denominator of which is the amount of the Aggregate Commitments at such time.  The initial Applicable Percentages of each Lender are set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.   “Applicable Rate” means, for Loans, from time to time, the number of basis points per annum set forth in the following table based upon the Debt Rating as set forth below:   Pricing Level   Debt Ratings   Applicable Rate for Eurodollar Rate Loans   Applicable Rate for Base Rate Loans   1   ³A- from S&P/ ³A3 from Moody’s   42.5 bps   0 bps   2   ³BBB+ from S&P/ ³Baa1 from Moody’s   52.5 bps   0 bps   3   ³BBB from S&P/ ³Baa2 from Moody’s   70 bps   0 bps   4   ³BBB- from S&P/ ³Baa3 from Moody’s   95 bps   0 bps     2 --------------------------------------------------------------------------------   Pricing Level   Debt Ratings   Applicable Rate for Eurodollar Rate Loans   Applicable Rate for Base Rate Loans   5   <BBB- from S&P/ <Baa3 from Moody’s or nonrated by both S&P and Moody’s   125 bps   0 bps     “Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s non-credit enhanced, senior unsecured long-term debt; provided that if a Debt Rating is issued by each of the foregoing rating agencies, then the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5 being the lowest), unless there is a split in Debt Ratings of more than one level, in which case the Pricing Level that is one level higher than the Pricing Level of the lower Debt Rating shall apply.   Initially, the Applicable Rate shall be determined based upon the Debt Rating specified in the certificate delivered pursuant to Section 4.01(a)(vi).  Thereafter, each change in the Applicable Rate shall occur on the first Business Day following the effective change in the Debt Rating.   “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.   “Arrangers” means Banc of America Securities LLC and UBS Securities LLC, each in its capacity as joint lead arranger and joint bookrunner.   “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.   “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.   “Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.   3 --------------------------------------------------------------------------------   “Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2006, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.   “Bank Loan Agreement” means the credit agreement, dated as of August 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time), among the Borrower, as borrower, the lenders party thereto from time to time, Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer, Banc of America Securities LLC, as joint lead arranger and joint bookrunner, UBS Securities LLC, as joint lead arranger, joint bookrunner and syndication agent, Barclays Capital, as joint bookrunner and co-documentation agent, Citicorp North America, Inc., as co-documentation agent, Credit Suisse, Cayman Islands Branch, as co-documentation agent, Goldman Sachs Credit Partners L.P., as co-documentation agent, JPMorgan Chase Bank, N.A., as co-documentation agent, Wachovia Bank, National Association, as co-documentation agent, Wells Fargo Bank, N.A., as co-documentation agent, The Bank of Nova Scotia, as senior managing agent, Calyon New York Branch, as senior managing agent, Key Bank National Association, as senior managing agent, Merrill Lynch Bank USA, as senior managing agent, The Royal Bank of Scotland plc, as senior managing agent, and SunTrust Bank, as senior managing agent.   “Bank of America” means Bank of America, N.A. and its successors.   “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus ½ of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.   “Base Rate Loan” means a Loan that bears interest based on the Base Rate.   “Bookrunners” means Banc of America Securities LLC, UBS Securities LLC and Barclays Capital each in its capacity as joint bookrunner.   “Borrower” has the meaning specified in the introductory paragraph hereto.   “Borrower Material” has the meaning specified in Section 6.02.   “Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.   4 --------------------------------------------------------------------------------   “Bridge Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.   “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.   “Change in Law” means the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.   “Change of Control” means an event or series of events by which:   (a)                                  any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has 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 securities 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 that such person or group has the right to acquire pursuant to any option right); or   (b)                                 during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing 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 (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).   5 --------------------------------------------------------------------------------   “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.   “Closing Date Material Adverse Effect” means the occurrence since June 3, 2007 of any circumstance, change in or effect on the Acquired Business or its Subsidiaries that, when considered either alone or in combination, (a) is materially adverse to the assets, results of operations or the financial condition of the Acquired Business and its Subsidiaries, taken as a whole, or (b) prevents, materially impairs or materially delays the Acquired Business’ ability to consummate any of the transactions contemplated by the Purchase Agreement; provided, however, that none of the following, either alone or in combination, shall be considered in determining whether there has been a Closing Date Material Adverse Effect:  (i) general economic conditions in any of the markets or geographical areas in which the Acquired Business or any of its Subsidiaries operate (including the real estate market); (ii) any change in the United States’ financial, banking or capital markets in general; (iii) any calamity or other conditions generally affecting any of the industries in which the Acquired Business and its Subsidiaries operate (including the real estate market); (iv) acts of God or other calamities, national or international political or social conditions, including the engagement by any country in hostilities, whether commenced before or after the date hereof, and whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack; (v) changes in law or in GAAP or interpretations thereof, except, in the case of any event described in subclauses (i), (ii), (iii), (iv) and (v) above, to the extent such event materially and disproportionately affects the Acquired Business and its Subsidiaries, taken as a whole, relative to that of the competitors of the Acquired Business and its Subsidiaries; and (vi) the announcement of, or the taking of any action contemplated by, the Purchase Agreement and the other agreements contemplated hereby.   “Code” means the Internal Revenue Code of 1986.   “Commitment” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.   “Compliance Certificate” means a certificate substantially in the form of Exhibit C.   “Consolidated EBITDA” means the sum of (a) EBITDA of the Borrower and its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of EBITDA of each Material Joint Venture.   “Consolidated Fixed Charges” means, with respect to the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) Consolidated Interest Expense plus (b) Scheduled Principal Payments plus (c) dividends and distributions in respect of preferred stock (but excluding redemption payments or charges in connection with the redemption of preferred stock) of the Borrower and its Subsidiaries.   6 --------------------------------------------------------------------------------   “Consolidated Intangible Assets” means an amount equal to the Intangible Assets of the Borrower and its Subsidiaries on a consolidated basis.   “Consolidated Interest Expense” means the sum of (a) Interest Expense of the Borrower and its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of Interest Expense of each Material Joint Venture.   “Consolidated Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries, as determined in accordance with GAAP.   “Consolidated Tangible Net Worth” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to (a) Consolidated Shareholders’ Equity on such date minus (b) Consolidated Intangible Assets on such date.   “Consolidated Total Asset Value” means the sum of (a) Total Asset Value of the Borrower and its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of Total Asset Value of each Material Joint Venture.   “Consolidated Total Indebtedness” means the sum of (a) Indebtedness of the Borrower and its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of Indebtedness of each Material Joint Venture; provided that Consolidated Total Indebtedness shall not include security deposits, accrued liabilities or prepaid rent, each as defined in accordance with GAAP.   “Consolidated Unencumbered Asset Value” means the sum of (a) Unencumbered Asset Value of the Borrower and the Borrower’s Pro Rata Share of Unencumbered Asset Value of its Subsidiaries on a consolidated basis plus (b) without duplication, the Borrower’s Pro Rata Share of Unencumbered Asset Value of each Material Joint Venture.   “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.   “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.   “Credit Extension” means a Borrowing.   “Debt Rating” has the meaning specified in the definition of “Applicable Rate.”   “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,   7 --------------------------------------------------------------------------------   rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.   “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.   “Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.   “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.   “Development Property” means any real property in which the development and construction with respect thereto are not complete.   “Disposition” or “Dispose” means the sale, transfer or assignment (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, in any case other than sales or other dispositions of assets in the ordinary course of business.   “Documentation Agent” means each of Barclays Bank PLC, JPMorgan Chase Bank, N.A., and Wachovia Bank, National Association, in their capacity as Co-Documentation Agents.   “Dollar” and “$” mean lawful money of the United States.   “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.   “EBITDA” means, for any period, for a Person and its Subsidiaries on a consolidated basis, an amount equal to the Net Income of such Person and its Subsidiaries for such period plus (a) the following to the extent deducted in calculating such Net Income:  (i) Consolidated Interest Expense for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by such Person and its Subsidiaries for such period, (iii) depreciation and amortization expense for such period and (iv) expenses of such Person and its Subsidiaries reducing such Net Income during such period which do not represent a cash expenditure in such period or any prior or future period and minus (b) all items of such Person and its Subsidiaries increasing Net   8 --------------------------------------------------------------------------------   Income for such period which do not represent a cash receipt in such period or any prior or future period.   “Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).   “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.   “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.   “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person and all of the warrants or options for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person.   “ERISA” means the Employee Retirement Income Security Act of 1974.   “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).   “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any   9 --------------------------------------------------------------------------------   liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.   “Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) 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.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the commencement of such Interest Period.   “Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.   “Event of Default” has the meaning specified in Section 8.01.   “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a).   “Existing Credit Agreement” means that certain Credit Agreement, dated as of October 5, 2006, among the Borrower, guarantors party thereto, Bank of America, N.A., as administrative agent, swing line lender, and issuing bank, and the lenders party thereto.   “Existing Maturity Date” has the meaning set forth in Section 2.15.   10 --------------------------------------------------------------------------------   “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.   “Fee Letter” means the Bridge Facility Fee Letter, dated June 3, 2007, among the Borrower, Bank of America, N.A., Banc of America Securities LLC, UBS Loan Finance LLC and UBS Securities LLC.   “Fixed Charge Coverage Ratio” means, on the last day of any fiscal quarter, the ratio of (a) Consolidated EBITDA for the twelve month period ending on such date to (b) Consolidated Fixed Charges for the twelve month period ending on such date.   “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is a resident for tax purposes.  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.   “Foreign Subsidiary” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.   “FRB” means the Board of Governors of the Federal Reserve System of the United States.   “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.   “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.   “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to   11 --------------------------------------------------------------------------------   government (including any supranational bodies such as the European Union or the European Central Bank).   “Granting Lender” has the meaning set forth in Section 10.06(h).   “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.   “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.   “Indebtedness” means, as to any Person, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:   (a)                                  all obligations of such Person for borrowed money, whether secured or unsecured, and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments including, without limitation, recourse and non-recourse mortgage debt;   (b)                                 all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;   (c)                                  aggregate net obligations of such Person under Swap Contracts;   12 --------------------------------------------------------------------------------   (d)                                 all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);   (e)                                  indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, to the extent of the value of the property encumbered by such Lien;   (f)                                    capital leases and Synthetic Lease Obligations;   (g)                                 all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person at any time prior to the date that is six months after the Maturity Date, valued, in the case of a redeemable preferred interest, at the liquidation preference thereof; and   (h)                                 all Guarantees of such Person in respect of any of the foregoing.   For all purposes hereof, (i) the amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date (which shall be a positive number if such amount would be owed by the Borrower and a negative number if such amount would be owed to the Borrower) and the net obligations under Swap Contacts shall not be less than zero, and (ii) the amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.   “Indemnified Taxes” means Taxes other than Excluded Taxes.   “Indemnitee” has the meaning specified in Section 10.04(b).   “Initial Maturity Date” has the meaning set forth in the definition of Maturity Date.   “Intangible Assets” means assets of a Person and its Subsidiaries that are classified as intangible assets under GAAP, but excluding interests in real estate that are classified as intangible assets in accordance with GAAP.   “Interest Expense” means, for any period, for a Person and its Subsidiaries on a consolidated basis, the sum of all (a) interest expense for such period determined in accordance with GAAP (but excluding any charges resulting from settlement of options to repurchase remarketable bonds) and (b) interest that is capitalized in such period in accordance with GAAP.   “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates   13 --------------------------------------------------------------------------------   that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each calendar quarter and the Maturity Date.   “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months (or if agreed to by all Lenders, nine or twelve months) thereafter, as selected by the Borrower in its Bridge Loan Notice; provided that:   (i)                                     any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;   (ii)                                  any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and   (iii)                               no Interest Period shall extend beyond the Maturity Date.   “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.   “IP Rights” has the meaning specified in Section 5.16.   “IRS” means the United States Internal Revenue Service.   “Joint Venture” means any Person in which the Borrower, directly or indirectly, has an ownership interest but does not consolidate the assets or income of such Person in preparing its consolidated financial statements.   “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and   14 --------------------------------------------------------------------------------   permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.   “Lender” has the meaning specified in the introductory paragraph hereto.   “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.   “Leverage Ratio” means, on the last day of any fiscal quarter, the ratio of (a) Consolidated Total Indebtedness outstanding on such date to (b) Consolidated Total Asset Value as of such date.   “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).   “Loan” means an extension of credit by a Lender to the Borrower under Article II.   “Loan Documents” means this Agreement, each Note and the Fee Letter.   “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Borrower to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any Loan Document to which it is a party.   “Material Joint Venture” means a Joint Venture in which the Borrower has made a net equity investment of $15,000,000 or greater.  For purposes of this definition, the Borrower’s aggregate Investment in a Joint Venture will be valued at (a) the aggregate amount of cash and cash equivalents and the net book value of other property (less, without duplication, the aggregate principal amount of Indebtedness secured by a Lien on such property at the time of contribution unless, after giving effect to the contribution of such property to the Joint Venture and any other transactions occurring in connection therewith, such Indebtedness constitutes an obligation of the Borrower or any of its Subsidiaries) contributed by the Borrower to such Joint Venture minus (b) the aggregate amount of distributions received by the Borrower from such Joint Venture that would be classified as a return of capital (as opposed to a return on investment).   “Maturity Date” means the later of (a) July 31, 2008 (the “Initial Maturity Date”) and (b) if maturity is extended pursuant to Section 2.15, such extended maturity date as determined   15 --------------------------------------------------------------------------------   pursuant to such Section; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.   “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.   “Mortgage Lien” means any Lien that encumbers a real property owned by a Person other than Permitted Liens.   “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.   “Net Cash Proceeds” means, with respect to any Public Equity Issuance, the excess of (i) the sum of the cash and cash equivalents received in connection with such event over (ii) the underwriting discounts and commissions, and other out-of-pocket fees and expenses, incurred by the Borrower and its Subsidiaries in connection with such sale.   “Net Income” means, for any period, for a Person and its Subsidiaries on a consolidated basis, the net income of such Person and its Subsidiaries (excluding extraordinary gains and extraordinary losses and other non-recurring items, including, without limitation, charges resulting from settlement of options to repurchase remarketable bonds and other similar charges) for that period as determined in accordance with GAAP.   “Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B.   “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of the Borrower arising under any Loan Document or 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 (i) interest and fees that accrue after the commencement by or against the Borrower 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, (ii) obligations of the Borrower under any Swap Contract to which a Lender or any Affiliate of a Lender is a party and (iii) obligations of the Borrower under any Treasury Management Agreement with a Treasury Management Lender.   “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or   16 --------------------------------------------------------------------------------   organization and, if applicable, any certificate or articles of formation or organization of such entity.   “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.   “Outstanding Amount” means with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments occurring on such date.   “Participant” has the meaning specified in Section 10.06(d).   “Patriot Act” has the meaning specified in Section 10.17.   “PBGC” means the Pension Benefit Guaranty Corporation.   “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.   “Permitted Liens” means Liens permitted under Section 7.01(c), (d), (e), (f) and (g).   “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.   “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.   “Platform” has the meaning specified in Section 6.02.   “Pro Rata Share” means (a) with respect to the EBITDA, Net Income, Interest Expense, Total Asset Value and Unencumbered Asset Value of each Joint Venture, the Borrower’s direct or indirect, percentage ownership interest in such Joint Venture and (b) with respect to the Indebtedness of each Joint Venture (i) if the Indebtedness is recourse to the Borrower or any of its Subsidiaries the amount of such Indebtedness that is recourse to the Borrower or such Subsidiary and (ii) if the Indebtedness is not recourse to the Borrower or any of its Subsidiaries, the Borrower’s percentage ownership interest in such Joint Venture.   “Public Equity Issuance” means the issuance, sale or other disposition by the Borrower or one if its Subsidiaries of its Equity Interests, including any Rule 144A offering or any rights,   17 --------------------------------------------------------------------------------   warrants or options to purchase shares of its Equity Interests; provided that the term Public Equity Issuance shall not include (a) the issuance or sale of Equity Interests by a Subsidiary of the Borrower to the Borrower or another Subsidiary of the Borrower or (b) any rights, options or Equity Interests issued pursuant to employee or director incentive, stock option or stock repurchase plans in the ordinary course.   “Public Lender” has the meaning specified in Section 6.02.   “Purchase Agreement” means that certain Share Purchase Agreement, dated as of June 3, 2007, by and between SEGRO plc, a public limited company incorporated under the laws of England and Wales, with registered number 167591, as seller, and the Borrower, as buyer.   “Refinancing” means the repayment of existing indebtedness of the Borrower and the Acquired Business of up to $1,120,000,000 in connection with the Acquisition.   “Register” has the meaning specified in Section 10.06(c).   “REIT” means a real estate investment trust as defined in Sections 856-860 of the Code.   “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.   “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.   “Request for Credit Extension” means with respect to a Borrowing, conversion or continuation of Loans, a Bridge Loan Notice.   “Required Lenders” means, as of any date of determination, Lenders having more than 50% of (i) the Aggregate Commitments or (ii) the Total Outstandings, as the case may be; provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.   “Responsible Officer” means the chief executive officer, president, chief financial officer, each executive vice president and senior vice president, and the treasurer of the Borrower.  Any document delivered hereunder that is signed by a Responsible Officer shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower.   “Restricted Payment” means any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity   18 --------------------------------------------------------------------------------   Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).   “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.   “Scheduled Principal Payment” means (a) all scheduled principal payments by the Borrower and its Subsidiaries with respect to its Consolidated Total Indebtedness (other than payments due at final maturity of any tranche of Indebtedness) and (b) without duplication, the Borrower’s Pro Rata Share of all scheduled principal payments with respect to the Indebtedness (other than payments due at final maturity of any tranche of Indebtedness) of each Material Joint Venture, in each case without giving effect to any reduction in such scheduled principal payments as a result of any voluntary or mandatory prepayment with respect thereto made in the same period in which such principal payment was scheduled to be made.   “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.   “Secured Debt” means that portion of Consolidated Total Indebtedness that is subject to a Lien (other than Permitted Liens).   “Secured Debt Ratio” means, on the last day of any fiscal quarter, the ratio of (a) Secured Debt outstanding on such date to (b) Consolidated Total Asset Value as of such date.   “SPC” has the meaning set forth in Section 10.06(h).   “Significant Acquisition” means the acquisition (in one or a series of related transactions) of all or substantially all of the assets or Equity Interests of a Person or any division, line of business or business unit of a Person for an aggregate consideration in excess of $750,000,000.   “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity the accounts of which are consolidated with the accounts of the Borrower in the Borrower’s consolidated financial statements prepared in accordance with GAAP.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.   “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing, whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of   19 --------------------------------------------------------------------------------   master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.   “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).   “Syndication Agent” means UBS Securities LLC in its capacity as Syndication Agent.   “Synthetic Lease Obligation” means the monetary obligation of a Person under a so-called synthetic, off-balance sheet or tax retention lease.   “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.   “Threshold Amount” means $100,000,000.   “Total Asset Value” means an amount equal to (a) all assets of a Person and its Subsidiaries as determined in accordance with GAAP plus (b) all accumulated depreciation associated with such assets minus (c) Intangible Assets.   “Total Outstandings” means the aggregate Outstanding Amount of all Loans.   “Transactions” means, collectively, (i) the Acquisition, (ii) the Refinancing, (iii) the entering into of this Agreement and the funding of the Loans, (iv) the payment of related fees, commissions and expenses, (v) the entry into and borrowing of not more than $1,500,000,000 under the Bank Loan Agreement, and (vi) all transactions related thereto.   “Treasury Management Agreement” means any treasury, depository or cash management arrangements, services or products, including, without limitation, overdraft services and automated clearinghouse transfers of funds.   “Treasury Management Lender” means any Person that, at the time it enters into a Treasury Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Treasury Management Agreement.   “Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.   20 --------------------------------------------------------------------------------   “Unencumbered Asset Value” means the sum of (a) the aggregate net book value, as determined in accordance with GAAP, of all real property of a Person that is not subject to a Mortgage Lien plus (b) all accumulated depreciation with respect to such real properties plus (c) unrestricted cash and cash equivalents of such Person plus (d) the sum of (i) unencumbered mezzanine and mortgage loan receivables (at the value reflected in the consolidated financial statements of the Borrower, in accordance with GAAP, as of such date, including the effect of any impairment charges), (ii) unencumbered marketable securities (at the value reflected in the consolidated financial statements of the Borrower, in accordance with GAAP, as of such date, including the effect of any impairment charges), provided that the items described in this clause (ii) and in the preceding clause (i) shall not be taken into account to the extent that the amounts of such items exceed, in the aggregate, 20% of Unencumbered Asset Value.   “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.   “United States” and “U.S.” mean the United States of America.   “Unsecured Debt” means that portion of Consolidated Total Indebtedness that is not Secured Debt.   “Unsecured Leverage Ratio” means, on the last day of any fiscal quarter, the ratio of (a) Unsecured Debt outstanding on such date to (b) Consolidated Unencumbered Asset Value as of such date.   1.02                        Other Interpretive Provisions.   With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:   (a)                                  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) 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 herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all   21 --------------------------------------------------------------------------------   references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.   (b)                                 In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”   (c)                                  Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.   1.03                        Accounting Terms.   (a)                                  Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.   (b)                                 Changes in GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.   1.04                        Rounding.   Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).   22 --------------------------------------------------------------------------------   1.05                        Times of Day.   Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).   ARTICLE II   THE COMMITMENTS AND CREDIT EXTENSIONS   2.01                        Loans.   Subject to the terms and conditions set forth herein, each Lender severally agrees to make a loan (each such loan, a “Loan”) to the Borrower on the Closing Date in an amount not to exceed the amount of such Lender’s Commitment. The Commitments are not revolving in nature, and amounts repaid in respect of the Loans may not be reborrowed.  The Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.   2.02                        Borrowings, Conversions and Continuations of Loans.   (a)                                  Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 12:00 Noon (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans.  Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Bridge Loan Notice, appropriately completed and signed by a Responsible Officer.  Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.  Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.  All Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein, provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans unless the Borrower delivers a funding indemnity letter in form and substance reasonably acceptable to the Administrative Agent at least three (3) Business Days prior to the Closing Date.   Each Bridge Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type of Loan in a Bridge Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the   23 --------------------------------------------------------------------------------   applicable Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.  If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Bridge Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.   (b)                                 Following receipt of a Bridge Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  Each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 2:00 p.m. on the Business Day specified in the applicable Bridge Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.01, the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.   (c)                                  Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.   (d)                                 The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.   (e)                                  After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to all Loans hereunder.   2.03                         [Intentionally Omitted]   2.04                         [Intentionally Omitted]   2.05                         [Intentionally Omitted]   2.06                        Prepayments.   (a)                                  The Borrower may, upon notice to the Administrative Agent, at any time or from time to time, voluntarily prepay Loans in whole or in part without premium or penalty; provided   24 --------------------------------------------------------------------------------   that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.  Each prepayment shall be made ratably among the Lenders in accordance with the Applicable Percentages.   (b)                                 [Intentionally Omitted].   (c)                                  [Intentionally Omitted].   (d)                                 [Intentionally Omitted].   (e)                                  [Intentionally Omitted].   2.07                        Termination or Reduction of Commitments.   Unless previously terminated, the Commitments will terminate on the earliest to occur of (A) the Closing Date, immediately after the closing hereunder; (B) September 30, 2007, if the Closing Date has not occurred on or before such date; and (C) the termination of the Purchase Agreement.   2.08                        Repayment.   (a)                                  The Borrower shall repay to the Lenders on the Maturity Date, unless accelerated sooner pursuant to Section 8.02, the entire outstanding principal balance of all Loans together with accrued but unpaid interest, fees and all other sums with respect thereto.   (b)                                 [Intentionally Omitted].   (c)                                  [Intentionally Omitted].   (d)                                 [Intentionally Omitted].   25 --------------------------------------------------------------------------------   2.09                        Interest.   (a)                                  Applicable Interest.  Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.   (b)                                 Default Interest.   (i)                                     If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.   (ii)                                  If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.   (iii)                               Upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.   (iv)                              Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.   (c)                                  Interest Payment Date.  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.   2.10                        Fees.   (a)                                  [Intentionally Omitted].   (b)                                 Other Fees.   (i)                                     The Borrower shall pay to the Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee   26 --------------------------------------------------------------------------------   Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.   (ii)                                  The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.   2.11                        Computation of Interest and Fees.   All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.13(a), bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.   2.12                        Evidence of Debt.   (a)                                  The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.   (b)                                 [Intentionally Omitted].   2.13                        Payments Generally; Administrative Agent’s Clawback.   (a)                                  General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed,   27 --------------------------------------------------------------------------------   at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.   (b)                                 (i)  Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.   (ii)                                  Payments by the Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest   28 --------------------------------------------------------------------------------   thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.   A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.   (c)                                  Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.   (d)                                 Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 10.04(c).   (e)                                  Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.   2.14                        Sharing of Payments by Lenders.   If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:   (i)                                     if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and   29 --------------------------------------------------------------------------------   (ii)                                  the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).   The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.   2.15                        Extension of Maturity Date.   (a)                                  Requests for Extension.  The Borrower may, by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than 90 days and not later than 60 days prior to the Maturity Date then in effect hereunder (the “Existing Maturity Date”), request that each Lender extend such Lender’s Maturity Date for an additional 6 months from the Existing Maturity Date; provided that the Borrower may request no more than two such extensions during the term of this Agreement.   (b)                                 Conditions to Effectiveness of Extensions.  As a condition precedent to such extension, (i) the Borrower shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Existing Maturity Date signed by a Responsible Officer of the Borrower certifying that, before and after giving effect to such extension, (y) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Existing Maturity Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01 and (z) no Default or Event of Default exists, (ii) the Borrower shall pay to the Lenders on the (A) Initial Maturity Date a fee (to be shared among the Lenders based upon their pro rata share of the Total Outstandings) equal to the product of (x) 0.125% multiplied by (y) the Total Outstandings and, if extended a second time and (B) 6 months from the Initial Maturity Date a fee (to be shared among the Lenders based upon their pro rata share of the Total Outstandings) equal to the product of (x) 0.15% multiplied by (y) the then Total Outstandings and (iii) the Borrower shall repay the outstanding Loans in an amount such that the Total Outstandings after such repayments does not exceed $1,825,000,000.  If there is a second extension to the Maturity Date pursuant to Section 2.15 then, on the Existing Maturity Date, the Borrower shall repay the outstanding Loans in an amount such that the Total Outstandings after such repayments does not exceed $1,375,000,000.   30 --------------------------------------------------------------------------------   (c)                                  Conflicting Provisions.  This Section shall supersede any provisions in Section 2.14 or 10.01 to the contrary.   2.16                         [Intentionally Omitted].   ARTICLE III   TAXES, YIELD PROTECTION AND ILLEGALITY   3.01                        Taxes.   (a)                                  Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.   (b)                                 Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.   (c)                                  Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.   (d)                                 Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.   (e)                                  Status of Lenders.  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident   31 --------------------------------------------------------------------------------   for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.   Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:   (i)                                     duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,   (ii)                                  duly completed copies of Internal Revenue Service Form W-8ECI,   (iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or   (iv)                              any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.   (f)                                    Treatment of Certain Refunds.  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative   32 --------------------------------------------------------------------------------   Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.   3.02                        Illegality.   If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.   3.03                        Inability to Determine Rates.   If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.   33 --------------------------------------------------------------------------------   3.04                        Increased Costs; Reserves on Eurodollar Rate Loans.   (a)                                  Increased Costs Generally.  If any Change in Law shall:   (i)                                     impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e));   (ii)                                  subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Eurodollar Loan made by it or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or   (iii)                               impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender or participation therein;   and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender, as the case may be, for such additional costs incurred or reduction suffered.   (b)                                 Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.   (c)                                  Certificates for Reimbursement.  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, in detail sufficient to enable the Borrower to verify the computation thereof, shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.   (d)                                 Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of   34 --------------------------------------------------------------------------------   such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine month period referred to above shall be extended to include the period of retroactive effect thereof).   (e)                                  Reserves on Eurodollar Rate Loans.  The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.   3.05                        Compensation for Losses.   Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense (other than loss of anticipated profits) incurred by it as a result of:   (a)                                  any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);   (b)                                 failure to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or   (c)                                  any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13.   The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.   For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.   35 --------------------------------------------------------------------------------   3.06                        Mitigation Obligations; Replacement of Lenders.   (a)                                  Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.   (b)                                 Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 10.13.   3.07                        Survival.   All of the Borrower’s obligations under this Article III shall survive termination of the Commitments and repayment of all other Obligations hereunder.   ARTICLE IV   CONDITIONS PRECEDENT TO CREDIT EXTENSIONS   4.01                        Conditions of Initial Credit Extension.   The effectiveness of this Agreement and the obligation of each Lender to make its Credit Extension hereunder on the Closing Date are subject to satisfaction of the following conditions precedent:   (a)                                  The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent:   (i)                                     executed counterparts of this Agreement, executed and delivered by the Administrative Agent, the Borrower and each Lender listed on Schedule 2.01;   36 --------------------------------------------------------------------------------   (ii)                                  a Note executed by the Borrower in favor of each Lender requesting a Note;   (iii)                               such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents;   (iv)                              such documents and certifications as the Administrative Agent may reasonably require to evidence that the Borrower is duly organized or formed, and that the Borrower is validly existing, in good standing and qualified to engage in business in its state of organization and in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;   (v)                                 a favorable opinion of Gibson Dunn & Crutcher LLP, counsel to the Borrower, addressed to the Administrative Agent and each Lender, as to the matters set forth in Exhibit E;   (vi)                              a certificate signed by a Responsible Officer certifying (A) that no Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof; (B) that there has been no Closing Date Material Adverse Effect; (C) the current Debt Ratings; and (D) that the representations and warranties relating to the Borrower set forth in Sections 5.01, 5.02, 5.03, 5.04, 5.13, 5.17, 5.18 and 5.19 are true and correct on and as of the Closing Date.   (b)                                 Any fees required to be paid on or before the Closing Date shall have been paid.   (c)                                  Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges and disbursements of counsel to the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).   (d)                                 The Acquisition and the other Transactions shall be consummated in accordance with the Acquisition Agreement and the other documentation related to the Acquisition and each of the other Transactions, each as in effect on the date hereof (collectively, the “Acquisition Documents”) without waiver or amendment thereof that is   37 --------------------------------------------------------------------------------   materially adverse to the Lenders unless consented to by Bank of America, N.A. and UBS Loan Finance LLC.   (e)                                  The Borrower shall have provided the documentation and other information to the Lenders that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act.   (f)                                    The Administrative Agent shall have received a Request for Credit Extension in accordance with the requirements hereof.   Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, (i) this Agreement and each other document to which it is a party or which it has reviewed or (ii) any other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.   Each Request for Credit Extension (other than a Bridge Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.01(a)(vi)(A) and (f) have been satisfied on and as of the date of the Credit Extension.   ARTICLE V   REPRESENTATIONS AND WARRANTIES   The Borrower represents and warrants to the Administrative Agent and the Lenders that:   5.01                        Existence, Qualification and Power; Compliance with Laws.   The Borrower and each of its Subsidiaries (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.   38 --------------------------------------------------------------------------------   5.02                        Authorization; No Contravention.   The execution, delivery and performance by the Borrower of each Loan Document has been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of the Borrower’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which the Borrower is party or affecting the Borrower or the properties of the Borrower or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which the Borrower or its property is subject; or (c) violate any Law.  The Borrower and each of its Subsidiaries are in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.   5.03                        Governmental Authorization; Other Consents.   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, or enforcement against, the Borrower of this Agreement or any other Loan Document.   5.04                        Binding Effect.   This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by the Borrower.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.   5.05                        Financial Statements; No Material Adverse Effect.   (a)                                  The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.   (b)                                 The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated March 31, 2007 (or, if the Closing Date occurs after August 15, 2007, the unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated June 30, 2007), and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date   39 --------------------------------------------------------------------------------   thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.   (c)                                  Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.   (d)                                 The financial information of the Borrower and its Subsidiaries delivered pursuant to Section 6.01 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.   5.06                        Litigation.   There are no actions, suits, proceedings, claims, investigations or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.   5.07                        No Default.   Neither the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.   5.08                        Ownership of Property; Liens; Leases.   (a)                                  Each of the Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   40 --------------------------------------------------------------------------------   (b)                                 The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.   (c)                                  Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) there are no renewal or extension options applicable to any lease to which the Borrower or any Subsidiary is a party; (ii) to the Borrower’s knowledge, no condition exists which, with the giving of notice or the passage of time, or both, would permit any lessee to cancel its obligations under any lease to which the Borrower or any Subsidiary is a party; (iii) the Borrower has received no notice that any lessee intends to cease operations at any leased property prior to the expiration of the term of the applicable lease (other than temporarily due to casualty, remodeling, renovation or any similar causes) and (iv) to the Borrower’s knowledge, none of the lessees or their sub-lessees, if any, under any of the leases to which the Borrower or any Subsidiary is a party is the subject of any bankruptcy, reorganization, insolvency or similar proceeding.   5.09                        Environmental Compliance.   The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the Borrower has reasonably concluded that such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   5.10                        Insurance.   The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.   5.11                        Taxes.   The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.  Neither the Borrower nor any Subsidiary thereof is party to any tax sharing agreement.   41 --------------------------------------------------------------------------------   5.12                        ERISA Compliance.   (a)                                  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.   (b)                                 There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.   (c)                                  (i)  No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.   5.13                        Margin Regulations; Investment Company Act; REIT Status.   (a)                                  The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.   (b)                                 None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.   (c)                                  The Borrower meets all requirements to qualify as a REIT.   5.14                        Disclosure.   The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be   42 --------------------------------------------------------------------------------   expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.   5.15                        Compliance with Laws.   Each of the Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.   5.16                         Intellectual Property; Licenses, Etc.   The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person.  To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any rights held by any other Person.  No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.   5.17                        Use of Proceeds.   The proceeds of the Loans hereunder will be used solely for the purposes specified in Section 6.11.  No proceeds of the Loans hereunder will be used for the acquisition of another Person unless the board of directors (or other comparable governing body) or stockholders (or other equity owners), as appropriate, of such Person has approved such acquisition.   5.18                         Taxpayer Identification Number.   The Borrower’s true and correct U.S. taxpayer identification number is set forth on Schedule 10.02.   43 --------------------------------------------------------------------------------   5.19                         Acquisition Documents.   The Lenders have been furnished true and complete copies of each Acquisition Document to the extent executed and delivered on or prior to the Closing Date.   ARTICLE VI   AFFIRMATIVE COVENANTS   So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:   6.01                        Financial Statements.   Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:   (a)                                  as soon as available, but in any event within five days of the date the Borrower is required to file its Form 10-K with the SEC (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision thereto or otherwise) (commencing with the fiscal year ending December 31, 2007), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and   (b)                                 as soon as available, but in any event within five days of the date the Borrower is required to file its Form 10-Q with the SEC (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision thereto or otherwise) (commencing with the fiscal quarter ending June 30, 2007), a consolidated balance sheet of the Borrower as at the end of such fiscal quarter, and the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and a statement of cash flow for the portion of the Borrower’s fiscal year then ended setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a   44 --------------------------------------------------------------------------------   Responsible Officer as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and   (c)                              as soon as available, but in no event later that 60 days following the end of each fiscal year of the Borrower, an annual forecast for the then-current fiscal year, prepared in a manner and in the form of the forecast provided on the Closing Date or in such other form as is reasonably acceptable to the Administrative Agent and the Required Lenders.   As to any information contained in materials furnished pursuant to Section 6.02(d), the Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.   6.02                        Certificates; Other Information.   Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:   (a)                                  concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b) (commencing with the delivery of the financial statements for the fiscal quarter ending September 30, 2007), a duly completed Compliance Certificate signed by a Responsible Officer;   (b)                                 promptly after any request by the Administrative Agent or any Lender, copies of any management letters submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with an audit of the accounts of the Borrower;   (c)                                  concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;   (d)                                 promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;   45 --------------------------------------------------------------------------------   (e)                                  promptly, and in any event within five Business Days after receipt thereof by the Borrower or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of the Borrower or any Subsidiary thereof; and   (f)                                    promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.   Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that:  (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Administrative Agent.  Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.   The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel that do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ activities.  The Borrower hereby agrees that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (x) by marking Borrower Materials   46 --------------------------------------------------------------------------------   “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07) (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”   6.03                        Notices.   Promptly notify the Administrative Agent and each Lender of:   (a)                                  the occurrence of any Default;   (b)                                 any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;   (c)                                  the occurrence of any ERISA Event;   (d)                                 any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary; and   (e)                                  any announcement by Moody’s or S&P of any change or possible change in a Debt Rating.   Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.   6.04                        Payment of Obligations.   Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being   47 --------------------------------------------------------------------------------   maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, in each case except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.   6.05                        Preservation of Existence, Etc.   (a)                                  Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction not prohibited by Section 7.04 or 7.05, or to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; (b)  take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c)  preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the foregoing, the Borrower will do all things necessary to maintain its status as a REIT.   6.06                        Maintenance of Properties.   (a)                                  Maintain, preserve and protect, or make contractual or other provisions to cause to maintain, preserve or protect, all of its properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted, in each case except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (b)  make, or make contractual or other provisions to cause to be made, all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c)  use the standard of care typical in the industry in the operation and maintenance of its facilities.   6.07                        Maintenance of Insurance.   (a)                                  Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.   (b)                                 Use its, and cause the Subsidiaries to use their, commercially reasonable best efforts to ensure that each lessee of a property owned in whole or in part, directly or indirectly, by the Borrower or any Subsidiary, and each mortgagee of a property on which the Borrower or any Subsidiary holds a mortgage, has, and until the Maturity Date will keep, in place adequate insurance that names the Borrower or such Subsidiary as a loss payee.  For purposes of the preceding sentence “adequate insurance” shall mean insurance, with financially sound and reputable insurers in such amounts and insuring against such risks as are customarily maintained by similar businesses.   48 --------------------------------------------------------------------------------   6.08                        Compliance with Laws.   Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.   6.09                        Books and Records.   Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.   6.10                        Inspection Rights.   Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.   6.11                        Use of Proceeds.   Use proceeds from the Loans to finance, in part, the Acquisition, to pay transaction fees, commissions and expenses in connection therewith and to repay the amounts owed under the Existing Credit Agreement.   6.12                        REIT Status.   The Borrower will, and will cause each of its Subsidiaries to, operate its business at all times so as to satisfy all requirements necessary to qualify and maintain the Borrower’s qualification as a real estate investment trust under Sections 856 through 860 of the Code.  The Borrower will maintain adequate records so as to comply with all record-keeping requirements relating to its qualification as a real estate investment trust as required by the Code and applicable regulations of the Department of the Treasury promulgated thereunder and will properly prepare and timely file with the Internal Revenue Service all returns and reports required thereby.   49 --------------------------------------------------------------------------------   6.13                        Employee Benefits.   Comply in all material respects with the applicable provisions of ERISA and the Code with respect to each Plan, and (b) furnish to the Administrative Agent (x)  within five days after any Responsible Officer or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any of its ERISA Affiliates in an aggregate amount exceeding the Threshold Amount or the imposition of a Lien, a statement setting forth details as to such ERISA Event and the action, if any, that the Borrower or ERISA Affiliate proposes to take with respect thereto, and (y) upon request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; (ii) the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan as the Administrative Agent shall reasonably request.   ARTICLE VII   NEGATIVE COVENANTS   So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:   7.01                        Liens.   Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:   (a)                                  Liens pursuant to any Loan Document;   (b)                                 Liens securing Indebtedness permitted under Section 7.03;   (c)                                  Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;   (d)                                 carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto, to the extent required by GAAP, are maintained on the books of the applicable Person;   50 --------------------------------------------------------------------------------   (e)                                  pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;   (f)                                    deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;   (g)                                 easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; and   (h)                                 Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) or securing appeal or other surety bonds related to such judgments.   7.02                        Investments.   (a)                                  make or allow Investments in Development Property to exceed, in the aggregate at any one time outstanding, 35% of Consolidated Total Asset Value.   (b)                                 make or allow Investments in Joint Ventures to exceed, in the aggregate at any one time outstanding, 25% of Consolidated Total Asset Value.  For purposes of this Section 7.02(b), the Borrower’s aggregate Investment in Joint Ventures will be valued at (i) the aggregate amount of cash and cash equivalents and the net book value of other property (less, without duplication, the aggregate principal amount of Indebtedness secured by a Lien on such property at the time of contribution unless, after giving effect to the contribution of such property to the Joint Ventures and any other transactions occurring in connection therewith, such Indebtedness constitutes an obligation of the Borrower or any of its Subsidiaries) contributed by the Borrower to the Joint Ventures minus (ii) the aggregate amount of distributions received by the Borrower from the Joint Ventures that would be classified as a return of capital (as opposed to a return on investment).   7.03                        Indebtedness.   Create, incur, assume or suffer to exist any Indebtedness of the Borrower or any of its Subsidiaries, except:   (a)                                  Indebtedness under the Loan Documents; and   (b)                                 other Indebtedness; provided that (i) after giving effect thereto (including any Liens associated therewith) the Borrower and its Subsidiaries are in compliance with all of the terms of this Agreement, including, but not limited to, the financial covenants   51 --------------------------------------------------------------------------------   set forth in Section 7.10 and (ii) with respect to obligations of the Borrower in respect of Swap Contracts, such Swap Contracts shall be entered into in order to manage existing or anticipated risk and not for speculative purposes.   7.04                        Fundamental Changes.   Merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom, any Subsidiary may merge with (a) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (b) any one or more other Subsidiaries, provided that when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person.   7.05                        Dispositions.   Make any Disposition of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole.   7.06                        Restricted Payments.   Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no Default shall have occurred and be continuing or would result therefrom, the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it in an amount not to exceed, in the aggregate, fifteen percent (15%) of Consolidated Tangible Net Worth during the term of this Agreement.   7.07                        Change in Nature of Business.   Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.   7.08                        Transactions with Affiliates.   Enter into any transaction of any kind with any Affiliate of the Borrower (other than a Subsidiary), whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s-length transaction with a Person other than an Affiliate.   7.09                        Burdensome Agreements.   Enter into any Contractual Obligation (other than this Agreement or any other Loan Document) that limits the ability of (a) any wholly-owned Subsidiary of the Borrower (other than a Subsidiary that is a bankruptcy remote special purpose entity) to Guarantee the Indebtedness of the Borrower or (b) the Borrower to create, incur, assume or suffer to exist Liens on its property; provided, however, that this clause (b) shall not prohibit any negative pledge incurred or   52 --------------------------------------------------------------------------------   provided in favor of any holder of Indebtedness permitted under Section 7.03 solely to the extent any such negative pledge (i) relates to the property financed by or the subject of such Indebtedness or (ii) only requires the grant of a Lien to secure such Indebtedness if a Lien is granted by the Borrower to secure other Indebtedness of the Borrower.   7.10                        Financial Covenants.   (a)                                  Leverage Ratio.  Permit the Leverage Ratio to be greater than the following amounts as of the end of any fiscal quarter ending during the corresponding period set forth below:   Beginning on the Closing Date and on or prior to September 30, 2007   0.75           Beginning on October 1, 2007 and on or prior to June 30, 2008   0.70           Beginning on July 1, 2008 and on or prior to December 31, 2008   0.65           Beginning on January 1, 2009   0.60     Notwithstanding the foregoing, beginning on January 1, 2009 the Borrower shall be permitted to increase the maximum Leverage Ratio to 65% for a maximum of two (2) consecutive fiscal quarterly periods following a Significant Acquisition.   (b)                                 Secured Debt Ratio.  Permit the Secured Debt Ratio to be greater than .30 to 1.0 as of the end of any fiscal quarter.   (c)                                  Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio to be less than the following amounts as of the end of any fiscal quarter ending during the corresponding period set forth below:   Beginning on the Closing Date and on or prior to September 30, 2008   1.50           Beginning on October 1, 2008   1.75     53 --------------------------------------------------------------------------------   (d)                                 Unsecured Leverage Ratio.  Permit the Unsecured Leverage Ratio to be greater than the following amounts as of the end of any fiscal quarter ending during the corresponding period set forth below:   Beginning on the Closing Date and on or prior to December 31, 2007   0.90           Beginning on January 1, 2008 and on or prior to June 30, 2008   0.80           Beginning on July 1, 2008 and on or prior to December 31, 2008   0.75           Beginning on January 1, 2009   0.65     (e)                                  Consolidated Tangible Net Worth.  Permit the Consolidated Tangible Net Worth to be, as of the end of any fiscal quarter, less than (i) 85% of the Consolidated Tangible Net Worth at the Closing Date (on a pro forma basis to reflect the Acquisition) plus (ii) 85% of Net Cash Proceeds from all Public Equity Issuances subsequent to the Closing Date.   ARTICLE VIII   EVENTS OF DEFAULT AND REMEDIES   8.01                        Events of Default.   Any of the following shall constitute an Event of Default:   (a)                                  Non-Payment.  The Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three days after the same becomes due, any interest on any Loan or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or   (b)                                 Specific Covenants.  The Borrower or any of its Subsidiaries fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11 or Article VII; or   (c)                                  Other Defaults.  The Borrower or any of its Subsidiaries fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or   (d)                                 Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower   54 --------------------------------------------------------------------------------   herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect in any material respect when made or deemed made; or   (e)                                  Cross-Default.  (i) The Borrower or any of its Subsidiaries (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or   (f)                                    Insolvency Proceedings, Etc.  The Borrower or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or   (g)                                 Inability to Pay Debts; Attachment.  (i) The Borrower or any of its Subsidiaries becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any   55 --------------------------------------------------------------------------------   such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or   (h)                                 Judgments.  There is entered against the Borrower or any of its Subsidiaries (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or   (i)                                     ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or   (j)                                     Invalidity of Loan Documents.  Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or the Borrower denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or   (k)                                  Change of Control.  There occurs any Change of Control.   8.02                        Remedies Upon Event of Default.   If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:   (a)                                  declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated;   (b)                                 declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and   56 --------------------------------------------------------------------------------   (c)                                  exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;   provided, however, that upon the occurrence of an Event of Default pursuant to Sections 8.01(f) or (g) or the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent or any Lender.   8.03                        Application of Funds.   After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:   First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;   Second, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;   Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and fees, premiums and scheduled periodic payments, and any interest accrued thereon, due under any Swap Contract between the Borrower and any Lender, or any Affiliate of a Lender, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders) in proportion to the respective amounts described in this clause Third payable to them;   Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, payment of breakage, termination or other payments, and any interest accrued thereon, due under any Swap Contract between the Borrower and any Lender, or any Affiliate of a Lender and amounts owing under Treasury Management Agreements, ratably among the Lenders (and, in the case of such Swap Contracts, Affiliates of Lenders), the Treasury Management Lenders in proportion to the respective amounts described in this clause Fourth held by them; and   Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.   57 --------------------------------------------------------------------------------   ARTICLE IX   ADMINISTRATIVE AGENT   9.01                        Appointment and Authority.   Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.   9.02                        Rights as a Lender.   The Person 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 the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.   9.03                        Exculpatory Provisions.   The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:   (a)                                  shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;   (b)                                 shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and   58 --------------------------------------------------------------------------------   (c)                                  shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.   The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.   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 this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.   9.04                        Reliance by Administrative Agent.   The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.   9.05                        Delegation of Duties.   The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents   59 --------------------------------------------------------------------------------   appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.   9.06                        Resignation of Administrative Agent.   The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.   9.07                        Non-Reliance on Administrative Agent and Other Lenders.   Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based   60 --------------------------------------------------------------------------------   upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.   9.08                        No Other Duties, Etc.   Anything herein to the contrary notwithstanding, none of the Arrangers, Bookrunners, Syndication Agent or Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.   9.09                        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, 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:   (a)                                  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary 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 Sections 2.10 and 10.04) allowed in such judicial proceeding; and   (b)                                 to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;   and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.10 and 10.04.   Nothing contained herein shall be deemed to authorize the Administrative Agent 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.   61 --------------------------------------------------------------------------------   ARTICLE X   MISCELLANEOUS   10.01      Amendments, Etc.   No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:   (a)           extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender;   (b)           postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;   (c)           reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder (including pursuant to Section 2.06) or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate;   (d)           change Section 2.14 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; or   (e)           change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;   and provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or   62 --------------------------------------------------------------------------------   consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.   Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (y) the Required Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding.   10.02      Notices; Effectiveness; Electronic Communication.   (a)           Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:   (i)            if to the Borrower or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and   (ii)           if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.   Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).   (b)           Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (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 to any Lender if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.   Unless the Administrative Agent otherwise prescribes, (i) 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”   63 --------------------------------------------------------------------------------   function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.   (c)           Change of Address, Etc.  Each of the Borrower and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.  Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.   (d)           Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Bridge Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.   10.03      No Waiver; Cumulative Remedies.   No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.   64 --------------------------------------------------------------------------------   10.04      Expenses; Indemnity; Damage Waiver.   (a)           Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their 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, due diligence, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.   (b)           Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, the Agents and their Affiliates and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby (including, without limitation, each Lender’s agreement to make Loans or the use or intended use of the proceeds thereof), (ii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.   (c)           Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the   65 --------------------------------------------------------------------------------   foregoing and without relieving the Borrower of its obligations with respect thereto, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.13(d).   (d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.   (e)           Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.   (f)            Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.   10.05      Payments Set Aside.   To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.   66 --------------------------------------------------------------------------------   10.06      Successors and Assigns.   (a)           Successors and Assigns Generally.  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 the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment or grant of a security interest subject to the restrictions of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other attempted assignment or transfer by any party hereto 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, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.   (b)           Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:   (i)            Minimum Amounts.   (A)          in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and   (B)           in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.   67 --------------------------------------------------------------------------------   (ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;   (iii)          Required Consents.  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:   (A)          the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; and   (B)           the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.   (iv)          Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.   (v)           No Assignment to the Borrower.  No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.   (vi)          No Assignment to Natural Persons.  No such assignment shall be made to a natural person.   Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.   68 --------------------------------------------------------------------------------   (c)           Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice.   (d)           Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.   Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.14 as though it were a Lender.   (e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.   (f)            Certain Pledges.  Any Lender may at any time pledge, assign or grant a security interest in, all or any portion of its rights under this Agreement (including under its Note, if any)   69 --------------------------------------------------------------------------------   to secure obligations of such Lender, including any pledge or assignment or grant of a security interest to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment or grant of a security interest shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee or grantee for such Lender as a party hereto.   (g)           Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.   (h)           Special Purpose Funding Vehicles.  Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.13(b)(ii).  Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof.  Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.   70 --------------------------------------------------------------------------------   10.07      Treatment of Certain Information; Confidentiality.   Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any governmental agency or regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower that the Administrative Agent, any such Lender reasonably believes is not bound by a duty of confidentiality to the Borrower (i) to any rating agency (provided such rating agencies are advised of the confidential nature of such information and agree to keep such information confidential) or (j) as reasonably required by any Lender or other Person providing financing to such Lender (provided such Lenders or other Persons are advised of the confidential nature of such information and agree to keep such information confidential).   For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section 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 or its other similarly situated customers’ confidential information.   10.08      Right of Setoff.   If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or   71 --------------------------------------------------------------------------------   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 or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have.  Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.   10.09      Interest Rate Limitation.   Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.   10.10      Counterparts; Integration; Effectiveness.   This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  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.   10.11      Survival of Representations and Warranties.   All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any   72 --------------------------------------------------------------------------------   investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.   10.12      Severability.   If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.   10.13      Replacement of Lenders.   If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender, or if any Lender does not consent to any amendment or waiver of any provision hereof or of any other Loan Document for which its consent is required under Section 10.01 after Required Lenders have consented thereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:   (a)           the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);   (b)           such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);   (c)           in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and   (d)           such assignment does not conflict with applicable Laws.   73 --------------------------------------------------------------------------------   A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.   10.14      Governing Law; Jurisdiction; Etc.   (a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.   (b)           SUBMISSION TO JURISDICTION.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.   (c)           WAIVER OF VENUE.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.   (d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY   74 --------------------------------------------------------------------------------   PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.   10.15      Waiver of Jury Trial.   EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.   10.16      No Advisory or Fiduciary Responsibility.   In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arranger, the Lenders and the other Lead Arrangers are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lenders and the Lead Arrangers, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, each Lender and each Lead Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent, any Lender nor any Lead Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Lenders and the Lead Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent, any Lender nor any Lead Arranger has any obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Lenders and the Lead Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.   75 --------------------------------------------------------------------------------   10.17      USA Patriot Act Notice.   Each Lender that is subject to the Patriot Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.   10.18      Delivery of Signature Page.   Each Lender to become a party to this Agreement on the date hereof shall do so by delivering to the Administrative Agent a counterpart of this Agreement duly executed by such Lender.   76 --------------------------------------------------------------------------------   Each of the parties hereto have caused a counterpart of this Agreement to be duly executed as of the date first above written.     HEALTH CARE PROPERTY INVESTORS, INC.   as Borrower           By: /s/ Mark Wallace   Name: Mark Wallace   Title: EVP, CFO & Treasurer           BANK OF AMERICA, N.A.,   as Administrative Agent           By: /s/ Amie L. Edwards   Name: Amie L. Edwards   Title: Vice President               BANK OF AMERICA, N.A.,   as a Lender               By: /s/ Amie L. Edwards   Name: Amie L. Edwards   Title: Vice President   77 --------------------------------------------------------------------------------     UBS LOAN FINANCE, LLC           By:  /s/ Mary E. Evans   Name: Mary E. Evans   Title: Associate Director               By:  /s/ David B. Julie   Name: David B. Julie   Title: Associate Director               BARCLAYS BANK PLC           By:  /s/ Gary B. Wenslow   Name: Gary B. Wenslow   Title: Associate Director               JPMORGAN CHASE BANK, N.A.               By:  /s/ Vanessa Chiu   Name: Vanessa Chiu   Title: Vice President               WACHOVIA BANK, NATIONAL ASSOCIATION               By:  /s/ Jeanette A. Griffin   Name: Jeanette A. Griffin   Title: Director   78 --------------------------------------------------------------------------------     CITICORP NORTH AMERICA, INC.           By:  /s/ Ricardo James   Name: Ricardo James   Title: Director               CREDIT SUISSE, Cayman Islands Branch           By:  /s/ CASSANDRA DROOGAN   Name: CASSANDRA DROOGAN   Title: VICE PRESIDENT               By:  /s/ LAURENCE LAPEYRE   Name: LAURENCE LAPEYRE   Title: ASSOCIATE               GOLDMAN SACHS CREDIT PARTNERS, L.P.               By:  /s/ Bruce Mendelsohn   Name: Bruce Mendelsohn   Title: Authorized Signatory               WELLS FARGO BANK, N.A.               By:  /s/ David W. Shaw   Name: David W. Shaw   Title: Vice President               THE BANK OF NOVA SCOTIA               By:  /s/ W. B. Hamilton   Name: W. B. Hamilton   Title: Director   79 --------------------------------------------------------------------------------     CALYON NEW YORK BRANCH           By:  /s/ Thomas Randolph   Name: Thomas Randolph   Title: Managing Director               By:  /s/ Priya Vrat   Name: Priya Vrat   Title: Director               KEYBANK NATIONAL ASSOCIATION,   A national banking association               By:  /s/ Bellini Lacey   Name: Bellini Lacey   Title: Closing Officer               MERRILL LYNCH BANK USA               By:  /s/ Louis Alder   Name: Louis Alder   Title: Director               THE ROYAL BANK OF SCOTLAND PLC         By:  /s/ Neil Crawford   Name: Neil Crawford   Title: Managing Director               SUNTRUST BANK               By:  /s/ Helen C. Hartz   Name: Helen C. Hartz   Title: Vice President   80 --------------------------------------------------------------------------------   SCHEDULE 1.01   MANDATORY COST   1.                                       The Mandatory Cost (to the extent applicable) is an addition to the interest rate to compensate Lenders for the cost of compliance with:   (a)                                  the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions); or   (b)                                 the requirements of the European Central Bank.   2.                                       On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below.  The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.  The Administrative Agent will, at the request of the Company or any Lender, deliver to the Company or such Lender as the case may be, a statement setting forth the calculation of any Mandatory Cost.   3.                                       The Additional Cost Rate for any Lender lending from a Lending Office in a Participating Member State will be the percentage notified by that Lender to the Administrative Agent.  This percentage will be certified by such Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of such Lender’s participation in all Loans made from such Lending Office) of complying with the minimum reserve requirements of the European Central Bank in respect of Loans made from that Lending Office.   4.                                       The Additional Cost Rate for any Lender lending from a Lending Office in the United Kingdom will be calculated by the Administrative Agent as follows:   (a)                                  in relation to any Loan in Sterling:     AB+C(B-D)+E x 0.01   per cent per annum   100 - (A+C)   (b)                                 in relation to any Loan in any currency other than Sterling:     E x 0.01   per cent per annum   300   Where:   “A”                          is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.   “B”                            is the percentage rate of interest (excluding the Applicable Rate, the Mandatory Cost and any interest charged on overdue amounts pursuant to the first sentence of Section 2.09(b) and, in the case of interest (other than on overdue amounts) charged at the Default Rate, without counting any increase in interest rate   --------------------------------------------------------------------------------   effected by the charging of the Default Rate) payable for the relevant Interest Period of such Loan.   “C”                            is the percentage (if any) of Eligible Liabilities which the Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.   “D”                           is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits.   “E”                             is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Administrative Agent as being the average of the most recent rates of charge supplied by the Lenders to the Administrative Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.   5.                                       For the purposes of this Schedule:   (a)                                  “Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;   (b)                                 “Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;   (c)                                  “Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and   (d)                                 “Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.   6.                                       In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5% will be included in the formula as 5 and not as 0.05).  A negative result obtained by subtracting D from B shall be taken as zero.  The resulting figures shall be rounded to four decimal places.   7.                                       If requested by the Administrative Agent or the Company, each Lender with a Lending Office in the United Kingdom or a Participating Member State shall, as soon as practicable after publication by the Financial Services Authority, supply to the Administrative Agent and the Company, the rate of charge payable by such Lender to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by such Lender as being the average of the Fee Tariffs applicable to such Lender for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of such Lender.   8.                                       Each Lender shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate.  In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender:   --------------------------------------------------------------------------------   (a)                                  the jurisdiction of the Lending Office out of which it is making available its participation in the relevant Loan; and   (b)                                 any other information that the Administrative Agent may reasonably require for such purpose.   Each Lender shall promptly notify the Administrative Agent in writing of any change to the information provided by it pursuant to this paragraph.   9.                                       The percentages of each Lender for the purpose of A and C above and the rates of charge of each Lender for the purpose of E above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Administrative Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Lending Office in the same jurisdiction as its Lending Office.   10.                                 The Administrative Agent shall have no liability to any Person if such determination results in an Additional Cost Rate which over- or under-compensates any Lender and shall be entitled to assume that the information provided by any Lender pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.   11.                                 The Administrative Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3, 7 and 8 above.   12.                                 Any determination by the Administrative Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties hereto.   13.                                 The Administrative Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties hereto.   --------------------------------------------------------------------------------   SCHEDULE 2.01   COMMITMENTS AND APPLICABLE PERCENTAGES   Lender   Commitment   Applicable Percentage   Bank of America, N.A.   $ 110,000,000   7.333333333 % UBS Loan Finance, LLC   $ 110,000,000   7.333333333 % Barclays Bank PLC   $ 90,000,000   6.000000000 % JPMorgan Chase Bank, N.A.   $ 90,000,000   6.000000000 % Wachovia Bank, National Association   $ 90,000,000   6.000000000 % Citicorp North America, Inc.   $ 90,000,000   6.000000000 % Credit Suisse, Cayman Islands Branch   $ 90,000,000   6.000000000 % William Street Credit Corporation   $ 90,000,000   6.000000000 % Wells Fargo Bank, N.A.   $ 90,000,000   6.000000000 % The Bank of Nova Scotia   $ 55,000,000   3.666666667 % Calyon New York Branch   $ 55,000,000   3.666666667 % KeyBank National Association   $ 55,000,000   3.666666667 % Merrill Lynch Bank USA   $ 55,000,000   3.666666667 % The Royal Bank of Scotland PLC   $ 55,000,000   3.666666667 % SunTrust Bank   $ 55,000,000   3.666666667 % MidFirst Bank   $ 35,000,000   2.333333333 % First Commercial Bank, Los Angeles Branch   $ 30,000,000   2.000000000 % National Bank of Egypt, New York Branch   $ 30,000,000   2.000000000 % Taiwan Business Bank   $ 30,000,000   2.000000000 % The Bank of New York   $ 25,000,000   1.666666667 % Land Bank of Taiwan   $ 25,000,000   1.666666667 % Mega International Commercial Bank Co., Ltd., Los Angeles Branch   $ 25,000,000   1.666666667 % National City   $ 25,000,000   1.666666667 % Regions Bank   $ 25,000,000   1.666666667 % Bank of the West, a California banking corporation   $ 15,000,000   1.000000000 % Chang Hwa Commercial Bank, Ltd., New York Branch   $ 15,000,000   1.000000000 % E.Sun Commercial Bank Ltd., Los Angeles Branch   $ 15,000,000   1.000000000 % Taipei Fubon Commercial Bank, New York Agency   $ 15,000,000   1.000000000 % The Bank of East Asia, Limited, Los Angeles Branch   $ 10,000,000   0.666666667 % Total   $ 1,500,000,000   100.000000000 %   --------------------------------------------------------------------------------   SCHEDULE 2.02   ALTERNATIVE CURRENCY PARTICIPATING LENDER(1)   Lender   Euro   Sterling   Yen   Canadian Dollars   Bank of America, N.A.   Yes   Yes   Yes   Yes   UBS Loan Finance, LLC   Yes   Yes   Yes   Yes   Barclays Bank PLC   Yes   Yes   Yes   Yes   JPMorgan Chase Bank, N.A.   Yes   Yes   Yes   Yes   Wachovia Bank, National Association   Yes   Yes   Yes   No   Citicorp North America, Inc.   Yes   Yes   Yes   Yes   Credit Suisse   Yes   Yes   Yes   Yes   William Street Credit Corporation   Yes   Yes   Yes   Yes   Wells Fargo Bank, N.A.   Yes   Yes   Yes   Yes   The Bank of Nova Scotia   Yes   Yes   Yes   Yes   Calyon New York Branch   Yes   Yes   Yes   Yes   KeyBank National Association   Yes   Yes   Yes   Yes   Merrill Lynch Bank USA   Yes   Yes   No   No   The Royal Bank of Scotland PLC   Yes   Yes   Yes   Yes   SunTrust Bank   Yes   Yes   Yes   Yes   MidFirst Bank   No   No   No   No   First Commercial Bank, Los Angeles Branch   No   No   No   No   National Bank of Egypt, New York Branch   No   No   No   No   Taiwan Business Bank   No   No   No   No   The Bank of New York   Yes   Yes   Yes   No   Land Bank of Taiwan   No   No   No   No   Mega International Commercial Bank Co., Ltd., Los Angeles Branch   No   No   No   No   National City Bank   Yes   Yes   Yes   Yes   Regions Bank   No   No   No   No   Bank of the West, a California banking corporation   Yes   Yes   Yes   Yes   Chang Hwa Commercial Bank, Ltd., New York Branch   No   No   No   No   E.Sun Commercial Bank Ltd., Los Angeles Branch   No   No   No   No   Taipei Fubon Commercial Bank, New York Agency   No   No   No   No   The Bank of East Asia, Limited, Los Angeles Branch   No   No   No   No     -------------------------------------------------------------------------------- (1)  The table indicates each Lender’s ability to fund in a particular currency (e.g., Bank of America, N.A. can fund each of the four currencies).   --------------------------------------------------------------------------------   SCHEDULE 2.03   EXISTING LETTERS OF CREDIT   Letter of Credit #   Beneficiary   Expiration Date   Amount   3071955   PROFESSIONAL CLAIMS MANAGERS, INC.   12/1/2007   $ 50,000.00   3080219   FANNIE MAE   5/31/2008   $ 2,200,000.00   3082276   FANNIE MAE   5/31/2008   $ 175,440.00   3086055   GENERAL ELECTRIC CAPITAL   1/22/2008   $ 356,760.00   3086056   GENERAL ELECTRIC CAPITAL   1/22/2008   $ 489,240.00   3086057   GENERAL ELECTRIC CAPITAL   1/22/2008   $ 172,800.00   3088086   ST. JOHNS RIVER WATER MANAGEMENT   5/10/2008   $ 240,385.00           Total   $ 3,684,625.00     --------------------------------------------------------------------------------   SCHEDULE 10.02   ADMINISTRATIVE AGENT’S OFFICE; CERTAIN ADDRESSES FOR NOTICES   BORROWER:   Health Care Property Investors, Inc. 3760 Kilroy Airport Way, Suite 300 Long Beach, California 90806 Attention:  Legal Department and Treasurer Telephone:  562-733-5100 Telecopier:  562-733-5200 Electronic Mail:  legaldept@hcpi.com Website Address:  www.hcpi.com U.S. Taxpayer Identification Number:  33-0091377   --------------------------------------------------------------------------------   ADMINISTRATIVE AGENT:   Administrative Agent’s Office (for payments and Requests for Credit Extensions): Bank of America, N.A. 101 N. Tryon Street Mail Code:  NC1-001-04-39 Charlotte, NC 28255 Attention: Sally Bixby Telephone: 704-387-9482 Telecopier: 704-719-8876 Electronic Mail: sally.a.bixby@bankofamerica.com   Bank of America, N.A. New York, NY Account No. (for Dollars): 1366212250600 ABA# 026009593 Attn: Credit Services Ref:  Health Care Property Investors, Inc.   Bank of America, London Account No. (for Euro): 65280019 Swift Address:  BOFAGB22 Attn: Credit Services Ref:  Health Care Property Investors, Inc.   Bank of America, London Account No. (for Sterling):  65280027 London Sort Code: 16-50-50 Swift Address: BOFAGB22 Attn: Credit Services Ref:  Health Care Property Investors, Inc.   Bank of America, Tokyo Account No. (for Yen): 606490661046 Swift Address:  BOFAJPJX Attn: Credit Services Ref:  Health Care Property Investors, Inc.   Bank of America Canada, Toronto Account No. (for Canadian Dollars): 711465003220 Swift Address:  BOFACATT Attn: Credit Services Ref:  Health Care Property Investors, Inc.   --------------------------------------------------------------------------------   Other Notices as Administrative Agent: Bank of America, N.A. Agency Management 1455 Market Street Mail Code: CA5-701-05-19 San Francisco, CA 94103 Attention: Angela Lau Telephone: 415-436-4000 Telecopier: 415-503-5008 Electronic Mail:  angela.lau@bankofamerica.com   with a copy to:   Bank of America, N.A. Corporate Bank Debt 100 N. Tryon Street Mail Code:  NC1-007-17-11 Charlotte, NC  28255 Attention:  Amie Edwards Telephone:  704-387-1346 Telecopier:  704-388-6002 Electronic Mail:  amie.l.edwards@bankofamerica.com   --------------------------------------------------------------------------------   L/C ISSUER:   Bank of America, N.A. Trade Operations 1000 W. Temple Street Mail Code: CA9-705-07-05 Los Angeles, CA  90012 Attention: Stella Rosales Telephone: 213-481-7828 Telecopier: 213-580-8441 Electronic Mail: stella.rosales@bankofamerica.com   SWING LINE LENDER:   Bank of America, N.A. 101 N. Tryon Street Mail Code:  NC1-001-04-39 Charlotte, NC 28255 Attention: Sally Bixby Telephone: 704-387-9482 Telecopier: 704-719-8876 Electronic Mail: sally.a.bixby@bankofamerica.com   Bank of America, N.A. New York, NY Account No: 1366212250600 ABA# 026009593 Attn: Credit Services Ref:  Health Care Property Investors, Inc.   ALTERNATIVE CURRENCY FRONTING LENDER:   Bank of America, N.A. 101 N. Tryon Street Mail Code:  NC1-001-04-39 Charlotte, NC 28255 Attention: Sally Bixby Telephone: 704-387-9482 Telecopier: 704-719-8876 Electronic Mail: sally.a.bixby@bankofamerica.com   --------------------------------------------------------------------------------   EXHIBIT A   FORM OF COMMITTED LOAN NOTICE   Date:                 ,         To:          Bank of America, N.A., as Administrative Agent   Ladies and Gentlemen:   Reference is made to that certain $1,500,000,000 Credit Agreement, dated as of August 1, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party thereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   The undersigned hereby requests (select one):   o A Borrowing of Revolving Loans   o A conversion or continuation of Revolving Loans     1. On                                            (a Business Day).     2. In an amount the Dollar Equivalent of which is $                                    .     3. Comprised of the following Type of Loans: [Base Rate Loans] (1) [Eurocurrency Rate Loans].     5. For Eurocurrency Rate Loans: with an Interest Period of [one] [two] [three] [six] [nine] [twelve](2) months.     4. In the following currency:                                                 .   The Committed Borrowing, if any, requested herein complies with Section 2.01(a) of the Agreement.   -------------------------------------------------------------------------------- (1)  Base Rate Loans are only available for Committed Revolving Loans in Dollars. (2)  An Interest Period of nine or twelve months must be agreed to by all Lenders.   --------------------------------------------------------------------------------     HEALTH CARE PROPERTY INVESTORS, INC.           By:       Name:     Title:   --------------------------------------------------------------------------------   EXHIBIT B   FORM OF SWING LINE LOAN NOTICE   Date:                         ,         To:          Bank of America, N.A., as Swing Line Lender Bank of America, N.A., as Administrative Agent   Ladies and Gentlemen:   Reference is made to that certain $1,500,000,000 Credit Agreement, dated as of August 1, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party thereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   The undersigned hereby requests a Swing Line Loan:   1.             On                                            (a Business Day).   2.             In the amount of $                                          .   The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.04(a) of the Agreement.     HEALTH CARE PROPERTY INVESTORS, INC.           By:       Name:     Title:   --------------------------------------------------------------------------------   EXHIBIT C   FORM OF NEGOTIATED RATE LOAN NOTICE   Date:                     ,         To:          Bank of America, N.A., as Administrative Agent   Ladies and Gentlemen:   Reference is made to that certain $1,500,000,000 Credit Agreement, dated as of August 1, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party thereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   The undersigned hereby provides notice of a Negotiated Rate Loan:   1.             On                                            (a Business Day).   2.             In the amount of $   3.             From                                                                                (Lender(s)).(1)   4.             Maturing   5.             Interest Rate:   The Negotiated Rate Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.05(a) of the Agreement.     HEALTH CARE PROPERTY INVESTORS, INC.           By:       Name:     Title   -------------------------------------------------------------------------------- (1)  Specify the principal amount of Negotiated Rate Loans for each Lender.   --------------------------------------------------------------------------------   EXHIBIT D   FORM OF REVOLVING NOTE   FOR VALUE RECEIVED, the undersigned, HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”) hereby promises to pay to the order of [                           ] (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrower under that certain $1,500,000,000 Credit Agreement, dated as of August 1, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among the Borrower, the lending institutions party thereto from time to time, BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement.  Except as otherwise provided in Section 2.04(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in the currency in which such Committed Loan was denominated and in Same Day Funds at the Administrative Agent’s Office for such currency.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.   This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.   Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement.  Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.   The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.   --------------------------------------------------------------------------------   THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.     HEALTH CARE PROPERTY INVESTORS, INC.           By:       Name:     Title:   --------------------------------------------------------------------------------   LOANS AND PAYMENTS WITH RESPECT THERETO   Date   Type of Loan Made   Amount of Loan Made   End of Interest Period   Amount of Principal or Interest Paid This Date   Outstanding Principal Balance This Date   Notation Made By                                                                                 --------------------------------------------------------------------------------   EXHIBIT E   FORM OF COMPLIANCE CERTIFICATE   Financial Statement Date:             To:          Bank of America, N.A., as Administrative Agent   Ladies and Gentlemen:   Reference is made to that certain $1,500,000,000 Credit Agreement, dated as of August 1, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party thereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the                                             of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:   [Use following paragraph 1 for fiscal year-end financial statements]   1.             Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.   [Use following paragraph 1 for fiscal quarter-end financial statements]   1.             Attached hereto as Schedule 1 are the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the above date.  Such financial statements fairly present the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.   2.             The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by the attached financial statements.   --------------------------------------------------------------------------------   3.             A review of the activities of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Obligations under the Loan Documents, and   [select one:]   [to the best knowledge of the undersigned during such fiscal period, the Borrower performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]   —or—   [the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]   4.             The financial covenant analyses and information set forth on Schedule 2 and Annex 1 attached hereto are true and accurate as of the Statement Date referred to thereon.   IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                 ,       .     HEALTH CARE PROPERTY INVESTORS, INC.           By:       Name:     Title:   --------------------------------------------------------------------------------   EXHIBIT E   For the Quarter/Year ended                                (“Statement Date”)   SCHEDULE 2 to the Compliance Certificate ($ in 000’s)   I. Section 7.10(a) — Leverage Ratio.       A. Consolidated Total Indebtedness on the Statement Date:               1.       Indebtedness of Borrower and its Subsidiaries: $                                 2.       Borrower’s Pro Rata Share of Indebtedness of each Material Joint Venture: $                                 3.       Consolidated Total Indebtedness (Line I.A.1 plus Line I.A.2): $                               B. Consolidated Total Asset Value on the Statement Date:               1.       Total Asset Value of the Borrower and its Subsidiaries: $                                 2.       Borrower’s Pro Rata Share of Total Asset Value of Material Joint Ventures: $                                 3.       Consolidated Total Asset Value on the Statement Date (Line I.B.1 + I.B.2): $                               C. Leverage Ratio (Line I.A.3 ÷ I.B.3): $                                 Maximum Permitted as of the end of any fiscal quarter ending during the corresponding period set forth below:       Maximum Leverage Ratio   Beginning on the Closing Date and on or prior to September 30, 2007   0.75           Beginning on October 1, 2007 and on or prior to June 30, 2008   0.70           Beginning on July 1, 2008 and on or prior to December 31, 2008   0.65           Beginning on January 1, 2009   0.60     --------------------------------------------------------------------------------   Notwithstanding the foregoing, beginning on January 1, 2009 the Borrower shall be permitted to increase the maximum Leverage Ratio to 65% for a maximum of two (2) consecutive fiscal quarterly periods following a Significant Acquisition.   II Section 7.10(b) — Secured Debt Ratio.           A.        Secured Debt on the Statement Date: $                             B.         Consolidated Total Asset Value on the Statement Date (Line I.B.3): $                             C.         Secured Debt Ratio (Line II.A ÷ II.B): $                               Maximum Permitted as of the end of any fiscal quarter:    0.30 to 1.0       III. Section 7.10(c) — Fixed Charge Coverage Ratio.           A.      Consolidated EBITDA for the twelve month period ending on the Statement Date (See Annex 1):         1.       EBITDA of the Borrower and its Subsidiaries (From Annex 1): $                                 2.       Borrower’s Pro Rata Share of EBITDA of Material Joint Ventures (From Annex 1): $                                 3.       Consolidated EBITDA (Line III.A.1 + III.A.2): $                               B.      Consolidated Fixed Charges for the twelve month period ending on the Statement Date:         1.       Consolidated Interest Expense               a.       Interest Expense of the Borrower and its Subsidiaries $                                 b.       Borrower’s Pro Rata Share of Interest Expense of Material Joint Ventures $                                 c.       Consolidated Interest Expense (Line III.B.1.a + III.B.1.b) $                                 2.       Scheduled Principal Payments: $                                 a.       Scheduled Principal Payments by the Borrower and its Subsidiaries with respect to its Consolidated Total Indebtedness (other than payments due at final maturity) $                       --------------------------------------------------------------------------------       b.       Borrower’s Pro Rata Share of all Scheduled Principal Payments with respect to the Indebtedness (other than payments due at final maturity) of Material Joint Ventures $                                 c.       Scheduled Principal Payments (Line III.B.2.a + III.B.2.b) $                                 3.       Dividends and distributions in respect of preferred stock (excluding redemption payments or charges in connection with redemption of preferred stock) of the Borrower and its Subsidiaries: $                                 4.       Consolidated Fixed Charges (Line III.B.1.c + III.B.2.c + III.B.3): $                               C.      Fixed Charge Coverage Ratio (Line III.A.3 ÷ Line III.B.4): $                             Minimum requirement as of the end of any fiscal quarter ending during the corresponding period set forth below:       Minimum Fixed Charge Coverage Ratio   Beginning on the Closing Date and on or prior to September 30, 2008   1.50           Beginning on October 1, 2008   1.75     IV.               Section 7.10(d) — Unsecured Leverage Ratio.     A.        Unsecured Debt on the Statement Date: $                           B.         Consolidated Unencumbered Asset Value on the Statement Date:         1.       Unencumbered Asset Value of the Borrower and the Borrower’s Pro Rata Share of Unencumbered Asset Value of its Subsidiaries: $                           2.       The Borrower’s Pro Rata Share of Unencumbered Asset Value of each Material Joint Venture: $                                 3.       Consolidated Unencumbered Asset Value (Line IV.B.1 + IV.B.2): $                               C.         Unsecured Leverage Ratio (Line IV.A ÷ IV.B.3): $                             Maximum Permitted as of the end of any fiscal quarter ending during the corresponding period set forth below:   --------------------------------------------------------------------------------       Maximum Unsecured Leverage Ratio   Beginning on the Closing Date and on or prior to December 31, 2007   0.90           Beginning on January 1, 2008 and on or prior to June 30, 2008   0.80           Beginning on July 1, 2008 and on or prior to December 31, 2008   0.75           Beginning on January 1, 2009   0.65     V.                Section 7.10(e) — Consolidated Tangible Net Worth.     A.      Consolidated Tangible Net Worth on the Statement Date         1.       Consolidated Shareholders’ Equity: $                                 2.       Consolidated Intangible Assets: $                                 3.       Consolidated Tangible Net Worth (Line V.A.1 minus Line V.A.2): $                           B.         85% of the Consolidated Tangible Net Worth at the Closing Date on a pro forma basis to reflect the Acquisition $                           C.         85% of Net Cash Proceeds from Public Equity Issuances subsequent to the closing date $                             Minimum required: Line V.A.3 shall be greater than or equal to Line V.B plus Line V.C as of the end of any fiscal quarter.   --------------------------------------------------------------------------------   Annex 1 to the Compliance Certificate   For the Quarter/Year ended                              ,           EBITDA of Borrower and its Subsidiaries   EBITDA of Borrower and its Subsidiaries   Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended   Year Ended   Net Income                                               +    Interest Expense                                               +    income taxes                                               +    depreciation and amortization expense                                               +    non-cash expenses                                               -     items increasing Net Income which do not represent a cash receipt                                               =    EBITDA of Borrower and Subsidiaries on a consolidated basis                         Borrower’s Pro Rata Share of EBITDA of Material Joint Ventures   Borrower’s Pro Rata Share of EBITDA of Material Joint Ventures   Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended   Year Ended   Net Income                                               +    Interest Expense                                               +    income taxes                                               +    depreciation and amortization expense                                               +    non-cash expenses                                               -     items increasing Net Income which do not represent a cash receipt                                               =    EBITDA of Borrower’s Pro Rata Share of Material Joint Ventures on a consolidated basis                         --------------------------------------------------------------------------------   EXHIBIT F   FORM OF ASSIGNMENT AND ASSUMPTION   This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”).  Receipt of a copy of the Credit Agreement is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.   For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit, the Swing Line Loans and the Negotiated Rate Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.   1. Assignor:         2. Assignee:             [for the Assignee, indicate [Affiliate] [Approved Fund] of [identify Lender]]       3. Borrower(s):         4. Administrative Agent: Bank of America, NA., as the administrative agent under the Credit Agreement       5. Credit Agreement: $1,500,000,000 Credit Agreement, dated as of August 1, 2007, among HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation (the “Borrower”), the lending institutions party thereto from time to time (each, a “Lender” and collectively, the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, BANC OF AMERICA SECURITIES LLC, as Joint Lead   --------------------------------------------------------------------------------       Arranger and Joint Bookrunner, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, BARCLAYS CAPITAL, as Joint Bookrunner and Co-Documentation Agent, CITICORP NORTH AMERICA, INC., as Co-Documentation Agent, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent, GOLDMAN SACHS CREDIT PARTNERS L.P., as Co-Documentation Agent, JPMORGAN CHASE BANK, N.A., as Co-Documentation Agent, WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent, WELLS FARGO BANK, N.A., as Co-Documentation Agent, THE BANK OF NOVA SCOTIA, as Senior Managing Agent, CALYON NEW YORK BRANCH, as Senior Managing Agent, KEY BANK NATIONAL ASSOCIATION, as Senior Managing Agent, MERRILL LYNCH BANK USA, as Senior Managing Agent, THE ROYAL BANK OF SCOTLAND PLC, as Senior Managing Agent, and SUNTRUST BANK, as Senior Managing Agent.   6.             Assigned Interest:   Facility Assigned(1)   Aggregate Amount of Commitment/Loans for all Lenders(2)   Amount of Commitment/ Loans Assigned   Percentage Assigned of Commitment/ Loans(3)   CUSIP Number       $   $     %         $   $     %         $   $     %       7.             Alternative Currency:          Assignee [can fund the following Alternative Currencies [Euro, Sterling, Yen and Canadian Dollars]][cannot fund any Alternative Currency].   [8.            Trade Date:                                           ](4)   Effective Date:                             , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]   -------------------------------------------------------------------------------- (1)  Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (i.e., “Revolving Loan” or “Swing Line Loan” or “Negotiated Rate Loan”).   (2)  Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.   (3)  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.   (4)  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.   --------------------------------------------------------------------------------   The terms set forth in this Assignment and Assumption are hereby agreed to:     ASSIGNOR   [NAME OF ASSIGNOR]               By:       Title:           ASSIGNEE   [NAME OF ASSIGNEE]               By:       Title:             [Consented to and](5) Accepted:           BANK OF AMERICA, N.A., as     Administrative Agent                     By:         Title:                 [Consented to](6)                   By:         Title:       -------------------------------------------------------------------------------- (5)  To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.   (6)  To be added only if the consent of the Borrower and/or other parties (e.g., Swing Line Lender, L/C Issuer or Alternative Currency Fronting Lender) is required by the terms of the Credit Agreement.   --------------------------------------------------------------------------------   ANNEX 1 TO ASSIGNMENT AND ASSUMPTION   STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION   1.             Representations and Warranties.   1.1.          Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.   1.2.          Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements referred to in Section 5.05 thereof or delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.   2.             Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.   --------------------------------------------------------------------------------   3.             General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.   THIS ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.   --------------------------------------------------------------------------------   EXHIBIT G   FORM OF OPINIONS OF GIBSON, DUNN & CRUTCHER, LLP AND BALLARD SPAHR ANDREWS & INGERSOLL, LLP   --------------------------------------------------------------------------------   EXHIBIT G   FORM OF OPINION OF GIBSON, DUNN & CRUTCHER LLP   August 1, 2007   (212) 351-4000   C 41736-00004   (212) 351-4035   Bank of America, N.A., as Administrative Agent for the Lenders party to the Credit Agreement referred to below   Each of the Lenders party to the Credit Agreement referred to below   Re:                               Health Care Property Investors, Inc. — $2,750,000,000  Credit Agreement dated as of August 1, 2007   Ladies and Gentlemen:   We have acted as counsel to Health Care Property Investors, Inc., a Maryland corporation (the “Company”), in connection with the Credit Agreement dated as of August 1, 2007 (the “Credit Agreement”) among the Company, the lenders party thereto (the “Lenders”), and Bank of America, N.A., as Administrative Agent (the “Administrative Agent”; and, together with the Lenders, the “Lender Parties”).  Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined.   In rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction as being true copies, of the following documents and instruments:   (i)         the Credit Agreement, including the Schedules and Exhibits thereto; and   --------------------------------------------------------------------------------   (ii)        the Notes dated as of August 1, 2007 (the “Notes”) made by the Company payable to the order of the Lenders.   The Credit Agreement and the Notes are referred to herein collectively as the “Financing Documents”.   We have assumed without independent investigation that:   (a)   The signatures on all documents examined by us are genuine, all individuals executing such documents had all requisite legal capacity and competency and were duly authorized to do so; the documents submitted to us as originals are authentic and the documents submitted to us as certified or reproduction copies conform to the originals;   (b)   The Company is a validly existing corporation in good standing under the laws of the State of Maryland; and   (c)   The Company has all requisite power and authority to execute, deliver and perform its obligations under each of the Financing Documents; the execution and delivery of the Financing Documents by the Company and performance of its obligations thereunder have been duly authorized by all necessary corporate action on the part of the Company; the Financing Documents have been duly executed and delivered by the Company; and, except as expressly covered by our opinions in Paragraphs 2, 3, 4 and 5, the execution, delivery and performance by the Company of the Financing Documents do not violate any law, regulation, order, judgment or decree applicable the Company.   We understand that you have received the legal opinion of Ballard Spahr Andrews & Ingersoll, LLP, special Maryland counsel to the Company, with respect to, among other matters, certain of the matters described in clauses (b) and (c) above.   In rendering this opinion, we have made such inquiries and examined, among other things, originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, certificates, instruments and other documents as we have considered necessary or appropriate for purposes of this opinion.  As to certain factual matters, we have relied to the extent we deemed appropriate and without independent investigation upon the representations and warranties of the Company in the Credit Agreement, a certificate of officers of the Company (the “Officers’ Certificate”) or certificates obtained from public officials and others.   Based on the foregoing and in reliance thereon, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:   1.     Each Financing Document constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.   --------------------------------------------------------------------------------   2.     The execution and delivery by the Company of the Financing Documents, and the performance of its obligations thereunder, do not (i) based solely upon review of the orders, judgments or decrees identified to us in the Officers’ Certificate as constituting all orders, judgments or decrees binding on the Company, which are listed in Schedule B hereto (each, a “Governmental Order”), violate any Governmental Order, or (ii) result in a breach of or default under any contract of the Company or any of its subsidiaries that is filed as an exhibit to the periodic reports of the Company under the Securities and Exchange Act of 1934, as amended (the “1934 Act”), and will not result in or require the creation of any lien on the property of the Company or a subsidiary thereof under any such contract.   3.     The execution and delivery by the Company of the Financing Documents, and the performance of its obligations thereunder, do not violate, or require any filing with or approval of any governmental authority or regulatory body of any of the States of California or New York or the United States of America under, any law or regulation of the States of California or New York or the United States of America applicable to the Company that, in our experience, is generally applicable to transactions in the nature of those contemplated by the Financing Documents.   4.     The Company is not required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.   5.     The execution and delivery by the Company of the Financing Documents, and the performance of its obligations thereunder, do not result in a breach or violation of Regulation U or X of the Board of Governors of the Federal Reserve System.  Regulation T of the Board of Governors of the Federal Reserve System (“Regulation T”) does not apply to any Lender that is not a “creditor” (as defined in Regulation T).  Regulation T defines “creditor” as any broker or dealer (as defined in sections 3(a)(4) and 3(a)(5) of the 1934 Act), any member of a national securities exchange, or any person associated with a broker or dealer (as defined in section 3(a)(18) of the 1934 Act), except for business entities controlling or under common control with the creditor.   The foregoing opinions are subject to the following exceptions, qualifications and limitations:   A.    We render no opinion herein as to matters involving the laws of any jurisdiction other than (i) the State of New York, (ii) the United States of America, and (iii) for purposes of Paragraph 3 above, the State of California.  This opinion is limited to the effect of the present state of the laws of the State of New York, the United States of America and, to the limited extent set forth above, the State of California, and the facts as they currently exist.  We assume no obligation to revise or supplement this opinion in the event of future changes in such laws or the interpretations thereof or such facts.  Except as expressly set forth in Paragraphs 4 and 5 above, we express no opinion regarding the Securities Act of 1933, as amended, or any other federal or state securities laws or regulations.   --------------------------------------------------------------------------------   B.    Our opinion set forth in Paragraph  1 is subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and remedies of creditors generally (including, without limitation, the effect of statutory or other laws regarding fraudulent transfers or preferential transfers or distributions by corporations to stockholders), and (ii) general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.   C.    We express no opinion regarding the effectiveness of (i) any waiver (whether or not stated as such) contained in the Financing Documents of, or any consent therein relating to, unknown future rights or the rights of any party thereto existing, or duties owing to it, as a matter of law; (ii) any waiver (whether or not stated as such) contained in the Financing Documents of rights of any party, or duties owing to it, that is broadly or vaguely stated or does not describe the right or duty purportedly waived with reasonable specificity; (iii) provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be held unenforceable as contrary to public policy or federal or state securities laws or due to the negligence or willful misconduct of the indemnified party; (iv) any provision in any Financing Document waiving the right to object to venue in any court; (v) any agreement to submit to the jurisdiction of any Federal Court; (vi) any provision purporting to establish evidentiary standards; (vii) any power of attorney granted under the Financing Documents; (viii) any rights of setoff (other than such as are provided by Section 151 of the Civil Code of the State of New York, as interpreted by applicable judicial decisions); or (ix) the availability of damages or other remedies not specified in the Financing Documents in respect of breach of any covenants (other than covenants relating to the payment of principal, interest, indemnities and expenses).   E.     For purposes of our opinion in Paragraph 5, we have assumed without independent investigation that: (i) the representation and warranty of the Company set forth in Section 5.14 of the Credit Agreement is and will be true and correct at all relevant times and (ii) less than 25% of the value of the assets of the Company and its Subsidiaries taken as a whole, or of any of the Company and any of its Subsidiaries, individually, subject to the negative covenants of the Credit Agreement consist and will consist of “margin stock” within the meaning of Regulations U or X of the Board of Governors of the Federal Reserve System at all relevant times.  Our opinion in Paragraph 7 is subject to (and we express no opinion in respect of) any requirement applicable to the Administrative Agent or any Lender to obtain in good faith a Form FR U-1 or FR G-3 signed by the Company.  Except as expressly set forth in Paragraph 5, we express no opinion with respect to Regulation T of the Board of Governors of the Federal Reserve System.   F.     In rendering our opinion expressed in Paragraph 2, insofar as it requires interpretation of the contracts described in Paragraph 2, we express no opinion with respect to the compliance by the Company with, or any financial calculations or data in respect of, financial covenants included in any such contract.  Further, we call to your attention that the contracts described in Paragraph 2 may include an election of the law of a jurisdiction other than   --------------------------------------------------------------------------------   the State of New York to govern the interpretation of such contracts.  We express no opinion herein as to which law would be applied to govern the interpretation of such contacts, and we assume that the law of the State of New York is applied to govern the interpretation of such contracts.   This opinion is rendered to the Lender Parties in connection with the Financing Documents and may not be relied upon by any person other than the Lender Parties or by the Lender Parties in any other context.  The Lender Parties may not furnish this opinion or copies hereof to any other person except (i) to bank examiners and other regulatory authorities should they so request in connection with their normal examinations, (ii) to the independent auditors and attorneys of the Lender Parties, (iii) pursuant to order or legal process of any court or governmental agency, (iv) in connection with any legal action to which any Lender Party is a party arising out of the transactions contemplated by the Financing Documents, or (v) to potential permitted assignees or participants for their information (and potential permitted assignees who become Lenders may rely on this opinion as if it were addressed to them (provided that such delivery shall not constitute a re-issue or reaffirmation of this opinion as of any date after the date hereof)).   This opinion may not be quoted without the prior written consent of this Firm.     Very truly yours,           GIBSON, DUNN & CRUTCHER LLP   BDK/CRM/NG   --------------------------------------------------------------------------------     LAW OFFICES   BALLARD SPAHR ANDREWS & INGERSOLL, LLP PHILADELPHIA, PA 300 EAST LOMBARD STREET, 18TH FLOOR DENVER, CO BALTIMORE, MARYLAND 21202-3268 SALT LAKE CITY, UT 410-528-5600 VOORHEES, NJ FAX: 410-528-5650 WASHINGTON, DC WWW.BALLARDSPAHR.COM WILMINGTON, DE   August 1, 2007   Bank of America, N.A.   Re:          $2,750,000,000 Credit Agreement, dated as of August 1, 2007 (“Credit Agreement”), by and among Health Care Property Investors, Inc., a Maryland corporation (the “Borrower”), the lending institutions that are parties thereto (individually a “Lender” and collectively the “Lenders”), and Bank of America, N.A., as Administrative Agent and certain other parties named therein   Ladies and Gentlemen:   We have acted as Maryland corporate counsel to the Borrower in connection with the transactions evidenced and contemplated by the Credit Agreement and the other loan documents, if any, referred to on Schedule 1 attached hereto (collectively with the Credit Agreement, the “Loan Documents”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.   We understand that the Borrower is being represented in this matter by Gibson, Dunn & Crutcher LLP, and we understand that, except for those issues specifically opined to herein, you will be relying upon the opinion of Gibson, Dunn & Crutcher LLP pertaining to the legality, binding effect and enforceability of the Credit Agreement, the other Loan Documents and any other instruments or documents to which the Borrower may be a party.   In our capacity as Maryland corporate counsel to the Borrower, and for purposes of this opinion, we have examined the following:   (i)            the corporate charter of the Borrower (the “Borrower Charter”) represented by Articles of Restatement filed with the State Department of Assessments and Taxation of Maryland (the “Department”) on August 2, 2004 and Articles of Merger of HCP QRS (TEMP), Inc. with and into the Borrower filed with the Department on November 30, 2004;   (ii)           the Fourth Amended and Restated Bylaws of the Borrower dated as of September 20, 2006 (the “Borrower Bylaws”);   --------------------------------------------------------------------------------   (iii)          minutes of organizational action of the Board of Directors of the Borrower, dated as of March 21, 1985 (the “Borrower Organizational Minutes”);   (iv)          resolutions adopted by the Board of Directors of the Borrower dated as of June 3, 2007 (the “Borrower Directors’ Resolutions”);   (v)           copies of the fully executed Loan Documents;   (vi)          a status certificate of the Department, dated as of a recent date, to the effect that the Borrower is duly incorporated and existing under the laws of the State of Maryland and is duly authorized to transact business in the State of Maryland;   (vii)         a certificate of Edward J. Henning, Senior Vice President and Corporate Secretary of the Borrower and Mark A. Wallace, Senior Vice President and Chief Financial Officer of the Borrower, of even date herewith (the “Borrower Officer Certificate”), to the effect that, among other things, the Borrower Charter, the Borrower Bylaws, the Borrower Organizational Minutes and the Borrower Directors’ Resolutions are true, correct and complete, have not been rescinded or modified and are in full force and effect on the date of the Borrower Officer Certificate, and certifying as to, among other things, the manner of adoption of the Borrower Directors’ Resolutions and the form, approval, execution, and delivery of the Loan Documents to which Borrower is a party; and   (viii)        such other documents and matters as we have deemed necessary and appropriate to render the opinions set forth in this letter, subject to the limitations, assumptions, and qualifications noted below.   Insofar as the opinions and other matters set forth herein constitute, or are based upon, factual matters, we have relied solely upon the Officers’ Certificates and our knowledge. The words “our knowledge” signify that, in the course of our representation of the Borrower as Maryland corporate counsel in matters with respect to which we have been engaged by the Borrower as Maryland corporate counsel, no information has come to our attention that would give us actual knowledge or actual notice that the Officers’ Certificates on which we have relied are not accurate and complete. We have undertaken no independent investigation or verification of any such factual matters. The words “our knowledge” are intended to be limited to the knowledge of the lawyers within our firm who have rendered services to the Borrower in connection with the Loan Documents.   In reaching the opinions set forth below, we have assumed the following:   (a)           each person executing any instrument, document or agreement on behalf of any party (other than the Borrower) is duly authorized to do so;   2 --------------------------------------------------------------------------------   (b)           each natural person executing any instrument, document, or agreement is legally competent to do so;   (c)           there are no material modifications of, or amendments to, the Loan Documents;   (d)           all documents submitted to us as originals are authentic; all documents submitted to us as certified, facsimile or photostatic copies conform to the original document; the form and content of any documents submitted to us as unexecuted drafts do not differ in any respect relevant to the opinion from such documents as executed and delivered; all signatures of parties other than the Borrower on all documents submitted to us for examination are genuine, and all public records reviewed are accurate and complete;   (e)           all certificates, including the Officers’ Certificates, submitted to us are true and correct, both when made and as of the date hereof;   (f)            each of the parties (other than the Borrower) executing any of the Loan Documents has duly authorized and validly executed and delivered each of the Loan Documents to which such party is a signatory, and such party’s obligation set forth therein are legal, valid and binding and are enforceable in accordance with their respective terms;   (g)           all representations and warranties made by the Borrower (other than representations and warranties of the Borrower as to legal matters on which opinions are rendered herein) are true and correct; and   (h)           consummation of the transactions contemplated by the Credit Agreement and the other Loan Documents will result in receipt by the Borrower of good and valuable consideration, and such transactions are fair and reasonable to the Borrower.   Based on our review of the foregoing and subject to the assumptions and qualifications set forth herein, it is our opinion that, as of the date of this letter:   1.             Borrower has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland.   2.             Borrower has the requisite corporate power to own, or hold under lease, its assets and conduct its business as described in its charter, and to execute and deliver the Loan Documents to which it is a party and to carry out the terms and conditions thereof applicable to it.   3.             The execution and delivery by Borrower of the Loan Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Borrower under the Borrower Charter and the Borrower Bylaws and under the   3 --------------------------------------------------------------------------------   Maryland General Corporation Law (“MGCL”); and such Loan Documents have been duly executed, and to our knowledge, delivered by Borrower.   4.             The execution and delivery by Borrower of the Loan Documents to which it is a party will not conflict with or result in a violation of the Borrower Charter or the Borrower Bylaws, or the MGCL.   The opinions presented herein are limited to the laws of the State of Maryland, and we do not express any opinion herein concerning any laws other than the laws of the State of Maryland. Furthermore, the opinions presented herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. Without limiting the generality of the foregoing sentence, we express no opinion with respect to the legality, binding effect or enforceability of the Credit Agreement or any other of the Loan Documents.   This opinion letter is issued as of the date hereof and is necessarily limited to laws now in effect and facts and circumstances presently existing and brought to our attention. We assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof, or if we become aware of any facts or circumstances which now exist or which occur or arise in the future and may change the opinions expressed herein after the date hereof.   The opinions expressed in this letter are solely for your use in connection with the transactions evidenced and contemplated by the Loan Documents and may not be relied upon for any other purposes or by any other person or entity without our prior written consent. We consent, however, to reliance on this letter by each entity which is a Lender on the date hereof or becomes a Lender under the Credit Agreement pursuant to Section 10.06 of the Credit Agreement, as amended, and its respective successors, and by Gibson, Dunn & Crutcher LLP in rendering its opinion to you in connection with the Loan Documents. We also consent to a Lender delivering copies of this letter to any regulating authority having jurisdiction over such Lender; however, we do not consent to reliance on this letter by any such regulating authority.     Very truly yours,   [g114331kqi001.jpg]   4 --------------------------------------------------------------------------------   SCHEDULE 1   Loan Documents   1.     Promissory Note of Borrower dated August 1, 2007 in favor of KeyBank National Association.   2.     Promissory Note of Borrower dated August 1, 2007 in favor of Wells Fargo Bank, N.A.   3.     Promissory Note of Borrower dated August 1, 2007 in favor of Bank of America, N.A.   --------------------------------------------------------------------------------
Exhibit 10.1    Interest free if paid in full within 4 months   $250,000 CONVERTIBLE NOTE   FOR VALUE RECEIVED, Apptigo International, Inc, a Nevada corporation (the “Issuer” of this Security) with at least 29,000,000 common shares issued and outstanding, issues this Security and promises to pay to JMJ Financial, a Nevada sole proprietorship, or its Assignees (the “Investor”) the Principal Sum along with the Interest Rate and any other fees according to the terms herein. This Note will become effective only upon execution by both parties and delivery of the first payment of Consideration by the Investor (the “Effective Date”).   The Principal Sum is $250,000 (two hundred fifty thousand) plus accrued and unpaid interest and any other fees. The Consideration is $225,000 (two hundred twenty five thousand) payable by wire (there exists a $25,000 original issue discount (the “OID”)). The Investor shall pay $25,000 of Consideration upon closing of this Note. The Investor may pay additional Consideration to the Issuer in such amounts and at such dates as the Investor may choose in its sole discretion. The Principal Sum due to THE Investor shall be prorated based on the Consideration actually paid by Investor (plus an approximate 10% original issue discount that is prorated based on the Consideration actually paid by the Investor as well as any other interest or fees) such that the Issuer is only required to repay the amount funded and the Issuer is not required to repay any unfunded portion of this Note. The Maturity Date is two years from the Effective Date of each payment (the “Maturity Date”) and is the date upon which the Principal Sum of this Note, as well as any unpaid interest and other fees, shall be due and payable. The Conversion Price is the lesser of $0.087 or 60% of the lowest trade price in the 25 trading days previous to the conversion (In the case that conversion shares are not deliverable by DWAC an additional 10% discount will apply; and if the shares are ineligible for deposit into the DTC system and only eligible for Xclearing deposit an additional 5% discount shall apply; in the case of both an additional cumulative 15% discount shall apply). Unless otherwise agreed in writing by both parties, at no time will the Investor convert any amount of the Note into common stock that would result in the Investor owning more than 4.99% of the common stock outstanding.   1. ZERO Percent Interest for the First Four Months. The Issuer may repay this Note at any time on or before 120 days from the Effective Date, after which the Issuer may not make further payments on this Note prior to the Maturity Date without written approval from the Investor. If the Issuer repays a payment of Consideration on or before 120 days from the Effective Date of that payment, the Interest Rate on that payment of Consideration shall be ZERO PERCENT (0%). If the Issuer does not repay a payment of Consideration on or before 120 days from its Effective Date, a one-time Interest charge of 12% shall be applied to the Principal Sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by the Issuer.    2. Conversion. The Investor has the right, at any time after the Effective Date, at its election, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Issuer as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. Conversions may be delivered to the Issuer by method of the Investor’s choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Investor. If no objection is delivered from the Issuer to the Investor regarding any variable or calculation of the conversion notice within 24 hours of delivery of the conversion notice, the Issuer shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto. The Issuer shall deliver the shares from any conversion to the Investor (in any name directed by the Investor) within 3 (three) business days of conversion notice delivery.         3. Conversion Delays. If the Issuer fails to deliver shares in accordance with the timeframe stated in Section 2, the Investor, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Issuer (under the Investor’s and the Issuer’s expectations that any returned conversion amounts will tack back to the original date of the Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of the Note (under the Investor’s and the Issuer’s expectations that any penalty amounts will tack back to the original date of the Note).   4. Reservation of Shares. At all times during which this Note is convertible, the Issuer will reserve from its authorized and unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note. The Issuer will at all times reserve at least 10,000,000 shares of Common Stock for conversion.   5. Piggyback Registration Rights. The Issuer shall include on the next registration statement the Issuer files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Investor at its election in the form of cash payment or addition to the balance of this Note.   6. Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Issuer or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Investor in this Note, then the Issuer shall notify the Investor of such additional or more favorable term and such term, at the Investor’s option, shall become a part of the transaction documents with the Investor. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.   7. Default. The following are events of default under this Note: (i) the Issuer shall fail to pay any principal under the Note when due and payable (or payable by conversion) thereunder; or (ii) the Issuer shall fail to pay any interest or any other amount under the Note when due and payable (or payable by conversion) thereunder; or (iii) a receiver, trustee or other similar official shall be appointed over the Issuer or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Issuer shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or (v) the Issuer shall make a general assignment for the benefit of creditors; or (vi) the Issuer shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (vii) an involuntary proceeding shall be commenced or filed against the Issuer; or (viii) the Issuer shall lose its status as “DTC Eligible” or the Issuer’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or (ix) the Issuer shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC; or (x) the Issuer shall fail to meet all requirements to satisfy the availability of Rule 144 to the Investor or its assigns including but not limited to timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings, and requirements for disclosure of financial statements on its website.   8. Remedies. In the event of any default, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Investor’s election, immediately due and payable in cash at the Mandatory Default Amount. The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Note, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher VWAP, or (ii) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages, fees and other amounts hereon. Commencing five (5) days after the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Investor need not provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Investor may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by the Investor at any time prior to payment hereunder and the Investor shall have all rights as a holder of the note until such time, if any, as the Investor receives full payment pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit the Investor’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.         9. No Shorting. The Investor agrees that so long as this Note from the Issuer to the Investor remains outstanding, the Investor will not enter into or effect “short sales” of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Issuer. The Issuer acknowledges and agrees that upon delivery of a conversion notice by the Investor, the Investor immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.   10. Assignability. The Issuer may not assign this Note. This Note will be binding upon the Issuer and its successors and will inure to the benefit of the Investor and its successors and assigns and may be assigned by the Investor to anyone without the Issuer’s approval.   11. Governing Law. This Note will be governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.   12. Delivery of Process by the Investor to the Issuer. In the event of any action or proceeding by the Investor against the Issuer, and only by the Investor against the Issuer, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by the Investor via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Issuer at its last known attorney as set forth in its most recent SEC filing.   13. Attorney Fees. If any attorney is employed by either party with regard to any legal or equitable action, arbitration or other proceeding brought by such party for enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party will be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.   14. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, the Investor has the right to have any such opinion provided by its counsel. Investor also has the right to have any such opinion provided by Issuer’s counsel.   15. Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.          Issuer:   Investor:             David Steinberg   JMJ Financial Apptigo International Inc.   Its Principal Chief Financial Officer                 Date: _______________________________   Date: _______________________________     [Signature Page to $250,000 Promissory Note]
Exhibit 10.1   EMPLOYMENT AGREEMENT KAREN M. SINGER   This Employment Agreement (this “Agreement”), is made and entered into as of the 28th day of November, 2005, by and between Corporate Office Properties L.P., a Delaware limited partnership (the “Employer”), and Corporate Office Properties Trust, a Maryland business trust (“COPT”), and Karen M. Singer (the “Executive”).   RECITALS   A.            The Employer (as referenced in the first paragraph) wishes to assure itself of the continued services of the Executive for the period provided in this Agreement and the Executive is willing to continue in the employ of the Employer on a full-time basis for said period, and upon the other terms and conditions hereinafter provided.   B.            The Employer recognizes that circumstances may arise in which a change of control of the Employer or COPT, through acquisition or otherwise, may occur, thereby causing uncertainty of employment without regard to the competence or past contributions of the Executive, and that such uncertainty may result in the loss of valuable services of the Executive. Accordingly, the Employer and the Executive wish to provide reasonable security to the Executive against changes in the employment relationship in the event of any such change of control.   C.            COPT has agreed to become a party to this Agreement for the purpose of assuming the liabilities, obligations and duties of the Employer to the extent provided herein.   NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter contained, it is covenanted and agreed by and between the parties hereto as follows:   AGREEMENTS   1.             EFFECTIVE DATE.  Notwithstanding the date of execution hereof, this Agreement shall become effective as of September 15, 2005 (the “Effective Date”).   2.             POSITION AND DUTIES.  As of the Effective Date, the Employer hereby employs the Executive as Vice-President and General Counsel of the Employer, or in such other capacity as shall be mutually agreed between the Employer and the Executive. During the period of the Executive’s employment hereunder, the Executive shall devote her best efforts and full business time, energy, skills and attention to the business and affairs of the Employer.  The Executive’s duties and authority shall consist of and include all duties and authority customarily performed and held by persons holding equivalent positions with business organizations similar in nature and size to the Employer, as such duties and authority are reasonably defined, modified and delegated from time to time by the Board of Trustees of the COPT (the “Board”). The Executive shall have the powers necessary to perform the duties assigned to her, and shall be provided such supporting services, staff, secretarial and other assistance, office space and   --------------------------------------------------------------------------------   accouterments as shall be reasonably necessary and appropriate in the light of such assigned duties.   3.             COMPENSATION.  As compensation for the services to be provided by the Executive hereunder, the Executive shall receive the following compensation and other benefits:   (a)           BASE SALARY.  The Executive shall receive an aggregate annual minimum “Base Salary” at the annualized rate of One Hundred Eighty-Nine Thousand Fifty-Five Dollars ($189,055) per annum, payable in periodic installments in accordance with the regular payroll practices of the Employer. Such Base Salary shall be subject to review annually by the Board and Compensation Committee of COPT (“Compensation Committee”) during the term hereof, in accordance with the established compensation policies of the Compensation Committee.   (b)           PERFORMANCE BONUS.  The Executive shall be entitled to an annual cash “Performance Bonus,” which shall be determined by the Board based upon the recommendation of the Compensation Committee.  Any amount due and payable to the Executive under this paragraph (b) of Section 3 for any calendar year shall be paid to the Executive no later than two and one-half months following the close of such calendar year.   (c)           STOCK OPTION/RESTRICTED SHARES.  Executive shall be entitled to stock options and/or restricted shares as determined by the Compensation Committee and the Board.   (d)           BENEFITS.  The Executive shall be entitled to participate in all plans and benefits generally, from time to time, accorded to employees of the Employer (“Benefit Plans”), all as determined by the Board from time to time based upon the input of the Compensation Committee. Executive shall also receive additional benefits as follows:   (i)            a seven hundred fifty dollars ($750) per month automobile allowance; and   (ii)           two thousand dollars ($2000) per year for personal financial planning and personal income tax preparation.   Any amounts due and payable to the Executive under this paragraph (d) of Section 3 during any calendar year shall be paid to the Executive no later than two and one-half months following the close of such calendar year.   (e)           WITHHOLDING.  The Employer shall be entitled to withhold, from amounts payable to the Executive hereunder, any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Employer shall be entitled to rely upon the opinion of its independent accountants, with regard to any question concerning the amount or requirement of any such withholding.   2 --------------------------------------------------------------------------------   4.             TERM AND TERMINATION.   (a)           BASIC TERM.  The Executive’s employment hereunder shall be for a five (5) year basic term (the “Basic Term”), commencing as of the Effective Date. If either the Executive or the Employer notifies the Compensation Committee in writing at least six (6) months but not more than one (1) year prior to the expiration of the Basic Term that the Agreement is set to terminate at the end of the Basic Term, the Agreement shall automatically be extended after the Basic Term for a continuous, self-renewing one (1) year term without further action of the parties unless either party shall have served written notice on the other at least six (6) months prior to the expiration of the Basic Term, that this Agreement shall terminate at the end of the Basic Term.  If this Agreement is extended beyond the Basic Term, either party may at any time thereafter give written notice to the other party that the term of this Agreement will expire on the date that is one (1) year following the date of such written notice.  Notwithstanding the foregoing and other applicable terms of this Agreement, this Agreement may be terminated by either party, with or without cause, effective as of the first (1st) business day after written notice to that effect is delivered to the other party.   (b)           PREMATURE TERMINATION.   (i)            In the event of the termination of the employment of the Executive under this Agreement by the Employer for any reason other than expiration of the term hereof or any renewal term, termination upon disability in accordance with the provisions of paragraph (g) of this Section 4, or a “for-cause” termination in accordance with the provisions of paragraph (e) of this Section 4, then notwithstanding any actual or allegedly available alternative employment or other mitigation of damages by or available to the Executive, the Executive shall be entitled to a “Termination Payment” equal to the sum of:  (w) one (1) times the rate of annualized Base Salary then payable to the Executive, plus (x) one (1) times the average of the three (3) most recent annual Performance Bonuses that the Executive received. In the event of a termination governed by this paragraph (b) of Section 4, the Employer shall also: (y) allow a period of eighteen (18) months following the termination of employment for the Executive (but in no event beyond the expiration of any option term or period specified in the option agreement with the Executive) to exercise any options granted under any stock option or share incentive plan established by Employer or COPT (“Stock Plan”); and (z) continue for the Executive (provided that such items are not available to her by virtue of other employment secured after termination) the perquisites, plans and benefits provided under the Employer’s Perquisite Policy and Benefit Plans as of and after the date of termination, [all items in (z) being collectively referred to as “Post-Termination Perquisites and Benefits”], for the lesser of the number of full months the Executive has theretofore been employed by the Employer or twelve (12) months following such termination. The payments and benefits provided under (w), (x), (y) and (z) above by the Employer shall not be offset against or diminish any other compensation or benefits accrued as of the date of termination.   3 --------------------------------------------------------------------------------   (ii)           Notwithstanding the vesting schedule otherwise applicable, in the event of a termination governed by this paragraph (b) of Section 4, the Executive shall be fully vested in all of the Executive’s options and restricted shares under any Stock Plan or similar program.   (iii)          Any cash payments to the Executive under this paragraph (b) of Section 4 will be made monthly over twelve (12) months, unless otherwise mutually agreed by the parties to minimize the Executive’s tax burden in any year.   (c)           CONSTRUCTIVE TERMINATION. If at any time during the term of this Agreement, except in connection with a “for-cause” termination pursuant to paragraph (d) of this Section 4, the Executive is Constructively Discharged (as hereinafter defined), then the Executive shall have the right, by written notice to the Employer given within one hundred and twenty (120) days of such Constructive Discharge, to terminate her services hereunder, effective as of thirty (30) days after such notice, and the Executive shall have no rights or obligations under this Agreement other than as provided in Sections 5 and 6 hereof.  The Executive shall in such event be entitled to a Termination Payment of Base Salary and Performance Bonus compensation as well as all of the Post-Termination Perquisites and Benefits, as if such termination of her employment had been effectuated pursuant to paragraph (b) of this Section 4.   For purposes of this Agreement, the Executive shall be deemed to have been “Constructively Discharged” upon the occurrence of any one of the following events:   (i)            The Executive is not re-elected to, or is removed from, the position with the Employer as set forth in Section 2 hereof, other than as a result of the Executive’s election or appointment to positions of equal or superior scope and responsibility; or   (ii)           The Executive shall fail to be vested by the Employer with the powers, authority and support services normally attendant to any of said offices; or   (iii)          The Employer shall notify the Executive that the employment of the Executive will be terminated or materially modified in the future or that the Executive will be Constructively Discharged in the future; or   (iv)          The Employer changes the primary employment location of the Executive to a place that is more than fifty (50) miles from the primary employment location, 8815 Centre Park Drive, Columbia, Maryland 21045, as of the Effective Date of this Agreement; or   (v)           The Employer otherwise commits a material breach of its obligations under this Agreement.   (d)           TERMINATION FOR CAUSE. The employment of the Executive and this Agreement may be terminated “for-cause” as hereinafter defined. Termination “for- cause”   4 --------------------------------------------------------------------------------   shall mean the termination of employment on the basis or as a result of (i) a violation by the Executive of any applicable law or regulation respecting the business of the Employer; (ii) the Executive’s conviction of a felony or any crime involving moral turpitude; (iii) any act of dishonesty or fraud, or the Executive’s commission of an act which in the opinion of the Board disqualifies the Executive from serving as an officer or director of the Employer; (iv) the willful or negligent failure of the Executive to perform her duties hereunder, which failure continues for a period of thirty (30) days after written notice thereof is given to the Executive; or (v) a violation of any provision of the Code of Business Conduct and Ethics.  In the event the Employer terminates the Executive’s employment “for cause” under this paragraph (d) of Section 4, the Executive shall be entitled only to the Base Salary through the date of the termination of the Executive’s employment and any other additional benefit in accordance with applicable plans, programs or agreements with the Employer; and all such amounts shall be payable no later than two and one-half months following the close of the calendar year in which such termination occurs.   (e)           TERMINATION UPON DEATH. In the event payments are due and owing under this Agreement at the death of the Executive, such payments shall be made to such beneficiary, designee or fiduciary as Executive may have designated in writing, or failing such designation, to the executor or administrator of her estate, in full settlement and satisfaction of all claims and demands on behalf of the Executive. Any cash payments shall be made no later than two and one-half months following the close of the calendar year in which the Executive’s death occurs.  Such payments shall be in addition to any other death benefits of the Employer made available for the benefit of the Executive, and in full settlement and satisfaction of all payments provided for in this Agreement.  Notwithstanding the vesting schedule otherwise applicable in the event of a termination governed by this subparagraph (e) of Section 4, all of options and restricted shares granted to the Executive under any Stock Plan or similar program shall be fully vested.   (f)            TERMINATION UPON DISABILITY. The Employer may terminate the Executive’s employment after the Executive is determined to be disabled under the long-term disability program of the Employer then covering the Executive or by a physician engaged by the Employer and reasonably approved by the Executive. In the event of a dispute regarding the Executive’s “disability,” such dispute shall be resolved through arbitration as provided in paragraph (d) of Section 11 hereof, except that the arbitrator appointed by the American Arbitration Association shall be a duly licensed medical doctor. The Executive shall be entitled to the compensation and benefits provided for under this Agreement during any period of incapacitation occurring during the term of this Agreement, and occurring prior to the establishment of the Executive’s “disability” during which the Executive is unable to work due to a physical or mental infirmity. Notwithstanding anything contained in this Agreement to the contrary, until the date specified in a notice of termination relating to the Executive’s disability, the Executive shall be entitled to return to her positions with the Employer as set forth in this Agreement, in which event no disability of the Executive will be deemed to have occurred.  Notwithstanding the vesting schedule otherwise applicable, in the event of a termination governed by this subparagraph (g) of Section 4, the Executive shall be fully vested in all of the Executive’s options and restricted shares under any Stock Plan or similar program.   5 --------------------------------------------------------------------------------   (g)           TERMINATION UPON CHANGE OF CONTROL.   (i)            In the event of a Change in Control (as defined below) and the termination of the Executive’s employment by Executive or by the Employer under either 1 or 2 below, the Executive shall be entitled to a Termination Payment equal to the sum of: (w) one (1) times the rate of annualized Base Salary then payable to the Executive, plus (x) one (1) times the average of the three (3) most recent annual Performance Bonuses that the Executive received (or, if less, the average of the annual performance Bonuses that the Executive has theretofore received..  The Employer shall also continue for the Executive the Post-Termination Perquisites and Benefits for the same period and to the same extent as provided in paragraph (b) of this Section 4; provided, however, that notwithstanding the vesting schedule otherwise applicable, immediately following a Change in Control (whether or not the Executive’s employment is terminated), the Executive shall be fully vested in all of Executive’s options and restricted shares outstanding under any Stock Plan or similar program and shall be allowed a period of eighteen (18) months following the termination of employment of the Executive for the Executive’s exercise of such options. The following shall constitute termination under this paragraph:   1 .            The Executive terminates her employment under this Agreement pursuant to a written notice to that effect delivered to the Board within twelve (12) months after the occurrence of the Change in Control.   2.             Executive’s employment is terminated, including Constructively Discharged, by the Employer or its successor either in contemplation of or after Change in Control, other than on a for-cause basis.   (ii)           For purposes of this paragraph, the term “Change in Control” shall mean the following occurring after the date of this Agreement:   1.             The consummation of the acquisition by any person, (as such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more of the combined voting power embodied in the then outstanding voting securities of COPT or the Employer; or   2.             Approval by the stockholders of COPT or the Employer of: (1) a merger or consolidation of COPT or the Employer, if the stockholders of COPT or the Employer immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the entity resulting from such merger or consolidation in substantially the same proportion as was represented by their ownership of the combined voting power of the voting securities of COPT or the Employer   6 --------------------------------------------------------------------------------   outstanding immediately before such merger or consolidation; or (2) a complete or substantial liquidation or dissolution, or an agreement for the sale or other disposition, of all or substantially all of the assets of COPT or the Employer.   Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because fifty percent (50%) or more of the combined voting then outstanding securities is acquired by: (1) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained for employees of the entity; or (2) any corporation or other entity which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of COPT or the Employer in the same proportion as their ownership of stock in COPT or the Employer immediately prior to such acquisition.   (iii)          Any cash payments to the Executive under this paragraph (g) of Section 4 shall be paid to the Executive no later than two and one-half months following the close of the calendar year in which the Executive has a vested right to the payment.   (h)           VOLUNTARY TERMINATION.  In the event of a termination of employment by the Executive on her own initiative, other than a termination due to death, disability or a Constructive Discharge, the Executive shall have the same entitlements as provided in paragraph (d) of this Section 4 for a termination “for-cause.”   5.             CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that heretofore or hereafter during the course of her employment she has produced and received, and may hereafter produce, receive and otherwise have access to various materials, records, data, trade secrets and information not generally available to the public (collectively, “Confidential Information”) regarding the Employer and its subsidiaries and affiliates. Accordingly, during and subsequent to termination of this Agreement, the Executive shall hold in confidence and not directly or indirectly disclose, use, copy or make lists of any such Confidential Information, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Employer, required by law or by any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with the performance by the Executive of her duties hereunder. All records, files, documents, computer diskettes, computer programs and other computer-generated material, as well as all other materials or copies thereof relating to the Employer’s business, which the Executive shall prepare or use, shall be and remain the sole property of the Employer, shall not be removed from the Employer’s premises without its written consent, and shall be promptly returned to the Employer upon termination of the Executive’s employment hereunder. The Executive agrees to abide by the Employer’s reasonable policies, as in effect from time to time, respecting confidentiality and the avoidance of interests conflicting with those of the Employer.   6.             NON-COMPETITION COVENANT.   (a)           RESTRICTIVE COVENANT. The Employer and the Executive have jointly reviewed the tenant lists, property submittals, logs, broker lists, and operations of the Employer, and have agreed that as an essential ingredient of and in consideration of this   7 --------------------------------------------------------------------------------   Agreement and the payment of the amounts described in Sections 3 and 4 hereof, the Executive hereby agrees that, except with the express prior written consent of the Employer, for a period of twelve (12) months after the termination of the Executive’s employment with the Employer for any reason (including termination as a result of the expiration of the term so this Agreement), (the “Restrictive Period”), she will not directly or indirectly compete with the business of the Employer, including, but not by way of limitation, by directly or indirectly owning, managing, operating, controlling, financing, or by directly or indirectly serving as an employee, officer or director of or consultant to, or by soliciting or inducing, or attempting to solicit or induce, any employee or agent of Employer to terminate employment with Employer and become employed by any person, firm, partnership, corporation, trust or other entity which owns or operates a business similar to that of the Employer (the “Restrictive Covenant”). For purposes of this subparagraph (a), a business shall be considered “similar” to that of the Employer if it is engaged in the acquisition, development, ownership, operation, management or leasing of suburban office property in any geographic market or submarket in which the Employer owns more than 1,000,000 s.f. of properties either as of the date hereof or as of the date of termination of the Executive’s employment. If the Executive violates the Restrictive Covenant and the Employer brings legal action for injunctive or other relief, the Employer shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Restrictive Covenant. Accordingly, the Restrictive Covenant shall be deemed to have the duration specified in this paragraph (a) computed from the date the relief is granted but reduced by the time between the period when the Restrictive Period began to run and the date of the first violation of the Restrictive Covenant by the Executive. In the event that a successor of the Employer assumes and agrees to perform this Agreement or otherwise acquires the Employer, this Restrictive Covenant shall continue to apply only to the primary service area of the Employer as it existed immediately before such assumption or acquisition and shall not apply to any of the successor’s other offices or markets. The foregoing Restrictive Covenant shall not prohibit the Executive from owning, directly or indirectly, capital stock or similar securities which are listed on a securities exchange or quoted on the National Association of Securities Dealers Automated Quotation System which do not represent more than five percent (5%) of the outstanding capital stock of any corporation.   (b)           REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive acknowledges that the restrictions contained in Sections 5 and 6 of this Agreement are reasonable and necessary for the protection of the legitimate proprietary business interests of the Employer; that any violation of these restrictions would cause substantial injury to the Employer and such interests; that the Employer would not have entered into this Agreement with the Executive without receiving the additional consideration offered by the Executive in binding herself to these restrictions; and that such restrictions were a material inducement to the Employer to enter into this Agreement. In the event of any violation or threatened violation of these restrictions, the Employer shall be relieved of any further obligations under this Agreement, shall be entitled to any rights, remedies or damages available at law, in equity or otherwise under this Agreement, and shall be entitled to preliminary and temporary injunctive relief granted by a court of competent jurisdiction to prevent or restrain any such violation by the Executive and any and all persons directly or indirectly acting for or with her, as the case may be, while awaiting the decision of the arbitrator selected in accordance with paragraph (d) of Section 11 of this Agreement, which decision, if rendered adverse to the Executive, may include permanent injunctive relief to be granted by the court.   8 --------------------------------------------------------------------------------   7.             INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily transferred to an affiliate of the Employer, such transfer shall not be deemed to terminate or modify this Agreement, and the employing corporation to which the Executive shall have been transferred shall, for all purposes of this Agreement, be construed as standing in the same place and stead as the Employer as of the date of such transfer. For purposes hereof, an affiliate of the Employer shall mean any corporation or other entity directly or indirectly controlling, controlled by, or under common control with the Employer. The Employer shall be secondarily liable to the Executive for the obligations hereunder in the event the affiliate of the Employer cannot or refuses to honor such obligations. For all relevant purposes hereof, the tenure of the Executive shall be deemed to include the aggregate term of her employment by the Employer or its affiliate.   8.             INTEREST IN ASSETS. Neither the Executive nor her estate shall acquire hereunder any rights in funds or assets of the Employer, otherwise than by and through the actual payment of amounts payable hereunder; nor shall the Executive or her estate have any power to transfer, assign (except into a trust for purposes of estate planning), anticipate, hypothecate or otherwise encumber in advance any of said payments; nor shall any of such payments be subject to seizure for the payment of any debt, judgment, alimony, separate maintenance or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise of the Executive.   9.             INDEMNIFICATION.   (a)           The Employer shall provide the Executive (including her heirs, personal representatives, executors and administrators), during the term of this Agreement and thereafter throughout all applicable limitations periods, with coverage under the Employer’s then-current directors’ and officers’ liability insurance policy, at the Employer’s expense.   (b)           In addition to the insurance coverage provided for in paragraph (a) of this Section 9, the Employer shall defend, hold harmless and indemnify the Executive (and her heirs, personal representatives, executors and administrators) to the fullest extent permitted under applicable law, and subject to the requirements, limitations and specifications set forth in the Bylaws and other organizational documents of the Employer, against all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit or proceeding in which she may be involved by reason of her having been an officer of the Employer (whether or not she continues to be an officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements.   (c)           In the event the Executive becomes a party, or is threatened to be made a party, to any action, suit or proceeding for which the Employer has agreed to provide insurance coverage or indemnification under this Section 9, the Employer shall, to the full extent permitted under applicable law, advance all expenses (including the reasonable attorneys’ fees of the attorneys selected by Employer and approved by Executive for the representation of the Executive), judgments, fines and amounts paid in settlement (collectively “Expenses”) incurred by the Executive in connection with the investigation, defense, settlement, or appeal of any   9 --------------------------------------------------------------------------------   threatened, pending or completed action, suit or proceeding, subject to receipt by the Employer of a written undertaking from the Executive covenanting: (i) to reimburse the Employer for all Expenses actually paid by the Employer to or on behalf of the Executive in the event it shall be ultimately determined that the Executive is not entitled to indemnification by the Employer for such Expenses; and (ii) to assign to the Employer all rights of the Executive to insurance proceeds, under any policy of directors’ and officers’ liability insurance or otherwise, to the extent of the amount of Expenses actually paid by the Employer to or on behalf of the Executive.   10.           ASSUMPTION BY COPT.  By its execution of this Agreement, and in consideration of the services provided by the Executive to the Employer hereunder, COPT agrees to be secondarily liable to the Executive, and shall assume the liabilities, obligations and duties of the Employer as contained in this Agreement in the event the Employer cannot or refuses to honor such obligations.   11.           GENERAL PROVISIONS.   (a)           SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Executive, the Employer and her and its respective personal representatives, successors and assigns, and any successor or assign of the Employer shall be deemed the “Employer” hereunder. The Employer shall require any successor to all or substantially all of the business and/or assets of the Employer, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Employer would be required to perform if no such succession had taken place.  No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than her rights to compensation and benefits, which may be transferred only by will or by operation of law.   (b)           ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the entire agreement between the parties respecting the subject matter hereof, and supersedes all prior negotiations, undertakings, agreements and arrangements with respect thereto, whether written or oral. Except as otherwise explicitly provided herein, this Agreement may not be amended or modified except by written agreement signed by the Executive and the Employer.   (c)           ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement shall be regarded as divisible and separate; if any of said provisions should be declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remaining provisions shall not be affected thereby. This Agreement shall be construed and the legal relations of the parties hereto shall be determined in accordance with the laws of the State of Maryland as it constitutes the situs of the corporation and the employment hereunder, without reference to the law regarding conflicts of law.   (d)           ARBITRATION. Except as provided in paragraph (b) of Section 6, any dispute or controversy arising under or in connection with this Agreement or the Executive’s employment by the Employer shall be settled exclusively by arbitration, conducted by a single arbitrator sitting in Columbia, MD in accordance with the rules of the American Arbitration Association (the “AAA”) then in effect. The arbitrator shall be selected by the parties from a list   10 --------------------------------------------------------------------------------   of eleven (11) arbitrators provided by the AAA, provided that no arbitrator shall be related to or affiliated with either of the parties. No later than ten (10) days after the list of proposed arbitrators is received by the parties, the parties, or their respective representatives, shall meet at a mutually convenient location in Columbia, Maryland, or telephonically. At that meeting, the party who sought arbitration shall eliminate one (1) proposed arbitrator and then the other party shall eliminate one (1) proposed arbitrator. The parties shall continue to alternatively eliminate names from the list of proposed arbitrators in this manner until each party has eliminated five (5) proposed arbitrators. The remaining arbitrator shall arbitrate the dispute. Each party shall submit, in writing, the specific requested action or decision it wishes to take, or make, with respect to the matter in dispute, and the arbitrator shall be obligated to choose one (1) party’s specific requested action or decision, without being permitted to effectuate any compromise or “new” position; provided, however, that the arbitrator is authorized to award amounts not in dispute during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Employer shall bear the cost of all counsel, experts or other representatives that are retained by both parties, together with all costs of the arbitration proceeding, including, without limitation, the fees, costs and expenses imposed or incurred by the arbitrator; provided, however, that if the arbitrator determines that the claim or defenses of the Executive were without reasonable basis, each party shall bear her or its own cost. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; including, if applicable, entry of a permanent injunction under paragraph (b) of Section 6.   (e)           PRESS RELEASES AND PUBLIC DISCLOSURE. Any press release or other public communication by either the Executive or the Employer with any other person concerning the terms, conditions or circumstances of Executive’s employment, or the termination of such employment, shall be subject to prior written approval of both the Executive and the Employer, subject to the proviso that the Employer shall be entitled to make requisite and appropriate public disclosure of the terms of this Agreement, without the Executive’s consent or approval, as required under applicable statutes, and the rules and regulations of the Securities and Exchange Commission and the Stock Exchange on which the shares of Employer or COPT may from time to time be listed.   (f)            WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party, shall be deemed a waiver of any similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.   (g)           NOTICES. Notices given pursuant to this Agreement shall be in writing, and shall be deemed given when received, and, if mailed, shall be mailed by United States registered or certified mail, return receipt requested, postage prepaid. Notices to the Employer shall be addressed to the principal headquarters of the Employer, Attention: Chairman. Notices to the Executive shall be sent to the address set forth below the Executive’s signature on this Agreement, or to such other address as the party to be notified shall have given to the other.   11 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.     “Employer” “Executive” Corporate Office Properties L.P., a   Delaware limited partnership           By: /s/ Randall M. Griffin   /s/ Karen M. Singer     Randall M. Griffin Karen M. Singer   President and Chief Executive Officer 8815 Centre Park Drive, Suite 400   Columbia, MD 21045     Corporate Office Properties Trust, a Maryland   business trust       By: /s/ Randall M. Griffin     President & CEO   12 --------------------------------------------------------------------------------
Exhibit 10.1 EXECUTION VERSION AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 18, 2017 (this “Amendment”), by and among CATALENT PHARMA SOLUTIONS, INC., a Delaware corporation (the “Borrower”), PTS INTERMEDIATE HOLDINGS LLC, a Delaware limited liability company (“Holdings”), MORGAN STANLEY SENIOR FUNDING, INC. (“MSSF”), as Administrative Agent (in such capacity, the “Administrative Agent”), Collateral Agent and Swing Line Lender and the Lenders party hereto. PRELIMINARY STATEMENTS: (1) The Borrower, Holdings, MSSF, as Administrative Agent, Collateral Agent and Swing Line Lender, MSSF and JPMorgan Chase Bank, N.A., as L/C Issuers, the other Lenders party thereto and the other agents party thereto have entered into an Amended and Restated Credit Agreement dated as of May 20, 2014 (as the same may have been amended, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement. (2) The Borrower, the undersigned Lenders (constituting the Required Lenders) and the Administrative Agent have agreed to amend the Credit Agreement as hereinafter set forth. (3) Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A., Bank of America, N.A., and Royal Bank of Canada (collectively, the “Arrangers”) are acting as joint lead arrangers and joint bookrunners for this Amendment. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendments to Credit Agreement. Upon, and subject to, the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows: (a) Section 1.01 of the Credit Agreement is amended by inserting the following new definitions in the appropriate alphabetical order: “Amendment No. 3” means that certain Amendment No. 3 to the Amended and Restated Credit Agreement, dated as of October 18, among Holdings, the Borrower, the Lenders party thereto and the Administrative Agent. “Amendment No. 3 Effective Date” means the date on which all of the conditions contained in Section 2 of Amendment No. 3 have been satisfied or waived by the Administrative Agent. -------------------------------------------------------------------------------- “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution. “Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. “Captive Insurance Subsidiary” shall mean a direct or indirect Subsidiary of the Borrower designated to the Administrative Agent in writing as a ‘Captive Insurance Subsidiary’ and established for the purpose of, and to be engaged solely in the business of, insurance with respect to the businesses or property, whether real, personal or intangible, owned or operated by the Borrower or any of its Subsidiaries. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time. “Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule. (b) Section 1.01 of the Credit Agreement is further amended by restating the definition of “Applicable Rate” as follows: “‘Applicable Rate’ means:   2 -------------------------------------------------------------------------------- (a) (x) prior to the Amendment No. 3 Effective Date, (i) in respect of the Dollar Term Loans, a percentage per annum equal to, in the case of Eurodollar Rate Loans, 2.75% and, in the case of Base Rate Loans, 1.75% and (ii) in respect of the Euro Term Loans that are Eurodollar Rate Loans, a percentage per annum equal to 2.50% and (y) on and after the Amendment No. 3 Effective Date, (i) in respect of the Dollar Term Loans, a percentage per annum equal to, in the case of Eurodollar Rate Loans, 2.25% and, in the case of Base Rate Loans, 1.25% and (ii) in respect of the Euro Term Loans that are Eurodollar Rate Loans, a percentage per annum equal to 1.75%; and (b) (x) prior to the Amendment No. 3 Effective Date, in respect of the Revolving Credit Facility, the applicable rates set forth in clause (b) of the definition of ‘Applicable Rate’ as in effect immediately prior to giving effect to Amendment No. 3 and (y) on and after the Amendment No. 3 Effective Date, in respect of the Revolving Credit Facility, a percentage per annum equal to (i) initially, in the case of Eurodollar Rate Loans, 2.25%, and in the case of Base Rate Loans, 1.25% and (ii) on and after the first Business Day after the Amendment No. 3 Effective Date on which a Compliance Certificate was required to have been delivered under Section 6.02(a), a percentage per annum equal to the following percentages per annum, based upon the Total Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a): Applicable Rate   Pricing Level    Total Leverage Ratio      Eurodollar Rate for Revolving Credit Loans and Letter of Credit Fees     Base Rate for Revolving Credit Loans     Commitment Fee Rate   1      > 4.50:1.00        2.25 %      1.25 %      0.50 %  2      < 4.50:1.00        2.00 %      1.00 %      0.375 %  Any increase or decrease in the Applicable Rate resulting from a change in the Total Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided that, at the option of the Administrative Agent or the Required Lenders, Pricing Level 1 shall apply (x) as of the first Business Day after the date on which a Compliance Certificate was required to have been delivered but was not delivered, and shall continue to so apply to and including the date on which such Compliance Certificate is so delivered (and thereafter the Pricing Level otherwise determined in accordance with this definition shall apply) and (y) as of the first Business Day after an Event of Default under Section 8.01(a) shall have occurred and be continuing, and shall continue to so apply to but excluding the date on which such Event of Default is cured or waived (and thereafter the Pricing Level otherwise determined in accordance with this definition shall apply).”   3 -------------------------------------------------------------------------------- (c) Section 1.01 of the Credit Agreement is further amended by restating the definition of “Base Rate” as follows: “‘Base Rate’ means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest per annum published by the Wall Street Journal from time to time, as the “prime lending rate” and (c) the Eurodollar Rate for an Interest Period of one month as of such day, plus 1.0%; provided that in respect of any Base Rate Loan that is a Dollar Term Loan, if the Base Rate would otherwise be less than 2.00%, the Base Rate shall be deemed to be 2.00%. Notwithstanding any provision to the contrary in this Agreement, the applicable Base Rate shall at no time be less than 0.00% per annum.” (d) Section 1.01 of the Credit Agreement is further amended by restating the definition of “Cash Management Obligations” as follows: “‘Cash Management Obligations’ means obligations owed by the Borrower or any Restricted Subsidiary to any Lender or any Affiliate of a Lender in respect of any overdraft, credit card processing, credit or debit card, purchase card, and related liabilities arising from treasury, depository and cash management services or any automated clearing house transfers of funds.” (e) Clause (d) of the definition of “Defaulting Lender” in Section 1.01 of the Credit Agreement is hereby amended by (x) deleting the word “or” appearing immediately prior to clause (ii) of such definition and (y) inserting new clause (iii) therein immediately before the proviso thereto to read as follows: “or (iii) become the subject of a Bail-in Action”. (f) The last sentence of the definition of “Eurodollar Rate” is hereby amended and restated in its entirety to read as follows: “Notwithstanding the foregoing, (x) in respect of any Eurodollar Rate Loan that is a Term Loan, if the Eurodollar Rate would otherwise be less than 1.00%, the Eurodollar Rate shall be deemed to be 1.00% and (y) the applicable Eurodollar Rate shall at no time be less than 0.00% per annum.” (g) Clause (b) of the definition of “Excluded Subsidiary” is hereby amended by replacing the phrase “any Securitization Subsidiary” appearing in the second line thereof with the phrase “any Securitization Subsidiary and any Captive Insurance Subsidiary”. (h) Section 1.01 of the Credit Agreement is further amended by restating clauses (a) and (b) of the definition of “Maturity Date” as follows: “(a) with respect to the Term Loans, the date that is ten years after the Restatement Effective Date; (b) with respect to the Revolving Credit Facility, the date that is eight years after the Restatement Effective Date;” (i) The last sentence of Section 2.02(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “If no currency is specified, the requested Borrowing shall be in Dollars (and, for the avoidance of doubt, Revolving Credit Loans shall be denominated only in Dollars).”   4 -------------------------------------------------------------------------------- (j) Section 2.05(a)(i) of the Credit Agreement is hereby amended by restating clause (4) of the proviso to the first sentence thereof as follows: “(4) in the case of any Repricing Event (as defined below) with respect to all or any portion of the Term Loans, a prepayment premium of 1.00% shall apply to any principal amount of the Term Loans subject to such Repricing Event during the first six-month period after the Amendment No. 3 Effective Date.” (k) Section 2.12 of the Credit Agreement is hereby amended by inserting the following sentence at the end thereof: “Notwithstanding anything to the contrary contained herein, the Borrower may apply cash on hand of the Borrower and its Subsidiaries to prepay on a non-ratable basis the Term Loans held by any Term Lender which declines or fails to consent to Amendment No. 3 as the Borrower and the Administrative Agent may agree.” (l) The last sentence of clause (iv) of Section 2.20(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “Subject to Section 10.27, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.” (m) Section 5.18 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “(a) To the extent applicable, each of Holdings and its Subsidiaries is in compliance in all material respects with all applicable (i) Sanctions and (ii) the USA PATRIOT Act. (b) Borrower represents that neither Holdings nor any of its Subsidiaries (collectively, the ‘Company’) nor to the Company’s knowledge, any director, officer, employee, agent, affiliate or representative of the Company, is an individual or entity (‘Specified Person’) that is, or is owned or controlled by Specified Persons that are: (i) the subject of any sanctions administered or enforced by the U.S. government, including the U.S. Department of Treasury’s Office of Foreign Assets Control and the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury (‘HMT’), (collectively, ‘Sanctions’), nor (ii) located, organized or resident in a country or territory that is the subject or target of Sanctions (including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria (such country, a ‘Sanctioned Country’).   5 -------------------------------------------------------------------------------- (c) No part of the proceeds of the Loans will be used, directly or indirectly, for any offer, payment, promise to pay, authorization of the payment or giving of money, or anything else of value to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the ‘FCPA’) or any other applicable anti-corruption laws (‘Anti-Corruption Laws’) or for the purposes of funding, financing or facilitating any activities or business with any Specified Person that, at the time of such financing, is the subject of any Sanctions, or located in a Sanctioned Country or in any other manner that will result in a violation of Sanctions by any Specified Person. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by Holdings and its Subsidiaries and their respective directors, officers, employees and agents with applicable Anti-Corruption Laws. Holdings and, to the knowledge of the Borrower, its Subsidiaries have conducted their businesses in compliance, in all material respects, with applicable Anti-Corruption Laws and Holdings and its Subsidiaries will conduct their business in a manner designed to promote and achieve compliance, in all material respects, with such laws and with the representation and warranty contained herein.” (n) Article VI of the Credit Agreement is hereby amended by inserting new Section 6.16 therein in the appropriate numerical order to read as follows: “SECTION 6.16. Maintenance of Flood Insurance. If any portion of Improvements (as defined in the Mortgage) constituting part of the Mortgaged Properties is a Flood Hazard Property, Borrower will (or will cause the applicable mortgagor to) purchase flood insurance in an amount satisfactory to the Administrative Agent, but in no event less than the maximum limit of coverage available under the National Flood Insurance Act of 1968, as amended or supplemented from time to time, and including the regulations issued thereunder.” (o) Section 7.03 of the Credit Agreement is hereby amended by replacing the phrase “[reserved]” in clause (z) thereof with the following phrase: “to the extent constituting Indebtedness, obligations in respect of the ‘Subsequent Payment Amount’ (under and as defined in that certain Interest Purchase Agreement dated September 18, 2017 among the Borrower, Cook Pharmica LLC, a limited liability company organized under the laws of Indiana, Cook Group Incorporated, a corporation incorporated under the laws of Indiana, and the other Persons party thereto, as in effect on the Amendment No. 3 Effective Date)”. (p) Section 7.08 of the Credit Agreement is hereby amended by replacing the phrase “[reserved]” in clause (d) thereof with the following phrase: “transactions with the Captive Insurance Subsidiary in the ordinary course of business”. (q) Clause (x) of the first proviso to Section 10.07(a) is hereby amended and restated in its entirety to read as follows: “(x) no Lender may assign or transfer by participation any of its rights or obligations hereunder to (i) any Person that is a Defaulting Lender, (ii) a natural Person or (iii) to Holdings, the Borrower or any of their respective Subsidiaries or Affiliates (except with respect to Term Loans pursuant to Section 2.05(a)(iv), Section 10.07(l) or Section 10.07(m) or to the extent otherwise explicitly permitted hereunder)”.   6 -------------------------------------------------------------------------------- (r) Clause (o) of Section 10.07(l) is hereby amended by adding the following new sentence at the end thereof: “Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, each Affiliated Lender hereby agrees that it shall not have any right to make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against the Administrative Agent or any Lender with respect to any duties or obligations or alleged duties or obligations of the Administrative Agent or any Lender under the Loan Documents, except with respect to any claims that Administrative Agent or any Lender is treating such Affiliated Lender, in its capacity as a Lender, in a disproportionate manner relative to the other Lenders (other than as expressly provided herein or in any other Loan Document).” (s) Article X of the Credit Agreement is hereby amended by inserting new Section 10.27 therein in the appropriate numerical order to read as follows: “SECTION 10.27. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and (b) the effects of any Bail-in Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.”   7 -------------------------------------------------------------------------------- SECTION 2. Conditions of Effectiveness. This Amendment shall become effective on the date when, and only when, the following conditions shall have been satisfied or waived (such date, the “Effective Date”): (a) The Administrative Agent shall have received a counterpart signature page of this Amendment duly executed by (i) Holdings, (ii) the Borrower, (iii) each of the Guarantors, (iv) the Lenders (constituting the Required Lenders) and (v) any Increasing Lenders (as defined below) on, or prior to, 12:00 p.m., New York City time on October 17, 2017 (the “Consent Deadline”). (b) (i) After giving effect to this Amendment and the transactions contemplated hereby, the representations and warranties set forth in Article V of the Credit Agreement (as amended by this Amendment) and in any other Loan Document are true and correct in all material respects on and as of the Effective Date; provided that, 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 as of such earlier date; provided further that any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates and (ii) no Default has occurred and is continuing, or would result from the occurrence of the Effective Date. (c) The Administrative Agent shall have received a certificate of the Borrower dated as of the Effective Date signed on behalf of the Borrower by a Responsible Officer of the Borrower, certifying on behalf of the Borrower as to the matters set forth in Section 2(b) above. (d) The Administrative Agent shall have received a certificate with respect to each Loan Party certifying that attached thereto is a true, correct and complete copy of (A) the articles or certificate of incorporation or formation (or equivalent), as applicable, of such Loan Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, organization or formation (or equivalent), as applicable (or certifying that such organizational documents have not been amended, modified or supplemented since the Restatement Effective Date), (B) the bylaws or other governing document of such Loan Party as in effect on the Effective Date (or certifying that such organizational documents have not been amended, modified or supplemented since the Restatement Effective Date) and (C) resolutions duly adopted by the board of directors (or other governing body) of such Loan Party authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Amendment. (e) The Administrative Agent shall have received payment from the Borrower, (i) for the account of each Existing Lender (as defined below) holding a Revolving Credit Commitment that has executed and delivered a counterpart signature page to this Amendment at or prior to the Consent Deadline (or such later time as the Administrative Agent and the Borrower shall agree), a consent fee (which may take the form of original issue discount) (the “Existing Revolving Lender Consent Fee”) in an amount equal to 0.15% of the aggregate existing Revolving Credit Commitment held by such Existing Revolving Lender immediately prior to giving effect to this Amendment (such aggregate existing Revolving Credit Commitments, the “Existing Revolving Credit Commitments”), (ii) for the account of each Increasing Lender (as defined below) holding a Revolving Credit Commitment that has executed and delivered a counterpart signature page to this Amendment at or prior to the Consent Deadline (or such later time as the   8 -------------------------------------------------------------------------------- Administrative Agent and the Borrower shall agree), a consent fee (which may take the form of original issue discount) (the “Increasing Revolving Lender Consent Fee”) in an amount equal to 0.25% of the aggregate Revolving Credit Commitment assumed or provided by such Increasing Lender on the Effective Date (and excluding for purposes of such calculation and for the avoidance of doubt, any Existing Revolving Credit Commitments of such applicable Increasing Lender referred to in the immediately preceding clause (i)) and (iii) for the account of each Term Lender that has executed and delivered a counterpart signature page to this Amendment at or prior to the Consent Deadline (or such later time as the Administrative Agent and the Borrower shall agree), a consent fee (which may take the form of original issue discount) (the “Term Lender Consent Fee”, and, together with the Existing Revolving Lender Consent Fee and the Increasing Revolving Lender Consent Fee, the “Amendment Consent Fees”)) in an amount equal to 0.25% of the aggregate outstanding principal amount of Term Loans of such Lender as of the date hereof. The Amendment Consent Fees shall be payable on the Effective Date and, once paid, such fee or any part thereof shall not be refundable. (f) The Borrower shall have paid (or substantially concurrently with the satisfaction of the other conditions set forth herein, on the Effective Date, shall be paying) all fees in connection with this Amendment as previously agreed in writing by the Borrower and all reasonable out-of-pocket and documented expenses (including the fees and expenses of Shearman & Sterling LLP) incurred by the Arrangers and the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment required to be paid in connection with this Amendment. SECTION 3. Representations and Warranties. The Borrower represents and warrants to the Agents and the Lenders that: (a) Each Loan Party and each of its Subsidiaries (i) is a Person duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and (ii) has all requisite power and authority to execute and deliver this Amendment and perform its obligations under this Amendment and the Loan Documents to which it is a party. (b) The execution and delivery of this Amendment by each Loan Party that is a party hereto and the performance under this Amendment and the Loan Documents to which each Loan Party is a party, are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (i) contravene the terms of any of such Person’s Organization Documents, (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under (other than as permitted by Section 7.01 of the Credit Agreement), or require any payment to be made under (x) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any material Law; except with respect to any conflict, breach or contravention or payment (but not creation of Liens) referred to in clause (ii)(x), to the extent that such conflict, breach, contravention or payment could not reasonably be expected to have a Material Adverse Effect.   9 -------------------------------------------------------------------------------- (c) No material 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, or enforcement against, any Loan Party of this Amendment, except for (i) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect and (ii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect. (d) This Amendment has been duly executed and delivered by each Loan Party that is party hereto. This Amendment constitutes a legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party that is party hereto in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity. SECTION 4. Reference to and Effect on the Credit Agreement and the Other Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment. (b) The Credit Agreement, as specifically amended by this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, in each case, as amended by this Amendment. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. On and after the effectiveness of this Amendment, this Amendment shall for all purposes constitute a Loan Document. (d) Each Loan Party hereby (i) 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, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Security Agreement) and confirms that such liens and security interests continue to secure the Obligations under the Loan Documents, subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Guaranty.   10 -------------------------------------------------------------------------------- SECTION 5. Increasing Lenders. If any Lender declines or fails to consent to this Amendment by returning an executed counterpart of this Amendment to the Administrative Agent prior to the Consent Deadline, then pursuant to and in compliance with the terms of Section 3.07 of the Credit Agreement, such Lender may be replaced and its commitments and/or obligations purchased and assumed by either a new lender (a “New Lender”) or an existing Lender which is willing to consent to this Amendment (an “Existing Lender” and, together with any New Lender, the “Increasing Lenders”) upon execution of this Amendment (which will also be deemed to be the execution of an Assignment and Assumption substantially in the form of Exhibit E to the Credit Agreement). The Loan Parties and the Administrative Agent hereby agree that from and after the Amendment No. 3 Effective Date, each New Lender shall be deemed to be, and shall become a “Lender”, a “Revolving Credit Lender”, a “Term Lender”, a “Dollar Term Lender” and/or a “Euro Term Lender”, as applicable, for all purposes of, and with all the rights and remedies of a “Lender”, a “Revolving Credit Lender”, a “Term Lender”, a “Dollar Term Lender” and/or a “Euro Term Lender”, as applicable, under, the Credit Agreement and the other Loan Documents. SECTION 6. Costs and Expenses. The Borrower agrees to pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration of this Amendment and the other instruments and documents to be delivered hereunder or in connection herewith (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 10.04 of the Credit Agreement. SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or other electronic delivery (e.g., “pdf”) shall be effective as delivery of a manually executed counterpart of this Amendment. SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   11 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to Amended and Restated Credit Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.   CATALENT PHARMA SOLUTIONS, INC. By: /s/ Matthew Walsh                                                    Name: Matthew Walsh       Title: Executive Vice President and           Chief Executive Officer CATALENT US HOLDING I, LLC By: /s/ Kirk Walsh                                                            Name: Kirk Walsh       Title: Company Secretary PTS INTERMEDIATE HOLDINGS LLC CATALENT USA PACKAGING, LLC CATALENT PHARMA SOLUTIONS, LLC CATALENT US HOLDING II, LLC CATALENT CTS INFORMATICS, INC. CATALENT CTS, LLC CATALENT CTS (KANSAS CITY), LLC CATALENT USA WOODSTOCK, INC. R.P. SCHERER TECHNOLOGIES, LLC CATALENT MTI PHARMA SOLUTIONS, INC. CATALENT SAN DIEGO, INC. CATALENT MICRON TECHNOLOGIES, INC. REDWOOD BIOSCIENCE, INC. By: /s/ Matthew Walsh                                                    Name: Matthew Walsh       Title: Executive Vice President and           Chief Financial Officer Signature Page to Amendment No. 3 to Amended and Restated Credit Agreement (Catalent) -------------------------------------------------------------------------------- MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent, Collateral Agent and Swing Line Lender By: /s/ Nehal Abdel Hakim                                           Name: Nehal Abdel Hakim       Title: Authorized Signatory Signature Page to Amendment No. 3 to Amended and Restated Credit Agreement (Catalent) -------------------------------------------------------------------------------- Lender Signature Pages to Amendment No. 3 to Amended and Restated Credit Agreement On file with the Administrative Agent. Signature Page to Amendment No. 3 to Amended and Restated Credit Agreement (Catalent)
CONFIDENTIAL Exhibit 10.22(c) AMENDMENT N° 3 TO LETTER OF AGREEMENT DCT-026/2003 This Amendment No. 3 to Letter of Agreement DCT-026/2003, dated as of December 4, 2006 (‘‘Amendment 3’’) relates to Letter Agreement DCT-026/2003 between Embraer - Empresa Brasileira de Aeronáutica S.A. (‘‘Embraer’’) and JetBlue Airways Corporation (‘‘Buyer’’) dated June 9, 2003 as amended from time to time (collectively referred to herein as ‘‘Letter Agreement’’). This Amendment 3 is between Embraer and Buyer, collectively referred to herein as the ‘‘Parties’’. This Amendment 3 sets forth the further agreement between Embraer and Buyer relative to [***] among other things. All capitalized terms used in this Amendment 3 and not defined herein, shall have the meaning given in the Purchase Agreement, and in case of any conflict between this Amendment 3, the Letter Agreement, the terms of this Amendment 3 shall control. Now, therefore, for good and valuable consideration, which is hereby acknowledged, Embraer and Buyer hereby agree as follows: [spacer.gif] [spacer.gif] 1.  Delivery Date: A new article 11 shall be inserted in the Letter Agreement: [spacer.gif] [spacer.gif] 11.  [***] [spacer.gif] [spacer.gif] 2.  [***] [spacer.gif] [spacer.gif][spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. 1 -------------------------------------------------------------------------------- AMENDMENT NO. 3 TO LETTER OF AGREEMENT DCT-026/2003 All other terms and conditions of the Letter Agreement, which are not specifically amended by this Amendment 3, shall remain in full force and effect without any change. [Signature page follows] 2 -------------------------------------------------------------------------------- AMENDMENT NO. 3 TO LETTER OF AGREEMENT DCT-026/2003 IN WITNESS WHEREOF, Embraer and Buyer, by their duly authorized officers, have entered into and executed this Amendment 3 to the Letter Agreement to be effective as of the date first written above. [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] Embraer - Empresa Brasileira [spacer.gif] [spacer.gif] JetBlue Airways Corporation de Aeronáutica S.A. [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]   By: [spacer.gif] [spacer.gif] /s/ Frederico Fleury Curado [spacer.gif] [spacer.gif] By: [spacer.gif] [spacer.gif] /s/ Thomas E. Anderson Name: [spacer.gif] [spacer.gif] Frederico Fleury Curado [spacer.gif] [spacer.gif] Name: [spacer.gif] [spacer.gif] Thomas E. Anderson Title: [spacer.gif] [spacer.gif] Executive Vice President [spacer.gif] [spacer.gif] Title: [spacer.gif] [spacer.gif] Senior Vice President   [spacer.gif] [spacer.gif] Airline Market [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]   By: [spacer.gif] [spacer.gif] /s/ Jose Luis D. Molina [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]   Name: [spacer.gif] [spacer.gif] Jose Luis D. Molina [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]   Title: [spacer.gif] [spacer.gif] Director of Contracts [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]     [spacer.gif] [spacer.gif] Airline Market [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif]   [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] Date: [spacer.gif] [spacer.gif] December 6, 2006 [spacer.gif] [spacer.gif] Date: [spacer.gif] [spacer.gif] December 5, 2006 Place: [spacer.gif] [spacer.gif] Sao Jose Dos Campos, SP [spacer.gif] [spacer.gif] Place: [spacer.gif] [spacer.gif] New York, New York Witness: [spacer.gif] [spacer.gif] /s/ Erika Lulai Natali [spacer.gif] [spacer.gif] Witness: [spacer.gif] [spacer.gif] /s/ Cindy R. England Name: [spacer.gif] [spacer.gif] Erika Lulai Natali [spacer.gif] [spacer.gif] Name: [spacer.gif] [spacer.gif] Cindy R. England [spacer.gif] 3 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Exhibit 10.4 Form of Stock Option Agreement under the Amended and Restated 2005 Stock Option Plan Pluristem Therapeutics Inc. STOCK OPTION AGREEMENT Made as of the _______________ BETWEEN: Pluristem Therapeutics Inc.   A company incorporated in Nevada, USA   (hereinafter the "Company") AND: Name :   I.D. No.:   Address:   (hereinafter the "Optionee") WHEREAS On November 10, 2005, the Company duly adopted and the Board approved the 2005 Stock Option Plan. On January 21, 2009, the Company’s stockholders approved the adoption of the Amended and Restated 2005 Stock Option Plan, a copy of which has been made available to the Optionee, forming an integral part hereof (the “ISOP”); and – WHEREAS Pursuant to the ISOP, the Company has decided to grant Options to purchase Shares of the Company to the Optionee, and the Optionee has agreed to such grant, subject to all the terms and conditions as set forth in the ISOP and as provided herein; NOW, THEREFORE, it is agreed as follows: 1. Preamble and Definitions   1.1 The preamble to this Agreement constitutes an integral part of this Agreement, as do the terms of the ISOP.   1.2 Unless otherwise defined herein, capitalized terms used herein shall have the meaning ascribed to them in the ISOP. 2. Grant of Options   2.1 The Company hereby grants to the Optionee the number of Options as set forth in Exhibit A hereto, each Option shall be exercisable for one Share, upon payment of the Purchase Price as set forth in Exhibit A, subject to the terms and the conditions as set forth in the ISOP and as provided herein. -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   2.2 The Optionee is aware that the Company intends in the future to issue additional shares and to grant additional options to various entities and individuals, as the Company in its sole discretion shall determine. 3. Period of Option and Conditions of Exercise   3.1 The terms of this Option Agreement shall commence on the Date of Grant and terminate at the Expiration Date as set out on Exhibit A, or at the time at which the Option expires pursuant to the terms of the ISOP or pursuant to this Option Agreement.   3.2 Options may be exercised only to purchase whole Shares, and in no case may a fraction of a Share be purchased. If any fractional Share would be deliverable upon exercise, such fraction shall be rounded up one-half or less, or otherwise rounded down, to the nearest whole number. 4. Adjustments   Notwithstanding anything to the contrary in Section 7.1 (m) of the ISOP and in addition thereto, if in any such Transaction as described in Section 7.1 (m) of the ISOP, the Successor Company (or parent or subsidiary of the Successor Company) does not agree to assume or substitute for the Options, the Vesting Dates shall be accelerated so that any unvested Option shall be immediately vested in full as of the date which is ten (10) days prior to the effective date of the Transaction, and the Committee shall notify the Optionee that the unexercised Options are fully exercisable for a period of ten (10) days from the date of such notice, and that any unexercised Options shall terminate upon the expiration of such period.   If the successor Company (or parent or subsidiary of the Successor Company) agrees to assume or substitute for the Options and Optionee’s employment with the Successor Company is terminated by the Successor Company without “Cause” within one year of the closing of such Transaction, the Vesting Dates shall be accelerated so that any unvested portion of the substituted Option shall be immediately vested in full as of the date of such termination without Cause. 5. Vesting; Period of Exercise   Subject to the provisions of the ISOP, Options shall vest and become exercisable according to the Vesting Dates set forth in Exhibit A hereto, provided that the Optionee is an Employee of or providing services to the Company and/or its Affiliates on the applicable Vesting Date. Where there is a discrepancy between the terms of Exhibit A and the terms of the ISOP, Exhibit A shall govern.   All unexercised Options granted to the Optionee shall terminate and shall no longer be exercisable on the Expiration Date. 6. Exercise of Options   6.1 Options may be exercised in accordance with the provisions of Section 7.1(h) of the ISOP. - 2 - -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   6.2 In order for the Company to issue Shares upon the exercise of any of the Options, the Optionee hereby agrees to sign any and all documents required by any applicable law and/or by the Company’s Articles of Association or Bylaws.   6.3 The Company shall not be obligated to issue any Shares upon the exercise of an Option if such issuance, in the opinion of the Company, might constitute a violation by the Company of any provision of law. 7. Restrictions on Transfer of Options and Shares   7.1 The transfer of Options and the transfer of Shares to be issued upon exercise of the Options shall be subject to the limitations set forth in the ISOP and in the Company’s Articles of Association and any shareholders’ agreement to which the holders of ordinary shares of the Company are bound.   7.2 With respect to any Approved 102 Option, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, an Optionee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Optionee.   7.3 With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Affiliate, the Optionee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.   7.4 The Optionee shall not dispose of any Shares in transactions which violate, in the opinion of the Company, any applicable laws, rules and regulations.   7.6 The Optionee agrees that the Company shall have the authority to endorse upon the certificate or certificates representing the Shares such legends referring to the foregoing restrictions, and any other applicable restrictions as it may deem appropriate (which do not violate the Optionee’s rights according to this Option Agreement). 8. Taxes; Indemnification   8.1 Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby or from any other event or act (of the Company and/or its Affiliates, the Trustee or the Optionee), hereunder, shall be borne solely by the Optionee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Optionee hereby agrees to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Optionee. - 3 - -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   8.2 The Optionee will not be entitled to receive from the Company and/or the Trustee any Shares allocated or issued upon the exercise of Options prior to the full payments of the Optionee’s tax liabilities arising from Options which were granted to him and/or Shares issued upon the exercise of Options. For the avoidance of doubt, neither the Company nor the Trustee shall be required to release any share certificate to the Optionee until all payments required to be made by the Optionee have been fully satisfied.   8.3 The receipt of the Options and the acquisition of the Shares to be issued upon the exercise of the Options may result in tax consequences. THE OPTIONEE IS ADVISED TO CONSULT A TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OR EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.   8.4 With respect to Approved 102 Options, the Optionee hereby acknowledges that he is familiar with the provisions of Section 102 and the regulations and rules promulgated thereunder, including without limitations the type of Option granted hereunder and the tax implications applicable to such grant. The Optionee accepts the provisions of the trust agreement signed between the Company and the Trustee, attached as Exhibit C hereto, and agrees to be bound by its terms. 9. Miscellaneous   9.1 No Obligation to Exercise Options. The grant and acceptance of these Options imposes no obligation on the Optionee to exercise it.   9.2 Confidentiality. The Optionee shall regard the information in this Option Agreement and its exhibits attached hereto as confidential information and the Optionee shall not reveal its contents to anyone except when required by law or for the purpose of gaining legal or tax advice.   9.3 Continuation of Employment or Service. Neither the ISOP nor this Option Agreement shall impose any obligation on the Company or an Affiliate to continue the Optionee’s employment or service and nothing in the ISOP or in this Option Agreement shall confer upon the Optionee any right to continue in the employ or service of the Company and/or an Affiliate or restrict the right of the Company or an Affiliate to terminate such employment or service at any time.   9.4 Entire Agreement. Subject to the provisions of the ISOP, to which this Option Agreement is subject, this Option Agreement, together with the exhibits hereto, constitute the entire agreement between the Optionee and the Company with respect to Options granted hereunder, and supersedes all prior agreements, understandings and arrangements, oral or written, between the Optionee and the Company with respect to the subject matter hereof. - 4 - -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   9.5 Failure to Enforce – Not a Waiver. The failure of any party to enforce at any time any provisions of this Option Agreement or the ISOP shall in no way be construed to be a waiver of such provision or of any other provision hereof.   9.6 Provisions of the ISOP. The Options provided for herein are granted pursuant to the ISOP and said Options and this Option Agreement are in all respects governed by the ISOP and subject to all of the terms and provisions of the ISOP.   Any interpretation of this Option Agreement will be made in accordance with the ISOP but in the event there is any contradiction between the provisions of this Option Agreement and the ISOP, the provisions of the Option Agreement will prevail.   9.7 Binding Effect. The ISOP and this Option Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereof.   9.8 Notices. All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed by registered mail or delivered by email or facsimile with written confirmation of receipt to the Optionee and/or to the Company at the addresses shown on the letterhead above, or at such other place as the Company may designate by written notice to the Optionee. The Optionee is responsible for notifying the Company in writing of any change in the Optionee’s address, and the Company shall be deemed to have complied with any obligation to provide the Optionee with notice by sending such notice to the address indicated below. Pluristem Therapeutics Inc.: Name:________________________ Position:______________________ Signature:_____________________ - 5 - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- I, the undersigned, hereby acknowledge receipt of a copy of the ISOP and accept the Options subject to all of the terms and provisions thereof. I have reviewed the ISOP and this Option Agreement in its entirety, have had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understand all provisions of this Option Agreement. I agree to notify the Company upon any change in the residence address indicated above. —————————————— Date —————————————— Optionee’s Signature Attachments: Exhibit A:  Terms of the Option - 6 - -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EXHIBIT A TERMS OF THE OPTION Name of the Optionee: Date of Grant: Designation: 1. Number of Options granted: 2. Purchase Price: 3. Vesting Dates: 4. Expiration Date: 5. Post-employment exercise vested options —————————————— Optionee —————————————— Company - 7 - -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
EXHIBIT 10.10 Amended and Restated Board Compensation Program for Outside Directors Effective May 19, 2011 Annual Retainers · Outside Directors each receive an annual cash retainer of $35,000 · Lead Director receives an additional annual cash retainer of $30,000 · Audit Committee chair receives an additional annual cash retainer of $20,000 · Compensation, Scientific Review, Strategic Operations and Nominating and Corporate Governance Committee chairs receive an additional annual cash retainer of $15,000 · Audit Committee members (other than the chair) receive an additional annual cash retainer of $5,000 · Compensation, Scientific Review, Strategic Operations and Nominating and Corporate Governance Committee members (other than the chair) receive an additional annual cash retainer of $3,000 Meeting Fees · Board meeting fees of $2,000 for in-person attendance, $1,500 for telephonic attendance · Committee meeting fees of: o $2,000 for in-person attendance of all Committee meetings o $1,500 for telephonic attendance of Audit Committee meetings o $1,000 for telephonic attendance of Compensation, Scientific Review, Strategic Operations and Nominating and Corporate Governance Committee meetings Equity awards as follows:   No. of Stock Options No. of RSU's Total Shares Initial Election Award 10,800 5,400 16,200 Annual Award 7,200 3,600 10,800    For purposes of this Program: 1. Outside Director shall mean any individual that is not an Inside Director and meets the definition of "outside director" as it may be amended from time to time under Section 162(m) the Internal Revenue Code of 1986, as amended, and the rules and regulation thereunder; 2. Lead Director shall mean the Independent Director selected by a majority of the Independent Directors, pursuant to the Corporate Governance Guidelines. 3. Inside Director shall mean any individual who is also an officer or employee of the Corporation or any of its affiliates. 4. Independent Director shall mean any individual who qualifies as an "independent director," pursuant to the Corporate Governance Guidelines.          The determination of whether or not an individual is an Outside Director, Inside Director or Independent Director (and in the case of an Outside Director whether or not the grant of an option was necessary to attract such individual to join the Board) shall be made by the Board of Directors in its sole          and absolute discretion at any time prior or subsequent to the date on which the individual is appointed or elected to the Board of Directors. Approved By Board of Directors May 19, 2011
Exhibit 10.1   DECKERS OUTDOOR CORPORATION   RESTRICTED STOCK UNIT AWARD AGREEMENT UNDER 2006 EQUITY INCENTIVE PLAN   2012 LTIP AWARD   Name of Grantee:   Grant Date:   Threshold Number of Units:   Target Number of Units:   Maximum Number of Units:       In order to promote Grantee’s long-term commitment to Deckers Outdoor Corporation (the “Company”), to compensate Grantee for the Company’s performance measured on a long-term basis and to provide an incentive for Grantee to remain a Service Provider (as defined below) of the Company and to exert added effort towards its growth and success, the Company hereby grants an award (the “Award”) of restricted stock units (the “Restricted Stock Units”) for the Maximum Number of Units (as listed above).   Each Restricted Stock Unit represents the right to receive one share of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”), subject to certain restrictions and on the terms and conditions contained in this Award and the Deckers Outdoor Corporation 2006 Equity Incentive Plan (the “Plan”).  Any terms not defined herein shall have the meaning set forth in the Plan.  The Threshold Number of Units (as listed above) is the minimum number of Restricted Stock Units to be settled in the event that the Company meets the threshold Performance Criteria as described in this Award.  The Maximum Number of Units (as listed above) is the total number of Restricted Stock Units to be settled as described in this Award.   1.                                      Rights of the Grantee with Respect to the Restricted Stock Units.   (a)                                 No Stockholder Rights.  The Grantee shall have no rights as a stockholder of the Company until shares of Common Stock are actually issued to and held of record by the Grantee.  The rights of Grantee with respect to the Restricted Stock Units shall remain forfeitable at all times prior to the date on which such rights become vested, and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Sections 2, 3 or 4 below.   --------------------------------------------------------------------------------   (b)                                 Additional Restricted Stock Units.  As long as Grantee holds Restricted Stock Units granted pursuant to this Award, the Company shall credit to Grantee, on each date that the Company pays a cash dividend to holders of Common Stock generally, an additional number of Restricted Stock Units (“Additional Restricted Stock Units”) equal to the total number of whole Restricted Stock Units and Additional Restricted Stock Units previously credited to Grantee under this Award multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such date, divided by the Fair Market Value of a share of Common Stock on such date.  Any fractional Restricted Stock Unit resulting from such calculation shall be included in the Additional Restricted Stock Units.  A report showing the number of Additional Restricted Stock Units so credited shall be sent to Grantee periodically, as determined by the Company.  The Additional Restricted Stock Units so credited shall be subject to the same terms and conditions as the Restricted Stock Units to which such Additional Restricted Stock Units relate and the Additional Restricted Stock Units shall be forfeited in the event that the Restricted Stock Units with respect to which such Additional Restricted Stock Units were credited are forfeited.   (c)                                  Conversion of Restricted Stock Units; Issuance of Common Stock.  No shares of Common Stock shall be issued to Grantee prior to the date on which the Restricted Stock Units vest, and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Sections 2, 3, or 4 below.  Neither this Section 1(c) nor any action taken pursuant to or in accordance with this Section 1(c) shall be construed to create a trust of any kind.  As soon as practical and in all events within 10 business days after any Restricted Stock Units vest pursuant to Sections 2, 3 or 4 below, the Company shall promptly cause to be issued an equivalent number of shares of Common Stock, registered in Grantee’s name or in the name of Grantee’s legal representatives, beneficiaries or heirs, as the case may be, in payment of such vested whole Restricted Stock Units and any Additional Restricted Stock Units.  Such payment shall be subject to the tax withholding provisions of Section 7, and shall be in complete satisfaction of such vested Restricted Stock Units.  The value of any fractional Restricted Stock Unit shall be paid in cash at the time certificates are delivered to Grantee in payment of the Restricted Stock Units and any Additional Restricted Stock Units.   2.                                      Vesting.   (a)                                 The Restricted Stock Units shall vest, and the right to receive shares of Common Stock pursuant to the Restricted Stock Units shall be based upon the achievement by the Company of the performance criteria as set forth on Exhibit A (“Performance Criteria”), provided that the Grantee shall have provided Continuous Service to the Company through December 31, 2015.  Within 30 business days following the date of the Committee’s final determination of the achievement of the Performance Criteria, the Company shall deliver to the Grantee one share for each Restricted Stock Unit in which Grantee becomes entitled as described herein and such Restricted Stock Unit shall terminate.  Except as expressly set forth herein, no additional Restricted Stock Units shall vest after the date of termination of Grantee’s “Continuous Service” (as defined below).   (b)                                 As used herein, the term “Continuous Service” means (i) employment by either the Company or any parent or subsidiary corporation of the Company, or by any successor entity following a Change in Control, which is uninterrupted except for vacations, illness, or leaves of absence which are approved in writing by the Company or any of such other employer corporations, if applicable, or (ii) service as a member of the Board of Directors of the Company until Grantee resigns, is removed from office, or Grantee’s term of office expires and he or she is not reelected, (iii) or so long as engaged as a Consultant or other Service Provider.  The Grantee’s   2 --------------------------------------------------------------------------------   Continuous Service shall not terminate merely because of a change in the capacity in which the Grantee renders service to the Company or a corporation or subsidiary corporation described in clause (i) above.  For example, a change in the Grantee’s status from an employee to a Non-Employee Director will not constitute an interruption of the Grantee’s Continuous Service, provided there is no interruption in the Grantee’s performance of such services.  Notwithstanding the foregoing, for any employee of a subsidiary of the Company located outside the United States, such employee’s Continuous Service shall be deemed terminated upon the commencement of such employee’s “garden leave period,” “notice period,” or other similar period where such employee is being compensated by such subsidiary but not actively providing service to such subsidiary.   3.                                      Forfeiture or Early Vesting Upon Termination of Employment.   (a)                                 Termination of Employment Generally.  If, prior to vesting of the Restricted Stock Units pursuant to Section 2 or 4, Grantee ceases to provide Continuous Service to the Company, for any reason (voluntary or involuntary) other than death, Disability (as defined in the Plan), or Retirement (as defined below), then Grantee’s rights to any of the Restricted Stock Units shall be immediately and irrevocably forfeited, including the right to receive any Additional Restricted Stock Units.   (b)                                 Death; Disability or Retirement.   (i)                                     If Grantee’s Continuous Service ceases due to Grantee’s death, Disability (as defined in the Plan) or Retirement (as defined in Section 4(c)(v) below), then a Pro-Rata Portion (as defined in Section 4(c)(iv) below) of the Restricted Stock Units shall vest effective as of December 31, 2015, subject to achievement of the Performance Criteria.  Within 30 business days following the date of the Committee’s final determination of the achievement of the Performance Criteria, the Company shall deliver to the Grantee (or his/her estate in the event of death) one share for each Restricted Stock Unit in which Grantee becomes entitled as described herein and such Restricted Stock Unit shall terminate.  No transfer by will or the applicable laws of descent and distribution of any Restricted Stock Units that vest by reason of Grantee’s death shall be effective to bind the Company unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.   (ii)                                  By way of example only, if (i) Grantee’s Continuous Service terminates as a result of death or Disability as of March 15, 2013, and (ii) the Company’s performance for the 12-month period ending December 31, 2015, is $XXX Billion in revenue and $ XXX EPS, such that XXX% of the Target Number of Units, or XXX Units, are eligible for vesting, then Grantee (or Grantee’s estate) will vest his Pro-Rata Portion of the XXX Units, or XXX Units (XXX x XXX).   (iii)                               As an additional example only, if (i) Grantee’s Continuous Service ceases due to Grantee’s Retirement as of September 30, 2012, and (ii) the Company’s performance for the 12-month period ending December 31, 2015, is $ XXX Billion in revenue and $ XXX EPS, such that XXX% of the Target Number of Units, or XXX Units, are eligible for vesting, then Grantee will vest his Pro-Rata Portion of the XXX Units, or XXX Units (XXX x XXX).   3 --------------------------------------------------------------------------------   4.                                      Vesting Upon Change in Control.   (a)                                 Notwithstanding Section 2 above, if Grantee holds Restrictive Stock Units at the time a Change in Control occurs, and either (i) the Change in Control is not approved by a majority of the Continuing Directors (as defined below), or (ii) the acquiring or successor entity (or parent thereof) does not agree to provide for the continuance or assumption of this Agreement or the substitution for this Agreement of a new agreement of comparable value covering shares of a successor corporation (“New Incentives”), then the Target Number of Units shall become immediately and unconditionally vested effective immediately prior to and condition upon the consummation of such Change of Control, regardless of the Performance Criteria, and the Company shall deliver to Grantee one share of Common Stock for each of the Target Number of Units and the Restricted Stock Units shall terminate.   (b)                                 Notwithstanding Section 4(a) above, if pursuant to a Change in Control approved by a majority of the Continuing Directors, the acquiring or successor entity (or parent thereof) provides for the continuance or assumption of this Agreement or the substitution for this Agreement of a new agreement of comparable value covering New Incentives, then vesting of the Restricted Stock Units shall not accelerate in connection with such Change in Control to the extent this Agreement is continued, assumed or substituted for New Incentives; provided, however,   (i)                                     if Grantee’s Continuous Service is terminated without Cause or pursuant to a Constructive Termination (as defined below) within 12 months following such Change in Control, the Target Number of Units or New Incentives shall vest effective upon such termination, regardless of the Performance Criteria; or   (ii)                                  if, following a Change of Control, Grantee shall have provided Continuous Service through December 31, 2015, then the Target Number of Units or New Incentives shall vest effective December 31, 2015, regardless of the Performance Criteria.   (c)                                  For purposes of this Agreement, the following terms shall have the meanings set forth below:   (i)                                     “Cause” means, with respect to a Grantee’s Continuous Service, the termination by the Company of such Continuous Service for any of the following reasons: (a) The continued, unreasonable refusal or omission by the Grantee to perform any material duties required of him by the Company if such duties are consistent with duties customary for the position held with the Company; (b) Any material act or omission by the Grantee involving malfeasance or gross negligence in the performance of Grantee’s duties to, or material deviation from any of the policies or directives of, the Company; (c) Conduct on the part of Grantee which constitutes the breach of any statutory or common law duty of loyalty to the Company; including the unauthorized disclosure of material confidential information or trade secrets of the Company; or (d) any illegal act by Grantee which materially and adversely affects the business of the Company or any felony committed by Grantee, as evidenced by conviction thereof, provided that the Company may suspend Grantee with pay while any allegation of such illegal or felonious act is investigated.  In the event that the Grantee is a party to an employment agreement or other similar agreement with the Company or any Affiliate that defines a termination on account of “Cause” (or a term having similar meaning), such definition shall apply as the definition of a termination on account of “Cause” for purposes hereof, but only to the extent that such definition provides the Grantee with greater rights.  A termination on account of Cause shall be communicated by written notice to the Grantee, and shall be deemed to occur on the date such notice is delivered to the Grantee.   4 --------------------------------------------------------------------------------   (ii)                                  “Constructive Termination” shall mean a termination of employment by Grantee within sixty (60) days following the occurrence of any one or more of the following events without the Grantee’s written consent (i) any reduction in position, title, overall responsibilities, level of authority, level of reporting, base compensation, annual incentive compensation opportunity, aggregate employee benefits or (ii) a request that Grantee’s location of employment be relocated by more than fifty (50) miles.  In the event that the Grantee is a party to an employment agreement or other similar agreement with the Company or any Affiliate (or a successor entity) that defines a termination on account of “Constructive Termination,” “Good Reason” or “Breach of Agreement” (or a term having a similar meaning), such definition shall apply as the definition of “Constructive Termination” for purposes hereof in lieu of the foregoing, but only to the extent that such definition provides the Grantee with greater rights.  A Constructive Termination shall be communicated by written notice to the Committee, and shall be deemed to occur on the date such notice is delivered to the Committee, unless the circumstances giving rise to the Constructive Termination are cured within five (5) days of such notice.   (iii)                               “Continuing Director” means any member of the Board of Directors of the Company who was a member of the Board prior to the adoption of the Plan, and any person who is subsequently elected to the Board if such person is recommended or approved by a majority of the Continuing Directors.   (iv)                              “Pro-Rata Portion” shall be determined based (A) multiplying the Restricted Stock Units to be awarded to Grantee if Grantee had worked through December 31, 2015 (as listed on Exhibit A), by (B) a fraction, the numerator of which is the number of full months of Grantee’s Continuous Service from January 1, 2012, until the date of such Disability, death or Retirement, as the case may be, and the denominator of which is 48.   (v)                                 “Retirement” means both (i) attains age sixty-two (62) and (ii) completes five (5) years of Continuous Service.   5.                                      Restriction on Transfer.  The Restricted Stock Units and any rights under this Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by Grantee otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, transfer, pledge, hypothecation or other disposition shall be void and unenforceable against the Company.  Notwithstanding the foregoing, Grantee may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of Grantee and receive any property distributable with respect to the Restricted Stock Units upon the death of Grantee.   6.                                      Adjustments to Restricted Stock Units.  Upon or in contemplation of any reclassification, recapitalization, stock split, reverse stock split or stock dividend; any merger, combination, consolidation or other reorganization; any split-up, spin-off, or similar extraordinary dividend distribution in respect of the Common Stock (whether in the form of securities or property); any exchange of Common Stock or other securities of the Company, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; or a sale of substantially all the assets of the Company as an entirety; then the Company shall, in such manner, make appropriate adjustments in the number of Restricted Stock Units subject to this Agreement and the number and kind of securities that may be issued in respect of such Units, as provided in Section 15 of the Plan.   5 --------------------------------------------------------------------------------   7.                                      Income Tax Matters.   (a)                                 In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Grantee, are withheld or collected from Grantee.   (b)                                 The Company shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its affiliates may reasonably be obligated to withhold with respect to the grant, vesting, or other event with respect to the Restricted Stock Units.  The Company may, in its sole discretion, withhold a sufficient number of shares of Common Stock in connection with the vesting of the Restricted Stock Units at the Fair Market Value (as defined in the Plan) of the Common Stock (determined as of the date of measurement of the amount of income subject to such withholding) to satisfy the minimum amount of any such withholding obligations that arise with respect to the vesting of such Restricted Stock Units.  The Company may take such action(s) without notice to the Grantee, and the Grantee shall have no discretion as to the satisfaction of tax withholding obligations in such manner.  If, however, any withholding event occurs with respect to the Restricted Stock Units other than upon the vesting of such Units, or if the Company for any reason does not satisfy the withholding obligations with respect to the vesting of the Units as provided above in this Section 7(b), the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable to the Grantee the minimum amount of any such withholding obligations.   (c)                                  The Restricted Stock Unit Award evidenced by this Agreement, and the issuance of shares of Common Stock to the Grantee in settlement of vested Units, is intended to be taxed under the provisions of Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not intended to provide and does not provide for the deferral of compensation within the meaning of Section 409A(d) of the Code.  Therefore, the Company intends to report as includible in the Grantee’s gross income for any taxable year an amount equal to the Fair Market Value of the shares of Common Stock covered by the Units that vest (if any) during such taxable year, determined as of the date such Units vest.  In furtherance of this intended tax treatment, all vested Units shall be automatically settled and payment to the Grantee shall be made as provided in Section 1(c) hereof, but in no event later than March 15th of the year following the calendar year in which such Units vest.  The Grantee shall have no power to affect the timing of such settlement or payment.  The Company reserves the right to amend this Agreement, without the Grantee’s consent, to the extent it reasonably determines from time to time that such amendment is necessary in order to achieve the purposes of this Section.   8.                                      Compliance with Laws.  The Award and the offer, issuance and delivery of securities under this Agreement are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities laws) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  The Grantee will, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements.  The Company will cause such action to be taken, and such filings to be made, so that the grant hereunder shall comply with the rules of the Nasdaq Stock Market or the principal stock exchange on which shares of the Company’s Common Stock are then listed for trading.   6 --------------------------------------------------------------------------------   9.                                      No Agreement to Employ. Nothing in this Agreement shall affect any right with respect to continuance of employment by the Company or any of its subsidiaries.  The right of the Company or any of its subsidiaries to terminate at will the Grantee’s employment at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to any other written employment agreement to which the Company and Grantee may be a party.   10.                               Entire Agreement.  This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior or contemporaneous written or oral agreements and understandings of the parties, either express or implied.   11.                               Conflict of Provisions.  The terms contained in the Plan are incorporated into and made a part of this Agreement and this Agreement shall be governed by and construed in accordance with the Plan.  In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling and determinative.   12.                               Assignment.  Grantee shall have no right, without the prior written consent of the Company, to (i) sell, assign, mortgage, pledge or otherwise transfer any interest or right created hereby, or (ii) delegate his or her duties or obligations under this Agreement.  This Agreement is made solely for the benefit of the parties hereto, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement.   13.                               “Market Stand-Off” Agreement.  Grantee agrees that, if requested by the Company or the managing underwriter of any proposed public offering of the Company’s securities (including any acquisition transaction where Company securities will be used as all or part of the purchase price), Grantee will not sell or otherwise transfer or dispose of any shares of Common Stock held by Grantee without the prior written consent of the Company or such underwriter, as the case may be, during such period of time, not to exceed 180 days following the effective date of the registration statement filed by the Company with respect to such offering, as the Company or the underwriter may specify.   14.                               Severability.  Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions and portions of this Agreement shall be unaffected by such holding.   15.                               Notices.  All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and effective (i) when delivered by hand, (ii) when otherwise delivered against receipt therefor, or (iii) three (3) business days after being mailed if sent by registered or certified mail, postage prepaid, return receipt requested.  Any notice shall be addressed to the parties as follows or at such other address as a party may designate by notice given to the other party in the manner set forth herein:   (a)                                 if to the Company:   Deckers Outdoor Corporation 495-A South Fairview Avenue Goleta, California  93117 Attention:  Chief Financial Officer   7 --------------------------------------------------------------------------------   (b)                                 if to the Grantee, at the address shown on the signature page of this Agreement or at his most recent address as shown in the employment or stock records of the Company.   16.                               Applicable Law.  This Agreement shall be construed in accordance with the laws of the State of California without reference to choice of law principles, as to all matters, including, but not limited to, matters of validity, construction, effect or performance.   17.                               Number and Gender.  Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.   18.                               Section Headings.  The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.   19.                               Modifications.  This Agreement may not be amended, modified or changed (in whole or in part), except by a written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.  Notwithstanding the foregoing, amendments made pursuant to Section 7(b) hereof may be effectuated solely by the Company.   20.                               Waiver.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.   21.                               Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one agreement and any party hereto may execute this Agreement by signing any such counterpart.  This Agreement shall be binding upon Grantee and the Company at such time as the Agreement, in counterpart or otherwise, is executed by Grantee and the Company.   [Signature Page Follows]   8 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock Unit Award Agreement as of the date first above written.   THE COMPANY: GRANTEE:     DECKERS OUTDOOR CORPORATION           By:       Name:       Title:         Address:           --------------------------------------------------------------------------------
EXHIBIT 10.1 JOINDER TO AMENDED AND RESTATED CREDIT AGREEMENT AND CREDIT DOCUMENTS This JOINDER TO AMENDED AND RESTATED CREDIT AGREEMENT AND CREDIT DOCUMENTS (this “Joinder”), is dated this 21st day of December, 2007, by and among StoneMor Arkansas Subsidiary LLC, an Arkansas limited liability company, StoneMor California, Inc., a California corporation, StoneMor California Subsidiary, Inc., a California corporation, StoneMor Florida Subsidiary LLC, a Florida limited liability company, StoneMor Hawaii LLC, a Hawaii limited liability company, StoneMor Hawaii Subsidiary LLC, a Hawaii limited liability company, StoneMor Iowa LLC, an Iowa limited liability company, StoneMor Iowa Subsidiary LLC, an Iowa limited liability company, StoneMor Puerto Rico LLC, a Puerto Rico limited liability company, StoneMor Puerto Rico Subsidiary LLC, a Puerto Rico limited liability company, StoneMor South Carolina LLC, a South Carolina limited liability company, StoneMor South Carolina Subsidiary LLC, a South Carolina limited liability company and StoneMor Tennessee Subsidiary, Inc., a Tennessee corporation, Alderwoods (Ohio) Cemetery Holdings, Inc., an Ohio nonprofit corporation, Highland Memorial Park, Inc., an Ohio nonprofit corporation, Hillside Memorial Park Association, Inc., an Ohio nonprofit corporation, Northlawn Memorial Gardens, an Ohio nonprofit corporation, and Sierra View Memorial Park, a California nonprofit corporation (each a “New Borrower”, and collectively, the “New Borrowers”), the other Credit Parties (as defined below), the Lenders (as defined below), Bank of America, N.A., a national banking association organized and existing under the laws of the United States of America, as Administrative Agent for the benefit of the Lenders (in such capacity, the “Administrative Agent”), as Collateral Agent for the benefit of the Lenders and other Secured Creditors (in such capacity, the “Collateral Agent”), as Swing Line Lender and as L/C Issuer. BACKGROUND A. Pursuant to that certain Amended and Restated Credit Agreement entered into on August 15, 2007, by and among StoneMor GP LLC, a Delaware limited liability company (the “General Partner”), StoneMor Partners L.P., a Delaware limited partnership (the “Partnership”), StoneMor Operating LLC, a Delaware limited liability company (the “Operating Company”), the Subsidiaries of the Operating Company set forth on the signature pages thereto (together with the Operating Company, the “Existing Borrowers” and collectively with the New Borrowers the “Borrowers” and together with the General Partner and the Partnership, collectively the “Credit Parties”), the lenders party thereto (the “Lenders”), and the Administrative Agent (as so amended, and as amended, modified or otherwise supplemented from time to time, the “Credit Agreement”), the Lenders agreed, inter alia, to extend to the Borrowers a revolving credit facility and an acquisition line in the maximum aggregate principal amount of Sixty-Five Million Dollars ($65,000,000). B. Pursuant to the Credit Agreement and the Credit Documents, the Existing Borrowers have granted to the Collateral Agent, for the benefit of the Lenders and other Secured Creditors, a lien on and security interest in substantially all of their property and assets to secure all Secured Obligations. -------------------------------------------------------------------------------- C. The Operating Company and certain of its subsidiaries (collectively, the “Buyers”) entered into an Asset Purchase and Sale Agreement (the “Purchase Agreement”), dated December 4, 2007, with SCI Funeral Services, Inc., an Iowa corporation, and certain of its subsidiaries (collectively, the “Sellers”), pursuant to which, as of the closing thereunder the Buyers will purchase certain cemeteries, funeral homes and other assets of the Sellers (the “Acquired Assets”) for an aggregate consideration of Sixty-Eight Million Dollars ($68,000,000), subject to adjustment, as described and set forth in the Purchase Agreement. D. Each New Borrower will benefit, directly and indirectly, from credit and other financial accommodations extended by the Lenders to the Borrowers. Now, therefore, for value received, and in consideration of Loans made or to be made, and other credit accommodations given or to be given, to the Borrowers by the Lenders from time to time, each New Borrower and each other Credit Party hereby agrees as follows: 1. Except as expressly set forth herein, all capitalized terms used and not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement or the Intercreditor Agreement (as defined in the Credit Agreement), as applicable. 2. Each Borrower represents and warrants that the purchase of the Acquired Assets pursuant to the Purchase Agreement, including, without limitation, the making of any Loans relating thereto, conforms, or will conform at the time of the related acquisition, in all respects with all the requirements of the Credit Agreement. 3. Each New Borrower acknowledges and agrees that it hereby agrees to join as a “Borrower” under the Credit Agreement, and to join, in the same capacity as the Existing Borrowers, in the Notes, the Intercreditor Agreement, the Security Agreement, the Pledge Agreement, and the other Security Documents and Credit Documents. 4. This Joinder is effective upon the date of the New Borrowers’ execution and delivery hereof to the Administrative Agent and upon such execution and delivery, all references in: (a) the Credit Agreement and other Credit Documents to the terms “Borrower” or “Borrowers”; (b) the Pledge Agreement to the terms “Pledgor” or “Pledgors”; and (c) the Security Agreement to the terms “Debtor” and “Debtors”, shall be deemed to include the New Borrowers. Without limiting the generality of the foregoing, each New Borrower hereby affirms all grants (including the grant of a lien and security interest), covenants, agreements, representations, and warranties (except to the extent expressly relating to an earlier date) contained in the Credit Agreement, the Pledge Agreement, and the Security Agreement, as amended hereby, each and all of which are and shall remain applicable to the Collateral from time to time owned by the New Borrowers or in which any New Borrower from time to time has any rights. Without limiting the foregoing, in order to secure payment of the Secured Obligations, whether now existing or hereafter arising, each New Borrower does hereby grant to Collateral Agent, for the benefit of the Secured Creditors, and hereby agrees that Collateral Agent has and shall continue to have, for the benefit of the Secured Creditors, a Lien on, among other things, substantially all of the New Borrowers’ property and assets, constituting Collateral of the New Borrowers, and each and all granting clauses in the Credit Documents are incorporated herein by reference with the same force and effect as if set forth herein in their   - 2 - -------------------------------------------------------------------------------- entirety except that all references in such clauses to the Borrowers or any of them shall be deemed to include references to the New Borrowers or any of them. Nothing contained herein shall in any manner impair the priority of the liens and security interests heretofore granted in favor of Collateral Agent under the Security Agreement, the Pledge Agreement or any other Credit Document. 5. The information set forth on Schedule A hereto, shall be added to various Annexes to the Pledge Agreement and the Security Agreement described thereon, and such Annexes are amended hereby. 6. In connection with the execution and delivery of this Joinder, the Existing Borrowers and the New Borrowers have delivered to the Administrative Agent or the Collateral Agent, as appropriate, such deliveries as are required by the Credit Agreement, including, without limitation: (a) certificates representing the Equity Interest in each New Borrower, together with assignments in blank (or such other similar deliveries as may be appropriate in the reasonable discretion of the Administrative Agent); (b) allonges joining each New Borrower to each Note; (c) a master secretary’s certificate attaching the organizational documents and authorizing resolutions for each New Borrower and any other applicable Credit Party; (d) mortgages, deeds of trust and other real estate related documentation; (e) the complete executed Purchase Agreement, certified by the Operating Company; and (f) legal opinions with respect to the above deliveries. 7. Each New Borrower represents and warrants that upon becoming a Borrower, such New Borrower, as applicable, is in compliance in all material respects, with all representations and warranties, is and shall be bound by and agrees to comply with the covenants contained in the Credit Agreement and other Credit Documents and is not in default in the performance or observation of any covenant or condition under the Credit Agreement or any Credit Document. 8. Each New Borrower hereby acknowledges and agrees that the Secured Obligations are secured by all of its assets constituting Collateral according to, and otherwise on and subject to, the terms and conditions of the Security Agreement and the Pledge Agreement to the same extent and with the same force and effect as if such New Borrower had originally been one of the Borrowers under the Credit Agreement and had originally executed the same as such a Borrower. 9. Except as specifically modified hereby, all of the terms and conditions of the Credit Agreement and other Credit Documents shall remain unchanged and in full force and effect. 10. Each New Borrower agrees to execute and deliver such further instruments and documents and do such further acts and things as the Administrative Agent, or the Collateral Agent, may reasonably deem necessary or proper to carry out more effectively the purposes of this Joinder and the other Credit Documents. 11. No reference to this Joinder need be made in the Credit Agreement or in any other Credit Document, and any reference to any Credit Document in any Credit Document shall be deemed a reference to the Credit Documents as modified hereby, and to include this Joinder, allonges and all other documents executed and delivered in connection herewith.   - 3 - -------------------------------------------------------------------------------- 12. This Joinder shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 13. This Joinder shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without reference to the choice of law doctrine of the Commonwealth of Pennsylvania. 14. This Joinder may be executed in any number of counterparts with the same affect as if all of the signatures on such counterparts appeared on one document and each counterpart shall be deemed an original. 15. Each New Borrower hereby waives acceptance of this Joinder by any of the Secured Creditors. 16. Section 10.10(e) of the Credit Agreement shall be applicable to all New Borrowers that are Controlled Non-Profits and nothing contained in this Joinder is intended to modify the limitations set forth in Section 10.10(e) with respect to the liability of such New Borrowers or the Obligations secured by the Collateral of such New Borrowers. [Remainder of page intentionally left blank]   - 4 - -------------------------------------------------------------------------------- This Joinder to Amended and Restated Credit Agreement and Credit Documents is hereby delivered, acknowledged and agreed to as of the date first above written. New Borrowers StoneMor Arkansas Subsidiary LLC StoneMor California, Inc. StoneMor California Subsidiary, Inc. StoneMor Florida Subsidiary LLC StoneMor Hawaii LLC StoneMor Hawaii Subsidiary LLC StoneMor Iowa LLC StoneMor Iowa Subsidiary LLC StoneMor Puerto Rico LLC StoneMor Puerto Rico Subsidiary LLC StoneMor South Carolina LLC StoneMor South Carolina Subsidiary LLC StoneMor Tennessee Subsidiary, Inc. Alderwoods (Ohio) Cemetery Holdings, Inc. Highland Memorial Park, Inc. Hillside Memorial Park Association, Inc. Northlawn Memorial Gardens Sierra View Memorial Park   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named New Borrowers Joinder New Borrowers Signature Page   S-1 -------------------------------------------------------------------------------- Credit Parties   STONEMOR GP LLC By:   /s/ Paul Waimberg   Paul Waimberg, Vice President of Finance   STONEMOR PARTNERS L.P.   By:   STONEMOR GP LLC its General Partner By:   /s/ Paul Waimberg   Paul Waimberg, Vice President of Finance   STONEMOR OPERATING LLC By:   /s/ Paul Waimberg   Paul Waimberg, Vice President of Finance Joinder Credit Parties Signature Page   S-2 -------------------------------------------------------------------------------- Additional Credit Parties Alleghany Memorial Park LLC Alleghany Memorial Park Subsidiary, Inc. Altavista Memorial Park LLC Altavista Memorial Park Subsidiary, Inc. Arlington Development Company Augusta Memorial Park Perpetual Care Company Bedford County Memorial Park LLC Bedford County Memorial Park Subsidiary LLC Bethel Cemetery Association Beth Israel Cemetery Association of Woodbridge, New Jersey Birchlawn Burial Park LLC Birchlawn Burial Park Subsidiary, Inc. Blue Ridge Memorial Gardens LLC Blue Ridge Memorial Gardens Subsidiary LLC Butler County Memorial Park LLC Butler County Memorial Park Subsidiary, Inc. Cedar Hill Funeral Home, Inc. Cemetery Investments LLC Cemetery Investments Subsidiary, Inc. Cemetery Management Services, L.L.C. Cemetery Management Services of Mid-Atlantic States, L.L.C. Cemetery Management Services of Ohio, L.L.C. Cemetery Management Services of Pennsylvania, L.L.C. Chartiers Cemetery LLC Chartiers Cemetery Subsidiary LLC Clover Leaf Park Cemetery Association CMS West LLC CMS West Subsidiary LLC Columbia Memorial Park LLC Columbia Memorial Park Subsidiary, Inc. The Coraopolis Cemetery LLC The Coraopolis Cemetery Subsidiary LLC Cornerstone Family Insurance Services, Inc. Cornerstone Family Services of New Jersey, Inc. Cornerstone Family Services of West Virginia LLC Cornerstone Family Services of West Virginia Subsidiary, Inc. Cornerstone Funeral and Cremation Services LLC Covenant Acquisition LLC Covenant Acquisition Subsidiary, Inc. Crown Hill Cemetery Association Eloise B. Kyper Funeral Home, Inc. Glen Haven Memorial Park LLC Glen Haven Memorial Park Subsidiary, Inc.   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named Credit Parties Joinder Additional Credit Parties Signature Page   S-3 -------------------------------------------------------------------------------- Green Lawn Memorial Park LLC Green Lawn Memorial Park Subsidiary LLC Henlopen Memorial Park LLC Henlopen Memorial Park Subsidiary, Inc. Henry Memorial Park LLC Henry Memorial Park Subsidiary, Inc. J.V. Walker LLC J.V. Walker Subsidiary LLC Juniata Memorial Park LLC Juniata Memorial Park Subsidiary LLC KIRIS LLC KIRIS Subsidiary, Inc. Lakewood/Hamilton Cemetery LLC Lakewood/Hamilton Cemetery Subsidiary, Inc. Lakewood Memory Gardens South LLC Lakewood Memory Gardens South Subsidiary, Inc. Laurel Hill Memorial Park LLC Laurel Hill Memorial Park Subsidiary, Inc. Laurelwood Cemetery LLC Laurelwood Cemetery Subsidiary LLC Laurelwood Holding Company Legacy Estates, Inc. Locustwood Cemetery Association Loewen [Virginia] LLC Loewen [Virginia] Subsidiary, Inc. Lorraine Park Cemetery LLC Lorraine Park Cemetery Subsidiary, Inc. Melrose Land LLC Melrose Land Subsidiary LLC Modern Park Development LLC Modern Park Development Subsidiary, Inc. Morris Cemetery Perpetual Care Company Mount Lebanon Cemetery LLC Mount Lebanon Cemetery Subsidiary LLC Mt. Airy Cemetery LLC Mt. Airy Cemetery Subsidiary LLC Oak Hill Cemetery LLC Oak Hill Cemetery Subsidiary, Inc. Osiris Holding Finance Company Osiris Holding of Maryland LLC Osiris Holding of Maryland Subsidiary, Inc. Osiris Holding of Pennsylvania LLC Osiris Holding of Pennsylvania Subsidiary LLC   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named Credit Parties Joinder Additional Credit Parties Signature Page   S-4 -------------------------------------------------------------------------------- Osiris Holding of Rhode Island LLC Osiris Holding of Rhode Island Subsidiary, Inc. Osiris Management, Inc. Osiris Telemarketing Corp. Perpetual Gardens.Com, Inc. The Prospect Cemetery LLC The Prospect Cemetery Subsidiary LLC Prospect Hill Cemetery LLC Prospect Hill Cemetery Subsidiary LLC PVD Acquisitions LLC PVD Acquisitions Subsidiary, Inc. Riverside Cemetery LLC Riverside Cemetery Subsidiary LLC Riverview Memorial Gardens LLC Riverview Memorial Gardens Subsidiary LLC Rockbridge Memorial Gardens LLC Rockbridge Memorial Gardens Subsidiary Company Rolling Green Memorial Park LLC Rolling Green Memorial Park Subsidiary LLC Rose Lawn Cemeteries LLC Rose Lawn Cemeteries Subsidiary, Incorporated Roselawn Development LLC Roselawn Development Subsidiary Corporation Russell Memorial Cemetery LLC Russell Memorial Cemetery Subsidiary, Inc. Shenandoah Memorial Park LLC Shenandoah Memorial Park Subsidiary, Inc. Southern Memorial Sales LLC Southern Memorial Sales Subsidiary, Inc. Springhill Memory Gardens LLC Springhill Memory Gardens Subsidiary, Inc. Star City Memorial Sales LLC Star City Memorial Sales Subsidiary, Inc. Stephen R. Haky Funeral Home, Inc. Stitham LLC Stitham Subsidiary, Incorporated StoneMor Alabama LLC StoneMor Alabama Subsidiary, Inc. StoneMor Colorado LLC StoneMor Colorado Subsidiary LLC StoneMor Georgia LLC StoneMor Georgia Subsidiary, Inc. StoneMor Illinois LLC StoneMor Illinois Subsidiary LLC   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named Credit Parties Joinder Additional Credit Parties Signature Page   S-5 -------------------------------------------------------------------------------- StoneMor Indiana LLC StoneMor Indiana Subsidiary LLC StoneMor Kansas LLC StoneMor Kansas Subsidiary LLC StoneMor Kentucky LLC StoneMor Kentucky Subsidiary LLC StoneMor Michigan LLC StoneMor Michigan Subsidiary LLC StoneMor Missouri LLC StoneMor Missouri Subsidiary LLC StoneMor North Carolina LLC StoneMor North Carolina Funeral Services, Inc. StoneMor North Carolina Subsidiary LLC StoneMor Oregon LLC StoneMor Oregon Subsidiary LLC StoneMor Pennsylvania LLC StoneMor Pennsylvania Subsidiary LLC StoneMor Washington, Inc. StoneMor Washington Subsidiary LLC Sunset Memorial Gardens LLC Sunset Memorial Gardens Subsidiary, Inc. Sunset Memorial Park LLC Sunset Memorial Park Subsidiary, Inc. Temple Hill LLC Temple Hill Subsidiary Corporation Tioga County Memorial Gardens LLC Tioga County Memorial Gardens Subsidiary LLC Tri-County Memorial Gardens LLC Tri-County Memorial Gardens Subsidiary LLC Twin Hills Memorial Park and Mausoleum LLC Twin Hills Memorial Park and Mausoleum Subsidiary LLC The Valhalla Cemetery Company LLC The Valhalla Cemetery Subsidiary Corporation Virginia Memorial Service LLC Virginia Memorial Service Subsidiary Corporation WNCI LLC W N C Subsidiary, Inc. Westminster Cemetery LLC Westminster Cemetery Subsidiary LLC Wicomico Memorial Parks LLC Wicomico Memorial Parks Subsidiary, Inc. Willowbrook Management Corp. Woodlawn Memorial Gardens LLC   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named Credit Parties Joinder Additional Credit Parties Signature Page   S-6 -------------------------------------------------------------------------------- Woodlawn Memorial Gardens Subsidiary LLC Woodlawn Memorial Park LLC Woodlawn Memorial Park Subsidiary LLC   By:   /s/ Paul Waimberg   Paul Waimberg, as Vice President of Finance for each of the above-named Credit Parties Joinder Additional Credit Parties Signature Page   S-7 -------------------------------------------------------------------------------- ACKNOWLEDGED BY: BANK OF AMERICA, N.A., as Collateral Agent By:   /s/ Matthew S. Hichborn Name:   Matthew S. Hichborn Title:   Assistant Vice President Joinder Collateral Agent Signature Page   S-8 -------------------------------------------------------------------------------- SCHEDULE A ADDITION TO ANNEX C TO SECURITY AGREEMENT SCHEDULE OF LEGAL NAMES, TYPES OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION, LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS   Name of Debtor (Exact Legal Name)    Jurisdiction of Organization/ Location    Type of Organization    Organizational ID Number    Prior Name    Successor By StoneMor Arkansas Subsidiary LLC    Arkansas    Limited Liability Company    800121002    N/A    N/A StoneMor California, Inc.    California    Corporation    C3051630    N/A    N/A StoneMor California Subsidiary, Inc.    California    Corporation    C3051631    N/A    N/A StoneMor Florida Subsidiary LLC    Florida    Limited Liability Company    L07000105449    N/A    N/A StoneMor Hawaii LLC    Hawaii    Limited Liability Company    56677 C5    N/A    N/A StoneMor Hawaii Subsidiary LLC    Hawaii    Limited Liability Company    56820 C5    N/A    N/A StoneMor Iowa LLC    Iowa    Limited Liability Company    353116    N/A    N/A StoneMor Iowa Subsidiary LLC    Iowa    Limited Liability Company    353115    N/A    N/A StoneMor Puerto Rico LLC    Puerto Rico    Limited Liability Company    819    N/A    N/A StoneMor Puerto Rico Subsidiary LLC    Puerto Rico    Limited Liability Company    820    N/A    N/A   1 -------------------------------------------------------------------------------- StoneMor South Carolina LLC    South Carolina      Limited Liability Company      071025-0124      N/A      N/A StoneMor South Carolina Subsidiary LLC    South Carolina      Limited Liability Company      071025-0126      N/A      N/A StoneMor Tennessee Subsidiary, Inc.    Tennessee      Corporation      0561540      N/A      N/A Alderwoods (Ohio) Cemetery Holdings, Inc.    Ohio      Not for profit corporation      691797      Forest Hills Memorial Gardens, Inc.      Name Change Highland Memorial Park, Inc.    Ohio      Not for profit corporation      323052      N/A      N/A Hillside Memorial Park Association, Inc.    Ohio      Not for profit corporation      132585      Ellet Memorial Cemetery Association, Inc.      Name Change Northlawn Memorial Gardens    Ohio      Not for profit corporation      545880      N/A      N/A Sierra View Memorial Park    California      Not for profit corporation      129581      N/A      N/A   2 -------------------------------------------------------------------------------- ADDITION TO ANNEX A TO PLEDGE AGREEMENT SCHEDULE OF LEGAL NAMES, TYPES OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION, LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS   Pledgor (Exact Legal Name)    Jurisdiction of Organization/ Location    Type of Organization    Organizational ID Number StoneMor Arkansas Subsidiary LLC    Arkansas    Limited Liability Company    800121002 StoneMor California, Inc.    California    Corporation    C3051630 StoneMor California Subsidiary, Inc.    California    Corporation    C3051631 StoneMor Florida Subsidiary LLC    Florida    Limited Liability Company    L07000105449 StoneMor Hawaii LLC    Hawaii    Limited Liability Company    56677 C5 StoneMor Hawaii Subsidiary LLC    Hawaii    Limited Liability Company    56820 C5 StoneMor Iowa LLC    Iowa    Limited Liability Company    353116 StoneMor Iowa Subsidiary LLC    Iowa    Limited Liability Company    353115 StoneMor Puerto Rico LLC    Puerto Rico    Limited Liability Company    819 StoneMor Puerto Rico Subsidiary LLC    Puerto Rico    Limited Liability Company    820 StoneMor South Carolina LLC    South Carolina    Limited Liability Company    071025-0124 StoneMor South Carolina Subsidiary LLC    South Carolina    Limited Liability Company    071025-0126 StoneMor Tennessee Subsidiary, Inc.    Tennessee    Corporation    0561540   3 -------------------------------------------------------------------------------- Pledgor (Exact Legal Name)    Jurisdiction of Organization/ Location    Type of Organization    Organizational ID Number Alderwoods (Ohio) Cemetery Holdings, Inc.    Ohio    Not for profit corporation    691797 Highland Memorial Park, Inc.    Ohio    Not for profit corporation    323052 Hillside Memorial Park Association, Inc.    Ohio    Not for profit corporation    132585 Northlawn Memorial Gardens    Ohio    Not for profit corporation    545880 Sierra View Memorial Park    California    Not for profit corporation    129581 ADDITION TO ANNEX D TO PLEDGE AGREEMENT LIST OF LIMITED LIABILITY INTERESTS   Entity    Units Issued    Ownership of Equity Outstanding StoneMor California Subsidiary, Inc.    100 shares common stock    Cornerstone Family Services of West Virginia Subsidiary, Inc., 100% of outstanding equity issued. StoneMor California Subsidiary, Inc.    100 shares common stock    Cornerstone Family Services of West Virginia Subsidiary, Inc., 100% of outstanding equity issued. StoneMor Tennessee Subsidiary, Inc.    100 shares common stock    Cornerstone Family Services of West Virginia Subsidiary, Inc., 100% of outstanding equity issued.   4 -------------------------------------------------------------------------------- ADDITION TO ANNEX D TO PLEDGE AGREEMENT LIST OF LIMITED LIABILITY INTERESTS   Entity    Units Issued    Ownership of Equity Outstanding StoneMor Arkansas Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc. StoneMor Florida Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc. StoneMor Hawaii LLC    100 membership units    StoneMor Operating LLC StoneMor Hawaii Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc. StoneMor Iowa LLC    100 membership units    StoneMor Operating LLC StoneMor Iowa Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc. StoneMor Puerto Rico LLC    100 membership units    StoneMor Operating LLC StoneMor Puerto Rico Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc. StoneMor South Carolina LLC    100 membership units    StoneMor Operating LLC StoneMor South Carolina Subsidiary LLC    100 membership units    Cornerstone Family Services of West Virginia Subsidiary, Inc.   5
AMERIWEST ENERGY CORP. EMPLOYMENT AGREEMENT   This Employment Agreement (this "Agreement"), dated as of June 5, 2008 (the “Effective Date”), by and between Ameriwest Energy Corp., a Nevada corporation (the “Company”) and Joseph J. McQuade, an individual with an address at 6230 South Chestnut Street, Casper, Wyoming 82601 (the “Executive”). WHEREAS, the Company and Executive desire to provide for the employment of Executive by the Company on the terms set forth herein; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive hereby agree as follows:   1. Employment.   1.1 Position. The Company hereby employs the Executive on an at-will basis, and the Executive hereby accepts employment on an at-will basis, as the Chief Financial Officer of the Company, on the terms and conditions hereinafter set forth   1.2 Duties. The Executive shall serve as the Company’s Chief Financial Officer and shall perform the customary duties and responsibilities of such positions including, without limitation, being responsible for the finance and accounting affairs of the Company as more fully described on Exhibit A attached hereto. In such capacities the Executive shall report directly to the Chief Executive Officer of the Company. These positions, duties, and responsibilities can be modified as reasonably required to suit the specific requirements and needs of the Company, provided that the same shall be commensurate with the Executive’s experience and expertise and shall not result in the Executive having duties and responsibilities substantially less senior and more onerous to the Executive than those set forth on Exhibit A attached hereto.    1.3 Time and Effort. During the Term, the Executive shall, except for vacation periods as provided for herein and reasonable periods of illness or disability, devote all of the Executive’s working time, attention, abilities, skill, labor and efforts to the performance of the Executive’s obligations hereunder. The Executive shall not, during the Term, engage in any other business activity or conduct, whether or not such business activity or conduct is pursued for gain, profit or other pecuniary advantage, which activity or conduct adversely affects in any material respect the Executive’s ability to perform his obligations hereunder. Notwithstanding the foregoing, the parties recognize and agree that Executive may engage in personal investments and other business, civic or charitable activities that do not conflict with the business and affairs of the Company or interfere in any material respect with Executive's performance of his duties hereunder. The Executive will at all times perform all of the duties and obligations required of the Executive by the terms of this Agreement in a loyal and conscientious manner and to the best of the Executive’s ability and experience. Executive agrees to comply in all material respects with (i) the policies and directives of the Company, and (ii) with all applicable laws and regulations of the states in which the Company and its affiliates operate, all as in effect from time to time.   1.4 Office Location. Executive's services hereunder shall be performed at the Company’s offices in Casper, Wyoming, except for reasonable travel on behalf of the Company consistent with the requirements of his duties and positions.   1 --------------------------------------------------------------------------------   2. Term. The term (the "Term") of this Agreement shall commence on the Effective Date and may be terminated by the Executive or the Company at any time for any reason whatsoever.   3.  Compensation. 3.1  Base Salary. The Company agrees to pay the Executive, and Executive agrees to accept, a base salary (the “Base Salary”), in accordance with the Company's normal payroll procedures applicable to executives, payable at least monthly. The Base Salary shall initially be payable at the rate of $7,500 per month. All compensation payments to be made to the Executive will be subject to required withholding of federal, state and local income and employment taxes.   3.2 Compensation From Other Sources. Any proceeds that Executive receives by virtue of qualifying for disability insurance, disability benefits, or health or accident insurance shall belong exclusively to Executive. 3.3 Equity Incentive Plan. The Company will develop and obtain Board and shareholder approval for an equity incentive compensation plan (the "Plan") within ninety (90) days of the Effective Date. Key elements of the Plan may include: (i) having the most favorable tax structure as determined by the Company’s Board of Directors with assistance from the Company's accountants and legal counsel; and (ii) capital stock issuable under the Plan shall be restricted and subject to vesting in accordance with standard industry practice. 3.4 Option Grant. Subject to approval by the Board of Directors of the Company and upon the effective date of the Plan, the Company will, pursuant to the terms and conditions under the Plan, grant the Executive an option to purchase 500,000 shares of common stock of the Company subject to a three-year vesting period. 4.  Expenses. The Company will pay or reimburse Executive for all reasonable out-of-pocket expenses actually incurred by Executive in the conduct of the business of the Company upon submission of such itemized vouchers, receipts or other documentation with respect to any such expenses as shall be reasonably requested by the Company, and, in any event, in accordance with the guidelines of the Company, if any, published from time to time. 5.  Benefits. During the Term, the Company shall provide the Executive and his eligible dependents: spouse and children under the age of 21, living with the Executive, at the Company's expense, with all benefits currently in place or to be established by the Company. Executive shall be entitled to (i) paid vacation, and (ii) paid days off for illness, religious observance and personal reasons, all in accordance with the Company’s policy in effect from time to time. 6. Termination Payments.   (a) Upon termination of this Agreement for any reason whatsoever, the Company's obligations to Executive shall terminate, subject to prompt payment within thirty (30) days of all monies due hereunder up to the date of termination including unpaid Base Salary and reimbursement of expenses as well as continuation of any applicable benefits prescribed under the applicable plans and payment of the proceeds of any applicable disability or other insurance policy relating to Executive. In the event this Agreement is terminated for any reason other than “Cause,” the Company shall also pay the Executive, within such thirty (30) day period, a lump sum amount equal to the Executive’s Base Salary then in effect for a period of two (2) months.   2 --------------------------------------------------------------------------------   (b)  In the event that the payments pursuant to Section 6(a), when considered in conjunction with any other payments payable hereunder after the termination date (collectively, “Post-Termination Payments”) constitute “an excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), then the Company shall pay to Executive, in addition to the payments required by this Section 6 above, an additional amount (the “Additional Amount”) which, after reduction for income taxes and excise taxes on the Additional Amount, is sufficient to provide for the payment of any excise tax imposed by Section 4999 of the Code, or applicable successor thereto (“Section 4999”) that may be due by Executive on the Post-Termination Payments. With respect to any payment that is made to Executive under the terms of this Agreement in the year of his termination of employment and on which an excise tax under Section 4999 will be assessed, the payment determined under this Subsection shall be made to Executive not later than thirty (30) days following the termination date. With respect to any payment made under the terms of this Agreement in any other year and on which an excise tax under Section 4999 will be assessed, the payment under this Subsection shall be made to Executive not later than December 31st of the year in which the payment on which such excise tax will be assessed is made to Executive or, if earlier, the date on which such tax is required to be remitted to the Internal Revenue Service. (c)  Notwithstanding anything contained herein or at law to the contrary, the amount payable to Executive pursuant to this Section 6 shall not be reduced or otherwise affected by any sums earned or that could be earned by Executive pursuant to any employment arrangement or other business activity in which the Executive may or could possibly participate after the termination date. The Company and Executive agree that amounts payable to Executive under this Section 6 are reasonable liquidated damages with respect to wrongful or early termination of this Agreement, and shall be absolutely and unconditionally payable to Executive, his heirs, successors, administrator or executor as provided herein without proof of actual damages and without regard to Executive’s efforts to mitigate damages. (e) Upon termination of this Agreement, the provisions of Sections 6 through 12 shall survive the termination of this Agreement for a period of five (5) years.   (f) As used herein, "Cause" shall be limited to the Executive’s: (A) embezzlement or willful misappropriation of funds of the Company, (B) willful misconduct that causes material harm to the Company or any of its affiliates; (C) conviction or commission of, or plea of nolo contendere by, Executive of any felony, misdemeanor or other illegal conduct involving an act of moral turpitude or otherwise relating directly or indirectly to the business or reputation of the Company; (D) habitual drug or other substance abuse that interferes in any material respects with the performance of Executive's duties under this Agreement; (E) debarment by any federal agency that would limit or prohibit Executive from serving in his prescribed capacity for the Company under this Agreement; (F) continuing failure to communicate and fully disclose any and all information related to the business, operations, management and accounting of the Company and/or its affiliates to the Board and CEO, the failure of which would adversely impact the Company or may result in a violation of state or federal securities laws; (G) continuing willful and intentional failure to perform his duties as stated herein or as reasonably requested by the Board or CEO; or (H) dishonesty towards, fraud upon, or deliberate injury or attempted injury to the Company or any of its affiliates.   3 --------------------------------------------------------------------------------   7. Confidential Information of Company. Executive acknowledges that Executive has been exposed to the Company's confidential and proprietary information prior to the Effective date and during the performance of his duties hereunder Executive will be handling financial, accounting, statistical, marketing and personnel information of customers of the Company ("Confidential Information"). All such Confidential Information is confidential and shall not be disclosed, directly or indirectly, or used by Executive in any way, either during the Term of this Agreement or for five (5) years thereafter except as required in the course of Executive's employment with the Company and/or its affiliates. Confidential information will not include information which: (a) is now, or hereafter becomes, through no act or failure to act on the part of Executive, public information; (b) was acquired by Executive before receiving such information from the Company and without restriction as to use or disclosure; (c) is hereafter rightfully furnished to the Executive by a third party, without restriction as to use or disclosure; (d) is required to be disclosed pursuant to law including, without limitation, to any governmental authority or in response to a subpoena, provided the Executive uses reasonable efforts to give the Company reasonable advance notice of such required disclosure; or (e) is disclosed with the prior written consent of the Company. 8. Unfair Competition; Non-Solicitation. 8.1 Unfair Competition. During the Term of this Agreement, Executive shall not, directly or indirectly, whether as a partner, employee, director, creditor, stockholder, or otherwise, promote, participate, or engage in any activity or other business which is competitive with the Company’s business. The obligation of Executive not to compete with Company shall not prohibit Executive from owning or purchasing up to two (2%) percent of any class of equity securities of any corporation having a class of equity securities registered pursuant to the Securities Exchange Act of 1934, as amended, which are publicly owned and regularly traded on a recognized stock exchange or on the over-the-counter market provided that such ownership represents a personal investment and that neither Executive nor any group of persons including the Executive in any way, directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations or otherwise takes part in its business other than exercising his right as a shareholder or seeks to do any of the foregoing. Notwithstanding anything in this Section 8.1 to the contrary, the Company and Executive agree that Executive may promote, participate, or engage, as a partner, employee, director, creditor, stockholder, or otherwise, in the entities listed on Exhibit B. 8.2 Non-Solicitation of Customers. While employed by the Company, and for a period of one (1) year thereafter, Executive agrees not to divert or attempt to divert (by solicitation or other means), whether directly, or indirectly, the Company's or its affiliate's customers existing at the time his employment terminates. 8.3 Non-Solicitation of Employees. During the term of Executive's employment with the Company, and for a period of one (1) year thereafter, Executive shall not directly or indirectly solicit or encourage, or cause others to solicit or encourage, any employees of Company or its affiliates to terminate their employment with the Company. However, this obligation will not affect any responsibility Executive may have as an employee if the Company with respect to the bona fide hiring and firing of the Company's personnel. 8.4 Non-Disparagement. Upon termination of Executive's employment with the Company, Executive agrees to not make any disparaging remarks about the Company, or its affiliates, or any officers, directors, employees, consultants or independent contractors of or to any of the foregoing.   4 --------------------------------------------------------------------------------   9. Trade Secrets. Executive shall not disclose to any others, or take or use for Executive’s own purposes or purposes of any others, during the term of this Agreement or at any time thereafter, any of Company’s trade secrets, including without limitation, Confidential Information, customer lists, computer programs or computer software of Company. Executive agrees that these restrictions shall also apply to (i) trade secrets belonging to third parties in Company’s possession and (ii) trade secrets conceived, originated, discovered or developed by Executive during the Term of this Agreement relating to the affairs of the Company. Information of Company shall not be considered a trade secret and its disclosure or use by Executive will be permitted if it falls within any of the provisions of the third sentence of Section 7 above. 10. Inventions; Ownership Rights. Executive agrees that all ideas, techniques, inventions, systems, formulas, designs, discoveries, technical information, programs, prototypes and similar developments (“Inventions”) developed, created, discovered, made, written or obtained by Executive in the course of or as a result of performance of his duties hereunder, and all related industrial property, copyrights, patent rights, trade secrets and other forms of protection thereof, shall be and remain the sole property of the Company and its assigns. Executive shall promptly disclose to Company, or any persons designated by it, all Inventions, made or conceived or reduced to practice or learned by Executive, either alone or jointly with others, during the Term which are related to or useful in the business of the Company, or result from tasks assigned to Executive by the Company, or result from use of premises owned, leased or contracted by the Company. Such disclosure shall continue for one year after termination of employment with respect to anything that would be an Invention if made, conceived, reduced to practice or learned prior to termination of employment. Executive agrees to execute or cause to be executed such assignments and applications, registrations and other documents and to take such other action as may be reasonably requested by the Company to enable the Company to protect its rights to any such Inventions. 11. Indemnification. In the event Executive or his estate or executors becomes a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of Company, and whether civil, criminal, administrative, investigative or otherwise, by reason of Executive's performance of Executive's duties hereunder or the fact that Executive is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, the Company shall, to the maximum extent permitted by applicable law, hold the Executive harmless from and against any claim, loss or cause of action arising from or relating thereto; provided, however, that the indemnity provided under this Section shall not apply with respect to any liability or matter arising from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for any breach of the Executive’s duty of loyalty to the Company, or for any transaction from which the Executive derived an improper personal benefit. If any claim is asserted against the Executive for which the Executive reasonably believes in good faith he is entitled to be indemnified hereunder, the Company shall, at its option and to the maximum extent permitted by applicable law, (i) assume the defense thereof or (ii) pay the Executive’s reasonable legal expenses (or cause such expenses to be paid) on a quarterly basis, if the Company does not so assume the defense; provided, that the Executive shall reimburse the Company for such amounts if the Executive shall be found by a final, non-appealable order of a court of competent jurisdiction or any arbitrator not to be entitled to indemnification hereunder. Executive shall cooperate as reasonably requested by the Company in the defense of any such threatened or pending action, suit or proceeding. The Company's indemnity obligations and duties as set forth in this shall survive indefinitely the termination or expiration of this Agreement for any reason.   5 --------------------------------------------------------------------------------   12.  Miscellaneous. 12.1 Assignment. It is hereby agreed that Executive’s rights and obligations under this Agreement are personal and may not be delegated or assigned. No assignment by the Company shall be effective unless the assignee expressly agrees in writing to become bound by the terms and conditions hereof; provided, however, Company may assign this Agreement to its affiliates. 12.2 Binding Effect. The obligations of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, the parties hereto, their legal representatives, administrators, executors, heirs, legatees, distributees, successors and permitted assigns, and upon transferees by operation of law, whether or not any such person or entity shall have signed this Agreement. 12.3 Notices. Any notice permitted, required or given hereunder shall be in writing and shall be delivered (i) personally, (ii) by any prepaid overnight courier delivery service then in general use, (iii) mailed, by registered or certified mail, return receipt requested, or (iv) transmitted by fax and then confirmed within three business days by any other method set forth above, to the addresses designated on the first page hereof or at such other address as may be designated by notice duly given hereunder. A notice provided in the manner required herein shall be deemed given : (i) if delivered personally, upon delivery; (ii) if sent by overnight courier, on the first business day after it is sent; (iii) if mailed, three business days after mailing; and (iv) if sent by fax, upon actual receipt of the fax or confirmation thereof (whichever is first). 12.4 Further Assurances. Each of the parties agrees to execute, acknowledge, deliver, file, record and publish such certificates, instruments, agreements and other documents, and to take all such further action as may be required by law or which either party deems reasonably necessary or useful in furtherance of the purposes and objectives and intentions underlying this Agreement and not inconsistent with its terms. 12.5 Entire Agreement. This Agreement incorporates the entire agreement between the parties relating to the subject matter hereof and supersedes all prior agreements and understandings of the parties, whether written or oral, with respect to its subject matter.   12.6 Amendments; Waiver. Except as expressly provided herein, neither this Agreement nor any provision hereof may be terminated, modified or amended unless in writing signed by both parties hereto. No waiver by any party, whether express or implied, of any provision of this Agreement, or of any breach or default, shall constitute a waiver of a breach of any similar or dissimilar provision or condition or shall be effective unless in writing signed by the party against whom enforcement is sought. 12.7 Severability; Captions. If any provision of this Agreement or the application thereof to any person or circumstances shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other parties or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. The headings in this Agreement are inserted for convenience and identification only. 12.8 Actions Contrary to Law. Nothing contained in this Agreement shall be construed to require the commission of any act contrary to law, and whenever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or regulation, contrary to which the parties have no legal right to contract, then the latter shall prevail; but in such event, the provisions of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within legal requirements.   6 --------------------------------------------------------------------------------   12.9  Attorneys’ Fees. If the services of an attorney are required by any party to secure the performance hereof or otherwise upon the breach or default of another party to this Agreement, or if any judicial remedy or arbitration is necessary to enforce or interpret any provision of this Agreement or the rights and duties of any person in relation thereto, the prevailing party shall be entitled to reasonable attorneys' fees, costs and other expenses, in addition to any other relief to which such party may be entitled.   12.10 Governing Law; Arbitration. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Nevada without giving effect to its principles of conflicts of law. Any dispute or controversy between the Company and Executive, arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be settled by binding arbitration in Casper, Wyoming administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules then in effect. No remedy conferred in this Agreement upon the Executive or the Company is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. 12.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and together shall constitute a single document. 12.12 Tax Advice. The Executive acknowledges that the Executive has not relied and will not rely upon the Company or the Company’s counsel with respect to any tax consequences related to the terms and conditions of this Agreement. The Executive assumes full responsibility for all such consequences and for the preparation and filing of all tax returns and elections which may or must be filed in connection with this Agreement.   12.13 Representation. The parties to this Agreement, and each of them, acknowledge, agree, and represent that it: (a) has directly participated in the negotiation and preparation of this Agreement; (b) has read the Agreement and has had the opportunity to discuss it with counsel of its own choosing; (c) it is fully aware of the contents and legal affect of this Agreement; (d) has authority to enter into and sign the Agreement; and (e) enters into and signs the same by its own free will.   12.14 Section 409A. It is intended that this Agreement will comply with Section 409A of the Internal Revenue Code of 1986, as amended (and the regulations promulgated thereunder) to the extent the Agreement is subject thereto, and the Agreement shall be interpreted on a basis consistent with such intent. If any amendment to the Agreement is necessary in order for it to comply with Section 409A, the parties will negotiate in good faith to amend the Agreement in a manner that preserves the original intent of the parties to the extent reasonably possible. 12.15 Drafting. The parties to this Agreement acknowledge that each of them have participated in the drafting and negotiation of this Agreement. For purposes of interpreting this Agreement, each provision, paragraph, sentence and word herein shall be deemed to have been jointly drafted by both parties. The parties intend for this Agreement to be construed and interpreted neutrally in accordance with the plain meaning of the language contained herein, and not presumptively construed against any actual or purported drafter of any specific language contained herein.    [Signatures on following page.]   7 --------------------------------------------------------------------------------   IN WITNESSETH WHEREOF, the undersigned have executed this Agreement as of the date first above written.   AMERIWEST ENERGY CORP.           By:     Name: Walter Merschat   Title: Chief Executive Officer               JOSEPH J. MCQUADE   8 -------------------------------------------------------------------------------- EXHIBIT A     9 --------------------------------------------------------------------------------   EXHIBIT B 10 --------------------------------------------------------------------------------
EXHIBIT 10.6.b AGREEMENT      Agreement, dated February 5, 2010 (this “Agreement”), by and between Cedar Shopping Centers, Inc., a Maryland corporation (the “Company”), and RioCan Holdings USA Inc., a Delaware corporation (the “Purchaser”). W I T N E S S E T H :      WHEREAS, the Company and the Purchaser entered into that certain Securities Purchase Agreement, dated October 26, 2009 (the “Securities Purchase Agreement”), pursuant to which the Purchaser acquired shares of common stock of the Company (“Common Stock”) and a warrant to acquire additional shares of Common Stock;      WHEREAS, the Company and the Purchaser entered into that certain Registration Rights Agreement, dated October 30, 2009 (the “Registration Rights Agreement”), pursuant to which the Purchaser was granted certain registration rights with respect to Registrable Securities (as defined therein and as amended hereby) acquired by the Purchaser pursuant to the Securities Purchase Agreement;      WHEREAS, the Company desires to issue and sell to the Purchaser additional shares of Common Stock and the Purchaser desires to purchase from the Company additional shares of Common Stock;      WHEREAS, the Company and the Purchaser desire to amend the Registration Rights Agreement to grant to the Purchaser certain registration rights with respect to additional shares of Common Stock the Purchaser intends to acquire from the Company;      WHEREAS, the Company and the Purchaser desire to amend the Securities Purchase Agreement to correct a typographical error;      WHEREAS, in connection with a public offering, the Company has entered into that certain Underwriting Agreement, dated February 2, 2010 (the “Underwriting Agreement”), with KeyBanc Capital Markets Inc., Raymond James & Associates, Inc. and the other Underwriters (as defined therein) indentified on Schedule A thereto; and      WHEREAS, in connection with such public offering, the Company has filed with the Securities and Exchange Commission the Registration Statement (as defined in the Underwriting Agreement) and the Prospectus (as defined in the Underwriting Agreement).      NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration set forth herein, the parties hereto agree as follows:      Section 1. Amendment to Registration Rights Agreement. From and after the date of this Agreement, the Registration Rights Agreement shall be amended as follows:   --------------------------------------------------------------------------------     (a)   Section 2.1(b) of the Registration Rights Agreement is hereby amended by deleting the words “one year from the date hereof” and replacing them with the following words “six months from February 5, 2010”.     (b)   Section 1 of the Registration Rights Agreement is hereby amended by (i) inserting the words “or acquired by” immediately after the words “any shares of Common Stock issuable to” in clause (a) of the definition of “Registrable Securities”, (ii) deleting the word “and” immediately after clause (b) of the definition of “Registrable Securities” and inserting in its place a new clause with the following words “, (c) any             shares of Common Stock acquired by the Investor prior to the date the Registration Statement is filed with the Commission, and” and (iii) renumbering what has heretofore been clause (c) in the definition of “Registrable Securities” as clause (d).       Section 2. Amendment to Securities Purchase Agreement. From and after the date of this Agreement, the Securities Purchase Agreement shall be amended as follows:   (a)   Section 9.4 of the Securities Purchase Agreement is hereby amended by deleting the words “Section 9.6(c)” at the end of the last sentence in such section and replacing them with the following words “Section 9.6(b)”.      Section 3. Purchase. Subject to the terms and conditions set forth herein, the Company hereby agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company 1,250,000 shares of Common Stock which shall be validly issued, fully paid, non-assessable and free and clear of any liens, other than liens created by the Purchaser (collectively, the “Shares” and each individually, a “Share”), at a purchase price of $6.60 per Share.      Section 4. Purchase Price. The purchase price payable by the Purchaser hereunder for the Shares is $8,250,000.00, which will be paid by the Purchaser to the Company as of the date hereof by means of a wire transfer to an account and depository designated by the Company to the Purchaser in writing.      Section 5. Closing. The closing (the “Closing”) of the transactions contemplated by this Agreement shall take place as of the date hereof or on such other date as the parties may mutually agree. At the Closing, (i) the Purchaser shall deliver to the Company the purchase price as set forth in Section 4 and (ii) the Company shall deliver to the Purchaser (A) the Shares and (B) an opinion letter from Stroock & Stroock & Lavan LLP in the form attached hereto as Schedule A.      Section 6. Representations and Warranties of the Company. As of the date hereof, the Company makes to the Purchaser those representations and warranties made by the Company in Section 1(a) (Representations and Warranties by the Company and the Operating Partnership) of the Underwriting Agreement, provided that, for purposes of this Agreement, the word “Securities” in each such representation and warranty shall be replaced by “Shares”. As of the date hereof, the Company further makes to the Purchaser that representation and warranty made by the Company in Section 2.30 (Private Offering) of the Securities Purchase Agreement, 2 --------------------------------------------------------------------------------   provided that, for purposes of this Agreement, the word “Shares” shall have the meaning ascribed thereto in this Agreement.      Section 7. Representations and Warranties of the Purchaser. The Purchaser makes to the Company those representations and warranties made by the Purchaser in Sections 3. 1 (Due Organization), 3.2 (Authorization), 3.3 (No Violations), 3.4 (Investment Intent), 3.5 (No Registration under Federal or State Securities Laws), 3.6 (Investment Experience), 3.7 (Investment Risks), 3.10 (Financial Resources) and 3.11 (Opportunity for Independent Investigation) of the Securities Purchase Agreement, provided that, for purposes of this Agreement, the word “Shares” shall have the meaning ascribed thereto in this Agreement.      Section 8. Representations and Warranties of the Parties. Each party hereby represents and warrants: (i) the execution, delivery and performance of this Agreement is within its power, has been duly authorized by all necessary action and, where applicable, is not in contravention of any of its organizational documents; (ii) this Agreement has been duly executed and delivered by such party; and (iii) this Agreement constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms.      Section 9. No Other Amendment. Except as and to the extent expressly amended by the terms and provisions of this Agreement, each of the Registration Rights Agreement and the Securities Purchase Agreement shall continue in full force and effect unamended. Except as expressly set forth herein, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of the parties under either the Registration Rights Agreement or the Securities Purchase Agreement, or constitute a waiver of any provision of the Registration Rights Agreement or the Securities Purchase Agreement.      Section 10. References to Registration Rights Agreement. On and after the date hereof, each reference in the Registration Rights Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import referring to the Registration Rights Agreement, and each reference in any of the agreements or certificates to be delivered in connection with the Registration Rights Agreement to the “Registration Rights Agreement,” “thereunder,” “thereof” or words of like import referring to the Registration Rights Agreement, shall mean and be a reference to the Registration Rights Agreement as amended by this Agreement.      Section 11. References to Securities Purchase Agreement. On and after the date hereof, each reference in the Securities Purchase Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import referring to the Securities Purchase Agreement, and each reference in any of the agreements or certificates to be delivered in connection with the Securities Purchase Agreement to the “Securities Purchase Agreement,” “thereunder,” “thereof” or words of like import referring to the Securities Purchase Agreement, shall mean and be a reference to the Securities Purchase Agreement as amended by this Agreement.      Section 12. Successors and Assigns. This Agreement is solely for the benefit of and shall be binding upon the parties and their respective successors and permitted assigns, including, without limitation, any successor of the Company by merger, acquisition, reorganization, recapitalization or otherwise. Neither the Company nor the Purchaser may assign this Agreement or any of its rights, duties or obligations hereunder without the prior written 3 --------------------------------------------------------------------------------   consent of the other party; provided, however, that the Purchaser may assign its rights, duties or obligations hereunder to any affiliate of the Purchaser, provided that such affiliate agrees to be bound by the terms of this Agreement as a Holder (as such term is defined in the Registration Rights Agreement). Except as expressly set forth herein, nothing herein shall be construed to provide any rights to any other entity or individual.      Section 13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.      Section 14. Headings. Section headings are for convenience only and do not control or affect the meaning or interpretation of any terms or provisions of this Agreement.      Section 15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York governing contracts to be made and performed therein without giving effect to principles of conflicts of law, and, with respect to any dispute arising out of this Agreement, each party hereby consents to the exclusive jurisdiction of the courts sitting in the City of New York as provided in Section 10.15 of the Securities Purchase Agreement.      Section 16. Survival of Representations and Warranties. All representations and warranties contained in this Agreement shall remain operative and in full force and effect regardless of delivery of and payment for the Shares.      Section 17. Severability. Should any part, term, condition or provision hereof or the application thereof be declared illegal, invalid or otherwise unenforceable or in conflict with any other law by a court of competent jurisdiction, the validity of the remaining parts, terms, conditions or provisions of this Agreement shall not be affected thereby, and the illegal, invalid or unenforceable portions of this Agreement shall be and hereby are redrafted to conform with applicable law, while leaving the remaining portions of this Agreement intact, except to the extent necessary to conform to the redrafted portions hereof.      Section 18. Further Assurances. Each party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and documents and to take all such actions, in each case as may be necessary or proper to carry out the provisions and purposes of this Agreement.      Section 19. Entire Understanding. This Agreement and the exhibits attached hereto state the entire understanding between the parties with respect to the subject matter hereof, and supersede all prior oral and written communications and agreements, and all contemporaneous oral communications and agreements, with respect to the subject matter hereof. This Agreement may not be amended, modified or waived except by an instrument in writing signed by each of the parties hereto. 4 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.             CEDAR SHOPPING CENTERS, INC.       By:   /s/ LEO S. ULLMAN         Name:   Leo S. Ullman        Title:   Chairman and President                RIOCAN HOLDINGS USA INC.       By:   /s/ RAGHUNATH DAVLOOR         Name:   Raghunath Davloor        Title:   Chief Financial Officer    5
Exhibit 10.4   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.   ADAR BAYS, LLC COLLATERALIZED SECURED PROMISSORY NOTE BACK END NOTE   $25,000.00       Miami Beach, FL   March 19, 2015   1.          Principal and Interest   FOR VALUE RECEIVED, Adar Bays, LLC, a Florida Limited Liability Company (the "Company") hereby absolutely and unconditionally promises to pay to VeriTeQ Corp. (the “Lender"), or order, the principal amount of Twenty Five Thousand Dollars ($25,000.00) no later than November 19, 2015, unless the Lender does not meet the “current information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note. This Full Recourse Note shall bear simple interest at the rate of 12%.   2.          Repayments and Prepayments; Security.   a.     All principal under this Note shall be due and payable no later than November 19, 2015, unless the Lender does not meet the “current information requirements” required under Rule 144 of the Securities Act of 1933, as amended, in which case the Company may declare the offsetting note issued by the Lender on the same date herewith to be in Default (as defined in that note) and cross cancel its payment obligations under this Note as well as the Lenders payment obligations under the offsetting note.   b.     The Company, at its option, may prepay this Note at any time. This note may not be assigned by the Lender, except by operation of law.     1 --------------------------------------------------------------------------------     (1)          c.     This Note shall initially be secured by the pledge of the $25,000 8% convertible promissory note issued to the Company by the Lender on even date herewith (the “Lender Note”). The Company may exchange this collateral for other collateral with an appraised value of at least $25,000.00, by providing 3 days prior written notice to the Lender. If the Lender does not object to the substitution of collateral in that 3 day period, such substitution of collateral shall be deemed to have been accepted by the Lender. Notwithstanding the foregoing, an exchange of collateral for $25,000.00 in cash shall not require the approval of the Lender. All collateral shall be retained by New Venture Attorneys, P.C., which shall act as the escrow agent for the collateral for the benefit of the Lender. The Company may not effect any conversions under the Lender Note until it has made full cash payment for the portion of the Lender Note being converted.     3.          Events of Default; Acceleration.   a.     The principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any of the following events (each, an “Event of Default”): the initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon the occurrence of any Event of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon shall be immediately due and payable. The Company may offset amounts due to the Lender under this Note by similar amounts that may be due to the Company by the Lender resulting from breaches under the Lender Note.   b.     No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise. The Company accepts and agrees that this Note is a full recourse note and that the Holder may exercise any and all remedies available to it under law.   4.          Notices.   a. All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (i) if to a Lender, at such Lender’s address as the Lender shall have furnished the Company in writing and (ii) if to the Company at such address as the Company shall have furnished the Lender(s) in writing.   b.     Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by electronic communication with confirmation, upon the delivery of electronic communication.     2 --------------------------------------------------------------------------------     5.          Miscellaneous.   a.      Neither this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing.   b.     No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable.   c.     If Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys' fees.   d.     This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of New York (without reference to conflict of laws).   e.     This Note shall be binding upon the Company's successors and assigns, and shall inure to the benefit of the Lender's successors and assigns.     3 --------------------------------------------------------------------------------           IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.     ADAR BAYS, LLC     By:/s/Sarah Eisenberg   Title:Manager     APPROVED:   VERITEQ CORP.     By:/s/Scott Silverman   Title: Chief Executive Officer     4
Exhibit 10.8   Equitrans Midstream Corporation   2018 PAYROLL DEDUCTION   AND   CONTRIBUTION PROGRAM   --------------------------------------------------------------------------------   EQUITRANS MIDSTREAM CORPORATION 2018 PAYROLL DEDUCTION AND CONTRIBUTION PROGRAM   TABLE OF CONTENTS   ARTICLE I   1       1.1 Statement of Purpose 1       ARTICLE II DEFINITIONS 1       2.1 Bonus 1 2.2 Code 1 2.3 Committee (BAC) and Committee (BIC) 1 2.4 Company 1 2.5 Company Benefit 1 2.6 Eligible Employee 1 2.7 Employer 2 2.8 Management Development and Compensation Committee 2 2.9 Participant 2 2.10 Personal Retirement Annuity 2 2.11 Program 2 2.12 Program Year 2 2.13 Selected Affiliate 2       ARTICLE III ELIGIBILITY AND PARTICIPATION 3       3.1 Eligibility 3 3.2 Participation; Removal from Participation 3 3.3 Ineligible Participant 3       ARTICLE IV COMPANY BENEFITS 4       4.1 Company Benefit 4 4.2 Company Benefit Amounts 4       ARTICLE V PERSONAL RETIREMENT ANNUITIES 5       5.1 General 5 5.2 Terms of Personal Retirement Annuity 5       ARTICLE VI ADMINISTRATION 5       6.1 Committees 5 6.2 Agents 6 6.3 Binding Effect of Decisions 6   i --------------------------------------------------------------------------------   6.4 Indemnification of Committees 6       ARTICLE VII AMENDMENT AND TERMINATION OF PROGRAM 6       7.1 Amendment 6 7.2 Termination 6       ARTICLE VIII MISCELLANEOUS 7       8.1 Funding 7 8.2 Nonassignability 7 8.3 No Acceleration of Benefits; No Deferred Compensation; Taxation; Tax Withholding 7 8.4 Captions 7 8.5 Governing Law 8 8.6 Successors 8 8.7 No Right to Continued Service 8 8.8 Benefit Claims 8       EXHIBIT A SECTION 3.1 - DESCRIPTION OF ELIGIBLE EMPLOYEES 10       EXHIBIT B PERSONAL RETIREMENT ANNUITY 11   ii --------------------------------------------------------------------------------   ARTICLE I   1.1                               Statement of Purpose   This is the Equitrans Midstream Corporation 2018 Payroll Deduction and Contribution Program (as amended from time to time, the “Program”).  The purpose of the Program is to provide a select group of management and highly compensated employees of the Employer with the ability to deposit in a Personal Retirement Annuity, as per Article V, an amount of Company Benefit on an after-tax basis.  It is intended that the Program will assist in attracting and retaining qualified individuals to serve as officers and managers of the Employer.   ARTICLE II   DEFINITIONS   When used in this Program and initially capitalized, the following words and phrases shall have the meanings indicated:   2.1                               Bonus.   “Bonus” means the total amount awarded and paid, prior to any reduction for applicable tax withholdings, under the Equitrans Midstream Corporation Executive Short-Term Incentive Plan (as implemented each year) or the Equitrans Midstream Corporation Short-Term Incentive Plan (as implemented each year).   2.2                               Code.   “Code” means the Internal Revenue Code of 1986, as amended.   2.3                               Committee (BAC) and Committee (BIC).   “Committee (BAC)” and “Committee (BIC)” have the meanings set forth in Section 6.1.  Together the Committee (BAC) and the Committee (BIC) shall be referred to as the “Committees.”   2.4                               Company.   “Company” means Equitrans Midstream Corporation and any successor thereto.   2.5                               Company Benefit.   “Company Benefit” means the benefit contributed to the Personal Retirement Annuity on behalf of the Participant pursuant to Sections 4.1 and 4.2.   2.6                               Eligible Employee.   “Eligible Employee” means a highly compensated or management employee of the Employer who is designated by the Company, by name or group or description, in accordance with Section 3.1, as eligible to participate in the Program; provided that to the extent such   --------------------------------------------------------------------------------   employee is an executive officer such participation must be approved by the Management Development and Compensation Committee.   2.7                               Employer.   “Employer” means, with respect to a Participant, the Company or the Selected Affiliate which pays such Participant’s  base earnings.   2.8                               Management Development and Compensation Committee.   “Management Development and Compensation Committee” means the Management Development and Compensation Committee of the Company’s Board of Directors.   2.9                               Participant.   “Participant” means any Eligible Employee listed on Exhibit A and designated under Section 3.2.   2.10                        Personal Retirement Annuity.   “Personal Retirement Annuity” means the annuity described in Section 5.1.   2.11                        Program.   “Program” means this Equitrans Midstream Corporation 2018 Payroll Deduction and Contribution Program, as amended from time to time. Program Year.   2.12                        Program Year   “Program Year” means each twelve-month period commencing January 1 and ending December 31, except that the first Program Year shall commence on November 12, 2018 and end on December 31, 2018.   2.13                        Selected Affiliate.   “Selected Affiliate” means (1) any company in an unbroken chain of companies beginning with the Company if each of the companies other than the last company in the chain owns or controls, directly or indirectly, stock possessing not less than 50 percent of the total combined voting power of all classes of stock in one of the other companies, or (2) any partnership or joint venture in which one or more of such companies is a partner or venturer, each of which shall be selected by the Company.   2 --------------------------------------------------------------------------------   ARTICLE III   ELIGIBILITY AND PARTICIPATION   3.1                               Eligibility.   Eligibility to participate in the Program is limited to Eligible Employees.  From time to time, and subject to Section 3.3, the Company shall prepare, and attach to the Program as Exhibit A, a complete list of the Eligible Employees, by individual name or by reference to an identifiable group of persons or by descriptions of individuals which would qualify as individuals who are eligible to participate, and all of whom shall be a select group of management or highly compensated employees.   3.2                               Participation; Removal from Participation.   Participation in the Program shall be limited to Eligible Employees.  An Eligible Employee shall commence participation in the Program upon designation as an Eligible Employee by the Chief Executive Officer of the Company or his designee, provided that, to the extent such Eligible Employee is an executive officer, such designation also must be approved by the Management Development and Compensation Committee.  Following designation, an Eligible Employee shall continue participation in the Program from year to year without further action by the Company, subject to this Section and Section 3.3.   Notwithstanding the foregoing, an Eligible Employee may be removed from participation at any time:  (a) in the case of an executive officer, by the Management Development and Compensation Committee and (b) in all other cases, by the Chief Executive Officer of the Company or his designee.  In the event of such removal:   (i)            there shall be no reduction of any Program benefits attributable to participation for years prior to the year of removal;   (ii)           for the year of removal, there shall be no reduction of any Program benefits (including Employer contributions under Article IV) that have been made already to the Personal Retirement Annuity prior to such removal; and   (iii)          for the year of removal, the removed Eligible Employee shall not have any right to a pro-rated or proportionate share of Program benefits for such year (including Employer contributions under Article IV) that have not been made to the Personal Retirement Annuity prior to such removal.   Eligible Employees who are removed under this Section 3.2 shall be notified in writing by the Company, not later than 90 days after their removal.   3.3                               Ineligible Participant.   Notwithstanding any other provisions of this Program to the contrary, if the Committee (BAC) determines that any Participant may not qualify as a member of a select group of “management or highly compensated employee” within the meaning of the Employee   3 --------------------------------------------------------------------------------   Retirement Income Security Act of 1974, as amended (“ERISA”), or regulations thereunder, the Committee (BAC) may determine, in its sole discretion, that such Participant shall cease to be eligible to participate in this Program.  Upon such determination by the Committee (BAC), the Committee (BAC) shall give written notice to the individual who has ceased to be eligible to participate in this Program (and, in the case of an executive officer, a copy of such notice shall also be given to the Management Development and Compensation Committee).  In any such notice, the Committee (BAC) shall explain that all benefits under the Program have been forfeited (or otherwise handled in a manner that the Committee (BAC) determines is consistent with applicable law) due to loss of eligibility under applicable law.   ARTICLE IV   COMPANY BENEFITS   4.1                               Company Benefit.   The Employer shall provide a Company Benefit under this Program with respect to each Participant who is eligible to be allocated matching contributions and/or performance contributions (also known as “retirement contributions”) under the Equitrans Midstream Corporation Employee Savings Plan (as amended from time to time, the “Equitrans Midstream 401(k) Plan”).  Prior to reduction for taxes as set forth in Section 4.2, the Company Benefit under this Program on behalf of a Participant for a Program Year shall be equal to the sum of (a) the matching contributions which would be credited to the Participant under the Equitrans Midstream 401(k) Plan based upon the Participant’s hypothetical pre-tax personal contribution amount that would be made under the Equitrans Midstream 401(k) Plan, absent the limitations of Sections 402(g), 401(a)(17), and 415 of the Code, (b) the performance contributions which would be credited to the Participant under the Equitrans Midstream 401(k) Plan, absent the limitations of Sections 401(a)(17) and 415 of the Code, and (c) an amount equal to 11% of the Participant’s Bonus payment, prior to reduction for any applicable tax withholding.  The express provisions herein on the time and form of payment applicable to Company Benefits shall control over the terms and conditions provided in the Equitrans Midstream 401(k) Plan.  For the avoidance of doubt, Eligible Employees are not required to make personal contributions to their Equitrans Midstream 401(k) Plan account or otherwise in order to receive the Company Benefit described in items (b) and (c) above, but personal contributions to the Equitrans Midstream 401(k) Plan are required to receive the Company Benefit described in item (a) above.   4.2                               Company Benefit Amounts.   The Company Benefit under the Program for each Participant shall be contributed by the Employer to the Participant’s Personal Retirement Annuity on an after-tax basis.  The gross amount (pre-tax) of the Company Benefit is determined under Section 4.1.  Prior to contribution to the Participant’s Personal Retirement Annuity, the Company shall withhold, and reduce the Company Benefit by, the applicable income and other taxes that the Company determines to be appropriate.  All references herein to “contribution of the Company Benefit” (or similar terminology) shall mean such amount remaining after applicable tax withholding.  In no event shall any Company Benefit be contributed to the Participant’s Personal Retirement Annuity later than 2½ months following the Program Year to which the Company Benefit relates.  An Eligible   4 --------------------------------------------------------------------------------   Employee must be a full-time, regular employee of the Employer on the date that the Employer makes the contribution to the Participant’s Personal Retirement Annuity.  If a Participant ceases to be employed by the Employer as a full-time, regular employee prior to the date that the Employer makes the contribution to the Participant’s Personal Retirement Annuity, or has terminated his or her participation in the Program prior to such date, the Company Benefit for such annual period shall be forfeited without any further action required by the Employer.   ARTICLE V   PERSONAL RETIREMENT ANNUITIES   5.1                               General.   The Personal Retirement Annuity to which Company Benefits will be contributed is listed on Exhibit B hereto and may be changed, on a prospective basis, from time to time.  Any such changes shall be authorized and approved by the Committee (BIC) or the Management Development and Compensation Committee.   5.2                               Terms of Personal Retirement Annuity.   The terms of the Personal Retirement Annuity, which is owned by the Participant, shall be as provided solely by the third-party sponsor of such annuity, including the investment returns and elections, payment and withdrawal provisions and statements of account.  The election of investments within a Personal Retirement Annuity shall be the sole responsibility of each Participant.  The Company, the other Employers, their employees and members of the Committees are not authorized to make any recommendation to any Participant with respect to such election.  Each Participant assumes all risk connected with any adjustment to the value of his or her Personal Retirement Annuity.  None of the Committees, the Management Development and Compensation Committee, the Company and the other Employers in any way guarantees against loss or depreciation.   ARTICLE VI   ADMINISTRATION   6.1                               Committees.   The administrative committee for the Program (the “Committee (BAC)”) shall be the Benefits Administration Committee of the Company.  The Committee (BAC) shall have (i) complete discretion to supervise the administration and operation of the Program, (ii) complete discretion to adopt rules and procedures governing the Program from time to time, and (iii) sole authority to give interpretive rulings with respect to the Program.   The investment committee for the Program (the “Committee (BIC)”) shall be the Benefits Investment Committee of the Company.  The Committee (BIC) shall have (i) complete discretion to determine and select the personal retirement annuity program under Section 5.1; (ii) complete discretion to monitor, remove and replace all or part of any personal retirement annuity program;   5 --------------------------------------------------------------------------------   and (iii) complete discretion to adopt rules, guidelines or other procedures for the management and investment of Program assets.   6.2                               Agents.   The Committees may appoint an individual, who may be an employee of the Company, to be the Committees’ agent with respect to the day-to-day administration of the Program.  In addition, the Committees may, from time to time, employ other agents and delegate to them such administrative duties as they see fit, and may from time to time consult with counsel who may be counsel to the Company.   6.3                               Binding Effect of Decisions.   Any decision or action of the Committees with respect to any question arising out of or in connection with the administration, investment, interpretation and application of the Program shall be final and binding upon all persons having any interest in the Program.   6.4                               Indemnification of Committees.   The Company shall indemnify and hold harmless the members of the Committees and their duly appointed agents under Section 6.2 against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to the Program, except in the case of gross negligence or willful misconduct by any such member or agent of the Committees.   ARTICLE VII   AMENDMENT AND TERMINATION OF PROGRAM   7.1                               Amendment.   The Company, on behalf of itself and of each Selected Affiliate, may at any time amend, suspend or reinstate any or all of the provisions of the Program, except that no such amendment, suspension or reinstatement may adversely affect any Participant’s Personal Retirement Annuity as it existed as of the day before the effective date of such amendment, suspension or reinstatement, without such Participant’s prior written consent, and provided that any amendment, suspension or reinstatement affecting the benefits to any executive officer of the Company shall require the approval of the Management Development and Compensation Committee.  Written notice of any amendment, suspension or reinstatement with respect to the Program shall be given to each Participant by the Committee (BAC).   7.2                               Termination.   The Company, on behalf of itself and of each Selected Affiliate, in its sole discretion, may terminate this Program at any time and for any reason whatsoever.  A termination of the Program shall not adversely affect any Participant’s Personal Retirement Annuity as it existed on the day before such termination, without the Participant’s prior written consent.   6 --------------------------------------------------------------------------------   ARTICLE VIII   MISCELLANEOUS   8.1                               Funding.   Participants and their heirs, successors and assigns, shall have no secured interest or claim in any property or assets of the Company or any other Employer.  The Employer’s obligation under the Program to contribute Company Benefits to a Participant’s Personal Retirement Annuity shall be merely that of an unfunded and unsecured promise.  To the extent that any Participant or other person acquires a right to receive Company Benefits under the Program, such right shall be no greater than the right, and each Participant shall at all times have the status, of a general unsecured creditor of the Company or any other Employer.   8.2                               Nonassignability.   No right or interest under the Program of a Participant (or any person claiming through or under him or her) shall be assignable or transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of any such Participant.  If any Participant shall attempt to or shall transfer, assign, alienate, anticipate, sell, pledge or otherwise encumber his or her benefits hereunder or any part thereof, or if by reason of his or her bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him or her, then the Committee (BAC), in its discretion, may terminate his or her interest in any such benefit to the extent the Committee (BAC) considers necessary or advisable to prevent or limit the effects of such occurrence.  Termination shall be effected by filing a written “termination declaration” with the Company’s Corporate Director, Compensation and Benefits and making reasonable efforts to deliver a copy to the Participant whose interest is adversely affected.   8.3                               No Acceleration of Benefits; No Deferred Compensation; Taxation; Tax Withholding.   This Program is not intended to provide for the deferral of compensation and there shall be no acceleration of the time or schedule of any payments or contributions under the Program.  The Employer shall be and is authorized to withhold from Company Benefits under this Program, or from such other compensation or benefits paid or payable to the Participant, those federal, state or local income taxes or similar charges that the Committee (BAC), in its sole discretion, determines are required to be withheld under applicable law.  The Employer does not represent or guarantee that any particular federal, state or local income, payroll, personal property or other tax consequence will result from participation in this Program.  Participants are directed to consult with professional tax advisors to determine the tax consequences of their participation.   8.4                               Captions.   The captions contained herein are for convenience only and shall not control or affect the meaning or construction hereof.   7 --------------------------------------------------------------------------------   8.5                               Governing Law.   The provisions of the Program shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania without regard to its conflicts of laws provisions.  If any insubstantial provision of this Program is declared unlawful for any reason, including by state or federal legislative act, regulation or judicial ruling, such provision shall become inoperative but will not affect the validity of any other provision.   8.6                               Successors.   The provisions of the Program shall bind and inure to the benefit of the Company, the other Employers, and their respective successors and assigns.  The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company or any other Employer and successors of any such Company or other business entity.   8.7                               No Right to Continued Service.   Nothing contained herein shall be construed to confer upon any Eligible Employee the right to continue to serve as an Eligible Employee of an Employer or in any other capacity.   8.8                               Benefit Claims.   (a)                                 Initial Claims.  To make a claim for a benefit, a Participant (or the Participant’s authorized representative) may file a written request setting forth the claim for such benefit with:  (i) in the case of an executive officer, the Management Development and Compensation Committee; and (ii) in all other cases, the Committee (BAC).  (On a case-by-case basis, the Management Development and Compensation Committee may delegate its claim review functions to the Committee (BAC).  All references in this Section 8.8 to Committee (BAC) shall include the Management Development and Compensation Committee, where the Management Development and Compensation Committee undertakes the review of a claim and does not delegate such review to the Committee (BAC).)   (b)                                 Denied Claims.  If the Committee (BAC) receives a claim in writing, the Committee (BAC) will advise the Participant of its decision on the claim in writing in a reasonable period of time after receipt of the claim (not to exceed 120 days).  The notice shall set forth the following information:   (1)                                 The specific basis for its decision,   (2)                                 Specific reference to pertinent Program provisions on which the decision is based,   (3)                                 A description of any additional material or information necessary for the Participant to perfect a claim and an explanation of why such material or information is necessary,   8 --------------------------------------------------------------------------------   (4)                                 An explanation of the Program’s claim review procedure, and   (5)                                 If applicable, a statement of the Participant’s right to bring an action under Section 502 of ERISA upon the denial of the appeal of a previously denied claim.   (c)                                  Appealing a Claim.  The Participant (or the Participant’s authorized representative) may make a written request within 60 days of the denial to the Committee (BAC) to have a designated appeals authority (which shall be different than the Committee (BAC)) review the denial.  The Participant may review the pertinent documents and submit issues and comments in writing for consideration by the appeals authority.  If the Participant does not request a review of the initial determination within such 60-day period, he or she will be barred from challenging the determination by reason of failure to exhaust administrative remedies.   Within 60 days after the Committee (BAC)’s receipt of the Participant’s request for appeal review, the Participant will receive notice of the appeals authority’s decision.  If the claim is further denied, the notice will contain the specific reasons for the decision of the appeals authority; specific references to the pertinent provisions of this Program upon which the decision is based; and, if applicable, a statement of the Participant’s right to bring an action under Section 502 of ERISA.  If special circumstances require that the 60-day time period be extended, the appeals authority will notify the Participant within the initial 60-day time period and will render the decision as soon as possible, but no later than 120 days, after receipt of the request for review.   (d)                                 Limitation of Time to Commence Legal Action.  Notwithstanding any otherwise applicable legally-prescribed statute of limitations period, no legal action may be commenced or maintained to recover benefits under this Program more than twelve (12) months after the final review decision by the appeals authority has been rendered (or deemed rendered).   9 --------------------------------------------------------------------------------   EXHIBIT A   Section 3.1 - Description of Eligible Employees   ·                  The executive officers of the Company designated as Eligible Employees by the Chief Executive Officer or his designee and approved by the Management Development and Compensation Committee, which record of designated Eligible Employees is maintained in the Company’s Human Resources Department.   ·                  Such employees of the Company or any Selected Affiliate other than executive officers of the Company designated as Eligible Employees by the Chief Executive Officer or his designee, which record of designated Eligible Employees is maintained in the Company’s Human Resources Department.   Effective Date:  November 12, 2018   Initials:   10 --------------------------------------------------------------------------------   EXHIBIT B   Personal Retirement Annuity   Fidelity Personal Retirement Annuity   11 --------------------------------------------------------------------------------
Exhibit 10.3   EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT   BIO-TECHNE CORPORATION SECOND AMENDED AND RESTATED 2010 EQUITY INCENTIVE PLAN   THIS AGREEMENT is made effective as of [●], by and between Bio-Techne Corporation, a Minnesota corporation (the “Company”), and [●] (“Participant”).   W I T N E S S E T H:   WHEREAS, Participant on the date hereof is a key employee or officer of the Company or one of its Subsidiaries; and   WHEREAS, the Company wishes to grant a nonqualified stock option to Participant to purchase shares of the Company's Common Stock pursuant to the Bio-Techne Corporation Second Amended and Restated 2010 Equity Incentive Plan (the “Plan”); and   WHEREAS, the Administrator of the Plan has authorized the grant of a nonqualified stock option to Participant and has determined that, as of the effective date of this Agreement, the fair market value of the Company's Common Stock is $[●] per share;   NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows:   1.       Grant of Option. The Company hereby grants to Participant on the date set forth above (the “Date of Grant”), the right and option (the “Option”) to purchase all or portions of an aggregate of [●] ([●]) shares of Common Stock at a per share price of $[●] on the terms and conditions set forth herein and subject to adjustment pursuant to Section 15 of the Plan. This Option is a nonqualified stock option and will not be treated as an incentive stock option, as defined under Section 422, or any successor provision, of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder.   2.       Duration and Exercisability.   (a)      General. The term during which this Option may be exercised shall terminate on [●], except as otherwise provided in Sections 2(b) through 2([d/e]) below. This Option shall become exercisable on the following dates (the “Vesting Dates”), provided that Participant remains employed by the Company on the applicable Vesting Date as set forth in Sections 2(b) through 2([d/e]) of this Agreement:   Date Shares Vesting     [●] [●] [●] [●] [●] [●] [●] [●]         --------------------------------------------------------------------------------     If and to the extent provided in an employment, change of control, severance or similar agreement executed by the Participant and the Company or by a determination by the Administrator, in each case pursuant and subject to Section 15 of the Plan, this Option may become fully-vested and exercisable in connection with a Change of Control as defined in Section 1(f) of the Plan.   Once the Option becomes exercisable with respect to any of the shares specified in Section 1, Participant may continue to exercise this Option with respect to such vested shares under the terms and conditions of this Agreement until the termination of the Option as provided herein. If Participant does not purchase upon an exercise of this Option the full number of shares which Participant is then entitled to purchase, Participant may purchase upon any subsequent exercise prior to this Option's termination such previously unpurchased shares in addition to those Participant is otherwise entitled to purchase.   (b)     Termination of Employment (other than Disability[,/or] Death [or Retirement]). Unless otherwise agreed to in writing by Participant and the Company, if Participant ceases to be an employee of the Company or any Subsidiary during the term of this Option for any reason other than disability[,/or] death [or Retirement (as defined in Section 2(e) of this Agreement)], this Option shall completely terminate on the earlier of: (i) the close of business on the three-month anniversary date of such termination of employment; and (ii) the expiration date of this Option stated in Section 2(a) above. In such period following the termination of Participant's employment, this Option shall be exercisable only to the extent the Option was exercisable on the Vesting Date immediately preceding such termination of employment, but had not previously been exercised. To the extent this Option was not exercisable upon such termination of employment, all rights of Participant under this Option shall be forfeited. If Participant does not exercise the Option within the time specified in this Section 2(b), all rights of Participant under this Option shall be forfeited.   (c)     Disability. If Participant's employment terminates because of disability (as defined in Code Section 22(e), or any successor provision), this Option shall terminate on the earlier of: (i) the close of business on the one year anniversary of the date of such termination of employment; and (ii) the expiration date of this Option stated in Section 2(a) above. In such period following the termination of Participant's employment, this Option shall be exercisable only to the extent the Option was exercisable on the Vesting Date immediately preceding such termination of employment, but had not previously been exercised. To the extent this Option was not exercisable upon such termination of employment, all rights of Participant under this Option shall be forfeited. If Participant does not exercise the Option within the time specified in this Section 2(c), all rights of Participant under this Option shall be forfeited.   (d)     Death. In the event of Participant's death, this Option shall terminate on the earlier of: (i) the close of business on the one year anniversary of the date of Participant's death; and (ii) the expiration date of this Option stated in Section 2(a) above. In such period following Participant's death, this Option may be exercised by the person or persons to whom Participant's rights under this Option shall have passed by Participant's will or by the laws of descent and distribution only to the extent the Option was exercisable on the Vesting Date immediately preceding the date of Participant's death, but had not previously been exercised. To the extent this Option was not exercisable on the date of Participant’s death, all rights of Participant under this Option shall be forfeited. If such person or persons fail to exercise this Option within the time specified in this Section 2(d), all rights under this Option shall be forfeited.   - 2 - --------------------------------------------------------------------------------     [OPTIONAL PROVISION TO BE USED ON A CASE-BY-CASE BASIS: (e)     Retirement. If Participant’s employment with the Company or any Affiliate terminates because of Retirement, this Option shall terminate on the expiration date of this Option stated in Section 2(a) above. In such period following the termination of Participant's employment, this Option shall be exercisable only to the extent the Option was exercisable on the Vesting Date immediately preceding such termination of employment, but had not previously been exercised. To the extent this Option was not exercisable upon such termination of employment, all rights of Participant under this Option shall be forfeited. If Participant does not exercise the Option within the time specified in this Section 2(e), all rights of Participant under this Option shall be forfeited.   Solely for purposes of this Section 2(e), “Retirement” means termination of employment for any reason on or after attaining age 55 and completing at least five (5) years of continuous service with the Company or any Affiliate; provided, however, that Participant shall be credited with continuous service only for periods during which Participant is regularly scheduled to work 20 or more hours per week. Notwithstanding anything in this Option Agreement to the contrary, if, pursuant to this Section 2(e), this Option is exercised after the expiration of the exercise periods that apply for purposes of Code Section 422, or any successor provision, this Option shall be thereafter treated as a nonqualified stock option.]   3.       Manner of Exercise.   (a)     General. The Option may be exercised only by Participant (or other proper party in the event of death or incapacity), subject to the conditions of the Plan and subject to such other administrative rules as the Administrator may deem advisable, by delivering within the option period written notice of exercise to the Company at its principal office. The notice shall state the number of shares as to which the Option is being exercised and shall be accompanied by payment in full of the option price for all shares designated in the notice. The exercise of the Option shall be deemed effective upon receipt of such notice by the Company and upon payment that complies with the terms of the Plan and this Agreement. The Option may be exercised with respect to any number or all of the shares as to which it can then be exercised and, if partially exercised, may be so exercised as to the unexercised shares any number of times during the option period as provided herein.   (b)     Form of Payment. Subject to approval by the Administrator, payment of the option price by Participant may be (i) in cash, or with a personal check or certified check, (ii) by the transfer from Participant to the Company of previously acquired shares of Common Stock, (iii) through the withholding of shares of Stock from the number of shares otherwise issuable upon the exercise of the Option (e.g., a net share settlement), (iv) through broker-assisted cashless exercise if such exercise complies with applicable securities laws and any insider trading policy of the Company, (v) such other form of payment as may be authorized by the Administrator, or (vi) by a combination thereof. In the event Participant elects to pay the exercise price in whole or in part with previously acquired shares of Common Stock or through a net share settlement, the Fair Market Value of the shares of Stock delivered or withheld shall equal the total exercise price for the shares being purchased in such manner. For purposes of this Agreement, "previously acquired shares of Common Stock" shall include shares of Common Stock that are already owned by Participant at the time of exercise.   - 3 - --------------------------------------------------------------------------------     (c)     Issuance of Shares. As soon as practicable after the effective exercise of all or any part of the Option, Participant shall be recorded on the stock transfer books of the Company as the owner of the shares purchased, less any shares withheld for payment of taxes as provided in Section 4(d) below, and the Company shall deliver to Participant one or more duly issued stock certificates or cause book entries to be made evidencing such ownership. All requisite original issue or transfer documentary stamp taxes shall be paid by the Company. Until the issuance of such shares, Participant shall not be entitled to vote the shares of Company Common Stock represented by the Option, shall not be entitled to receive dividends or distributions attributable to such shares of Company Common Stock, and shall not have any other rights as a shareholder with respect to such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 15 of the Plan.   4.       General Provisions.   (a)     Employment or Other Relationship. This Agreement shall not confer on Participant any right with respect to the continuance of employment or any other relationship with the Company or any of its Subsidiaries, nor will it interfere in any way with the right of the Company to terminate such employment or relationship. Nothing in this Agreement shall be construed as creating an employment contract for any specified term between Participant and the Company or any Subsidiary.   (b)     Securities Law Compliance. The exercise of all or any parts of this Option shall be effective only at such time as counsel to the Company shall have determined that the issuance and delivery of Common Stock pursuant to such exercise will not violate any state or federal securities or other laws. Participant may be required by the Company, as a condition of the effectiveness of any exercise of this Option, to agree in writing that all Common Stock to be acquired pursuant to such exercise will be held until such time that the shares are registered or otherwise freely tradeable under applicable state and federal securities laws, for Participant’s own account without a view to any further distribution thereof, and that the certificate(s) for such shares will bear an appropriate legend to that effect and that such shares will not be transferred or disposed of except in compliance with applicable state and federal securities laws.   (c)     Shares Reserved. The Company shall at all times during the term of this Agreement reserve and keep available such number of shares as will be sufficient to satisfy the requirements of this Agreement.   - 4 - --------------------------------------------------------------------------------     (d)     Withholding Taxes. In order to permit the Company to comply with all applicable federal and state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that, if necessary, all withholding and employment-related taxes attributable to this Option are withheld from any amounts payable by the Company to the Participant. If the Company is unable to withhold such federal and state taxes, for whatever reason, the Participant hereby agrees to pay to the Company an amount equal to such withholding and employment-related taxes prior to the date the Company’s withholding obligation arises. Subject to such rules as the Administrator may adopt, the Administrator may, in its sole discretion, permit Participant to satisfy such withholding tax obligations, in whole or in part, (i) by delivering shares of Company Common Stock, or (ii) by electing to have the Company withhold shares of Company Common Stock otherwise issuable to Participant upon exercise of the Option. In either case, such shares shall have a Fair Market Value, as of the date the amount of tax to be withheld is determined under applicable tax law, equal to such tax withholding, including payroll taxes, applicable to the supplemental income attributable to this Option. The Participant’s election to deliver shares or to have shares withheld for this purpose shall be made on or before the date that the amount of such tax withholding is determined under applicable tax law. Such election shall be approved by the Administrator and otherwise comply with such rules as the Administrator may adopt to assure compliance with Rule 16b-3 or any successor provision, as then in effect, of the General Rules and Regulations under the Securities Exchange Act of 1934, if applicable.   (e)     Transferability. Participant may transfer any or all of the Option to any member of the Participant's "immediate family" as such term is defined in Rule 16a-1(e) promulgated under the Securities Exchange Act of 1934, or any successor provision, or to one or more trusts whose beneficiaries are members of such Participant's "immediate family" or partnerships in which such family members are the only partners; provided, however, that the Participant cannot receive any consideration for the transfer and such transferred Option shall continue to be subject to the same terms and conditions as were applicable to such Option immediately prior to its transfer. Further, the transferee shall be subject to all restrictions that generally apply to shareholders of the Company, including but not limited to restrictions on the pledge, encumbrance, sale, assignment, transfer, gift, or disposition of any stock acquired through the exercise of the Option.   (f)     Second Amended and Restated 2010 Equity Incentive Plan. The Option evidenced by this Agreement is granted pursuant to the Plan, a copy of which Plan has been made available to Participant and is hereby incorporated into this Agreement. This Agreement is subject to and in all respects limited and conditioned as provided in the Plan. All defined terms of the Plan shall have the same meaning when used in this Agreement. The Plan governs this Option and, in the event of any questions as to the construction of this Agreement or in the event of a conflict between the Plan and this Agreement, the Plan shall govern, except as the Plan otherwise provides.   (g)     Lockup Period Limitation. Participant agrees that in the event the Company advises Participant that it plans an underwritten public offering of its Common Stock in compliance with the Securities Act of 1933, as amended, and that the underwriter(s) seek to impose restrictions under which Participant may not sell or contract to sell or grant any option to buy or otherwise dispose of part or all of this Option or the Company Common Stock underlying this Option, Participant hereby agrees that for a period not to exceed 180 days from the effective date of the prospectus relating to such offering Participant will not sell or contract to sell or grant an option to buy or otherwise dispose of this Option or any of the underlying shares of Company Common Stock without the prior written consent of the underwriter(s) or its representative(s).   - 5 - --------------------------------------------------------------------------------     (h)     Stock Legend. The Administrator may require that the certificates or book entries for any shares of Company Common Stock purchased by Participant (or Participant’s permitted successors or assigns) bear an appropriate legend and stop transfer order to reflect the restrictions of Section 4(b) and Sections 4(f) through 4(g) of this Agreement; provided, however, that failure to so endorse any of such certificates or book entries shall not render invalid or inapplicable Section 4(b) or Sections 4(f) through 4(g).   (i)     Scope of Agreement. This Agreement shall bind and inure to the benefit of the Company and its successors and assigns and Participant and any successor or assigns of Participant permitted by Section 2 or Section 4(e) above. This Option is expressly subject to all terms and conditions contained in the Plan and in this Agreement, and Participant’s failure to execute this Agreement shall not relieve Participant from complying with such terms and conditions.   (j)     Arbitration. Any dispute arising out of or relating to this Agreement or the alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement, shall be discussed between the disputing parties in a good faith effort to arrive at a mutual settlement of any such controversy. If, notwithstanding, such dispute cannot be resolved, such dispute shall be settled by binding arbitration. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator shall be a retired state or federal judge or an attorney who has practiced securities or business litigation for at least ten (10) years. If the parties cannot agree on an arbitrator within twenty (20) days, any party may request that the chief judge of the District Court of Hennepin County, Minnesota, select an arbitrator. Arbitration will be conducted pursuant to the provisions of this Agreement, and the commercial arbitration rules of the American Arbitration Association, unless such rules are inconsistent with the provisions of this Agreement. Limited civil discovery shall be permitted for the production of documents and taking of depositions. Unresolved discovery disputes may be brought to the attention of the arbitrator who may dispose of such dispute. The arbitrator shall have the authority to award any remedy or relief that a court of this state could order or grant; provided, however, that punitive or exemplary damages shall not be awarded. The arbitrator may award to the prevailing party, if any, as determined by the arbitrator, all of its costs and fees, including the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses and reasonable attorneys’ fees. Unless otherwise agreed by the parties, the place of any arbitration proceedings shall be Hennepin County, Minnesota.   (k)     Delay in Payment for Specified Employee. In the event this Option is subject to Code Section 409A and the Administrator determines that the Participant is a “specified employee” within the meaning of Code Section 409A, then any payment due to the Participant’s separation from service shall not be paid earlier than the first day of the seventh month immediately following such separation from service.   (l)     Right to Amend. The Company hereby reserves the right to amend this Agreement without Participant’s consent to the extent necessary or desirable to comply with the requirements of Code Section 409A and the regulations, notices and other guidance of general application issued thereunder.   - 6 - --------------------------------------------------------------------------------     (m)     Section 280G.   Notwithstanding anything to the contrary contained in this Agreement, to the extent that any of the payments and benefits provided for under this Agreement or any other agreement or arrangement between the Participant and the Company (collectively, the “Payments”) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this Section 4(m), would be subject to the excise tax imposed by Section 4999 of the Code, then the Payments shall be payable either (i) in full or (ii) as to such lesser amount which would result in no portion of such Payments being subject to excise tax under Section 4999 of the Code; whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the Participant’s receipt on an after-tax basis, of the greatest amount of economic benefits under this Agreement, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  Unless the Participant and the Company otherwise agree in writing, any determination required under this Section 4(m) shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose reasonable determination shall be conclusive and binding upon the Participant and the Company for all purposes.  For purposes of making the calculations required by this Section 4(m), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Sections 280G and 4999 of the Code.  The Participant and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 4(m).   (n)     Governing Law. The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Minnesota.   [Signature page follows.]   - 7 - --------------------------------------------------------------------------------     ACCORDINGLY, the parties hereto have caused this Agreement to be executed on the day and year first above written.     BIO-TECHNE CORPORATION               By                                                                         Its                                                                       PARTICIPANT       By: ___________________________________         Printed Name: [●]       [Signature Page to Employee Nonqualified Stock Option Agreement]
Exhibit 10.1   SECURITIES PURCHASE AGREEMENT   This Securities Purchase Agreement (this “Agreement”) is dated as of May 7, 2008, by and among Microfield Group, Inc., an Oregon corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).   WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.   NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows:   ARTICLE I   DEFINITIONS   1.1            DEFINITIONS.  IN ADDITION TO THE TERMS DEFINED ELSEWHERE IN THIS AGREEMENT THE FOLLOWING TERMS HAVE THE MEANINGS INDICATED IN THIS SECTION 1.1:   “Action” shall have the meaning ascribed to such term in Section 3.1(j).    “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.  With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.   “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.   “Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.    “Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.   “Commission” means the Securities and Exchange Commission.   --------------------------------------------------------------------------------   “Common Stock” means the common stock of the Company, no par value per share, and any securities into which such common stock shall hereinafter have been reclassified into.   “Company Counsel” means Sichenzia Ross Friedman Ference LLP.    “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1 hereof.   “Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission.    “Exchange Act” means the Securities Exchange Act of 1934, as amended.   “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).    “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.    “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).   “Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).   “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.   “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.   “Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto.   “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Warrant Shares by each Purchaser as provided for in the Registration Rights Agreement.    “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).   “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or   --------------------------------------------------------------------------------   regulation hereafter adopted by the Commission having substantially the same effect as such Rule.   “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).   “Securities” means the Common Stock, the Warrants and the Warrant Shares.   “Securities Act” means the Securities Act of 1933, as amended.   “Shares” means the shares of Common Stock issued or issuable to the Purchasers pursuant to this Agreement.   “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.    “Subscription Amount” shall mean, as to each Purchaser, the amount to be paid for the Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount”, in United States Dollars and in immediately available funds.   “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a).   “Trading Day” means a day on which the Common Stock is traded on a Trading Market.   “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Over-The-Counter Bulletin Board, the Nasdaq Global Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq Capital Market.    “Transaction Documents” means this Agreement, the Warrants, the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.    “Warrants” means collectively the Common Stock purchase warrants, in the form of Exhibit B delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise commencing on the date of issuance and ending three years after issuance.    “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.   --------------------------------------------------------------------------------   ARTICLE II PURCHASE AND SALE   2.1           CLOSING.  ON THE CLOSING DATE, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, CONCURRENT WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE PARTIES HERETO, THE COMPANY AGREES TO SELL TO THE PURCHASERS, AND EACH PURCHASER SEVERALLY AND NOT JOINTLY WITH ANY OTHER PURCHASER AGREES TO PURCHASE FROM THE COMPANY THE NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK AND WARRANTS SET FORTH ON  SUCH PURCHASER’S SIGNATURE PAGE HERETO AT THE PER SHARE PURCHASE PRICE OF $0.40 (“PURCHASE PRICE”). FOR EVERY TWO (2) SHARES OF COMMON STOCK PURCHASED, EACH PURCHASER WILL RECEIVE ONE (1) WARRANT.  EACH PURCHASER SHALL DELIVER TO THE COMPANY VIA WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS PURSUANT TO THE WIRE INSTRUCTIONS SET FORTH IN SECTION 2.2(B) AN AMOUNT EQUAL TO THEIR SUBSCRIPTION AMOUNT AND UPON CLOSING, THE COMPANY SHALL DELIVER TO EACH PURCHASER THEIR RESPECTIVE CERTIFICATES EVIDENCING THE SHARES OF COMMON STOCK AND WARRANTS AND THE OTHER ITEMS SET FORTH IN SECTION 2.2 ISSUABLE AT THE CLOSING WITHIN THREE (3) BUSINESS DAYS OF THE CLOSING DATE.  UPON SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 2.2, THE CLOSING SHALL OCCUR AT THE OFFICES OF COMPANY COUNSEL, OR SUCH OTHER LOCATION AS THE PARTIES SHALL MUTUALLY AGREE.  THERE MAY BE MULTIPLE CLOSINGS.   2.2                   DELIVERIES.   A)             ON THE CLOSING DATE, THE COMPANY SHALL DELIVER OR CAUSE TO BE DELIVERED TO EACH PURCHASER THE FOLLOWING:   (I)            THIS AGREEMENT DULY EXECUTED BY THE COMPANY;   (II)           A CERTIFICATE EVIDENCING THE NUMBER OF SHARES OF COMMON STOCK, REGISTERED IN THE NAME OF SUCH PURCHASER (OR ITS NOMINEE);   (III)          A WARRANT REGISTERED IN THE NAME OF SUCH PURCHASER (OR ITS NOMINEE) WITH AN EXERCISE PRICE EQUAL TO $0.60, SUBJECT TO ADJUSTMENT THEREIN;   (IV)          THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY THE COMPANY; AND   (V)           A CERTIFICATE, DATED THE CLOSING DATE, DULY EXECUTED BY AN OFFICER OF THE COMPANY TO THE EFFECT THAT THE CONDITIONS SPECIFIED IN SECTIONS 2.3(B)(I) AND 2.3(B)(II) HAVE BEEN SATISFIED AND STATING THE COMPLETE CAPITALIZATION OF THE COMPANY, INCLUDING ALL ISSUED AND OUTSTANDING COMMON STOCK, PREFERRED STOCK, WARRANTS, OPTIONS, CONVERTIBLE DEBT AND ALL OTHER CONVERTIBLE SECURITIES AND THE TERMS ON WHICH SUCH SECURITIES MAY BE CONVERTED.   B)            ON THE CLOSING DATE, EACH PURCHASER SHALL DELIVER OR CAUSE TO BE DELIVERED TO THE COMPANY THE FOLLOWING:   --------------------------------------------------------------------------------   (I)            THIS AGREEMENT DULY EXECUTED BY SUCH PURCHASER;   (II)           SUCH PURCHASER’S SUBSCRIPTION AMOUNT BY WIRE TRANSFER TO   Citibank N.A. 55 Water St. NY, NY 10041 ABA#: 021000089 FBO: Citigroup Global Markets Inc ACCT#: 30604518 FBO: Microfield Group, Inc. Further credit to: 240-94900-664 ; AND   (III)          THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY SUCH PURCHASER.   2.3                   CLOSING CONDITIONS.   A)             THE OBLIGATIONS OF THE COMPANY HEREUNDER IN CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING CONDITIONS BEING MET:   (I)            THE ACCURACY IN ALL MATERIAL RESPECTS WHEN MADE AND ON THE CLOSING DATE OF THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS CONTAINED HEREIN;   (II)           ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE PURCHASERS REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED; AND   (III)          THE DELIVERY BY THE PURCHASERS OF THE ITEMS SET FORTH IN SECTION 2.2(B) OF THIS AGREEMENT.   b)            The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:   (I)            THE ACCURACY IN ALL MATERIAL RESPECTS WHEN MADE AND ON THE CLOSING DATE OF THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED HEREIN;   (II)           ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE COMPANY REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED;   (III)          THE DELIVERY BY THE COMPANY OF THE ITEMS SET FORTH IN SECTION 2.2(A) OF THIS AGREEMENT;   --------------------------------------------------------------------------------   (IV)          THERE SHALL HAVE BEEN NO MATERIAL ADVERSE EFFECT WITH RESPECT TO THE COMPANY SINCE THE DATE HEREOF; AND   (V)           FROM THE DATE HEREOF TO THE CLOSING DATE, TRADING IN THE COMMON STOCK SHALL NOT HAVE BEEN SUSPENDED BY THE COMMISSION (EXCEPT FOR ANY SUSPENSION OF TRADING OF LIMITED DURATION AGREED TO BY THE COMPANY, WHICH SUSPENSION SHALL BE TERMINATED PRIOR TO THE CLOSING), AND, AT ANY TIME PRIOR TO THE CLOSING DATE, TRADING IN SECURITIES GENERALLY AS REPORTED BY BLOOMBERG FINANCIAL MARKETS SHALL NOT HAVE BEEN SUSPENDED OR LIMITED, OR MINIMUM PRICES SHALL NOT HAVE BEEN ESTABLISHED ON SECURITIES WHOSE TRADES ARE REPORTED BY SUCH SERVICE, OR ON ANY TRADING MARKET, NOR SHALL A BANKING MORATORIUM HAVE BEEN DECLARED EITHER BY THE UNITED STATES OR NEW YORK STATE AUTHORITIES NOR SHALL THERE HAVE OCCURRED ANY MATERIAL OUTBREAK OR ESCALATION OF HOSTILITIES OR OTHER NATIONAL OR INTERNATIONAL CALAMITY OF SUCH MAGNITUDE IN ITS EFFECT ON, OR ANY MATERIAL ADVERSE CHANGE IN, ANY FINANCIAL MARKET WHICH, IN EACH CASE, IN THE REASONABLE JUDGMENT OF EACH PURCHASER, MAKES IT IMPRACTICABLE OR INADVISABLE TO PURCHASE THE SECURITIES AT THE CLOSING.   ARTICLE III REPRESENTATIONS AND WARRANTIES   3.1           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  EXCEPT AS SET FORTH UNDER THE CORRESPONDING SECTION OF THE DISCLOSURE SCHEDULES DELIVERED TO THE PURCHASERS CONCURRENTLY HEREWITH (THE “DISCLOSURE SCHEDULES”) WHICH DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF, THE COMPANY HEREBY MAKES THE REPRESENTATIONS AND WARRANTIES SET FORTH BELOW TO EACH PURCHASER.   (A)           SUBSIDIARIES.  ALL OF THE DIRECT AND INDIRECT SUBSIDIARIES OF THE COMPANY ARE SET FORTH ON SCHEDULE 3.1(A).  EXCEPT AS SET FORTH ON SCHEDULE 3.1(A), THE COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL OF THE CAPITAL STOCK OR OTHER EQUITY INTERESTS OF EACH SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND ARE FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS TO SUBSCRIBE FOR OR PURCHASE SECURITIES.   (B)           ORGANIZATION AND QUALIFICATION.  EACH OF THE COMPANY AND THE SUBSIDIARIES IS AN ENTITY DULY INCORPORATED OR OTHERWISE ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE REQUISITE POWER AND AUTHORITY TO OWN AND USE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED.  NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN VIOLATION OR DEFAULT OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE COMPANY AND THE SUBSIDIARIES IS DULY QUALIFIED TO CONDUCT BUSINESS AND IS IN GOOD STANDING AS A FOREIGN CORPORATION OR OTHER ENTITY IN EACH JURISDICTION IN WHICH THE NATURE   --------------------------------------------------------------------------------   OF THE BUSINESS CONDUCTED OR PROPERTY OWNED BY IT MAKES SUCH QUALIFICATION NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING, AS THE CASE MAY BE, COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN (I) A MATERIAL ADVERSE EFFECT ON THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY TRANSACTION DOCUMENT, (II) A MATERIAL ADVERSE EFFECT ON THE RESULTS OF OPERATIONS, ASSETS, BUSINESS, PROSPECTS OR FINANCIAL CONDITION OF THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE, OR (III) A MATERIAL ADVERSE EFFECT ON THE COMPANY’S ABILITY TO PERFORM IN ANY MATERIAL RESPECT ON A TIMELY BASIS ITS OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT (ANY OF (I), (II) OR (III), A “MATERIAL ADVERSE EFFECT”) AND NO PROCEEDING HAS BEEN INSTITUTED IN ANY SUCH JURISDICTION REVOKING, LIMITING OR CURTAILING OR SEEKING TO REVOKE, LIMIT OR CURTAIL SUCH POWER AND AUTHORITY OR QUALIFICATION.   (C)           AUTHORIZATION; ENFORCEMENT.  THE COMPANY HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY EACH OF THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS THEREUNDER.  THE EXECUTION AND DELIVERY OF EACH OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED THEREBY HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF THE COMPANY AND NO FURTHER ACTION IS REQUIRED BY THE COMPANY IN CONNECTION THEREWITH OTHER THAN IN CONNECTION WITH THE REQUIRED APPROVALS.  EACH TRANSACTION DOCUMENT HAS BEEN (OR UPON DELIVERY WILL HAVE BEEN) DULY EXECUTED BY THE COMPANY AND, WHEN DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF, WILL CONSTITUTE THE VALID AND BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS EXCEPT (I) AS LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION AFFECTING ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND (II) AS LIMITED BY LAWS RELATING TO THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF OR OTHER EQUITABLE REMEDIES.   (D)           NO CONFLICTS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE OTHER TRANSACTIONS CONTEMPLATED THEREBY DO NOT AND WILL NOT: (I) CONFLICT WITH OR VIOLATE ANY PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S CERTIFICATE OR ARTICLES OF INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS, OR (II) CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT THAT WITH NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, RESULT IN THE CREATION OF ANY LIEN UPON ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY OR ANY SUBSIDIARY, OR GIVE TO OTHERS ANY RIGHTS OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION (WITH OR WITHOUT NOTICE, LAPSE OF TIME OR BOTH) OF, ANY AGREEMENT, CREDIT FACILITY, DEBT OR OTHER INSTRUMENT (EVIDENCING A COMPANY OR SUBSIDIARY DEBT OR OTHERWISE) OR OTHER AGREEMENT OR UNDERSTANDING TO WHICH THE COMPANY OR ANY SUBSIDIARY IS A PARTY OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR ANY SUBSIDIARY IS BOUND OR AFFECTED, OR (III) SUBJECT TO THE REQUIRED APPROVALS, CONFLICT WITH OR RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT, INJUNCTION, DECREE OR OTHER RESTRICTION OF ANY COURT OR GOVERNMENTAL AUTHORITY TO WHICH THE COMPANY OR A SUBSIDIARY IS SUBJECT (INCLUDING FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS), OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR A SUBSIDIARY IS BOUND OR AFFECTED; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND (III), SUCH AS COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.   --------------------------------------------------------------------------------   (E)           FILINGS, CONSENTS AND APPROVALS.  THE COMPANY IS NOT REQUIRED TO OBTAIN ANY CONSENT, WAIVER, AUTHORIZATION OR ORDER OF, GIVE ANY NOTICE TO, OR MAKE ANY FILING OR REGISTRATION WITH, ANY COURT OR OTHER FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF THE TRANSACTION DOCUMENTS, OTHER THAN (I) FILINGS REQUIRED PURSUANT TO SECTION 4.6, (II) THE FILING WITH THE COMMISSION OF THE REGISTRATION STATEMENT, (III) THE NOTICE AND/OR APPLICATION(S) TO EACH APPLICABLE TRADING MARKET FOR THE ISSUANCE AND SALE OF THE COMMON STOCK AND WARRANTS AND THE LISTING OF THE SHARES AND THE WARRANT SHARES FOR TRADING THEREON IN THE TIME AND MANNER REQUIRED THEREBY, (IV) THE FILING OF FORM D WITH THE COMMISSION AND SUCH FILINGS AS ARE REQUIRED TO BE MADE UNDER APPLICABLE STATE SECURITIES LAWS AND (VI) THE APPROVALS SET FORTH ON SCHEDULE 3.1(E) (COLLECTIVELY, THE “REQUIRED APPROVALS”).   (F)            ISSUANCE OF THE SECURITIES.  THE SECURITIES ARE DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THE APPLICABLE TRANSACTION DOCUMENTS, WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL LIENS IMPOSED BY THE COMPANY OTHER THAN RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE TRANSACTION DOCUMENTS.  THE COMPANY HAS RESERVED FROM ITS DULY AUTHORIZED CAPITAL STOCK A NUMBER OF SHARES OF COMMON STOCK FOR ISSUANCE OF THE WARRANT SHARES.  THE COMPANY HAS NOT, AND TO THE KNOWLEDGE OF THE COMPANY, NO AFFILIATE OF THE COMPANY HAS SOLD, OFFERED FOR SALE OR SOLICITED OFFERS TO BUY OR OTHERWISE NEGOTIATED IN RESPECT OF ANY SECURITY (AS DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD REQUIRE THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES TO THE PURCHASERS, OR THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES FOR PURPOSES OF THE RULES AND REGULATIONS OF ANY TRADING MARKET.   (G)           CAPITALIZATION.  THE CAPITALIZATION OF THE COMPANY IS AS DESCRIBED IN THE COMPANY’S MOST RECENT REPORT FILED WITH THE COMMISSION.  EXCEPT AS SET FORTH ON SCHEDULE 3.1(G), THE COMPANY HAS NOT ISSUED ANY CAPITAL STOCK SINCE SUCH FILING OTHER THAN PURSUANT TO THE EMPLOYEE STOCK OPTION PLAN.  NO PERSON HAS ANY RIGHT OF FIRST REFUSAL, PREEMPTIVE RIGHT, RIGHT OF PARTICIPATION, OR ANY SIMILAR RIGHT TO PARTICIPATE IN THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS WHICH SHALL NOT HAVE BEEN WAIVED PRIOR TO CLOSING.  EXCEPT AS DISCLOSED IN THE COMPANY’S SEC REPORTS ISSUED PURSUANT TO THE COMPANY’S STOCK INCENTIVE PLAN OR AS A RESULT OF THE PURCHASE AND SALE OF THE SECURITIES, THERE ARE NO OUTSTANDING OPTIONS, WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR OBLIGATIONS CONVERTIBLE INTO OR EXCHANGEABLE FOR, OR GIVING ANY PERSON ANY RIGHT TO SUBSCRIBE FOR OR ACQUIRE, ANY SHARES OF COMMON STOCK, OR CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY SUBSIDIARY IS OR MAY BECOME BOUND TO ISSUE ADDITIONAL SHARES OF COMMON STOCK, OR SECURITIES OR RIGHTS CONVERTIBLE OR EXCHANGEABLE INTO SHARES OF COMMON STOCK.  EXCEPT AS SET FORTH ON SCHEDULE 3.1(G), THE ISSUANCE AND SALE OF THE SECURITIES WILL NOT OBLIGATE THE COMPANY TO ISSUE SHARES OF COMMON STOCK OR OTHER SECURITIES TO ANY PERSON (OTHER THAN THE PURCHASERS) AND WILL NOT RESULT IN A RIGHT OF ANY HOLDER OF COMPANY SECURITIES TO ADJUST THE EXERCISE, CONVERSION, EXCHANGE OR RESET PRICE UNDER SUCH SECURITIES. ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE COMPANY ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE,   --------------------------------------------------------------------------------   HAVE BEEN ISSUED IN COMPLIANCE WITH ALL FEDERAL AND STATE SECURITIES LAWS, AND NONE OF SUCH OUTSTANDING SHARES WAS ISSUED IN VIOLATION OF ANY PREEMPTIVE RIGHTS OR SIMILAR RIGHTS TO SUBSCRIBE FOR OR PURCHASE SECURITIES, EXCEPT AS SET FORTH ON SCHEDULE 3.1(G).  NO FURTHER APPROVAL OR AUTHORIZATION OF ANY STOCKHOLDER, THE BOARD OF DIRECTORS OF THE COMPANY OR OTHERS IS REQUIRED FOR THE ISSUANCE AND SALE OF THE SHARES AND WARRANTS.   (H)           SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED ALL REPORTS REQUIRED TO BE FILED BY IT UNDER THE SECURITIES ACT AND THE EXCHANGE ACT, INCLUDING PURSUANT TO SECTION 13(A) OR 15(D) THEREOF, FOR THE TWO YEARS PRECEDING THE DATE HEREOF (OR SUCH SHORTER PERIOD AS THE COMPANY WAS REQUIRED BY LAW TO FILE SUCH MATERIAL) (THE FOREGOING MATERIALS, INCLUDING THE EXHIBITS THERETO, BEING COLLECTIVELY REFERRED TO HEREIN AS THE “SEC REPORTS”) ON A TIMELY BASIS OR HAS RECEIVED A VALID EXTENSION OF SUCH TIME OF FILING AND HAS FILED ANY SUCH SEC REPORTS PRIOR TO THE EXPIRATION OF ANY SUCH EXTENSION.  AS OF THEIR RESPECTIVE DATES, THE SEC REPORTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE SECURITIES ACT AND THE EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE COMMISSION PROMULGATED THEREUNDER, AND NONE OF THE SEC REPORTS, WHEN FILED, CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.  THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE SEC REPORTS COMPLY IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE RULES AND REGULATIONS OF THE COMMISSION WITH RESPECT THERETO AS IN EFFECT AT THE TIME OF FILING.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS DURING THE PERIODS INVOLVED (“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH FINANCIAL STATEMENTS OR THE NOTES THERETO AND EXCEPT THAT UNAUDITED FINANCIAL STATEMENTS MAY NOT CONTAIN ALL FOOTNOTES REQUIRED BY GAAP, AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND FOR THE DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED, SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL, IMMATERIAL, YEAR-END AUDIT ADJUSTMENTS.   (I)            MATERIAL CHANGES.  SINCE THE DATE OF THE LATEST AUDITED FINANCIAL STATEMENTS INCLUDED WITHIN THE SEC REPORTS, EXCEPT AS SPECIFICALLY DISCLOSED IN THE SEC REPORTS, (I) THERE HAS BEEN NO EVENT, OCCURRENCE OR DEVELOPMENT THAT HAS HAD OR THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, EXCEPT AS DISCLOSED IN SCHEDULE 3.1(I), (II) THE COMPANY HAS NOT INCURRED ANY LIABILITIES (CONTINGENT OR OTHERWISE) OTHER THAN (A) TRADE PAYABLES AND ACCRUED EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE AND (B) LIABILITIES NOT REQUIRED TO BE REFLECTED IN THE COMPANY’S FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE DISCLOSED IN FILINGS MADE WITH THE COMMISSION, (III) THE COMPANY HAS NOT ALTERED ITS METHOD OF ACCOUNTING, (IV) THE COMPANY HAS NOT DECLARED OR MADE ANY DIVIDEND OR DISTRIBUTION OF CASH OR OTHER PROPERTY TO ITS STOCKHOLDERS OR PURCHASED, REDEEMED OR MADE ANY AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL STOCK AND (V) THE COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR AFFILIATE, EXCEPT PURSUANT TO EXISTING COMPANY STOCK OPTION PLAN OR RESTRICTED STOCK PLAN.   --------------------------------------------------------------------------------   (J)            LITIGATION.  EXCEPT AS SET FORTH IN SEC REPORTS, THERE IS NO ACTION, SUIT, INQUIRY, NOTICE OF VIOLATION, PROCEEDING OR INVESTIGATION PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY, ANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE PROPERTIES BEFORE OR BY ANY COURT, ARBITRATOR, GOVERNMENTAL OR ADMINISTRATIVE AGENCY OR REGULATORY AUTHORITY (FEDERAL, STATE, COUNTY, LOCAL OR FOREIGN) (COLLECTIVELY, AN “ACTION”) WHICH (I) ADVERSELY AFFECTS OR CHALLENGES THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY OF THE TRANSACTION DOCUMENTS OR THE SECURITIES OR (II) COULD, IF THERE WERE AN UNFAVORABLE DECISION, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NEITHER THE COMPANY NOR ANY SUBSIDIARY, NOR ANY DIRECTOR OR OFFICER THEREOF, IS OR HAS BEEN THE SUBJECT OF ANY ACTION INVOLVING A CLAIM OF VIOLATION OF OR LIABILITY UNDER FEDERAL OR STATE SECURITIES LAWS OR A CLAIM OF BREACH OF FIDUCIARY DUTY.  THERE HAS NOT BEEN, AND TO THE KNOWLEDGE OF THE COMPANY, THERE IS NOT PENDING OR CONTEMPLATED, ANY INVESTIGATION BY THE COMMISSION INVOLVING THE COMPANY OR ANY CURRENT OR FORMER DIRECTOR OR OFFICER OF THE COMPANY.  THE COMMISSION HAS NOT ISSUED ANY STOP ORDER OR OTHER ORDER SUSPENDING THE EFFECTIVENESS OF ANY REGISTRATION STATEMENT FILED BY THE COMPANY OR ANY SUBSIDIARY UNDER THE EXCHANGE ACT OR THE SECURITIES ACT.   (K)           LABOR RELATIONS.  NO MATERIAL LABOR DISPUTE EXISTS OR, TO THE KNOWLEDGE OF THE COMPANY, IS IMMINENT WITH RESPECT TO ANY OF THE EMPLOYEES OF THE COMPANY WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.   (L)            COMPLIANCE.  EXCEPT AS SET FORTH IN THE SEC REPORTS OR ON SCHEDULE 3.1(L), NEITHER THE COMPANY NOR ANY SUBSIDIARY (I) IS IN MATERIAL DEFAULT UNDER OR IN VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN WAIVED THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY THE COMPANY OR ANY SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SUBSIDIARY RECEIVED NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER MATERIAL AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN VIOLATION OF ANY ORDER OF ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY, OR (III) IS OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE OR REGULATION OF ANY GOVERNMENTAL AUTHORITY, INCLUDING WITHOUT LIMITATION ALL FOREIGN, FEDERAL, STATE AND LOCAL LAWS APPLICABLE TO ITS BUSINESS EXCEPT IN EACH CASE AS COULD NOT HAVE A MATERIAL ADVERSE EFFECT.   (M)          REGULATORY PERMITS.  THE COMPANY AND THE SUBSIDIARIES POSSESS ALL CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE APPROPRIATE FEDERAL, STATE, LOCAL OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO CONDUCT THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS, EXCEPT WHERE THE FAILURE TO POSSESS SUCH PERMITS COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT (“MATERIAL PERMITS”), AND NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE REVOCATION OR MODIFICATION OF ANY MATERIAL PERMIT.   (N)           TITLE TO ASSETS.  EXCEPT AS SET FORTH ON SCHEDULE 3.1(N), THE COMPANY AND THE SUBSIDIARIES HAVE GOOD AND MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY OWNED BY THEM THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES AND GOOD AND MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY THEM THAT IS MATERIAL TO THE   --------------------------------------------------------------------------------   BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, IN EACH CASE FREE AND CLEAR OF ALL LIENS, EXCEPT FOR LIENS AS DO NOT MATERIALLY AFFECT THE VALUE OF SUCH PROPERTY AND DO NOT MATERIALLY INTERFERE WITH THE USE MADE AND PROPOSED TO BE MADE OF SUCH PROPERTY BY THE COMPANY AND THE SUBSIDIARIES AND LIENS FOR THE PAYMENT OF FEDERAL, STATE OR OTHER TAXES, THE PAYMENT OF WHICH IS NEITHER DELINQUENT NOR SUBJECT TO PENALTIES.  ANY REAL PROPERTY AND FACILITIES HELD UNDER LEASE BY THE COMPANY AND THE SUBSIDIARIES ARE HELD BY THEM UNDER VALID, SUBSISTING AND ENFORCEABLE LEASES OF WHICH THE COMPANY AND THE SUBSIDIARIES ARE IN COMPLIANCE.   (O)           PATENTS AND TRADEMARKS.  THE COMPANY AND THE SUBSIDIARIES HAVE, OR HAVE RIGHTS TO USE, ALL PATENTS, PATENT APPLICATIONS, TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS, TRADE NAMES, COPYRIGHTS, LICENSES AND OTHER SIMILAR RIGHTS THAT ARE NECESSARY OR MATERIAL FOR USE IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS AND WHICH THE FAILURE TO SO HAVE COULD HAVE A MATERIAL ADVERSE EFFECT (COLLECTIVELY, THE “INTELLECTUAL PROPERTY RIGHTS”).  NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS RECEIVED A WRITTEN NOTICE THAT THE INTELLECTUAL PROPERTY RIGHTS USED BY THE COMPANY OR ANY SUBSIDIARY VIOLATES OR INFRINGES UPON THE RIGHTS OF ANY PERSON. TO THE KNOWLEDGE OF THE COMPANY, ALL SUCH INTELLECTUAL PROPERTY RIGHTS ARE ENFORCEABLE AND THERE IS NO EXISTING INFRINGEMENT BY ANOTHER PERSON OF ANY OF THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.   (P)           INSURANCE.  THE COMPANY AND THE SUBSIDIARIES ARE INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH LOSSES AND RISKS AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE BUSINESSES IN WHICH THE COMPANY AND THE SUBSIDIARIES ARE ENGAGED.  TO THE BEST OF COMPANY’S KNOWLEDGE, SUCH INSURANCE CONTRACTS AND POLICIES ARE ACCURATE AND COMPLETE.  NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS ANY REASON TO BELIEVE THAT IT WILL NOT BE ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND WHEN SUCH COVERAGE EXPIRES OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE NECESSARY TO CONTINUE ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN COST.   (Q)           TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  EXCEPT AS SET FORTH IN THE SEC REPORTS, NONE OF THE OFFICERS OR DIRECTORS OF THE COMPANY AND, TO THE KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF THE COMPANY IS PRESENTLY A PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY SUBSIDIARY (OTHER THAN FOR SERVICES AS EMPLOYEES, OFFICERS AND DIRECTORS), INCLUDING ANY CONTRACT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM, OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR SUCH EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN WHICH ANY OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN OFFICER, DIRECTOR, TRUSTEE OR PARTNER, IN EACH CASE IN EXCESS OF $120,000 OTHER THAN (I) FOR PAYMENT OF SALARY OR CONSULTING FEES FOR SERVICES RENDERED, (II) REIMBURSEMENT FOR EXPENSES INCURRED ON BEHALF OF THE COMPANY AND (III) FOR OTHER EMPLOYEE BENEFITS, INCLUDING STOCK OPTION AGREEMENTS UNDER ANY STOCK OPTION PLAN OF THE COMPANY AND RESTRICTED STOCK AGREEMENTS UNDER ANY RESTRICTED STOCK PLAN OF THE COMPANY.   --------------------------------------------------------------------------------   (R)            SARBANES-OXLEY; INTERNAL ACCOUNTING CONTROLS.  EXCEPT AS SET FORTH IN THE SEC REPORTS, THE COMPANY IS IN MATERIAL COMPLIANCE WITH ALL PROVISIONS OF THE SARBANES-OXLEY ACT OF 2002 WHICH ARE APPLICABLE TO IT AS OF THE CLOSING DATE.  THE COMPANY AND THE SUBSIDIARIES 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 AUTHORIZATIONS, (II) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH GAAP AND TO MAINTAIN ASSET ACCOUNTABILITY, (III) ACCESS TO ASSETS IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATION, AND (IV) THE RECORDED ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING ASSETS AT REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY DIFFERENCES.   (S)           CERTAIN FEES.  EXCEPT AS DISCLOSED IN SCHEDULE 3.1(S), NO BROKERAGE OR FINDER’S FEES OR COMMISSIONS ARE OR WILL BE PAYABLE BY THE COMPANY TO ANY BROKER, FINANCIAL ADVISOR OR CONSULTANT, FINDER, PLACEMENT AGENT, INVESTMENT BANKER, BANK OR OTHER PERSON WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THE PURCHASERS SHALL HAVE NO OBLIGATION WITH RESPECT TO ANY FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON BEHALF OF OTHER PERSONS FOR FEES OF A TYPE CONTEMPLATED IN THIS SECTION THAT MAY BE DUE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.   (T)            PRIVATE PLACEMENT. ASSUMING THE ACCURACY OF THE PURCHASERS REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.2, NO REGISTRATION UNDER THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE SECURITIES BY THE COMPANY TO THE PURCHASERS AS CONTEMPLATED HEREBY. THE ISSUANCE AND SALE OF THE SECURITIES HEREUNDER DOES NOT CONTRAVENE THE RULES AND REGULATIONS OF THE TRADING MARKET.   (U)           INVESTMENT COMPANY. THE COMPANY IS NOT, AND IS NOT AN AFFILIATE OF, AND IMMEDIATELY AFTER RECEIPT OF PAYMENT FOR THE SECURITIES, WILL NOT BE OR BE AN AFFILIATE OF, AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THE COMPANY SHALL CONDUCT ITS BUSINESS IN A MANNER SO THAT IT WILL NOT BECOME SUBJECT TO THE INVESTMENT COMPANY ACT.   (V)           LISTING AND MAINTENANCE REQUIREMENTS.  THE COMPANY’S COMMON STOCK IS REGISTERED PURSUANT TO SECTION 15(D) OF THE EXCHANGE ACT, AND THE COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR WHICH TO ITS KNOWLEDGE IS LIKELY TO HAVE THE EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK UNDER THE EXCHANGE ACT NOR HAS THE COMPANY RECEIVED ANY NOTIFICATION THAT THE COMMISSION IS CONTEMPLATING TERMINATING SUCH REGISTRATION.  EXCEPT AS DISCLOSED ON SCHEDULE 3.1(V), THE COMPANY HAS NOT, IN THE 12 MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE FROM ANY TRADING MARKET ON WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR QUOTED TO THE EFFECT THAT THE COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR MAINTENANCE REQUIREMENTS OF SUCH TRADING MARKET.   (W)          DISCLOSURE.  THE COMPANY UNDERSTANDS AND CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING REPRESENTATIONS AND COVENANTS IN EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY.  ALL DISCLOSURE PROVIDED TO THE PURCHASERS REGARDING THE COMPANY, ITS BUSINESS AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING THE   --------------------------------------------------------------------------------   DISCLOSURE SCHEDULES TO THIS AGREEMENT, FURNISHED BY OR ON BEHALF OF THE COMPANY WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES MADE HEREIN ARE TRUE AND CORRECT WITH RESPECT TO SUCH REPRESENTATIONS AND WARRANTIES AND DO NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. THE COMPANY ACKNOWLEDGES AND AGREES THAT NO PURCHASER MAKES OR HAS MADE ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY OTHER THAN THOSE SPECIFICALLY SET FORTH IN SECTION 3.2 HEREOF.   (X)            NO INTEGRATED OFFERING. ASSUMING THE ACCURACY OF THE PURCHASERS’ REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.2, NEITHER THE COMPANY, NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON ITS OR THEIR BEHALF HAS, DIRECTLY OR INDIRECTLY, MADE ANY OFFERS OR SALES OF ANY SECURITY OR SOLICITED ANY OFFERS TO BUY ANY SECURITY, UNDER CIRCUMSTANCES THAT WOULD CAUSE THIS OFFERING OF THE SECURITIES TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY FOR PURPOSES OF THE SECURITIES ACT OR ANY APPLICABLE SHAREHOLDER APPROVAL PROVISIONS, INCLUDING, WITHOUT LIMITATION, UNDER THE RULES AND REGULATIONS OF ANY EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON WHICH ANY OF THE SECURITIES OF THE COMPANY ARE LISTED OR DESIGNATED.   (Y)           TAX STATUS.  EXCEPT FOR MATTERS THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, THE COMPANY AND EACH SUBSIDIARY HAS FILED ALL NECESSARY FEDERAL, STATE AND FOREIGN INCOME AND FRANCHISE TAX RETURNS AND HAS PAID OR ACCRUED ALL TAXES SHOWN AS DUE THEREON, AND THE COMPANY HAS NO KNOWLEDGE OF A TAX DEFICIENCY WHICH HAS BEEN ASSERTED OR THREATENED AGAINST THE COMPANY OR ANY SUBSIDIARY.   (Z)            NO GENERAL SOLICITATION.  NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS OFFERED OR SOLD ANY OF THE SECURITIES BY ANY FORM OF GENERAL SOLICITATION OR GENERAL ADVERTISING.  THE COMPANY HAS OFFERED THE SECURITIES FOR SALE ONLY TO THE PURCHASERS AND CERTAIN OTHER “ACCREDITED INVESTORS” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT.   (AA)         ACKNOWLEDGMENT REGARDING PURCHASERS’ PURCHASE OF SECURITIES.  THE COMPANY ACKNOWLEDGES AND AGREES THAT EACH OF THE PURCHASERS IS ACTING SOLELY IN THE CAPACITY OF AN ARM’S LENGTH PURCHASER WITH RESPECT TO THE TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY FURTHER ACKNOWLEDGES THAT NO PURCHASER IS ACTING AS A FINANCIAL ADVISOR OR FIDUCIARY OF THE COMPANY (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY ADVICE GIVEN BY ANY PURCHASER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS MERELY INCIDENTAL TO THE PURCHASERS’ PURCHASE OF THE SECURITIES.  THE COMPANY FURTHER REPRESENTS TO EACH PURCHASER THAT THE COMPANY’S DECISION TO ENTER INTO THIS AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION OF THE TRANSACTIONS CONTEMPLATED HEREBY BY THE COMPANY AND ITS REPRESENTATIVES.  THE COMPANY FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT (A) ONE OR MORE PURCHASERS MAY ENGAGE IN HEDGING ACTIVITIES AT VARIOUS TIMES DURING THE PERIOD THAT THE SECURITIES ARE OUTSTANDING, INCLUDING, WITHOUT LIMITATION, DURING THE PERIODS THAT   --------------------------------------------------------------------------------   THE VALUE OF THE WARRANT SHARES DELIVERABLE WITH RESPECT TO THE WARRANTS ARE BEING DETERMINED AND THAT SUCH HEDGING ACTIVITIES WILL BE DONE IN ACCORDANCE WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS AND (B) SUCH HEDGING ACTIVITIES (IF ANY) COULD REDUCE THE VALUE OF THE EXISTING STOCKHOLDERS’ EQUITY INTERESTS IN THE COMPANY AT AND AFTER THE TIME THAT THE HEDGING ACTIVITIES ARE BEING CONDUCTED.   3.2           REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.  EACH PURCHASER HEREBY, FOR ITSELF AND FOR NO OTHER PURCHASER, REPRESENTS AND WARRANTS AS OF THE DATE HEREOF AND AS OF THE CLOSING DATE TO THE COMPANY AS FOLLOWS:   (A)           ORGANIZATION; AUTHORITY.  IF SUCH PURCHASER IS AN ENTITY, IT IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION WITH FULL RIGHT, CORPORATE OR PARTNERSHIP POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS THEREUNDER. THE EXECUTION, DELIVERY AND PERFORMANCE BY SUCH PURCHASER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR SIMILAR ACTION ON THE PART OF SUCH PURCHASER.  EACH TRANSACTION DOCUMENT TO WHICH IT IS A PARTY HAS BEEN DULY EXECUTED BY SUCH PURCHASER, AND WHEN DELIVERED BY SUCH PURCHASER IN ACCORDANCE WITH THE TERMS HEREOF, WILL CONSTITUTE THE VALID AND LEGALLY BINDING OBLIGATION OF SUCH PURCHASER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, EXCEPT (I) AS LIMITED BY GENERAL EQUITABLE PRINCIPLES AND APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION AFFECTING ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, (II) AS LIMITED BY LAWS RELATING TO THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF OR OTHER EQUITABLE REMEDIES AND (III) INSOFAR AS INDEMNIFICATION AND CONTRIBUTION PROVISIONS MAY BE LIMITED BY APPLICABLE LAW.   (B)           PURCHASER REPRESENTATION.  SUCH PURCHASER UNDERSTANDS THAT THE SECURITIES ARE “RESTRICTED SECURITIES” AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW AND IS ACQUIRING THE SECURITIES AS PRINCIPAL FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO OR FOR DISTRIBUTING OR RESELLING SUCH SECURITIES OR ANY PART THEREOF, HAS NO PRESENT INTENTION OF DISTRIBUTING ANY OF SUCH SECURITIES AND HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY OTHER PERSONS REGARDING THE DISTRIBUTION OF SUCH SECURITIES (THIS REPRESENTATION AND WARRANTY NOT LIMITING SUCH PURCHASER’S RIGHT TO SELL THE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT OR OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS).  SUCH PURCHASER IS ACQUIRING THE SECURITIES HEREUNDER IN THE ORDINARY COURSE OF ITS BUSINESS. SUCH PURCHASER DOES NOT HAVE ANY AGREEMENT OR UNDERSTANDING, DIRECTLY OR INDIRECTLY, WITH ANY PERSON TO DISTRIBUTE ANY OF THE SECURITIES.   (C)           PURCHASER STATUS.  AT THE TIME SUCH PURCHASER WAS OFFERED THE SECURITIES, IT WAS, AND AT THE DATE HEREOF IT IS, AND ON EACH DATE ON WHICH IT EXERCISES ANY WARRANTS, IT WILL BE EITHER: (I) AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A)(1), (A)(2), (A)(3), (A)(7) OR (A)(8) UNDER THE SECURITIES ACT OR (II) A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A(A) UNDER THE SECURITIES ACT.  SUCH PURCHASER IS NOT REQUIRED TO BE REGISTERED AS A BROKER-DEALER UNDER SECTION 15 OF THE EXCHANGE ACT.   --------------------------------------------------------------------------------   (D)           EXPERIENCE OF SUCH PURCHASER.  SUCH PURCHASER, EITHER ALONE OR TOGETHER WITH ITS REPRESENTATIVES, HAS SUCH KNOWLEDGE, SOPHISTICATION AND EXPERIENCE IN BUSINESS AND FINANCIAL MATTERS SO AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT IN THE SECURITIES, AND HAS SO EVALUATED THE MERITS AND RISKS OF SUCH INVESTMENT.  SUCH PURCHASER IS ABLE TO BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE SECURITIES AND, AT THE PRESENT TIME, IS ABLE TO AFFORD A COMPLETE LOSS OF SUCH INVESTMENT.   (E)           GENERAL SOLICITATION.  SUCH PURCHASER IS NOT PURCHASING THE SECURITIES AS A RESULT OF ANY ADVERTISEMENT, ARTICLE, NOTICE OR OTHER COMMUNICATION REGARDING THE SECURITIES PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR SIMILAR MEDIA OR BROADCAST OVER TELEVISION OR RADIO OR PRESENTED AT ANY SEMINAR OR ANY OTHER GENERAL SOLICITATION OR GENERAL ADVERTISEMENT.   (f)            Certain Trading Activities.  Other than with respect to the transactions contemplated herein, since the earlier to occur of (1) the time that such Purchaser was first contacted by the Company or any other Person regarding this investment in the Company and (2) the tenth (10th) day prior to the date of this Agreement, neither the Purchaser nor any Affiliate of such Purchaser which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to such Purchaser’s investments or trading or information concerning such Purchaser’s investments, including in respect of the Securities, and (z) is subject to such Purchaser’s review or input concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser or Trading Affiliate, effected or agreed to effect any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities).  Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced.   (g)           Material Non-Public Information.  Such Purchaser understands that any material non-public information provided to such Purchaser pursuant to a confidentiality agreement is preliminary and subject to change at any time prior to any public announcement, if any.  Such Purchaser acknowledges that there can be no assurance that the Company will consummate or execute any transaction or agreement disclosed to such Purchaser and considered by the Company to be material non-public information.  Such Purchaser hereby represents that it is not entering into this Agreement solely on the basis of any material non-public information provided to such Purchaser.   (h)           Company Affiliated Investors.  Such Purchaser acknowledges that certain officers and directors of the Company may purchase Securities pursuant to this Agreement.  In addition, certain creditors of the Company may purchase Securities pursuant to this Agreement in exchange for the extinguishment of certain debt of the Company held by such creditors.   The Company acknowledges and agrees that each Purchaser does not make or has not   --------------------------------------------------------------------------------   made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.   ARTICLE IV OTHER AGREEMENTS OF THE PARTIES   4.1           TRANSFER RESTRICTIONS.   (A)           THE SECURITIES MAY ONLY BE DISPOSED OF IN COMPLIANCE WITH STATE AND FEDERAL SECURITIES LAWS.  IN CONNECTION WITH ANY TRANSFER OF SECURITIES OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR RULE 144, TO THE COMPANY OR TO AN AFFILIATE OF A PURCHASER OR IN CONNECTION WITH A PLEDGE AS CONTEMPLATED IN SECTION 4.1(B), THE COMPANY MAY REQUIRE THE TRANSFEROR THEREOF TO PROVIDE TO THE COMPANY AN OPINION OF COUNSEL SELECTED BY THE TRANSFEROR AND REASONABLY ACCEPTABLE TO THE COMPANY, THE FORM AND SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION OF SUCH TRANSFERRED SECURITIES UNDER THE SECURITIES ACT.  AS A CONDITION OF TRANSFER, ANY SUCH TRANSFEREE SHALL AGREE IN WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT AND SHALL HAVE THE RIGHTS OF A PURCHASER UNDER THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.   (B)           THE PURCHASERS AGREE TO THE IMPRINTING, SO LONG AS IS REQUIRED BY THIS SECTION 4.1(B), OF A LEGEND ON ANY OF THE SECURITIES SUBSTANTIALLY IN THE FOLLOWING FORM:   [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE]] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.   The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement   --------------------------------------------------------------------------------   and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.   (C)           CERTIFICATES EVIDENCING THE SHARES OR WARRANT SHARES SHALL NOT CONTAIN ANY LEGEND (INCLUDING THE LEGEND SET FORTH IN SECTION 4.1(B) HEREOF): (I) WHILE A REGISTRATION STATEMENT (INCLUDING THE REGISTRATION STATEMENT) COVERING THE RESALE OF SUCH SECURITY IS EFFECTIVE UNDER THE SECURITIES ACT, OR (II) FOLLOWING ANY SALE OF SUCH SHARES OR WARRANT SHARES PURSUANT TO RULE 144, OR (III) IF SUCH SHARES OR WARRANT SHARES ARE ELIGIBLE FOR SALE UNDER RULE 144(B)(1)(I), OR (IV) IF SUCH LEGEND IS NOT REQUIRED UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT (INCLUDING JUDICIAL INTERPRETATIONS AND PRONOUNCEMENTS ISSUED BY THE STAFF OF THE COMMISSION). THE COMPANY SHALL CAUSE ITS COUNSEL TO ISSUE A LEGAL OPINION TO THE COMPANY’S TRANSFER AGENT PROMPTLY AFTER THE EFFECTIVE DATE IF REQUIRED BY THE COMPANY’S TRANSFER AGENT TO EFFECT THE REMOVAL OF THE LEGEND HEREUNDER. IF ALL OR ANY PORTION OF A WARRANT IS CONVERTED OR EXERCISED (AS APPLICABLE) AT A TIME WHEN THERE IS AN EFFECTIVE REGISTRATION STATEMENT (INCLUDING THE REGISTRATION STATEMENT) TO COVER THE RESALE OF THE WARRANT SHARES, OR IF SUCH WARRANT SHARES MAY BE SOLD UNDER RULE 144(B)(1)(I) OR IF SUCH LEGEND IS NOT OTHERWISE REQUIRED UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT (INCLUDING JUDICIAL INTERPRETATIONS THEREOF) THEN SUCH WARRANT SHARES SHALL BE ISSUED FREE OF ALL LEGENDS.  THE COMPANY AGREES THAT FOLLOWING THE EFFECTIVE DATE OR AT SUCH TIME AS SUCH LEGEND IS NO LONGER REQUIRED UNDER THIS SECTION 4.1(C), IT WILL, NO LATER THAN FIVE TRADING DAYS FOLLOWING THE DELIVERY BY A PURCHASER TO THE COMPANY OR THE COMPANY’S TRANSFER AGENT OF A CERTIFICATE REPRESENTING SHARES OR WARRANT SHARES, AS APPLICABLE, ISSUED WITH A RESTRICTIVE LEGEND (SUCH THIRD TRADING DAY, THE “LEGEND REMOVAL DATE”), DELIVER OR CAUSE TO BE DELIVERED TO SUCH PURCHASER A CERTIFICATE REPRESENTING SUCH SHARES THAT IS FREE FROM ALL RESTRICTIVE AND OTHER LEGENDS.  THE COMPANY MAY NOT MAKE ANY NOTATION ON ITS RECORDS OR GIVE INSTRUCTIONS TO ANY TRANSFER AGENT OF THE COMPANY THAT ENLARGE THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS SECTION.   (d)           Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.   4.2           Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution   --------------------------------------------------------------------------------   may be substantial under certain market conditions.  The Company further acknowledges that its obligations under the Transaction Documents, including without limitation its obligation to issue the Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.   4.3           FURNISHING OF INFORMATION.  UNTIL THE EARLIEST OF THE TIME THAT (I) NO PURCHASER OWNS SECURITIES OR (II) THE SECURITIES CAN BE RESOLD PURSUANT TO RULE 144(B)(1)(I) UNDER THE SECURITIES ACT, THE COMPANY COVENANTS TO TIMELY FILE (OR OBTAIN EXTENSIONS IN RESPECT THEREOF AND FILE WITHIN THE APPLICABLE GRACE PERIOD) ALL REPORTS REQUIRED TO BE FILED BY THE COMPANY AFTER THE DATE HEREOF PURSUANT TO THE EXCHANGE ACT.  AS LONG AS ANY PURCHASER OWNS SECURITIES, IF THE COMPANY IS NOT REQUIRED TO FILE REPORTS PURSUANT TO THE EXCHANGE ACT, IT WILL PREPARE AND FURNISH TO THE PURCHASERS AND MAKE PUBLICLY AVAILABLE IN ACCORDANCE WITH RULE 144(C) SUCH INFORMATION AS IS REQUIRED FOR THE PURCHASERS TO SELL THE SECURITIES UNDER RULE 144.  THE COMPANY FURTHER COVENANTS THAT IT WILL TAKE SUCH FURTHER ACTION AS ANY HOLDER OF SECURITIES MAY REASONABLY REQUEST, ALL TO THE EXTENT REQUIRED FROM TIME TO TIME TO ENABLE SUCH PERSON TO SELL SUCH SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT WITHIN THE LIMITATION OF THE EXEMPTIONS PROVIDED BY RULE 144.   4.4           INTEGRATION.  THE COMPANY SHALL NOT SELL, OFFER FOR SALE OR SOLICIT OFFERS TO BUY OR OTHERWISE NEGOTIATE IN RESPECT OF ANY SECURITY (AS DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD REQUIRE THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES TO THE PURCHASERS OR THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES FOR PURPOSES OF THE RULES AND REGULATIONS OF ANY TRADING MARKET.   4.5           EXERCISE PROCEDURES.  THE FORM OF NOTICE OF EXERCISE INCLUDED IN THE WARRANTS SET FORTH THE TOTALITY OF THE PROCEDURES REQUIRED OF THE PURCHASERS IN ORDER TO EXERCISE THE WARRANTS.  NO ADDITIONAL LEGAL OPINION OR OTHER INFORMATION OR INSTRUCTIONS SHALL BE REQUIRED OF THE PURCHASERS TO EXERCISE THEIR WARRANTS.  THE COMPANY SHALL HONOR EXERCISES OF THE WARRANTS AND SHALL DELIVER WARRANT SHARES IN ACCORDANCE WITH THE TERMS, CONDITIONS AND TIME PERIODS SET FORTH IN THE TRANSACTION DOCUMENTS.   4.6           SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE COMPANY AND EACH PURCHASER SHALL CONSULT WITH EACH OTHER IN ISSUING ANY OTHER PRESS RELEASES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND NEITHER THE COMPANY NOR ANY PURCHASER SHALL ISSUE ANY SUCH PRESS RELEASE OR OTHERWISE MAKE ANY SUCH PUBLIC STATEMENT WITHOUT THE PRIOR CONSENT OF THE COMPANY, WITH RESPECT TO ANY PRESS RELEASE OF ANY PURCHASER, OR WITHOUT THE PRIOR CONSENT OF EACH PURCHASER, WITH RESPECT TO ANY PRESS RELEASE OF THE COMPANY, WHICH CONSENT SHALL NOT UNREASONABLY BE WITHHELD, EXCEPT IF SUCH DISCLOSURE IS REQUIRED BY LAW, IN WHICH CASE THE DISCLOSING PARTY SHALL PROMPTLY PROVIDE THE OTHER PARTY WITH PRIOR NOTICE OF SUCH PUBLIC STATEMENT OR COMMUNICATION.   --------------------------------------------------------------------------------   4.7           NON-PUBLIC INFORMATION.  THE COMPANY COVENANTS AND AGREES THAT NEITHER IT NOR ANY OTHER PERSON ACTING ON ITS BEHALF WILL PROVIDE ANY PURCHASER OR ITS AGENTS OR COUNSEL WITH ANY INFORMATION THAT THE COMPANY BELIEVES CONSTITUTES MATERIAL NON-PUBLIC INFORMATION, UNLESS PRIOR THERETO SUCH PURCHASER SHALL HAVE EXECUTED A WRITTEN AGREEMENT REGARDING THE CONFIDENTIALITY AND USE OF SUCH INFORMATION.  THE COMPANY UNDERSTANDS AND CONFIRMS THAT EACH PURCHASER SHALL BE RELYING ON THE FOREGOING REPRESENTATIONS IN EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY.   4.8           RESERVATION OF SECURITIES.   THE COMPANY SHALL MAINTAIN A RESERVE FROM ITS DULY AUTHORIZED SHARES OF COMMON STOCK FOR ISSUANCE PURSUANT TO THE TRANSACTION DOCUMENTS IN SUCH AMOUNT AS MAY BE REQUIRED TO FULFILL ITS OBLIGATIONS IN FULL UNDER THE TRANSACTION DOCUMENTS.   4.9           EQUAL TREATMENT OF PURCHASERS.  NO CONSIDERATION SHALL BE OFFERED OR PAID TO ANY PERSON TO AMEND OR CONSENT TO A WAIVER OR MODIFICATION OF ANY PROVISION OF ANY OF THE TRANSACTION DOCUMENTS UNLESS THE SAME CONSIDERATION IS ALSO OFFERED TO ALL OF THE PARTIES TO THE TRANSACTION DOCUMENTS.  FOR CLARIFICATION PURPOSES, THIS PROVISION CONSTITUTES A SEPARATE RIGHT GRANTED TO EACH PURCHASER BY THE COMPANY AND NEGOTIATED SEPARATELY BY EACH PURCHASER, AND IS INTENDED TO TREAT FOR THE COMPANY THE PURCHASERS AS A CLASS AND SHALL NOT IN ANY WAY BE CONSTRUED AS THE PURCHASERS ACTING IN CONCERT OR AS A GROUP WITH RESPECT TO THE PURCHASE, DISPOSITION OR VOTING OF SECURITIES OR OTHERWISE.   4.10         Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.   4.11         Transactions and Confidentiality After The Date Hereof.  Each Purchaser shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in any transactions in the securities of the Company (including, without limitation, any Short Sales) involving the Company’s securities during the period from the date hereof until the earlier of such time as (i) after the transactions contemplated by this Agreement are first publicly announced or (ii) this Agreement is terminated in full.  Notwithstanding the foregoing, in the case of a Purchaser or Trading Affiliate that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s or Trading Affiliate’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s or Trading Affiliate’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently takes the position that covering a short position established prior to effectiveness of a resale registration statement with securities included in such registration statement would be a violation of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of   --------------------------------------------------------------------------------   Corporation Finance.  Each Purchaser, severally and not jointly with any other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).   4.12         Indemnification of Purchasers.  Subject to the provisions of this Section 4.12, the Company will indemnify and hold the Purchasers and their directors, officers, stockholders, members, partners, employees and agents (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party.  The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchasers in this Agreement or in the other Transaction Documents.   ARTICLE V MISCELLANEOUS   5.1           FEES AND EXPENSES.  EXCEPT AS EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE FEES AND EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF ANY, AND ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO THE   --------------------------------------------------------------------------------   negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the issuance of any Securities.   5.2           ENTIRE AGREEMENT.  THE TRANSACTION DOCUMENTS, TOGETHER WITH THE EXHIBITS AND SCHEDULES THERETO, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, WITH RESPECT TO SUCH MATTERS, WHICH THE PARTIES ACKNOWLEDGE HAVE BEEN MERGED INTO SUCH DOCUMENTS, EXHIBITS AND SCHEDULES.   5.3           NOTICES.  ANY AND ALL NOTICES OR OTHER COMMUNICATIONS OR DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE EARLIEST OF (A) THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO PRIOR TO 5:30 P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (B) THE NEXT TRADING DAY AFTER THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO ON A DAY THAT IS NOT A TRADING DAY OR LATER THAN 5:30 P.M. (NEW YORK CITY TIME) ON ANY TRADING DAY, (C) THE SECOND TRADING DAY FOLLOWING THE DATE OF MAILING, IF SENT BY U.S. NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OR (D) UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE GIVEN.  THE ADDRESS FOR SUCH NOTICES AND COMMUNICATIONS SHALL BE AS SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO.   5.4           AMENDMENTS; WAIVERS.  NO PROVISION OF THIS AGREEMENT MAY BE WAIVED OR AMENDED EXCEPT IN A WRITTEN INSTRUMENT SIGNED, IN THE CASE OF AN AMENDMENT, BY THE COMPANY AND EACH PURCHASER OR, IN THE CASE OF A WAIVER, BY THE PARTY AGAINST WHOM ENFORCEMENT OF ANY SUCH WAIVER IS SOUGHT.  NO WAIVER OF ANY DEFAULT WITH RESPECT TO ANY PROVISION, CONDITION OR REQUIREMENT OF THIS AGREEMENT SHALL BE DEEMED TO BE A CONTINUING WAIVER IN THE FUTURE OR A WAIVER OF ANY SUBSEQUENT DEFAULT OR A WAIVER OF ANY OTHER PROVISION, CONDITION OR REQUIREMENT HEREOF, NOR SHALL ANY DELAY OR OMISSION OF EITHER PARTY TO EXERCISE ANY RIGHT HEREUNDER IN ANY MANNER IMPAIR THE EXERCISE OF ANY SUCH RIGHT.   5.5           CONSTRUCTION.  THE HEADINGS HEREIN ARE FOR CONVENIENCE ONLY, DO NOT CONSTITUTE A PART OF THIS AGREEMENT AND SHALL NOT BE DEEMED TO LIMIT OR AFFECT ANY OF THE PROVISIONS HEREOF.  THE LANGUAGE USED IN THIS AGREEMENT WILL BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.   5.6           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR SUCCESSORS AND PERMITTED ASSIGNS.  THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF EACH PURCHASER.  ANY PURCHASER MAY ASSIGN ANY OR ALL OF ITS RIGHTS UNDER THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT TO ANY PERSON TO WHOM SUCH PURCHASER ASSIGNS OR TRANSFERS ANY SECURITIES, PROVIDED SUCH TRANSFEREE AGREES IN WRITING TO BE BOUND, WITH RESPECT TO THE TRANSFERRED SECURITIES, BY THE PROVISIONS HEREOF THAT APPLY TO THE “PURCHASERS”.   5.7           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of,   --------------------------------------------------------------------------------   NOR MAY ANY PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON, EXCEPT AS OTHERWISE SET FORTH IN SECTION 4.9.   5.8           GOVERNING LAW.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.  EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND ANY OTHER TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK.  EACH PARTY HEREBY 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 CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER OR INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.  IF EITHER PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THE TRANSACTION DOCUMENTS, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS ATTORNEYS’ FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR PROCEEDING.   5.9           SURVIVAL.  THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN SHALL SURVIVE THE CLOSING AND THE DELIVERY, EXERCISE AND/OR CONVERSION OF THE SECURITIES, AS APPLICABLE FOR THE APPLICABLE STATUE OF LIMITATIONS.  EACH PURCHASER SHALL BE SOLELY RESPONSIBLE FOR ITS OWN REPRESENTATIONS, WARRANTIES, AGREEMENTS, AND COVENANTS HEREUNDER.   5.10         EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE AND THE SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT BOTH PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY SIGNATURE IS DELIVERED BY FACSIMILE TRANSMISSION (OR ELECTRONIC TRANSMISSION OF PDF FILE), SUCH SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF THE PARTY EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) WITH THE SAME FORCE AND EFFECT AS IF SUCH FACSIMILE (OR PDF FILE) SIGNATURE PAGE WERE AN ORIGINAL THEREOF.   5.11         Severability.  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties   --------------------------------------------------------------------------------   WILL ATTEMPT TO AGREE UPON A VALID AND ENFORCEABLE PROVISION THAT IS A REASONABLE SUBSTITUTE THEREFOR, AND UPON SO AGREEING, SHALL INCORPORATE SUCH SUBSTITUTE PROVISION IN THIS AGREEMENT.   5.12         REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR INSTRUMENT EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED, THE COMPANY SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR AND UPON CANCELLATION THEREOF, OR IN LIEU OF AND SUBSTITUTION THEREFOR, A NEW CERTIFICATE OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION AND CUSTOMARY AND REASONABLE INDEMNITY, IF REQUESTED.  THE APPLICANTS FOR A NEW CERTIFICATE OR INSTRUMENT UNDER SUCH CIRCUMSTANCES SHALL ALSO PAY ANY REASONABLE THIRD-PARTY COSTS ASSOCIATED WITH THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.   5.13         REMEDIES.  IN ADDITION TO BEING ENTITLED TO EXERCISE ALL RIGHTS PROVIDED HEREIN OR GRANTED BY LAW, INCLUDING RECOVERY OF DAMAGES, EACH OF THE PURCHASERS AND THE COMPANY WILL BE ENTITLED TO SPECIFIC PERFORMANCE UNDER THE TRANSACTION DOCUMENTS.  THE PARTIES AGREE THAT MONETARY DAMAGES MAY NOT BE ADEQUATE COMPENSATION FOR ANY LOSS INCURRED BY REASON OF ANY BREACH OF OBLIGATIONS DESCRIBED IN THE FOREGOING SENTENCE AND HEREBY AGREES TO WAIVE IN ANY ACTION FOR SPECIFIC PERFORMANCE OF ANY SUCH OBLIGATION THE DEFENSE THAT A REMEDY AT LAW WOULD BE ADEQUATE.   5.14         INDEPENDENT NATURE OF PURCHASERS’ OBLIGATIONS AND RIGHTS.  THE OBLIGATIONS OF EACH PURCHASER UNDER ANY TRANSACTION DOCUMENT ARE SEVERAL AND NOT JOINT WITH THE OBLIGATIONS OF ANY OTHER PURCHASER, AND NO PURCHASER SHALL BE RESPONSIBLE IN ANY WAY FOR THE PERFORMANCE OF THE OBLIGATIONS OF ANY OTHER PURCHASER UNDER ANY TRANSACTION DOCUMENT.  NOTHING CONTAINED HEREIN OR IN ANY TRANSACTION DOCUMENT, AND NO ACTION TAKEN BY ANY PURCHASER PURSUANT THERETO, SHALL BE DEEMED TO CONSTITUTE THE PURCHASERS AS A PARTNERSHIP, AN ASSOCIATION, A JOINT VENTURE OR ANY OTHER KIND OF ENTITY, OR CREATE A PRESUMPTION THAT THE PURCHASERS ARE IN ANY WAY ACTING IN CONCERT OR AS A GROUP WITH RESPECT TO SUCH OBLIGATIONS OR THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENT.  EACH PURCHASER SHALL BE ENTITLED TO INDEPENDENTLY PROTECT AND ENFORCE ITS RIGHTS, INCLUDING WITHOUT LIMITATION, THE RIGHTS ARISING OUT OF THIS AGREEMENT OR OUT OF THE OTHER TRANSACTION DOCUMENTS, AND IT SHALL NOT BE NECESSARY FOR ANY OTHER PURCHASER TO BE JOINED AS AN ADDITIONAL PARTY IN ANY PROCEEDING FOR SUCH PURPOSE.  EACH PURCHASER HAS BEEN REPRESENTED BY ITS OWN SEPARATE LEGAL COUNSEL IN THEIR REVIEW AND NEGOTIATION OF THE TRANSACTION DOCUMENTS.  THE COMPANY HAS ELECTED TO PROVIDE ALL PURCHASERS WITH THE SAME TERMS AND TRANSACTION DOCUMENTS FOR THE CONVENIENCE OF THE COMPANY AND NOT BECAUSE IT WAS REQUIRED OR REQUESTED TO DO SO BY THE PURCHASERS.   [SIGNATURE PAGE FOLLOWS]   --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.     MICROFIELD GROUP, INC.       Address for Notice: By:         Name: Microfield Group, Inc.   Title: 111 SW Columbia, Suite 480 Portland, Oregon 97201       With a copy to (which shall not constitute notice):     Jeffrey J. Fessler, Esq.     Sichenzia Ross Friedman Ference LLP     1065 Avenue of the Americas     New York, New York 10018       [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR PURCHASER FOLLOWS]   --------------------------------------------------------------------------------   [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]   Name of Investing Entity:   Signature of Authorized Signatory of Investing Entity:   Name of Authorized Signatory:   Title of Authorized Signatory:   Email Address of Authorized Signatory:   Tax ID number of Investing Entity:     Address for Notice of Investing Entity:     Address for Delivery of Securities for Investing Entity (if not same as above):     Subscription Amount: Shares of Common Stock: Warrant Shares:   --------------------------------------------------------------------------------   EXHIBIT A   [Registration Rights Agreement]   --------------------------------------------------------------------------------   EXHIBIT B   [Form of Warrant]   --------------------------------------------------------------------------------
Exhibit 10.10   DIRECTOR COMPENSATION    The following compensation arrangements have been established for the Board of Directors of the Company: All outside directors receive an annual retainer of $60,000. The chairpersons of the Strategic Advisory Committee, the Audit Committee, the Compensation Committee, the Risk Oversight Committee and the Nominating/Corporate Governance Committee, for these services, receive annual retainers of $70,000, $20,000, $20,000, $20,000 and $12,500, respectively. The individual filling the lead director role receives an annual retainer of $70,000. In addition, outside directors also receive a meeting fee of $1,500 for each Committee meeting attended and an annual grant of $120,000 of stock. No separate compensation is paid to directors who are employees of the Company.
EXHIBIT 10.9   HOME FEDERAL BANK Short-Term Incentive Plan (as amended and restated effective July 1, 2008)   1.             Purpose   The purpose of the Home Federal Bank (“the Bank”) Short-Term Incentive Plan is to reward senior managers of the Bank for the attainment of corporate objectives. The Plan is designed to motivate, reward and retain key executives. This Plan was approved by the Board of Directors to be effective July 1, 2008.   2.                                       Participation   The Short-Term Incentive Plan is for selected management staff of Home Federal Bank. Participation in this Plan will be recommended by the Chairman and CEO and approved by the Personnel, Compensation and Benefits Committee of the Board of Directors. Participation in any one year does not guarantee the participation in future years or at the same award level.   New hires to the Corporation and individuals promoted to assignments which by virtue of their responsibilities may be otherwise eligible to participate in this Plan, may only participate with the approval of the Chairman and CEO. New participants in this Plan will be added only at the start of a Plan Year. The Plan Year is the Corporation’s fiscal year.   3.                                       Performance Measure, Award Levels and Award Payment   The annual performance measure, award levels and award payment provisions are identified in Addendum I. Unless otherwise specifically provided in Addendum I, payment shall be in a lump sum within 2½ months after the close of the Plan Year.   4.                                       Termination of Employment   If during the fiscal year of the Bank, a plan participant terminates his or her employment or if the Bank terminates the employment of the plan participant during that same period, all rights to an Award under the plan for that year are forfeited. If the employment of a plan participant terminates after the end of the fiscal year but before the benefits are paid, no such rights are forfeited. Notwithstanding the provisions hereof, in the event of death, disability, retirement, or for those individuals who participate in the Plan and have executed a Change in Control Agreement with the Bank, the provision of paragraph 5 shall apply.   5.                                       Death, Disability, Retirement, and Change in Control   If a Plan participant dies, becomes disabled, retires, or is entitled to benefits under a Change in Control Agreement during a Plan Year, they or their designated beneficiary shall receive an incentive payment for the partial year based on the number of months from the start of the Plan Year to the first of the month following the month in which the death, disability, retirement, or the Date of Termination as defined in the Change in Control Agreement, but only to the extent that an incentive payment is otherwise earned for the Plan Year.   6.                                       Beneficiary Designation   Any incentive payment following the death of a participant shall be paid to such person or persons, or other legal entity, as the participant may have designated in writing and delivered to Home Federal Bank. The participant may from time to time revoke or change any such designation by writing to Home Federal Bank. If there is no unrevoked designation on file at the participant’s death, or if the person or persons designated therein shall have all pre-deceased the participant, such distribution shall be made to the participant’s estate. A beneficiary designation form is attached.   --------------------------------------------------------------------------------   7.                                       Administration and Interpretation of the Plan   The Plan shall be administered by the Chairman and CEO of the Bank whose actions will be subject to the approval of the Personnel, Compensation and Benefits Committee in material matters. The role of the Committee shall be to approve the Home Federal Bank’s Short-Term Incentive Plan, approve the annual target goal, approve Plan participants and (at the end of the Plan Year) approve the distribution of the incentive payment to all participants. The Plan Administrator is charged with the effective administration of the Plan including the interpretation in instances where the Plan is silent.   The Personnel, Compensation and Benefits Committee reserves the right, from time to time, to prescribe rules and regulations at such time and in such manner as it may deem appropriate.   8.                                       Amendment/Termination of Plan   The Plan may be amended and shall be interpreted by the Personnel, Compensation and Benefits Committee of the Board of Directors, and its interpretation shall be final and binding on participant and all other parties of interest. The Plan may be terminated at any time as the Personnel, Compensation and Benefits Committee of the Board of Directors approves. Plan participants will be notified as soon as possible in the event of an amendment or termination occurs.   9.                                       Employment   The Plan is not intended as an Employment Agreement. The Plan does not restrict the rights of the Bank to terminate the employment of a Plan participant at any time and without any obligation under the Plan.   10.                                 Legal Requirements   The Plan will be administered in accordance with all federal, state and local statutory requirements.   11.                                 Effective Date   This Amendment and Restatement becomes effective July 1, 2008.   *--*--*--*--*   The undersigned, an authorized executive officer of the Bank, certifies that this is the Home Federal Bank Amended and Restated Short-Term Incentive Plan amended and restated effective July 1, 2008.     HOME FEDERAL BANK       By: /s/ Curtis L. Hage     Curtis L. Hage   Its:    Chairman and CEO   --------------------------------------------------------------------------------
Exhibit 10.1 Execution Version FIRST LIEN CREDIT AGREEMENT dated as of July 1, 2011, among WALTER INVESTMENT MANAGEMENT CORP., as Borrower, THE LENDERS PARTY HERETO and CREDIT SUISSE AG, as Administrative Agent and Collateral Agent CREDIT SUISSE SECURITIES (USA) LLC and RBS SECURITIES INC., as Joint Lead Arrangers CREDIT SUISSE SECURITIES (USA) LLC, RBS SECURITIES INC. and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Bookrunners THE ROYAL BANK OF SCOTLAND PLC, as Syndication Agent MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and MORGAN STANLEY SENIOR FUNDING, INC., as Co-Documentation Agents     --------------------------------------------------------------------------------   TABLE OF CONTENTS               Page             ARTICLE 1 Definitions           Section 1.01. Defined Terms     1   Section 1.02. Terms Generally     46   Section 1.03. Classification of Loans and Borrowings     47             ARTICLE 2 The Credits           Section 2.01. Commitments     47   Section 2.02. Loans     47   Section 2.03. Borrowing Procedure     49   Section 2.04. Evidence of Debt; Repayment of Loans     50   Section 2.05. Fees     50   Section 2.06. Interest on Loans     51   Section 2.07. Default Interest     52   Section 2.08. Alternate Rate of Interest     52   Section 2.09. Termination and Reduction of Commitments     52   Section 2.10. Conversion and Continuation of Borrowings     53   Section 2.11. Repayment of Term Borrowings     54   Section 2.12. Voluntary Prepayment     55   Section 2.13. Mandatory Prepayments     56   Section 2.14. Reserve Requirements; Change in Circumstances     59   Section 2.15. Change in Legality     61   Section 2.16. Breakage     61   Section 2.17. Pro Rata Treatment     62   Section 2.18. Sharing of Setoffs     62   Section 2.19. Payments     63   Section 2.20. Taxes     63   Section 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate     66   Section 2.22. Letters of Credit     68   Section 2.23. Cash Collateral     72   Section 2.24. Defaulting Lenders     73     i --------------------------------------------------------------------------------                 Page             ARTICLE 3 Representations and Warranties           Section 3.01. Company Status     76   Section 3.02. Power and Authority     76   Section 3.03. No Violation     76   Section 3.04. Approvals     76   Section 3.05. Financial Statements; Financial Condition; Undisclosed Liabilities; Projections     77   Section 3.06. Litigation     79   Section 3.07. True and Complete Disclosure     79   Section 3.08. Use of Proceeds; Margin Regulations     79   Section 3.09. Tax Returns and Payments     79   Section 3.10. Compliance with ERISA     80   Section 3.11. Security Documents     80   Section 3.12. Properties     81   Section 3.13. Capitalization     81   Section 3.14. Subsidiaries     81   Section 3.15. Compliance with Statutes, Etc.     81   Section 3.16. Investment Company Act     82   Section 3.17. Insurance     82   Section 3.18. Environmental Matters     82   Section 3.19. Employment and Labor Relations     83   Section 3.20. Intellectual Property, Etc.     83   Section 3.21. Indebtedness     83   Section 3.22. Anti-Terrorism Law     84   Section 3.23. Servicing Agreements     84   Section 3.24. Agreements     84   Section 3.25. Transaction Documents     85   Section 3.26. Foreign Corrupt Practices Act     85             ARTICLE 4 Conditions of Lending           Section 4.01. All Credit Events after the Closing Date     85   Section 4.02. First Credit Event     86             ARTICLE 5 Affirmative Covenants           Section 5.01. Information Covenants     92   Section 5.02. Books, Records and Inspections     96   Section 5.03. Maintenance of Property; Insurance     96   Section 5.04. Existence; Franchises     98   Section 5.05. Compliance with Statutes, Etc.     98   Section 5.06. Compliance with Environmental Laws     98   Section 5.07. ERISA     99   Section 5.08. End of Fiscal Years; Fiscal Quarters     99   Section 5.09. Performance of Obligations     99   Section 5.10. Payment of Taxes     99   Section 5.11. Use of Proceeds     100     ii --------------------------------------------------------------------------------                 Page             Section 5.12. Additional Security; Further Assurances; Etc.     100   Section 5.13. [Reserved]     101   Section 5.14. [Reserved]     101   Section 5.15. [Reserved]     101   Section 5.16. [Reserved]     101   Section 5.17. [Reserved]     101   Section 5.18. Maintenance of Company Separateness     101   Section 5.19. Certain Required Dividends     102   Section 5.20. Maintenance of Ratings     102   Section 5.21. Post-Closing Items     102             ARTICLE 6 Negative Covenants           Section 6.01. Liens     103   Section 6.02. Consolidation, Merger, Purchase or Sale of Assets, Etc.     107   Section 6.03. Dividends     110   Section 6.04. Indebtedness     111   Section 6.05. Advances, Investments and Loans     115   Section 6.06. Transactions with Affiliates     120   Section 6.07. Capital Expenditures     120   Section 6.08. Interest Expense Coverage Ratio     121   Section 6.09. Total Leverage Ratio     122   Section 6.10. Modifications of Certain Agreements     123   Section 6.11. Limitation on Certain Restrictions on Subsidiaries     123   Section 6.12. Limitation on Issuance of Equity Interests     124   Section 6.13. Business; Etc.     124   Section 6.14. Limitation on Creation of Subsidiaries     125   Section 6.15. Prepayments of Other Indebtedness     126             ARTICLE 7 Events of Default           Section 7.01. Events of Default     126             ARTICLE 8 The Administrative Agent and the Collateral Agent   iii --------------------------------------------------------------------------------                 Page             ARTICLE 9 Miscellaneous           Section 9.01. Notices; Electronic Communications     133   Section 9.02. Survival of Agreement     136   Section 9.03. Binding Effect     136   Section 9.04. Successors and Assigns     136   Section 9.05. Expenses; Indemnity     143   Section 9.06. Right of Setoff     144   Section 9.07. Applicable Law     145   Section 9.08. Waivers; Amendment     145   Section 9.09. Interest Rate Limitation     147   Section 9.10. Entire Agreement     148   Section 9.11. WAIVER OF JURY TRIAL     148   Section 9.12. Severability     148   Section 9.13. Counterparts     148   Section 9.14. Headings     148   Section 9.15. Jurisdiction; Consent to Service of Process     149   Section 9.16. Confidentiality     149   Section 9.17. Lender Action     150   Section 9.18. USA PATRIOT Act Notice     150         SCHEDULE 1.01(a)     Lenders and Commitments SCHEDULE 1.01(b)   Lender Addresses SCHEDULE 1.01(c)   Continuing Letters of Credit SCHEDULE 1.01(d)   Knowledge SCHEDULE 3.06   Litigation SCHEDULE 3.09   Certain Tax Matters SCHEDULE 3.11(c)   Mortgage Filing Offices SCHEDULE 3.12   Real Property SCHEDULE 3.14   Subsidiaries SCHEDULE 3.17   Insurance SCHEDULE 3.21   Existing Indebtedness SCHEDULE 3.23   Certain Servicing Agreements SCHEDULE 4.02(a)   List of Counsel SCHEDULE 5.01   Reporting SCHEDULE 6.01   Existing Liens SCHEDULE 6.05   Existing Investments SCHEDULE 6.11   Certain Restrictive Agreements   iv --------------------------------------------------------------------------------               EXHIBIT A   Form of Borrowing Request EXHIBIT B   Form of Intercreditor Agreement EXHIBIT C   Form of Subsidiaries Guaranty EXHIBIT D   Form of Pledge Agreement EXHIBIT E   Form of Security Agreement EXHIBIT F   Form of Intercompany Subordination Agreement EXHIBIT G   Form of Compliance Certificate EXHIBIT H   Form of Assignment and Acceptance EXHIBIT I   Form of Intercompany Note EXHIBIT J   Form of Administrative Questionnaire EXHIBIT K   Form of Solvency Certificate EXHIBIT L   Form of Servicing Rights Acknowledgement Agreement EXHIBIT M   Procedures for Dutch Auction   v --------------------------------------------------------------------------------   FIRST LIEN CREDIT AGREEMENT dated as of July 1, 2011, among WALTER INVESTMENT MANAGEMENT CORP., a Maryland corporation (the “Borrower”), the Lenders (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article 1), and CREDIT SUISSE AG, as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Lenders. The Borrower has requested the Lenders to extend credit in the form of (a) Term Loans on the Closing Date, in an aggregate principal amount not in excess of $500,000,000 and (b) Revolving Loans at any time and from time to time prior to the Revolving Credit Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $45,000,000. The Borrower has requested the Issuing Banks to issue Letters of Credit, in an aggregate face amount at any time outstanding not in excess of $22,500,000, to support payment obligations incurred in the ordinary course of business by the Borrower and its Subsidiaries. The proceeds of the Term Loans are to be used, together with the proceeds of loans under the Second Lien Credit Agreement and cash on hand, solely to (x) pay the purchase price for the Acquisition, (y) repay all amounts outstanding under, and terminate, the Specified Credit Agreement and (z) pay related fees and expenses (including fees and expenses incurred and paid prior to the Closing Date). The proceeds of the Revolving Loans are to be used solely (x) to pay the purchase price for the Acquisition, (y) to pay related fees and expenses and (z) for working capital and general corporate purposes of the Borrower and its Subsidiaries. The Lenders are willing to extend such credit to the Borrower, and the Issuing Banks are willing to issue Letters of Credit for the account of the Borrower, in each case on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE 1 Definitions Section 1.01. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. “Acquired Entity or Business” shall mean either (x) all or substantially all of the assets, or all or substantially all of the assets constituting a business, division or product line, of any Person not already a Subsidiary of the Borrower or (y) 100% of the Equity Interests of any such Person, which Person shall, as a result of the acquisition of such Equity Interests, become a Wholly Owned Domestic Subsidiary of the Borrower that is a Subsidiary Guarantor (or shall be merged with and into the Borrower or another Wholly Owned Domestic Subsidiary of the Borrower that is a Subsidiary Guarantor, with the Borrower or such Subsidiary Guarantor being the surviving or continuing Person), but shall exclude Servicing Rights that are purchased or acquired on a stand-alone basis.     --------------------------------------------------------------------------------   “Acquisition” shall mean the acquisition by the Borrower of the Target pursuant to the Purchase Agreement. “Additional Security Documents” shall have the meaning assigned to such term in Section 5.12. “Adjusted Consolidated Net Income” shall mean, for any period, Consolidated Net Income for such period plus (a) the sum (without duplication) of: (i) the amount of all net non-cash charges or losses (including, but not limited to, depreciation, amortization, share-based non-cash compensation, deferred tax expense and non-cash interest expense) which were included in arriving at Consolidated Net Income for such period; (ii) changes for such period in fair value of bonds payable related to consolidated variable interests related to non-recourse debt issued by any Securitization Vehicle to the extent consolidated on the balance sheet; (iii) servicing income earned during such period for servicing of assets in any Securitization Vehicle (other than any such income attributable to a Heritage Walter Securitization Trust) to the extent consolidated on the balance sheet and carried at fair value; (iv) principal payments received during such period by any Heritage Walter Securitization Trust from borrowers to the extent consolidated on the balance sheet; (v) net cash proceeds received during such period from sales of REO Property by any Heritage Walter Securitization Trust to the extent consolidated on the balance sheet; (vi) losses for such period on non-recourse assets held by any Securitization Vehicle or Heritage Walter Securitization Trust to the extent consolidated on the balance sheet; and (vii) change for such period in fair value of servicing rights carried at fair value which were included in arriving at Consolidated Net Income for such period; less (b) the sum of: (i) the amount of all net non-cash gains and non-cash credits which were included in arriving at Consolidated Net Income for such period; (ii) the amount of all cash gains on Asset Sales the Net Sale Proceeds of which were applied as a mandatory repayment of Term Loans pursuant to Section 2.13(c) or reinvested (or to be reinvested) as permitted by such Section 2.13(c) to the extent that such cash gains were included in arriving at Consolidated Net Income for such period;   2 --------------------------------------------------------------------------------   (iii) changes for such period in fair value of assets related to consolidated variable interests related to non-recourse assets held by any Securitization Vehicle to the extent consolidated on the balance sheet; (iv) gains for such period on assets held by any Securitization Vehicle or Heritage Walter Securitization Trust to the extent consolidated on the balance sheet; and (v) principal payments during such period on Indebtedness of any Heritage Walter Securitization Trust to the extent consolidated on the balance sheet. “Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to the greater of (a) 1.50% per annum and (b) the product of (i) the LIBO Rate in effect for such Interest Period and (ii) Statutory Reserves. “Administrative Agent” shall have the meaning assigned to such term in the introductory statement to this Credit Agreement. “Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.05(b). “Administrative Questionnaire” shall mean an Administrative Questionnaire substantially in the form of Exhibit J, or such other form as may be supplied from time to time by the Administrative Agent. “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power (i) to vote 10% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person or (ii) to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. “Agents” shall have the meaning assigned to such term in Article 8. “Aggregate Revolving Credit Exposure” shall mean the aggregate amount of the Lenders’ Revolving Credit Exposures. “Agreement” shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.   3 --------------------------------------------------------------------------------   “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate determined on such day at approximately 11 a.m. (London time) by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized vendor for the purpose of displaying such rates). If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be. “Anti-Terrorism Laws” shall have the meaning assigned to such term in Section 3.22(a). “Applicable Equity Issuance Prepayment Percentage” shall mean, at any time, 50%; provided that, so long as no Default or Event of Default is in existence on the date on which the applicable Equity Issuance occurs, if the Total Leverage Ratio (as set forth in the most recent officer’s certificate delivered pursuant to Section 5.01(f)) is less than or equal to 2.50:1.00, the Applicable Equity Issuance Prepayment Percentage shall instead be 25%. “Applicable Excess Cash Flow Prepayment Percentage” shall mean, at any time, 75%; provided that, so long as no Default or Event of Default is in existence on the respective Excess Cash Flow Payment Date, if the Total Leverage Ratio (as set forth in the officer’s certificate delivered pursuant to Section 5.01(f)) for the fiscal year of the Borrower then last ended is less than or equal to 3.00:1.00, the Applicable Excess Cash Flow Prepayment Percentage shall instead be 50%. “Applicable Margin” shall mean (a) with respect to any Eurodollar Loan, 6.25% per annum and (b) with respect to any ABR Loan, 5.25% per annum. “Approved Takeout Investor” shall mean (i) Fannie Mae, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association and any other Government Sponsored Entity and (ii) any other Person that has a minimum stockholders’ equity of $10,000,000 (calculated in accordance with GAAP) and has been consented to by the Administrative Agent (such consent not to be unreasonably withheld or delayed) and such consent has not been withdrawn. “Asset Sale” shall mean any sale, transfer or other disposition by the Borrower or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to the Borrower or a Subsidiary Guarantor of any asset (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but (x) excluding sales of assets pursuant to Sections 6.02(ii), (iii), (vi), (vii), (viii), (ix), (x), (xii), (xiii), (xv), (xvi), (xvii) and (xviii) and (y) any other sale, transfer or disposition (for such purpose, treating any series of related sales, transfers or dispositions as a single such transaction) that generates Net Sale Proceeds of less than $100,000.   4 --------------------------------------------------------------------------------   “Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit H or such other form as shall be approved by the Administrative Agent. “Authorized Officer” shall mean the chief executive officer, president, any vice-president, secretary, any assistant secretary, treasurer, any assistant treasurer, chief operating officer or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer or the treasurer of the Borrower. “Available Amount” shall mean, on any date (the “Determination Date”), an amount equal to: (a) the sum, without duplication, of (I) an amount equal to the aggregate Net Equity Proceeds received by the Borrower after the Closing Date pursuant to a Permitted Equity Issuance less such Net Equity Proceeds that are required to be applied to prepay Term Loans pursuant to Section 2.13(f) or to prepay loans under the Second Lien Credit Agreement pursuant to any corresponding provision thereunder plus (II) the cumulative amount equal to the remainder of (x) 100% of Excess Cash Flow for each Excess Cash Flow Payment Period (commencing with the Excess Cash Flow Payment Period ending December 31, 2012) less (y) in respect of each Excess Cash Flow Payment Period, the Applicable Excess Cash Flow Prepayment Percentage of the Excess Cash Flow for such Excess Cash Flow Payment Period; provided that, in the case of clause (II), financial statements and a compliance certificate have been delivered in accordance with Section 5.01(c) and Section 5.01(f), respectively, with respect to such Excess Cash Flow Payment Period; minus (b) the portion of the amount calculated pursuant to clause (a) above that is used after the Closing Date and prior to the respective Determination Date to (i) make Investments permitted pursuant to Section 6.05(xix), (ii) make Capital Expenditures permitted pursuant to Section 6.07(b), (iii) consummate Permitted Acquisitions or Permitted Foreign Acquisitions permitted pursuant to Section 6.05, (iv) make Investments in SerVertis Funds pursuant to Section 6.05(ix)(C)(2) or (v) acquire Servicing Rights pursuant to Section 6.05(xx). “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto. “Borrower” shall have the meaning assigned to such term in the introductory statement to this Agreement. “Borrower Materials” shall have the meaning assigned to such term in Section 9.01. “Borrower Notice” shall have the meaning assigned to such term in Section 5.12(c).   5 --------------------------------------------------------------------------------   “Borrowing” shall mean Loans of the same Class and Type made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect. “Borrowing Request” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit A, or such other form as shall be approved by the Administrative Agent. “Breakage Event” shall have the meaning assigned to such term in Section 2.16. “Business Day” shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market. “Calculation Period” shall mean, with respect to any Permitted Acquisition, any Permitted Foreign Acquisition, any Significant Asset Sale or any other event expressly required to be calculated on a Pro Forma Basis pursuant to the terms of this Agreement, the Test Period most recently ended prior to the date of such Permitted Acquisition, Permitted Foreign Acquisition, Significant Asset Sale or other event for which financial statements have been delivered to the Lenders pursuant to Section 4.02(l) or Section 5.01(b) or (c), as applicable. “Capital Expenditures” shall mean, with respect to any Person, all expenditures (without duplication) by such Person which should be capitalized in accordance with GAAP (other than the origination of Residential Mortgage Loans to customers with proceeds of Short-Term Warehouse Debt or within a Securitization Vehicle that is a Heritage Walter Securitization Trust) and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person, but excluding, to the extent otherwise included, expenditures to purchase or acquire Servicing Rights (and any related Delinquency Advances and Protective Advances that were existing at the time of such purchase or acquisition). “Capitalized Lease Obligations” shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles. “Cash Collateralize” shall mean to pledge and deposit with or deliver to the Collateral Agent, for the benefit of one or more of the Issuing Banks or Lenders, as collateral for L/C Exposure or obligations of Lenders to fund participations in respect of L/C Exposure, cash or deposit account balances or, if the Collateral Agent and each applicable Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Collateral Agent and each applicable Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.   6 --------------------------------------------------------------------------------   “Cash Equivalents” shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s, (iii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, a combined capital and surplus of at least $1,000,000,000 with maturities of not more than one year from the date of acquisition by such Person, (iv) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iii) above, (v) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such Person, and (vi) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above. “CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq. “Change in Adjusted Consolidated Working Capital” shall mean, for a given period, without duplication, the sum of the changes (plus or minus) during such period in: (a) Delinquency Advances and Protective Advances net of the change in applicable borrowings under Non-Recourse Servicer Advance Debt, (b) finance receivable purchases net of collections and liquidation proceeds on purchased receivables, (c) new loan originations net of proceeds received from the sale of new loans, collections on new loans and the change in related borrowings under Short-Term Warehouse Debt, (d) cash and Cash Equivalents required to be maintained (i) at any Subsidiary of the Borrower pursuant to bona fide legal or regulatory requirements, (ii) by any Non-Recourse Entities related to non-recourse financing or (iii) by the Borrower or any Subsidiary in the ordinary course of business pursuant to any line of credit permitted to be maintained hereunder, and (e) other assets (excluding cash and Cash Equivalents) and liabilities (excluding the current portion of any Indebtedness under this Agreement and the current portion of any other long term Indebtedness which would otherwise be included therein), to the extent the impact of such changes are reflected in the consolidated statement of cash flows of the Borrower and its Subsidiaries, excluding for this purpose Securitization Vehicles (other than Heritage Walter Securitization Trusts) to the extent consolidated.   7 --------------------------------------------------------------------------------   “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority or the NAIC after the date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.14, by any lending office of such Lender or by such Lender’s or such Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Change of Control” shall mean (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof) shall have obtained the power (whether or not exercised) to elect a majority of the board of directors (or equivalent governing body) of the Borrower, (ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof) is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act as in effect on the date hereof), directly or indirectly, of 35% or more on a fully diluted basis of the voting interests in the Borrower’s Equity Interests, (iii) the board of directors (or equivalent governing body) of the Borrower shall cease to consist of a majority of Continuing Directors or (iv) a “change of control” or similar event howsoever denominated shall occur as provided in any Equity Interests of the Borrower (other than Qualified Equity Interests of the Borrower), the Second Lien Credit Agreement or any other Indebtedness of the Borrower or any of its Subsidiaries with an aggregate principal amount of at least $5,000,000 (or the documentation governing the same) and such “change of control” or similar event shall not be waived in writing by the holders of such Equity Interests or Indebtedness. “Charges” shall have the meaning assigned to such term in Section 9.09. “Claims” shall have the meaning assigned to such term in the definition of “Environmental Claims”. “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment or Term Loan Commitment. “Closing Date” shall mean the date of the first Credit Event. “Co-Documentation Agents” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley Senior Funding, Inc. in their capacity as documentation agents. “Code” shall mean the Internal Revenue Code of 1986. “Collateral” shall mean all property (whether real or personal) with respect to which any security interests or liens have been granted (or purported to be granted) pursuant to any Security Document, including all Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged Properties and all cash and Cash Equivalents delivered as collateral pursuant to Section 2.22 or Section 2.23.   8 --------------------------------------------------------------------------------   “Collateral Agent” shall have the meaning assigned to such term in the introductory statement to this Credit Agreement. “Collections” shall mean (without duplication) (i) all payments received and collected on all Transferred Receivables, (ii) all Hedge Receipts and (iii) all other proceeds relating to any Transferred Receivable. “Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Credit Commitment or Term Loan Commitment. “Commitment Fee” shall have the meaning assigned to such term in Section 2.05(a). “Commitment Letter” shall mean the Amended and Restated Commitment Letter dated April 25, 2011 among the Borrower, Credit Suisse Securities (USA) LLC, Credit Suisse AG, RBS Securities Inc., The Royal Bank of Scotland plc, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America, N.A. and Morgan Stanley Senior Funding, Inc. “Communications” shall have the meaning assigned to such term in Section 9.01. “Company” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate). “Comparably Favorable” shall mean, with respect to any agreement, that the terms and conditions of such agreement are not (x) materially more restrictive (taken as a whole) on the Borrower or any of its Subsidiaries or (y) materially less favorable (taken as a whole, and disregarding interest rates, advance rates, fees, tenor and similar economic terms) to the Lenders, in each case than those terms and conditions contained in another agreement to which such agreement is being compared. “Confidential Information Memorandum” shall mean the Confidential Information Memorandum of the Borrower dated May 2011. “Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period, adjusted by: (a) deducting therefrom (to the extent included in determining Consolidated Net Income for such period except for payments referred to in clause (a)(vi) below), without duplication, the amount (determined on a consolidated basis for the Borrower and its Subsidiaries for such period) of: (i) interest income with respect to Unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries, (ii) net after-tax extraordinary gains, (iii) net after-tax non-cash gains and other non-cash income,   9 --------------------------------------------------------------------------------   (iv) net after-tax gains realized upon the disposition of assets outside of the ordinary course of business, (v) net after-tax income (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness, (vi) the amount of all cash payments or cash charges made (or incurred) on account of a non-cash charge or non-cash loss added back to Consolidated EBITDA pursuant to clause (b)(iv) or (b)(vii) below in a previous period, (vii) net after-tax income attributable to discontinued operations, but only so long as such discontinued operations meet the requirements therefor under GAAP and such discontinued operations were actually disposed of as of the relevant date of calculation of Consolidated EBITDA, (viii) changes in fair value of assets related to consolidated variable interests related to non-recourse assets held by any Securitization Vehicle to the extent consolidated on the balance sheet, (ix) gains on assets held by any Securitization Vehicle or Heritage Walter Securitization Trust to the extent consolidated on the balance sheet, and (x) principal payments on any Indebtedness of the Heritage Walter Securitization Trust to the extent consolidated on the balance sheet; and (b) adding thereto (to the extent deducted in determining Consolidated Net Income for such period), without duplication, the amount (determined on a consolidated basis for the Borrower and its Subsidiaries for such period) of: (i) total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions (e.g., letter of credit fees and commitment fees)), excluding, except for purposes of the calculations referred to in Section 6.04(xi), Section 6.04(xii) and Section 6.04(xiii), any interest expense associated with any Non-Recourse MSR Loans, Non-Recourse Servicer Advance Debt and Non-Recourse Short-Term Warehouse Debt, and excluding any interest expense related to non-recourse debt held by any Heritage Walter Securitization Trust to the extent consolidated on the balance sheet, (ii) without duplication among periods, provision for taxes paid or accrued based on income or capital, withholding, franchise and similar taxes, (iii) all depreciation and amortization expense,   10 --------------------------------------------------------------------------------   (iv) non-cash charges or non-cash losses (including share based non-cash compensation), (v) fees and expenses incurred in connection with the Transactions on or prior to the first anniversary of the Closing Date, (vi) fees and expenses incurred in connection with any Investment (including any Permitted Acquisition or Permitted Foreign Acquisition), issuance of Equity Interests or incurrence of Indebtedness (in each case, whether or not consummated), except to the extent that such fees and expenses were financed with proceeds of equity or Indebtedness, (vii) net after-tax extraordinary losses or charges, (viii) net after-tax losses realized upon the disposition of assets outside of the ordinary course of business, (ix) net after-tax losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness, (x) net after-tax losses attributable to discontinued operations, but only so long as such discontinued operations meet the requirements therefor under GAAP and such discontinued operations were actually disposed of as of the relevant date of calculation of Consolidated EBITDA, (xi) any non-recurring fees, expenses or charges (including any such items directly attributable to the implementation of cost savings initiatives, severance, restructuring charges, relocation costs and one-time compensation charges) relating to the Acquisition and incurred on or prior to the date that is 18 months after the Closing Date; provided that the aggregate cash amount included in Consolidated EBITDA pursuant to this clause (xi) for any period shall not exceed 10% of Consolidated EBITDA for such period (calculated prior to giving effect to any adjustment pursuant to this clause (xi)), (xii) any changes in fair value of bonds payable related to consolidated variable interests related to non-recourse debt issued by any Securitization Vehicle to the extent consolidated on the balance sheet, (xiii) servicing income earned for servicing of assets in any Securitization Vehicle (other than any such income attributable to a Heritage Walter Securitization Trust) to the extent consolidated on the balance sheet, (xiv) principal payments received by any Heritage Walter Securitization Trust from borrowers to the extent consolidated on the balance sheet, (xv) losses on non-recourse assets held by any Securitization Vehicle or Heritage Walter Securitization Trust to the extent consolidated on the balance sheet,   11 --------------------------------------------------------------------------------   (xvi) change in fair value of servicing rights carried at fair value, and (xvii) net cash proceeds received from sales of REO Property owned by any Heritage Walter Securitization Trust to the extent consolidated on the balance sheet. For the avoidance of doubt, it is understood and agreed that, to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein. Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Closing Date, Consolidated EBITDA for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of Test Period contained herein. “Consolidated Indebtedness” shall mean, at any time, the sum of (without duplication) (i) all Indebtedness of the Borrower and its Subsidiaries (on a consolidated basis) as would be required to be reflected as debt or Capitalized Lease Obligations on a consolidated balance sheet of the Borrower and its Subsidiaries in accordance with GAAP, (ii) all Indebtedness of the Borrower and its Subsidiaries of the type described in clause (ii) of the definition of Indebtedness and (iii) all Contingent Obligations of the Borrower and its Subsidiaries in respect of Indebtedness of any third Person of the type referred to in preceding clauses (i) and (ii); provided that no determination of “Consolidated Indebtedness” shall include (u) the aggregate amount available to be drawn or paid (i.e., unfunded amounts) under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of the Borrower or any of its Subsidiaries (but excluding, for avoidance of doubt, all unpaid drawings or other matured monetary obligations owing in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations) (v) except for purposes of the calculation referred to in Section 6.04(xii), Non-Recourse Servicer Advance Debt, (w) except for purposes of the calculation referred to in Section 6.04(xiii), Non-Recourse Short-Term Warehouse Debt, (x) Non-Recourse Securitization Debt, (y) except for purposes of the calculation referred to in Section 6.04(xi), Non-Recourse MSR Loans or (z) Specified Contingent Liabilities (but only until such time, if any, as the Borrower or any of its Subsidiaries is required to fund or otherwise honor any such Specified Contingent Liability, at which time such liabilities shall be included in the determination of Consolidated Indebtedness). “Consolidated Interest Expense” shall mean, for any period, (i) the total cash consolidated interest expense of the Borrower and its Subsidiaries (including, without limitation, all commissions, discounts and other commitment and banking fees and charges (e.g., fees with respect to letters of credit, Interest Rate Protection Agreements and Other Hedging Agreements), but excluding, to the extent included therein, except for purposes of the calculations referred to in Section 6.04(xi), Section 6.04(xii) and Section 6.04(xiii), all interest expense on Non-Recourse MSR Loans, Non-Recourse Servicer Advance Debt and Non-Recourse Short-Term Warehouse Debt, and Non-Recourse Securitization Debt) for such period (calculated without regard to any limitations on payment thereof), plus (ii) without duplication, that portion of Capitalized Lease Obligations of the Borrower and its Subsidiaries on a consolidated basis representing the interest factor for such period. Notwithstanding anything to the contrary contained above, for purposes of determining the Interest Expense Coverage Ratio, to the extent Consolidated Interest Expense is to be determined for any Test Period which ends prior to the first anniversary of the Closing Date, Consolidated Interest Expense for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of Test Period contained herein.   12 --------------------------------------------------------------------------------   “Consolidated Net Income” shall mean, for any period, the net income (or loss) of the Borrower and its Subsidiaries determined on a consolidated basis for such period (taken as a single accounting period) in accordance with GAAP, provided that (A) the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income of any Person (other than Borrower) in which a Person or Persons other than the Borrower and its Wholly-Owned Subsidiaries has an Equity Interest or Equity Interests, except to the extent of the amount of cash dividends or other cash distributions actually paid to the Borrower or a Wholly-Owned Subsidiary by such Person during such period, (ii) except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by the Borrower or a Subsidiary and (iii) the net income of any Subsidiary to the extent that the declaration or payment of cash dividends or similar cash distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary, and (B) any interest expense on Non-Recourse Servicer Advance Debt and Non-Recourse Short-Term Warehouse Debt for such period shall reduce Consolidated Net Income for such period to the extent that such amounts did not otherwise reduce Consolidated Net Income for such period. “Contingent Obligation” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing, having the economic effect of guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or any property constituting direct or indirect security therefor or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth, solvency or other financial statement condition of the primary obligor, (iii) to purchase or lease property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.   13 --------------------------------------------------------------------------------   “Continuing Directors” shall mean the directors (or equivalent governing body) of the Borrower on the Closing Date and each other director (or equivalent Person) if such director’s (or equivalent Person’s) nomination for election to the board of directors (or equivalent governing body) of the Borrower is recommended by a majority of the then Continuing Directors. “Continuing Letters of Credit” shall mean each of the letters of credit listed on Schedule 1.01(c). “Credit Documents” shall mean this Agreement, the Subsidiaries Guaranty, the Pledge Agreement, the Security Agreement, the Intercompany Subordination Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note and each other Security Document. “Credit Event” shall have the meaning assigned to such term in Section 4.01. “Credit Facilities” shall mean the revolving credit, letter of credit and term loan facilities provided for by this Agreement. “Credit Party” shall mean the Borrower and each Subsidiary Guarantor. “Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect. “Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. “Defaulting Lender” shall mean, subject to Section 2.24(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or any Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public   14 --------------------------------------------------------------------------------   statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.24(b)) upon delivery of written notice of such determination to the Borrower, each Issuing Bank and each Lender. “Delinquency Advance” shall mean an advance by a Seller pursuant to the terms of a Servicing Agreement of all or any portion of a Monthly Payment under such Servicing Agreement. “Determination Date” shall have the meaning assigned to such term in the definition of “Available Amount”. “Dividend” shall mean, with respect to any Person, that such Person has, directly or indirectly, declared or paid a dividend, distribution or returned any equity capital to its stockholders, shareholders, partners or members or authorized or made any other distribution, payment or delivery of property or cash to its stockholders, shareholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired or terminated or cancelled, directly or indirectly, for a consideration (whether in cash, securities or other property) any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests).   15 --------------------------------------------------------------------------------   “Dollars” and the sign “$” shall each mean freely transferable lawful money of the United States. “Domestic Subsidiary” of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State thereof or the District of Columbia. “Dutch Auction” means an auction conducted by the Borrower to purchase Term Loans as contemplated by Section 9.04(l) substantially in accordance with the procedures set forth in Exhibit M. “Eligible Assignee” means (a) in the case of Term Loans, (i) a Lender, (ii) an Affiliate of a Lender, (iii) a Related Fund of a Lender, and (iv) any other Person (other than a natural person) approved by the Administrative Agent and (b) in the case of any assignment of a Revolving Credit Commitment, (i) a Revolving Credit Lender, (ii) an Affiliate of a Revolving Credit Lender, (iii) a Related Fund of a Revolving Credit Lender, and (iv) any other Person (other than a natural person) approved by the Administrative Agent, each Issuing Bank and, unless an Event of Default has occurred and is continuing or in the case of assignments during the initial syndication of the Commitments and Loans, the Borrower (each such approval not to be unreasonably withheld or delayed and, in the case of the Borrower, such approval shall be deemed to have been given if the Borrower has not responded within seven Business Days of a request for such approval); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (x) the Borrower or any of the Borrower’s Affiliates (it being understood and agreed that assignments to the Borrower may be made pursuant to Section 9.04(l)) or (y) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (y). “Eligible Hedge Counterparty” shall mean any Person mutually agreed to by a Non-Recourse Servicer Advance Debt Entity and the agent under a Non-Recourse Servicer Advance Debt Document. “Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, orders, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “Claims”), including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.   16 --------------------------------------------------------------------------------   “Environmental Law” shall mean any federal, state, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect and in each case as amended, including any judicial or administrative order, consent decree or judgment, relating to the environment, natural resources, human health and safety or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 5101 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time. “Equity Interests” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interest in (however designated) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest. “Equity Issuance” shall mean any issuance or sale by the Borrower or any of its Subsidiaries of any Equity Interests of the Borrower or any such Subsidiary, as applicable, or any capital contribution to the Borrower or any Subsidiary, except in each case for (a) any issuance or sale to the Borrower or any Subsidiary or any contribution by the Borrower or any Subsidiary to any Subsidiary, (b) any issuance of directors’ qualifying shares, and (c) sales or issuances of common stock of the Borrower to management or employees of the Borrower or any Subsidiary under any employee stock option or stock purchase plan or employee benefit plan in existence from time to time. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with Borrower or a Subsidiary of Borrower is treated as a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code. “ERISA Event” shall mean (a) any Reportable Event, (b) with respect to any Plan or Multiemployer Plan, the failure to satisfy the minimum funding standard (as defined in Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(c) of the Code or Section 402(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan or Multiemployer Plan, (d) the filing of a notice to terminate any Plan if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, (e) a determination that any Plan is in “at-risk status” or any Multiemployer Plan is in “endangered status” or “critical status” (as each is defined in Section 303 and 305 of ERISA, respectively), (f) 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 or the withdrawal or partial withdrawal   17 --------------------------------------------------------------------------------   of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (g) proceedings have been instituted to terminate or appoint a trustee to administer any Plan which is subject to Title IV of ERISA, (h) the receipt by the Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Borrower or any of its ERISA Affiliates 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 or (i) the occurrence of a non-exempt “prohibited transaction” with respect to which the Borrower or any ERISA Affiliate is a “disqualified person” (each within the meaning of Section 4975 of the Code) that is reasonably likely to result in material liability to the Borrower. “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate. “Event of Default” shall have the meaning assigned to such term in Section 7.01. “Evidence of Flood Insurance” shall have the meaning assigned to such term in Section 5.12(c). “Excess Cash Flow” shall mean, for any period, the remainder of (a) the sum of, without duplication, (i) Adjusted Consolidated Net Income for such period and (ii) Change in Adjusted Consolidated Working Capital (if negative) for such period, minus (b) the sum of, without duplication, (i) the aggregate amount of all Capital Expenditures made by the Borrower and its Subsidiaries in cash during such period and the aggregate amount of cash used to consummate Permitted Acquisitions and Permitted Foreign Acquisitions during such period or to acquire Servicing Rights during such period (including, for this purpose, the aggregate amount of all principal prepayments and repayments of MSR Loans during such period the proceeds of which were previously used to purchase Servicing Rights) (other than such Capital Expenditures, Permitted Acquisitions, Permitted Foreign Acquisitions and acquisitions of Servicing Rights to the extent financed with equity proceeds, Equity Interests, asset sale proceeds (other than from sales of inventory in the ordinary course of business), insurance or condemnation proceeds or Indebtedness (other than Revolving Loans) or other proceeds that would not be included in Adjusted Consolidated Net Income or utilizing the Available Amount), (ii) the aggregate amount of permanent principal payments of Indebtedness of the types described in clauses (i), (iii), (iv) and (viii) of the definition of Indebtedness of the Borrower and its Subsidiaries during such period (other than (1) repayments of MSR Loans, Non-Recourse Short-Term Warehouse Debt, Non-Recourse Securitization Debt and Non-Recourse Servicer Advance Debt, (2) repayments of revolving loans unless such repayment is accompanied by a corresponding permanent reduction in commitments in respect thereof, (3) repayments made with the proceeds of asset sales (other than from sales of inventory in the ordinary course of business), sales or issuances of Equity Interests, capital contributions, insurance or condemnation events or Indebtedness or other proceeds that would not be included in Adjusted Consolidated Net Income or utilizing the Available Amount and (4) payments of Loans and/or other Obligations, provided that repayments of Term Loans shall be deducted in determining Excess Cash Flow to the extent such repayments were required pursuant to Section 2.11(a)), (iii) Change in Adjusted Consolidated Working Capital (if positive) for such period, and (iv) the aggregate amount of Investments made in cash to the SerVertis Funds during such period (other than such Investments to the extent financed with equity proceeds, Equity Interests, asset sale proceeds (other than from sales of inventory in the ordinary course of business), insurance or condemnation proceeds or Indebtedness (other than Revolving Loans) or other proceeds that would not be included in Adjusted Consolidated Net Income or utilizing the Available Amount), provided that no more than $12,000,000 in the aggregate may be deducted pursuant to this clause (b)(iv) for all periods.   18 --------------------------------------------------------------------------------   “Excess Cash Flow Payment Date” shall mean the earlier of (a) the date occurring 90 days after the last day of each fiscal year of the Borrower (commencing with the fiscal year of the Borrower ending December 31, 2012) and (b) the third Business Day following the date on which financial statements with respect to such period are delivered pursuant to Section 5.01(c). “Excess Cash Flow Payment Period” shall mean with respect to the repayment required on each Excess Cash Flow Payment Date, the immediately preceding fiscal year of the Borrower. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Excluded Collateral” shall have the meaning assigned to such term in the Security Agreement. “Excluded Subsidiary” shall mean each (a) Non-Recourse Entity, (b) Securitization Vehicle and (c) Subsidiary that is prohibited by any applicable law from guaranteeing the Obligations or that would require the consent, approval, license or authorization of any Governmental Authority or any Regulatory Supervising Organization to guarantee the Obligations (unless such consent, approval, license or authorization has been received). “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower or any other Credit Party hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above or in which the Borrower is located and (c) in the case of a Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts payable to such Lender under applicable law in effect (including FATCA) at the time such Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Lender’s failure to comply with Section 2.20(e), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.20(a). “Executive Order” shall have the meaning assigned to such term in Section 3.22(a).   19 --------------------------------------------------------------------------------   “Existing Fannie Mae Credit Agreement” shall mean the Senior Secured Credit Agreement, dated as of October 9, 2009, among Green Tree Servicing LLC, as borrower, and Fannie Mae, as lender, as in effect on the Closing Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. “Existing Indebtedness” shall have the meaning assigned to such term in Section 3.21. “Existing Receivables Loan Agreement” shall mean the Receivables Loan Agreement, dated as of July 31, 2009, among Green Tree Advance Receivables II LLC, as borrower, Green Tree Servicing LLC, as administrator, the lenders party thereto from time to time, Wells Fargo Bank, National Association, as calculation agent, account bank and securities intermediary and Wells Fargo Foothill LLC, as agent, as in effect on the Closing Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. “Existing Receivables Purchase Agreement” shall mean each of (a) the Purchase and Sale Agreement, dated as of July 31, 2009, among Green Tree Advance Receivables II LLC, as buyer, and Green Tree Servicing LLC, as seller, (b) the Purchase and Sale Agreement, dated as of July 31, 2009, among Green Tree Advance Receivables II LLC, as buyer, and Green Tree MH LLC, as seller and (c) the Purchase and Sale Agreement, dated as of July 31, 2009, among Green Tree Advance Receivables II LLC, as buyer, and Green Tree HE/HI LLC, as seller, in each case as in effect on the Closing Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. “Existing Warehouse Loan Agreement” shall mean the Master Purchase Agreement, dated as of August 20, 2009 and as amended and restated as of August 20, 2010, among Green Tree Servicing LLC, as seller, and Silvergate Bank, as buyer, as in effect on the Closing Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. “Fair Market Value” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would reasonably be expected to agree to purchase and sell such asset, as determined in good faith by the board of directors or other governing body or, pursuant to a specific delegation of authority by such board of directors or other governing body, a designated senior executive officer, of the Borrower, or the Subsidiary of the Borrower selling such asset; provided, however, for the purposes of satisfying the criteria of “Fair Market Value” of the MSR Call Option related to Fannie Mae, the purchase price for the applicable Servicing Rights or the Equity Interests of the Fannie Mae Servicer Entity shall be considered, in the aggregate, to include all economic costs and benefits of the respective parties in such applicable transaction. “Fannie Mae” shall mean the Federal National Mortgage Association, in its corporate capacity, and any majority owned and controlled affiliate thereof.   20 --------------------------------------------------------------------------------   “Fannie Mae Credit Agreements” shall mean, collectively, (i) the Existing Fannie Mae Credit Agreement and (ii) each other credit agreement among any Subsidiary of the Borrower (including a Fannie Mae Servicer Entity), as borrower, and Fannie Mae, as lender, entered into after the Closing Date, provided that each credit agreement referred to in the preceding clause (ii) is Comparably Favorable to the Existing Fannie Mae Credit Agreement. “Fannie Mae Documents” shall mean the Fannie Mae Credit Agreements and all other documents executed and delivered with respect to the Fannie Mae Credit Agreements, as the same may be amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof. “Fannie Mae Loans” shall mean, collectively, the loans made by Fannie Mae to any Subsidiary of the Borrower (including the Fannie Mae Servicer Entity) under, and in accordance with, the Fannie Mae Credit Agreements, the proceeds of which are used exclusively to purchase Servicing Rights relating to Residential Mortgage Loans (and any related Delinquency Advances and Protective Advances with respect to such Servicing Rights that were existing at the time of such purchase) owned or controlled by Fannie Mae. “Fannie Mae Servicer Entity” shall mean a Wholly-Owned Domestic Subsidiary of the Borrower that is a Subsidiary Guarantor and is exclusively engaged in the servicing of Residential Mortgage Loans owned or controlled by Fannie Mae, the purchase of Servicing Rights with respect to Residential Mortgage Loans owned or controlled by Fannie Mae and the incurrence of Fannie Mae Loans and activities relating directly thereto. “FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (and any amended or successor provision substantively comparable thereto and not materially more onerous to comply with), and any current or future regulations or official interpretations thereof. “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. “Fee Letter” shall mean the Agent Fee Letter dated March 25, 2011, between the Borrower, Credit Suisse Securities (USA) LLC and the Administrative Agent. “Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C Participation Fees, the Issuing Bank Fees and the Prepayment Fees. “FINRA” shall mean the Financial Industry Regulatory Authority, Inc. or any other self-regulatory body which succeeds to the functions of the Financial Industry Regulatory Authority, Inc.   21 --------------------------------------------------------------------------------   “Flood Determination Form” shall have the meaning assigned to such term in Section 5.12(c). “Flood Documents” shall have the meaning assigned to such term in Section 5.12(c). “Foreign Lender” shall mean any Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code. “Foreign Pension Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by the Borrower or any one or more of its Subsidiaries primarily for the benefit of employees of the Borrower or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code. “Foreign Subsidiary” of any Person shall mean any Subsidiary of such Person that is not a Domestic Subsidiary. “Fronting Exposure” shall mean, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s Pro Rata Percentage of the outstanding L/C Exposure with respect to Letters of Credit issued by such Issuing Bank other than L/C Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof. “GAAP” shall mean generally accepted accounting principles in the United States as in effect from time to time. “Government Sponsored Entity” shall mean (i) Fannie Mae, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association and (ii) any other entity that is “sponsored”, chartered or controlled by the federal government of the United States. “Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. “Granting Lender” shall have the meaning assigned to such term in Section 9.04(i). “Green Tree Advance Receivables II LLC” shall mean Green Tree Advance Receivables II LLC, a Delaware limited liability company and a Wholly-Owned Domestic Subsidiary of the Borrower which is also a Non-Recourse Servicer Advance Debt Entity. “Green Tree Servicing LLC” shall mean Green Tree Servicing LLC, a Delaware limited liability company and a Wholly-Owned Domestic Subsidiary of the Borrower.   22 --------------------------------------------------------------------------------   “Hazardous Materials” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, lead, mold, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable environmental law; and (c) any other chemical, material or substance, the exposure to, or Release of which is prohibited, limited or regulated by any Governmental Authority. “Hedge Provider” shall mean an Eligible Hedge Counterparty that has entered into one or more Interest Rate Protection Agreements with any Non-Recourse Servicer Advance Debt Entity. “Hedge Receipts” shall mean all amounts payable to a Non-Recourse Servicer Advance Debt Entity under an Interest Rate Protection Agreement entered into with a Hedge Provider. “Heritage Walter Securitization Trust” shall mean any Securitization Vehicle of the Borrower or its Subsidiaries and any installment sale contract, chattel paper or loan contract and related promissory note and mortgage and any REO Property owned by the Borrower or its Subsidiaries, in each case in existence immediately prior to the consummation of the Acquisition. “Indebtedness” shall mean, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services and all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (iv) all Capitalized Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person in respect of indebtedness and other obligations described in another clause of this definition, (vii) all obligations under any Interest Rate Protection Agreement, any Other Hedging Agreement or under any similar type of agreement and (viii) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include trade payables, accrued expenses and deferred tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.   23 --------------------------------------------------------------------------------   “Indemnified Taxes” shall mean Taxes imposed on or with respect to any payment made by any Credit Party under any Credit Document other than Excluded Taxes. “Indemnitee” shall have the meaning assigned to such term in Section 9.05(b). “Information” shall have the meaning assigned to such term in Section 9.16. “Intercompany Debt” shall mean any Indebtedness, payables or other obligations, whether now existing or hereafter incurred, owed by the Borrower or any Subsidiary of the Borrower to the Borrower or any other Subsidiary of the Borrower. “Intercompany Loans” shall have the meaning assigned to such term in Section 6.05(viii). “Intercompany Note” shall mean a promissory note evidencing Intercompany Loans, duly executed and delivered substantially in the form of Exhibit I (or such other form as shall be reasonably satisfactory to the Administrative Agent), with blanks completed in conformity herewith. “Intercompany Subordination Agreement” shall have the meaning assigned to such term in Section 4.02(f). “Intercreditor Agreement” shall mean the Intercreditor Agreement substantially in the form attached as Exhibit B hereto among the Collateral Agent, the collateral agent under the Second Lien Credit Agreement and each Credit Party. “Interest Expense Coverage Ratio” shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense (reduced, to the extent included in such Consolidated Interest Expense, by the amount of any cash interest income with respect to Unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries) for such period; provided that for purposes of any calculation of the Interest Expense Coverage Ratio pursuant to Section 6.04(xi), Section 6.05(xii), Section 6.05(xx) or Section 6.05(xxi) or with respect to any Significant Asset Sale only, (i) Consolidated EBITDA shall be determined on a Pro Forma Basis in accordance with clause (iii) of the definition of “Pro Forma Basis” contained herein and (ii) Consolidated Interest Expense shall be determined on a Pro Forma Basis in accordance with the requirements of the definition of “Pro Forma Basis” contained herein. “Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.   24 --------------------------------------------------------------------------------   “Interest Period” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect; provided, however, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period and (c) no Interest Period for any Loan shall extend beyond the maturity date of such Loan. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day 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. “Interest Rate Protection Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement. “Investments” shall have the meaning assigned to such term in Section 6.05. “Issuing Bank” shall mean, as the context may require, (a) Credit Suisse AG, acting through any of its Affiliates or branches, in its capacity as the issuer of Letters of Credit hereunder (it being agreed that Credit Suisse AG shall only issue standby Letters of Credit hereunder), and (b) any other Lender that may become an Issuing Bank pursuant to Section 2.22(i) or Section 2.22(k), with respect to Letters of Credit issued by such Lender. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates or branches of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate or branch with respect to Letters of Credit issued by such Affiliate or branch. “Issuing Bank Fees” shall have the meaning assigned to such term in Section 2.05(c). “Joint Bookrunners” shall mean Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated in their capacity as joint bookrunners. “Knowledge of the Borrower”, “Knowledge of the Borrower or any of its Subsidiaries” or “Knowledge of the Borrower or each Credit Party” shall mean (x) on or prior to the Closing Date, the actual knowledge of any Person listed on Schedule 1.01(d) and (y) thereafter, the actual knowledge of any of the chief executive officer, president, any vice-president, secretary, any assistant secretary, treasurer, chief operating officer, chief financial officer, chief strategic officer, general counsel, any assistant general counsel, chief information officer or chief human resources officer, or any other Person performing functions that would customarily be performed by a person holding any of the foregoing positions, in each case of the Borrower.   25 --------------------------------------------------------------------------------   “L/C Commitment” shall mean the commitment of each Issuing Bank to issue Letters of Credit pursuant to Section 2.22. “L/C Disbursement” shall mean a payment or disbursement made by any Issuing Bank pursuant to a Letter of Credit issued by such Issuing Bank. “L/C Exposure” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The L/C Exposure of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time. “L/C Participation Fee” shall have the meaning assigned to such term in Section 2.05(c). “Lead Arrangers” shall mean Credit Suisse Securities (USA) LLC and RBS Securities Inc., each in their capacities as joint lead arrangers and joint bookrunners of the Credit Facilities. “Leaseholds” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures. “Lenders” shall mean (a) the Persons listed on Schedule 1.01(a) and (b) any Person that has become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance. “Letter of Credit” shall mean any letter of credit issued pursuant to Section 2.22. “LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.   26 --------------------------------------------------------------------------------   “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, charge, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or a lessor under any capital lease, conditional sale agreement or other title retention agreement or any financing lease having substantially the same economic effect as any of the foregoing). “Loans” shall mean the Revolving Loans and the Term Loans. “Margin Stock” shall have the meaning assigned to such term in Regulation U. “Material Adverse Effect” shall mean a material adverse effect on (i) the business, operations, property, assets or financial condition of the Borrower and its Subsidiaries taken as a whole, (ii) the rights or remedies of or benefits available to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other material Credit Document or (iii) the ability of the Borrower or the other Credit Parties, taken as a whole, to perform its or their obligations to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other material Credit Document. “Maximum Rate” shall have the meaning assigned to such term in Section 9.09. “Minimum Collateral Amount” shall mean, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of all Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Collateral Agent and the Issuing Banks in their sole discretion. “Monthly Payment” shall mean any scheduled monthly payment of interest and/or principal due on a Securitization Vehicle Asset. “Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto. “Mortgage” shall mean a mortgage, deed of trust, deed to secure debt or similar security instrument made by any Credit Party in favor of, or for the benefit of, the Collateral Agent for the benefit of the Secured Creditors in such form or forms as are reasonably satisfactory to the Collateral Agent. “Mortgage Policy” shall mean a lender’s title insurance policy (Form 2006). “Mortgaged Property” shall mean any Real Property owned by the Borrower or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms hereof.   27 --------------------------------------------------------------------------------   “MSR Call Option” shall mean (x) the right of an MSR Lender which is a Government Sponsored Entity to repurchase Servicing Rights from the Borrower or any of its Subsidiaries the purchase of which was initially financed by such MSR Lender with proceeds of MSR Loans and (y) in the case of Fannie Mae, also the right of Fannie Mae to purchase all of the Equity Interests of the Fannie Mae Servicer Entity, in each case so long as (i) each such repurchase or purchase right is set forth in the applicable MSR Document or Servicing Agreement and (ii) the purchase price in respect thereof is at Fair Market Value and for cash. “MSR Documents” shall mean, collectively, (i) each Fannie Mae Credit Agreement and (ii) each other credit (or similar) agreement among a Subsidiary of the Borrower, as borrower, and an MSR Lender, as lender, entered into after the Closing Date with respect to MSR Loans and containing terms and conditions as are customary for similar financings (as reasonably determined by the Borrower in good faith). “MSR Lender” shall mean a third party financing source (including, without limitation, Fannie Mae) which provides financing to a Subsidiary of the Borrower the proceeds of which are used exclusively to purchase Servicing Rights of Residential Mortgage Loans owned or controlled by such financing source. “MSR Loans” shall mean, collectively, (i) the Fannie Mae Loans and (ii) all other loans made by each other MSR Lender to a Subsidiary of the Borrower under, and in accordance with, the applicable MSR Documents, the proceeds of which are used exclusively to purchase Servicing Rights relating to Residential Mortgage Loans (and any related Delinquency Advances and Protective Advances with respect to such Servicing Rights that were existing at the time of such purchase) owned or controlled by such MSR Lender. “Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate currently makes or is obligated to make contributions or to which the Borrower or any ERISA Affiliate has made or was obligated, within the preceding six years, to make contributions. “NAIC” shall mean the National Association of Insurance Commissioners. “Net Cash Proceeds” shall mean, for any event requiring a repayment of Term Loans pursuant to Section 2.13(b) or (e), as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event and, in the case of a Recovery Event, net of the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than Indebtedness secured by the Security Documents or the Second Lien Credit Documents) which is secured by the respective property or assets destroyed, damaged, taken or otherwise underlying such Recovery Event. “Net Equity Proceeds” shall mean, with respect to each capital contribution to any Person or sale or issuance by any Person of its Equity Interests, the cash proceeds received by such Person therefrom net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary discounts and commissions and reasonable legal, advisory and other fees and expenses associated therewith).   28 --------------------------------------------------------------------------------   “Net Sale Proceeds” shall mean for any sale or other disposition of assets, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such sale or other disposition of assets, net of (i) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and other fees and expenses (including title and recording expenses), associated therewith and sales, VAT and transfer taxes arising therefrom), (ii) payments of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition, (iii) the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than Indebtedness secured by the Security Documents or by the Second Lien Credit Documents) which is secured by the respective assets which were sold or otherwise disposed of, and (iv) the estimated net marginal increase in income taxes which will be payable by the Borrower’s consolidated group or any Subsidiary of the Borrower with respect to the fiscal year of the Borrower in which the sale or other disposition occurs as a result of such sale or other disposition; provided, however, that such gross proceeds shall not include any portion of such gross cash proceeds which the Borrower determines in good faith should be reserved for post-closing adjustments (to the extent the Borrower delivers to the Administrative Agent a certificate signed by an Authorized Officer of the Borrower as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than 12 months following the date of the respective asset sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by the Borrower or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by the Borrower and/or any of its Subsidiaries from such sale or other disposition. “NFIP” shall have the meaning assigned to such term in Section 5.12(c). “Non-Defaulting Lender” shall mean, at any time, each Lender that is not a Defaulting Lender at such time. “Non-Recourse Entities” shall mean, collectively, (i) each Non-Recourse Servicer Advance Debt Entity and (ii) each Non-Recourse Warehouse Debt Entity. “Non-Recourse MSR Loans” shall mean MSR Loans with respect to which recourse for payment is limited solely to the applicable Servicing Rights acquired with the proceeds of such MSR Loans. “Non-Recourse Securitization Debt” shall mean Indebtedness of a Securitization Vehicle (whether or not consolidated for financial accounting purposes with the Borrower) as to which neither the Borrower nor any Subsidiary (other than a Subsidiary that is also a Securitization Vehicle) has any liability, either directly or by way of a Contingent Obligation, operation of law or otherwise, other than with respect to any Specified Contingent Liability.   29 --------------------------------------------------------------------------------   “Non-Recourse Servicer Advance Debt” of any Non-Recourse Servicer Advance Debt Entity shall mean all Indebtedness of such Non-Recourse Servicer Advance Debt Entity under Non-Recourse Servicer Advance Documents to which it is a party with respect to which (i) recourse for payment is limited solely to the applicable Transferred Assets encumbered by a Lien securing such Indebtedness and (ii) the proceeds of such Indebtedness are used solely to purchase Transferred Receivables in order to enable the Sellers to substantially contemporaneously fund Delinquency Advances and Protective Advances. “Non-Recourse Servicer Advance Debt Entity” shall mean any special purpose bankruptcy remote Subsidiary of the Borrower that is exclusively engaged in the purchase of Transferred Assets from Sellers pursuant to any Receivables Purchase Agreement and the incurrence of Non-Recourse Servicer Advance Debt and Subordinated Seller Advance Loans in connection therewith and activities relating directly thereto. “Non-Recourse Servicer Advance Documents” shall mean, collectively, (i) the Existing Receivables Loan Agreement and the Existing Receivables Purchase Agreement and (ii) each other loan (or similar) agreement and Receivables Purchase Agreement entered into by a Non-Recourse Servicer Advance Debt Entity in connection with the incurrence by it of Non-Recourse Servicer Advance Debt and the related purchase of Transferred Receivables and containing terms and conditions as are customary for similar financings (as reasonably determined by the Borrower in good faith). “Non-Recourse Short-Term Warehouse Debt” of any Non-Recourse Warehouse Debt Entity shall mean all Short-Term Warehouse Debt of such Non-Recourse Warehouse Debt Entity with respect to which recourse for payment is limited solely to the applicable Residential Mortgage Loans originated by such Non-Recourse Warehouse Debt Entity with the proceeds of such Short-Term Warehouse Debt. “Non-Recourse Warehouse Debt Entity” shall mean any special purpose bankruptcy remote Subsidiary of the Borrower that is exclusively engaged in the origination of Residential Mortgage Loans and the incurrence of Non-Recourse Short-Term Warehouse Debt in connection therewith and activities relating directly thereto. “Non-Wholly Owned Subsidiary” shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person. “Notes” means any promissory notes issued from time to time pursuant to Section 2.04(e). “Obligations” shall mean all amounts owing to the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender pursuant to the terms of this Agreement or any other Credit Document, including, without limitation, all amounts in respect of any principal, premium, interest (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding (or which would accrue but for the operation of applicable bankruptcy or insolvency laws) at the rate provided for herein, whether or not such interest is an allowed or allowable claim in any such proceeding), penalties, fees, expenses, indemnifications, reimbursements (including L/C Disbursements with respect to Letters of Credit), damages and other liabilities, and guarantees of the foregoing amounts.   30 --------------------------------------------------------------------------------   “OFAC” shall have the meaning assigned to such term in Section 3.22(a). “Other Hedging Agreements” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices. “Other Taxes” shall mean any and all present or future stamp or documentary taxes, mortgage recording taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document. “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto. “Permitted Acquisition” shall mean the acquisition by the Borrower or a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor of an Acquired Entity or Business (including by way of merger of such Acquired Entity or Business with and into the Borrower (so long as the Borrower is the surviving corporation) or a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor (so long as a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor is the surviving corporation)), provided that (in each case) (A) the consideration paid or to be paid by the Borrower or such Wholly-Owned Domestic Subsidiary consists solely of cash (including proceeds of Revolving Loans), Qualified Equity Interests of the Borrower, the issuance or incurrence of Indebtedness otherwise permitted by Section 6.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 6.04, (B) in the case of the acquisition of 100% of the Equity Interests of any Acquired Entity or Business (including by way of merger), such Acquired Entity or Business shall own no Equity Interests of any other Person unless either (x) such Acquired Entity or Business owns 100% of the Equity Interests of such other Person and such other Person is incorporated or organized in the United States or any State thereof or the District of Columbia or (y) if such Acquired Entity or Business owns Equity Interests in any other Person which is a Non-Wholly Owned Subsidiary or a Foreign Subsidiary of such Acquired Entity or Business, (1) any such Non-Wholly Owned Subsidiary or Foreign Subsidiary of the Acquired Entity or Business shall have been a Non-Wholly Owned Subsidiary or Foreign Subsidiary of such Acquired Entity or Business prior to the date of the respective Permitted Acquisition and shall not have been created or established in contemplation thereof and (2) such Acquired Entity or Business and/or its Wholly-Owned Domestic Subsidiaries own at least 95% of the total value of all the assets owned by such Acquired Entity or Business and its subsidiaries (for purposes of such determination, excluding the value of the Equity Interests of Non-Wholly Owned Subsidiaries and Foreign Subsidiaries held by such Acquired Entity or Business and its Wholly-Owned Subsidiaries), (C) the Acquired Entity or Business acquired pursuant to the respective Permitted Acquisition is in a business permitted by Section 6.13 and (D) all requirements of Section 6.14 applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of “Permitted Acquisition” shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement.   31 --------------------------------------------------------------------------------   “Permitted Encumbrance” shall mean, with respect to any Mortgaged Property, such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, all of which exceptions must be acceptable to the Administrative Agent in its reasonable discretion. “Permitted Equity Issuance” shall mean any sale or issuance of any Qualified Equity Interests of the Borrower or a cash capital contribution to the Borrower in respect of its common Equity Interests. “Permitted Foreign Acquisition” shall mean any acquisition by a Wholly-Owned Subsidiary of the Borrower which does not constitute a Permitted Acquisition and which is of either (x) all or substantially all of the assets, or all or substantially all of the assets constituting a business, division or product line, of any Person not already a Subsidiary of the Borrower or (y) 100% of the Equity Interests of any such Person, which Person shall, as a result of the acquisition of such Equity Interests, become a Wholly Owned Subsidiary of the Borrower (or shall be merged with and into a Wholly Owned Subsidiary of the Borrower); provided that (in each case) (A) the consideration paid or to be paid by such Wholly-Owned Subsidiary consists solely of cash, Qualified Equity Interests of the Borrower, the issuance or incurrence of Indebtedness otherwise permitted by Section 6.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 6.04, (B) in the case of the acquisition of 100% of the Equity Interests of any such Person (including by way of merger), such Person shall own no Equity Interests of any other Person unless either (x) such Person owns 100% of the Equity Interests of such other Person or (y) if such Person owns Equity Interests in any other Person which is a Non-Wholly Owned Subsidiary of such Person, (1) any such Non-Wholly Owned Subsidiary of such Person shall have been a Non-Wholly Owned Subsidiary of such Person prior to the date of the respective Permitted Foreign Acquisition and shall not have been created or established in contemplation thereof and (2) such Person and/or its Wholly-Owned Subsidiaries own at least 95% of the total value of all the assets owned by such Person and its subsidiaries (for purposes of such determination, excluding the value of the Equity Interests of Non-Wholly Owned Subsidiaries held by such Person and its Wholly-Owned Subsidiaries), (C) such Person acquired pursuant to the respective Permitted Foreign Acquisition is in a business permitted by Section 6.13 and (D) all requirements of Section 6.14 applicable to Permitted Foreign Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of “Permitted Foreign Acquisition” shall constitute a Permitted Foreign Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Foreign Acquisition for purposes of this Agreement.   32 --------------------------------------------------------------------------------   “Permitted Liens” shall have the meaning assigned to such term in Section 6.01. “Permitted Refinancing” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to refinance, renew, replace, defease, discharge or refund Indebtedness outstanding under, the Second Lien Credit Agreement; provided that: (a) the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness so exchanged, refinanced, renewed, replaced, defeased, discharged or refunded (plus all accrued interest thereon and the amount of all reasonable fees, expenses and premiums incurred in connection with such exchange, refinancing, renewal, replacement, defeasance, discharge or refunding); (b) such Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being exchanged, refinanced, renewed, replaced, defeased, discharged or refunded; (c) the terms of such Indebtedness, taken as a whole, are not more restrictive to the Credit Parties than the Indebtedness being exchanged, refinanced, renewed, replaced, defeased, discharged or refunded (other than with respect to interest rates, fees, premiums and no call periods); (d) no person, other than a Credit Party, shall be an obligor in respect of such exchanged, refinanced, renewed, replaced, defeased, discharged or refunded Indebtedness; (e) if such Indebtedness is secured by a junior Lien on all or any portion of the Collateral, the holders of such Indebtedness (or an agent or trustee on their behalf) enters into an intercreditor agreement with the Collateral Agent that is in substantially the form of Exhibit B hereto (mutatis mutandis); and (f) no Default or Event shall have occurred and be continuing at the time of such exchange, refinancing, renewal, replacement, defeasance, discharge or refunding. “Person” shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any Governmental Authority. “Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. “Platform” shall have the meaning assigned to such term in Section 9.01. “Pledge Agreement” shall have the meaning assigned to such term in Section 4.02(g).   33 --------------------------------------------------------------------------------   “Pledge Agreement Collateral” shall mean all “Collateral” as defined in the Pledge Agreement. “Pledgee” shall have the meaning assigned to such term in the Pledge Agreement. “Preferred Equity”, as applied to the Equity Interests of any Person, means Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designed) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person. “Prepayment Fee” shall have the meaning assigned to such term in Section 2.12(d). “Prime Rate” shall mean the rate of interest per annum determined from time to time by Credit Suisse AG as its prime rate in effect at its principal office in New York City and notified to the Borrower. The prime rate is a rate set by Credit Suisse AG based upon various factors including Credit Suisse AG’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such rate. “Pro Forma Basis” shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (without duplication) (x) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition, a Permitted Foreign Acquisition or a transaction permitted hereunder that utilizes the Available Amount, and other than MSR Loans) after the first day of the relevant Calculation Period or Test Period, as the case may be, as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, (y) the permanent repayment of any Indebtedness (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) after the first day of the relevant Test Period or Calculation Period, as the case may be, as if such Indebtedness had been retired or repaid on the first day of such Test Period or Calculation Period, as the case may be, and (z) any Permitted Acquisition, Permitted Foreign Acquisition, purchase of Servicing Rights (unless such purchase is financed with the proceeds of MSR Loans) or any Significant Asset Sale then being consummated as well as any other Permitted Acquisition, Permitted Foreign Acquisition, purchase of Servicing Rights (unless such purchase is financed with the proceeds of MSR Loans) or any other Significant Asset Sale if consummated after the first day of the relevant Test Period or Calculation Period, as the case may be, and on or prior to the date of the respective Permitted Acquisition, Permitted Foreign Acquisition, purchase of Servicing Rights or Significant Asset Sale, as the case may be, then being effected, as if each such transaction had been effected on the first day of such Test Period or Calculation Period, as the case may be with the following rules to apply in connection therewith: (i) all Indebtedness (x) (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance Permitted Acquisitions, Permitted Foreign Acquisitions, purchases of Servicing Rights or a transaction permitted hereunder that utilizes the Available Amount) incurred or issued after the first day of the relevant Test Period or Calculation Period (whether incurred to finance a Permitted Acquisition, a Permitted Foreign Acquisition or a purchase of Servicing Rights, to refinance Indebtedness or otherwise) shall be deemed to have been incurred or issued (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, and remain outstanding through the date of determination and (y) (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) permanently retired or redeemed after the first day of the relevant Test Period or Calculation Period, as the case may be, shall be deemed to have been retired or redeemed on the first day of such Test Period or Calculation Period, as the case may be, and remain retired through the date of determination;   34 --------------------------------------------------------------------------------   (ii) all Indebtedness assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness, or (y) the rates which would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); provided that all Indebtedness (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions; and (iii) whenever pro forma effect is given to any Permitted Acquisition, any Permitted Foreign Acquisition, any purchase of Servicing Rights or any Significant Asset Sale, the pro forma calculations shall be made in good faith by an Authorized Officer of the Borrower and, except as set forth in the next sentence, in a manner consistent with Article 11 of Regulation S-X of the Securities Act, as set forth in a certificate of an Authorized Officer of the Borrower (with supporting calculations) delivered to the Administrative Agent. In addition to any adjustments consistent with Regulation S-X, such certificate may set forth additional pro forma adjustments arising out of factually supportable and identifiable cost savings initiatives attributable to any such transaction (net of any additional costs associated with such transaction) and expected in good faith to be realized within 12 months following such transaction, including, but not limited to, (w) reduction in personnel expenses, (x) reduction of costs related to administrative functions, (y) reductions of costs related to leased or owned properties and (z) reductions from the consolidation of operations and streamlining of corporate overhead (taking into account, for purposes of determining such calculation, any historical financial statements of the business or entities acquired or disposed of, assuming such transaction and all other such transaction that have been consummated since the beginning of such period, and any Indebtedness or other liabilities repaid or incurred in connection therewith had been consummated and incurred or repaid at the beginning of such period; provided, that, unless the Administrative Agent shall otherwise agree in its reasonable discretion, the aggregate amount of adjustments made pursuant to this sentence shall at no time exceed 10% of Consolidated EBITDA prior to giving pro forma effect thereto.   35 --------------------------------------------------------------------------------   “Pro Rata Percentage” of any Revolving Credit Lender at any time shall mean the percentage of the Total Revolving Credit Commitment represented by such Lender’s Revolving Credit Commitment. In the event the Revolving Credit Commitments shall have expired or been terminated, the Pro Rata Percentages shall be determined on the basis of the Revolving Credit Commitments most recently in effect, giving effect to any subsequent assignments. “Projections” shall mean the projections that are contained in the Private Supplement to the Confidential Information Memorandum and that were prepared by or on behalf of the Borrower in connection with the Transactions and delivered to the Administrative Agent and the Lenders on or about May 19, 2011. “Property” shall mean the Real Property, including the improvements thereon, or the personal property (tangible and intangible), in either case which are encumbered pursuant to a Securitization Vehicle Asset. “Protective Advance” shall mean an advance by a Seller pursuant to the terms of a Servicing Agreement of fees, costs or expenses to inspect, protect, preserve or repair the Properties securing Securitization Vehicle Assets serviced by such Seller under such Servicing Agreement or that have been acquired through foreclosure or deed in lieu of foreclosure, including, but not limited to, delinquent taxes, forced placed insurance, necessary legal fees and costs expended or incurred by a Seller in connection with foreclosure, bankruptcy, eviction or litigation actions with or involving the obligors on such Securitization Vehicle Assets, as well as costs to obtain clear title to a Property, to protect the priority of the Lien created by such Securitization Vehicle Asset on such Property, and to dispose of Properties taken through foreclosure or by deed in lieu thereof or other similar action. “Public Lender” shall have the meaning assigned to such term in Section 9.01. “Purchase Agreement” means the Membership Interest Purchase Agreement dated as of March 25, 2011 by and among GTH LLC, the Target and the Borrower. “Qualified Equity Interests” shall mean any Equity Interests of the Borrower so long as the terms of any such Equity Interests (or the terms of any security into which it is convertible or for which it is exchangeable) (a) do not contain any maturity, mandatory put, redemption, repayment, sinking fund or other similar provision (whether as a result of an asset sale, change of control or otherwise), (b) do not require the payment of dividends or distributions that would otherwise be prohibited by the terms of this Agreement and (c) do not provide that such Equity Interests are or will become convertible into or exchangeable for Indebtedness or any other Equity Interests (other than Qualified Equity Interests), in each case before the date that is one year after the Term Loan Maturity Date.   36 --------------------------------------------------------------------------------   “Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds. “Receivable” shall mean the right to reimbursement from a Securitization Vehicle for a Delinquency Advance or a Protective Advance not theretofore reimbursed and all rights to enforce payment of such obligation under the related Servicing Agreement. “Receivables Purchase Agreement” shall mean each purchase and sale agreement (including the Existing Receivables Purchase Agreement) between a Seller, as seller, and a Non-Recourse Servicer Advance Debt Entity, as buyer, pursuant to which a Non-Recourse Servicer Advance Debt Entity purchases Transferred Receivables from a Seller in order to enable such Seller to fund Delinquency Advances and Protective Advances, provided that each Receivables Purchase Agreement shall not be less favorable in any material respect to a Seller than the Existing Receivables Purchase Agreement. “Recovery Event” shall mean the receipt by the Borrower or any of its Subsidiaries of any cash insurance proceeds or condemnation awards payable (i) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of the Borrower or any of its Subsidiaries or (ii) under any policy of insurance required to be maintained under Section 5.03 (excluding, for the avoidance of doubt, business interruption insurance). “Register” shall have the meaning assigned to such term in Section 9.04(d). “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. “Regulation T” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. “Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. “Regulation X” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. “Regulatory Supervising Organization” shall mean any of (a) the SEC, (b) FINRA, (c) the New York Stock Exchange, (d) state securities commissions and (e) any other U.S. or foreign governmental or self-regulatory organization, exchange, clearing house or financial regulatory authority of which any Subsidiary is a member or to whose rules it is subject. “REIT Subsidiary” shall mean a Subsidiary that is intended by the Borrower to qualify as a real estate investment trust under the Code.   37 --------------------------------------------------------------------------------   “Related Fund” shall mean, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents, representatives and advisors of such Person and such Person’s Affiliates. “Release” shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating or the like, into or upon any land or water or air, or otherwise entering into the environment. “REO Property” shall mean any real estate, other property and chattels, in each case acquired as a result of foreclosure or repossession in the ordinary course of business. “Repayment Date” shall have the meaning given such term in Section 2.11(a). “Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived. “Required Lenders” shall mean, at any time, Lenders having Loans, L/C Exposure, and unused Revolving Credit Commitments and Term Loan Commitments representing more than 50% of the sum of all Loans outstanding, L/C Exposure, and unused Revolving Credit Commitments and Term Loan Commitments at such time; provided that the Revolving Loans, L/C Exposure, and unused Revolving Credit Commitments and Term Loan Commitments of any Defaulting Lender shall be disregarded in the determination of the Required Lenders at any time. “Residential Mortgage” shall mean a mortgage, deed of trust, deed to secured debt, security deed or other similar evidence of a lien legally effective in the U.S. jurisdiction where the residential owned Real Property that is its subject is located to create and constitute a lien on improved Real Property. “Residential Mortgage Loan” shall mean any residential mortgage loan, manufactured housing installment sale contract and loan agreement, home equity loan, home improvement loan, consumer installment sale contract or similar loan evidenced by a Residential Mortgage Note, and any installment sale contract, loan contract or chattel paper. “Residential Mortgage Note” shall mean a promissory note, bond or similar instrument evidencing indebtedness of an obligor under a Residential Mortgage Loan, including, without limitation, all related security interests and any and all rights to receive payments due thereunder.   38 --------------------------------------------------------------------------------   “Restricted” shall mean, when referring to cash or Cash Equivalents of the Borrower or any of its Subsidiaries, that such cash or Cash Equivalents (i) appears (or would be required to appear) as “restricted” on a consolidated balance sheet of the Borrower or of any such Subsidiary (unless such appearance is related to the Credit Documents or the Second Lien Credit Documents or Liens created thereunder), (ii) are subject to any Lien in favor of any Person other than the Collateral Agent for the benefit of the Secured Creditors (other than subordinated liens in favor of the collateral agent under the Second Lien Credit Agreement) or (iii) are not otherwise generally available for use by the Borrower or such Subsidiary. “Returns” shall have the meaning assigned to such term in Section 3.09. “Revolving Credit Borrowing” shall mean a Borrowing comprised of Revolving Loans. “Revolving Credit Commitment” shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans hereunder (and to acquire participations in Letters of Credit as provided for herein) as set forth on Schedule 1.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. “Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s L/C Exposure. “Revolving Credit Lender” shall mean a Lender with a Revolving Credit Commitment or an outstanding Revolving Loan. “Revolving Credit Maturity Date” shall mean the earlier of (a) the day that is five years after the Closing Date and (b) June 30, 2016; provided that if either such day is not a Business Day, the Revolving Credit Maturity Date shall be the immediately preceding Business Day. “Revolving Loans” shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.01(b). “S&P” shall mean Standard & Poor’s Ratings Service, or any successor thereto. “SEC” shall have the meaning assigned to such term in Section 5.01(h). “Second Lien Credit Agreement” shall mean the Second Lien Credit Agreement dated as the date hereof among the Borrower, the lenders party thereto from time to time and Credit Suisse AG, as administrative agent and collateral agent, as in effect on the Closing Date and as thereafter amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof, and any Permitted Refinancing thereof. “Second Lien Credit Documents” shall mean the “Credit Documents” as defined in the Second Lien Credit Agreement.   39 --------------------------------------------------------------------------------   “Secured Creditors” shall have the meaning assigned that term in the respective Security Documents. “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Securitization Vehicle” shall mean (i) each real estate mortgage investment conduit or other trust the subject of a Servicing Agreement or (ii) any other special purpose bankruptcy remote entity that is formed for the purpose of being a depositor or transferor into an entity described in clause (i) of this definition, other than a Non-Recourse Entity, but only if in each case of (i) and (ii) each of the following conditions is satisfied: (x) such conduit, trust or other entity would not be consolidated with the Borrower for financial accounting purposes but for the application of Statement of Financial Accounting Standard No. 166 or 167 issued by the Financial Accounting Standards Board or successor provisions thereto (or any interpretation thereof by the Financial Accounting Standards Board) and (y) neither the Borrower nor any of its Subsidiaries has any liability in respect of any Indebtedness of such conduit, trust or other entity (whether by contract, Contingent Obligation, operation of law or otherwise), other than with respect to any Specified Contingent Liability. “Securitization Vehicle Assets” shall mean, with respect to a Securitization Vehicle, the pool of home equity loan contracts, home improvement contracts, manufactured housing loan contracts, installment sale or loan contracts and related promissory notes and mortgages constituting part of the corpus of such Securitization Vehicle. “Security Agreement” shall have the meaning assigned to such term in Section 4.02(h). “Security Agreement Collateral” shall mean all “Collateral” as defined in the Security Agreement. “Security Document” shall mean and include each of the Security Agreement, the Pledge Agreement, each Mortgage, the Intercreditor Agreement and, after the execution and delivery thereof, each Additional Security Document. “Seller” shall mean each Subsidiary of the Borrower (other than a Non-Recourse Entity) that is a “Seller” under a Receivables Purchase Agreement. “SerVertis Funds” shall mean, collectively, (i) SerVertis Fund I L.P., a Delaware limited partnership, (ii) SerVertis Master Fund I L.P., an exempted limited partnership registered under the Exempted Limited Partnership Law (Revised) of the Cayman Islands, (iii) SerVertis Fund I Ltd., an exempted company incorporated and existing under the laws of the Cayman Islands, (iv) SerVertis REO LLC, a Delaware limited liability company, (v) SerVertis Depositor, LLC, a Delaware limited liability company, (vi) SerVertis SPV Holdings, LLC, a Delaware limited liability company, (vii) SerVertis Grantor Trust Holdings, LLC, a Delaware limited liability company, (viii) SerVertis GP, LLC, a Delaware limited liability company, (ix) any Person electing to be treated as a real estate investment trust under the Code or any fund (or group of related funds) managed by the Borrower or any Subsidiary that has as its primary investment objective the origination or acquisition of Residential Mortgage Loans (performing or non-performing) or interests therein, including mortgage backed securities and (x) any similarly structured Affiliate or Subsidiary of any of the foregoing.   40 --------------------------------------------------------------------------------   “Servicing Agreement” shall mean each pooling and servicing agreement, securitization servicing agreement, sale and servicing agreement, servicing agreement, transfer and servicing agreement, sub-servicing agreement, trust agreement, indenture and other agreement howsoever denominated pursuant to which a seller services or advances on Securitization Vehicle Assets, the related Securitization Vehicle is formed or the servicing of the Securitization Vehicle Assets in the related Securitization Vehicle is governed, each as amended, restated, modified or supplemented from time to time in accordance with the terms hereof and thereof. “Servicing Rights” of any Person shall mean all of such Person’s rights and interests under its Servicing Agreements (or any equivalent agreement) with the seller of such rights and interests including (i) the right to service the Residential Mortgage Loans that are the subject matter of the Servicing Agreements, (ii) to be compensated, directly or indirectly, for doing so, and (iii) the ownership of all files, electronic data, and finds related to the Residential Mortgage Loans. “Servicing Rights Acknowledgement Agreement” shall mean an Acknowledgement Agreement, substantially in the form of Exhibit L (with such changes thereto (including, without limitation, to reflect a different owner of the respective Residential Mortgage Loans), or such other form, as may be approved by the Administrative Agent), among the Collateral Agent, the respective owner of the Residential Mortgage Loans to which the applicable Servicing Rights relate and the applicable Credit Party pursuant to which the Collateral Agent acknowledges and agrees that its security interest in the Servicing Rights described in such Acknowledgement Agreement is subject and subordinate to all rights, powers and prerogatives of such owner on the terms (and subject to the conditions) set forth in such Acknowledgement Agreement. “Short-Term Warehouse Debt” of any Subsidiary of the Borrower (including, without limitation, a Non-Recourse Warehouse Debt Entity) shall mean all Indebtedness of such Subsidiary under Short-Term Warehouse Documents to which it is a party (which Indebtedness may not be outstanding for more than 90 days from the date that the respective Residential Mortgage Loan is originated) with respect to which the proceeds of such Indebtedness are used solely to originate Residential Mortgage Loans. “Short-Term Warehouse Documents” shall mean, collectively, (i) the Existing Warehouse Loan Agreement and (ii) each other loan (or similar) agreement entered into by a Subsidiary of the Borrower (including, without limitation, a Non-Recourse Warehouse Debt Entity) in connection with the incurrence by it of Short-Term Warehouse Debt and containing terms and conditions as are customary for similar financings (as reasonably determined by the Borrower in good faith).   41 --------------------------------------------------------------------------------   “Significant Asset Sale” shall mean each Asset Sale (or series of related Asset Sales) which generates Net Sale Proceeds of at least $2,500,000. “Specified Credit Agreement” shall mean the Credit Agreement dated as of December 18, 2009 among the Target, Green Tree Credit Solutions LLC, the lenders party thereto and Deutsche Bank Trust Company Americas, as administrative agent. “Specified Contingent Liabilities” shall mean those contingent liabilities of Green Tree Servicing LLC existing as of the Closing Date commonly referred to as the MBIA clean-up call obligation, the Freddie Mac repurchase obligation and the LOC payment amount and related solely to the acquisition by Green Tree Servicing LLC of Green Point Credit, LLC in 2004. “SPV” shall have the meaning assigned to such term in Section 9.04(i). “Statutory Reserves” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board). Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of the Board) 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 any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. “Subordinated Seller Advance Loans” shall mean the loans made by each Seller to a Non-Recourse Servicer Advance Debt Entity under, and in accordance with, the applicable Subordinated Seller Advance Note and Receivables Purchase Agreement, the proceeds of which are used exclusively by such Non Recourse Servicer Advance Debt Entity to finance the portion of the purchase price for the Transferred Receivables that are not financed with Non-Recourse Servicer Advance Debt (which portion of such purchase price shall not exceed 30% of the aggregate purchase price for the respective Transferred Receivables). “Subordinated Seller Advance Note” shall mean an unsecured subordinated note issued by a Non-Recourse Servicer Advance Debt Entity to a Seller which is junior and subordinate to such Non-Recourse Servicer Advance Debt Entity’s Non-Recourse Servicer Advance Debt. “Subsidiaries Guaranty” shall have the meaning assigned to such term in Section 4.02(e).   42 --------------------------------------------------------------------------------   “Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. “Subsidiary Guarantor” shall mean each Wholly-Owned Domestic Subsidiary of the Borrower (other than the Excluded Subsidiaries) (in each case, whether existing on the Closing Date or established, created or acquired after the Closing Date), unless and until such time as the respective Wholly-Owned Domestic Subsidiary is released from all of its obligations under the Subsidiaries Guaranty in accordance with the terms and provisions thereof. “Syndication Agent” shall mean The Royal Bank of Scotland plc acting in its capacity as syndication agent. “Target” shall mean GTCS Holdings LLC, a Delaware limited liability company. “Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. “Term Borrowing” shall mean a Borrowing comprised of Term Loans. “Term Lender” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan. “Term Loan Commitment” shall mean, with respect to each Lender, the commitment of such Lender to make Term Loans hereunder as set forth on Schedule 1.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its Term Loan Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. “Term Loan Maturity Date” shall mean the earlier of (a) the day that is five years after the Closing Date and (b) June 30, 2016; provided that if either such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day. “Term Loans” shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01(a).   43 --------------------------------------------------------------------------------   “Test Period” shall mean each period of four consecutive fiscal quarters of the Borrower then last ended, in each case taken as one accounting period; provided that in the case of any Test Period which includes any fiscal quarter of the Borrower ending on or prior to September 30, 2012, the rules set forth in the two immediately succeeding sentences shall apply; provided further, that in the case of determinations of the Total Leverage Ratio pursuant to this Agreement, such further adjustments (if any) as described in the proviso to the definition of “Total Leverage Ratio” contained herein shall be made to the extent applicable. In the case of determinations of the Total Leverage Ratio and the Interest Expense Coverage Ratio pursuant to this Agreement, if the respective Test Period (i) includes the fiscal quarter of the Borrower ended December 31, 2010, Consolidated EBITDA for such fiscal quarter shall be deemed to be $47.5 million, (ii) includes the fiscal quarter of the Borrower ended March 31, 2011, Consolidated EBITDA for such fiscal quarter shall be deemed to be $50.3 million, (iii) includes the fiscal quarter of the Borrower ended June 30, 2011, Consolidated EBITDA for such fiscal quarter shall be deemed to be the actual Consolidated EBITDA for such fiscal quarter (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on March 31, 2011) and (iv) includes the fiscal quarter of the Borrower ended September 30, 2011, Consolidated EBITDA for such fiscal quarter shall be deemed to be the actual Consolidated EBITDA for such fiscal quarter (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on June 30, 2011). In the case of determinations of the Interest Expense Coverage Ratio pursuant to this Agreement, (i) in the case of the Test Period ending on September 30, 2011, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on October 1, 2010 and ending on September 30, 2011 (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on October 1, 2010), (ii) in the case of the Test Period ending on December 31, 2011, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on January 1, 2011 and ending on December 31, 2011 (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on January 1, 2011), (iii) in the case of the Test Period ending on March 31, 2012, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on April 1, 2011 and ending on March 31, 2012 (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on April 1, 2011) and (iv) in the case of the Test Period ending on June 30, 2012, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on July 1, 2011 and ending on June 30, 2012 (determined on a Pro Forma Basis giving effect to the Transactions as if same had occurred on July 1, 2011). “Total Leverage Ratio” shall mean, on any date of determination, the ratio of (x) Consolidated Indebtedness on such date to (y) Consolidated EBITDA for the Test Period most recently ended on or prior to such date; provided that, for purposes of any calculation of the Total Leverage Ratio pursuant to this Agreement, Consolidated EBITDA shall be determined on a Pro Forma Basis in accordance with clause (iii) of the definition of “Pro Forma Basis” contained herein. “Total Revolving Credit Commitment” shall mean, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. The initial Total Revolving Credit Commitment is $45,000,000. “Transactions” shall mean, collectively, (a) the execution, delivery and performance by the Borrower of the Purchase Agreement and the consummation of the Acquisition and the other transactions contemplated thereby, (b) the execution, delivery and performance by the Borrower and the Subsidiaries party thereto of the Second Lien Credit Agreement and the other Second Lien Credit Documents and the making of the loans thereunder, (c) the execution, delivery and performance by the Credit Parties of the Credit Documents to which they are a party and the making of the Borrowings hereunder, (d) the repayment of all amounts due or outstanding under or in respect of, and the termination of, the Specified Credit Agreement and (e) the payment of related fees and expenses.   44 --------------------------------------------------------------------------------   “Transferred Assets” shall mean, at any time, the Transferred Receivables, all Collections with respect thereto and other proceeds thereof and any assets directly related thereto, including books, records and supporting obligations, contracts and other rights directly relating thereto, in each case which are customarily transferred in connection with the asset securitization transactions involving Transferred Receivables. “Transferred Receivables” shall mean, at any time, all outstanding Receivables acquired by a Non-Recourse Servicer Advance Debt Entity from a Seller pursuant to any Receivables Purchase Agreement. “Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “Rate” shall mean the Adjusted LIBO Rate and the Alternate Base Rate. “UCC” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction. “Uniform Customs” shall have the meaning assigned to such term in Section 9.07. “United States” and “U.S.” shall each mean the United States of America. “Unrestricted” shall mean, when referring to cash or Cash Equivalents of the Borrower or any of its Subsidiaries, that such cash or Cash Equivalents are not Restricted. “USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)). “Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the then outstanding principal amount of such Indebtedness into (ii) the product obtained by multiplying (x) the amount of each then remaining installment or other required scheduled payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment. “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal by the Borrower or an ERISA Affiliate from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.   45 --------------------------------------------------------------------------------   “Wholly-Owned Domestic Subsidiary” shall mean, as to any Person, any Wholly Owned Subsidiary of such Person which is a Domestic Subsidiary. “Wholly-Owned Foreign Subsidiary” shall mean, as to any Person, any Wholly Owned Subsidiary of such Person which is a Foreign Subsidiary. “Wholly-Owned Subsidiary” shall mean, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person, and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of a Foreign Subsidiary of the Borrower with respect to the preceding clauses (i) and (ii), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law). Section 1.02. Terms Generally. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Credit Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the express terms of this Agreement, (b) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (c) all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article 6 or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article 6 or any related definition for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders. Notwithstanding anything to the contrary contained herein, all financial covenants contained herein or in any other Credit Document shall be calculated without giving effect to any election under Statement of Financial Accounting Standards 159 (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof.   46 --------------------------------------------------------------------------------   Section 1.03. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Credit Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Credit Borrowing”). ARTICLE 2 The Credits Section 2.01. Commitments. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on the Closing Date in a principal amount not to exceed its Term Loan Commitment, and (b) to make Revolving Loans to the Borrower, at any time and from time to time on or after the date hereof, and until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Credit Commitment; provided that the aggregate principal amount of Revolving Loans made on the Closing Date shall not exceed $23,000,000. Within the limits set forth in clause (b) of the preceding sentence and subject to the terms, conditions and limitations set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed. Section 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided, however, that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1,000,000 and not less than $5,000,000 in the case of a Term Borrowing and an integral multiple of $100,000 and not less than $1,000,000 in the case of a Revolving Borrowing or (ii) equal to the remaining available balance of the applicable Commitments. (b) Subject to Sections 2.02(f), 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided, however, that the Borrower shall not be entitled to request any Borrowing that, if made, would result in more than seven Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.   47 --------------------------------------------------------------------------------   (c) Except with respect to Loans made pursuant to Section 2.02(f), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 1:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account designated by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. (d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower to but excluding the date such amount is repaid to the Administrative Agent at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement. (e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Revolving Credit Borrowing if the Interest Period requested with respect thereto would end after the Revolving Credit Maturity Date. (f) If the applicable Issuing Bank shall not have received from the Borrower the payment required to be made by Section 2.22(e) within the time specified in such Section, such Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Lender’s Pro Rata Percentage of such L/C Disbursement (it being understood that (i) if the conditions precedent to borrowing set forth in Sections 4.01(b) and (c) have been satisfied, such amount shall be   48 --------------------------------------------------------------------------------   deemed to constitute an ABR Revolving Loan of such Lender and, to the extent of such payment, the obligations of the Borrower in respect of such L/C Disbursement shall be discharged and replaced with the resulting ABR Revolving Credit Borrowing, and (ii) if such conditions precedent to borrowing have not been satisfied, then any such amount paid by any Revolving Credit Lender shall not constitute a Loan and shall not relieve the Borrower from its obligation to reimburse such L/C Disbursement), and the Administrative Agent will promptly pay to such Issuing Bank amounts so received by it from the Revolving Credit Lenders. The Administrative Agent will promptly pay to such Issuing Bank any amounts received by it from the Borrower pursuant to Section 2.22(e) prior to the time that any Revolving Credit Lender makes any payment pursuant to this paragraph (f); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made such payments and to such Issuing Bank, as their interests may appear. If any Revolving Credit Lender shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and the Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of such Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate. Section 2.03. Borrowing Procedure. In order to request a Borrowing (other than a deemed Borrowing pursuant to Section 2.02(f), as to which this Section 2.03 shall not apply), the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time, three Business Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 (noon), New York City time, one Business Day before a proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable, and shall be confirmed promptly by hand delivery, e-mail or facsimile transmission to the Administrative Agent of a written Borrowing Request and shall specify the following information: (i) whether the Borrowing then being requested is to be a Term Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing (provided that, until the Administrative Agent shall have notified the Borrower that the primary syndication of the Commitments has been completed (which notice shall be given as promptly as practicable and, in any event, within 30 days after the Closing Date), the Borrower shall not be permitted to request a Eurodollar Borrowing with an Interest Period in excess of one month); (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested Borrowing.   49 --------------------------------------------------------------------------------   Section 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender (i) the principal amount of each Term Loan of such Lender as provided in Section 2.11 and (ii) the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Credit Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type thereof and, if applicable, the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Subsidiary Guarantor and each Lender’s share thereof. (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms. (e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to the Administrative Agent and the Borrower. Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive such a promissory note, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns. Section 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through the Administrative Agent, on the last Business Day of March, June, September and December in each year and on each date on which any Commitment of such Lender shall expire or be terminated as provided herein, a commitment fee (a “Commitment Fee”) equal to 0.75% per annum on the daily unused amount of the Revolving Credit Commitment of such Lender during the preceding quarter (or other period commencing with the date hereof or ending with the Revolving Credit Maturity Date or the date on which the Commitments of such Lender shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.   50 --------------------------------------------------------------------------------   (b) The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter at the times and in the amounts specified therein (the “Administrative Agent Fees”). (c) The Borrower agrees to pay (i) to each Revolving Credit Lender, through the Administrative Agent, on the last Business Day of March, June, September and December of each year and on the date on which the Revolving Credit Commitment of such Lender shall be terminated as provided herein, a fee (an “L/C Participation Fee”) calculated on such Lender’s Pro Rata Percentage of the daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or shorter period commencing with the date hereof or ending with the Revolving Credit Maturity Date or the date on which all Letters of Credit have been canceled or have expired and the Revolving Credit Commitments of all Lenders shall have been terminated) at a rate per annum equal to the Applicable Margin from time to time used to determine the interest rate on Revolving Credit Borrowings comprised of Eurodollar Loans pursuant to Section 2.06 and (ii) to each Issuing Bank with respect to each Letter of Credit issued by such Issuing Bank a fronting fee equal to 0.25% (or such other amount as may be agreed to by such Issuing Bank) of the aggregate face amount of outstanding Letters of Credit (due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of any Letter of Credit, and on the Revolving Credit Maturity Date) and the standard issuance and drawing fees specified from time to time by such Issuing Bank (the “Issuing Bank Fees”). All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. (d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid directly to the applicable Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances. Section 2.06. Interest on Loans. (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, at all times and calculated from and including the date of such Borrowing to but excluding the date of repayment thereof) at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin. (b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin. (c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.   51 --------------------------------------------------------------------------------   Section 2.07. Default Interest. If the Borrower shall default in the payment of any principal of or interest on any Loan or any other amount due hereunder or under any other Credit Document, by acceleration or otherwise, then, until such defaulted amount shall have been paid in full, to the extent permitted by law, such defaulted amount shall bear interest (after as well as before judgment), payable on demand, (a) in the case of principal, at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, at all times) equal to the rate that would be applicable to an ABR Revolving Loan plus 2.00% per annum. Section 2.08. Alternate Rate of Interest. In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined that Dollar deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such Dollar deposits are being offered will not adequately and fairly reflect the cost to the Lenders holding more than 50% in principal amount of the Loans which are to be included in such Eurodollar Borrowing of making or maintaining such Eurodollar Loans during such Interest Period, or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or Section 2.10 shall be deemed to be a request for an ABR Borrowing. Each determination by the Administrative Agent under this Section 2.08 shall be conclusive absent manifest error. Section 2.09. Termination and Reduction of Commitments. (a) The Term Loan Commitments shall automatically terminate upon the making of the Term Loans on the Closing Date. The Revolving Credit Commitments shall automatically terminate on the Revolving Credit Maturity Date. The L/C Commitment shall automatically terminate on the earlier to occur of (i) the termination of the Revolving Credit Commitments and (ii) the date 30 days prior to the Revolving Credit Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on September 30, 2011, if the initial Credit Event shall not have occurred by such time. (b) Upon at least three Business Days’ prior irrevocable written or fax notice to the Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Term Loan Commitments or the Revolving Credit Commitments; provided, however, that (i) each partial reduction of the Term Loan Commitments or the Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure at the time.   52 --------------------------------------------------------------------------------   (c) Each reduction in the Term Loan Commitments or the Revolving Credit Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments. The Borrower shall pay to the Administrative Agent for the account of the applicable Lenders, on the date of each termination or reduction, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction. Section 2.10. Conversion and Continuation of Borrowings. The Borrower shall have the right at any time upon prior irrevocable written notice to the Administrative Agent (a) not later than 12:00 (noon), New York City time, one Business Day prior to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00 (noon), New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 12:00 (noon), New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following: (i) until the Administrative Agent shall have notified the Borrower that the primary syndication of the Commitments has been completed (which notice shall be given as promptly as practicable and, in any event, within 30 days after the Closing Date), no ABR Borrowing may be converted into a Eurodollar Borrowing with an Interest Period in excess of one month; (ii) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing; (iii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type; (iv) each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion; (v) if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;   53 --------------------------------------------------------------------------------   (vi) any portion of a Borrowing maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing; (vii) any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing; (viii) no Interest Period may be selected for any Eurodollar Term Borrowing that would end later than a Repayment Date occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of (A) the Eurodollar Term Borrowings with Interest Periods ending on or prior to such Repayment Date and (B) the ABR Term Borrowings would not be at least equal to the principal amount of Term Borrowings to be paid on such Repayment Date; and (ix) upon notice to the Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan. Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall promptly advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be converted into an ABR Borrowing. Section 2.11. Repayment of Term Borrowings. (a) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on the last Business Day of each March, June, September and December, commencing on the last Business Day of December, 2011 (each such date being called a “Repayment Date”), a principal amount of the Term Loans (as adjusted from time to time pursuant to Section 2.12(b), Section 2.13(g) and Section 9.04(l)) equal to 3.75% of the aggregate principal amount of the Term Loans made on the Closing Date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.   54 --------------------------------------------------------------------------------   (b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment. (c) All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall otherwise be without premium or penalty. Section 2.12. Voluntary Prepayment. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days’ prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by written or fax notice) at least one Business Day prior to the date of prepayment in the case of ABR Loans, to the Administrative Agent before 12:00 (noon), New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 in the case of a Term Borrowing and an integral multiple of $100,000 and not less than $1,000,000 in the case of a Revolving Borrowing. (b) Voluntary prepayments of Term Loans shall be applied against the remaining scheduled installments of principal due in respect of the Term Loans under Section 2.11 as may be specified by the Borrower, or if not so specified, in direct order of maturity. (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing by the amount stated therein on the date stated therein; provided, however, that if such prepayment is for all of the then outstanding Loans, then the Borrower may (x) revoke such notice prior to the proposed date of prepayment and/or (y) extend the prepayment date by not more than five Business Days; provided further, however, that the provisions of Section 2.16 shall apply with respect to any such revocation or extension. All prepayments under this Section 2.12 shall be subject to Section 2.12(d)and to Section 2.16 but otherwise without premium or penalty. All prepayments under this Section 2.12 (other than prepayments of ABR Revolving Loans that are not made in connection with the termination or permanent reduction of the Revolving Credit Commitments) shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.   55 --------------------------------------------------------------------------------   (d) In the event that the Term Loans are prepaid in whole or in part pursuant to Section 2.12(a) or Section 2.13 (other than Sections 2.13(a) and 2.13(d)) or in the event of an assignment of Term Loans pursuant to Section 2.21, in each case on or prior to the second anniversary of the Closing Date, the Borrower shall pay to the Term Lenders a prepayment fee (the “Prepayment Fee”) equal to the applicable percentage set forth below of the aggregate principal amount of Term Loans so prepaid, assigned or paid, as the case may be, determined as follows:               Prepayment Premium or Fee       as a Percentage of   Relevant Period   the Principal Amount Prepaid or Assigned   On or prior to the first anniversary of the Closing Date     2.00 %           After the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date     1.00 % Amounts payable pursuant to this Section 2.12(d) shall be due and payable on the date of effectiveness of the applicable prepayment or assignment. Section 2.13. Mandatory Prepayments. (a) In the event of any termination of all the Revolving Credit Commitments, the Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Credit Borrowings and replace or cause to be canceled or Cash Collateralized (or make other arrangements satisfactory to the Administrative Agent and each Issuing Bank with respect to) all outstanding Letters of Credit issued by such Issuing Bank. If, after giving effect to any partial reduction of the Revolving Credit Commitments or at any other time, the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment, then the Borrower shall, on the date of such reduction or at such other time, repay or prepay Revolving Credit Borrowings and, after the Revolving Credit Borrowings shall have been repaid or prepaid in full, replace or cause to be canceled or Cash Collateralized (or make other arrangements satisfactory to the Administrative Agent and each Issuing Bank with respect to) Letters of Credit issued by such Issuing Bank in an amount sufficient to eliminate such excess. (b) In addition to any other mandatory repayments pursuant to this Section 2.13, on each date on or after the Closing Date upon which the Borrower or any of its Subsidiaries receives any cash proceeds from any issuance or incurrence by the Borrower or any of its Subsidiaries of Indebtedness for borrowed money (other than Indebtedness permitted to be incurred pursuant to Section 6.04), an amount equal to 100% of the Net Cash Proceeds of the respective issuance or incurrence of such Indebtedness shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.13(g). (c) In addition to any other mandatory repayments pursuant to this Section 2.13, on each date on or after the Closing Date upon which the Borrower or any of its Subsidiaries receives any cash proceeds from any Asset Sale, an amount equal to 100% of the Net Sale Proceeds therefrom shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.13(g); provided, however, that with respect to any Net Sale Proceeds received by the Borrower or its Subsidiaries from an Asset Sale permitted hereunder (other than in connection with an Asset Sale pursuant to Section 6.02(xiv) the Net Sale Proceeds of which shall be applied as provided in this Section 2.13(c) without regard to this proviso or the following proviso), such Net Sale Proceeds shall not be required to be so applied on such date so long as no Default or Event of Default then exists and an Authorized Officer of the Borrower shall have delivered a certificate to the Administrative Agent setting forth the Borrower’s or such Subsidiary’s   56 --------------------------------------------------------------------------------   intention to purchase assets as permitted pursuant to this proviso and such Net Sale Proceeds shall be used (or contractually committed to be used pursuant to a written binding agreement with a Person that is not an Affiliate of the Borrower or any Subsidiary) to purchase assets (other than inventory and working capital) used or to be used in the businesses permitted pursuant to Section 6.13 within 365 days following the date of such Asset Sale, and provided further, that (I) if all or any portion of such Net Sale Proceeds not required to be so applied as provided above in this Section 2.13(c) are not so used (or contractually committed to be so used) within such 365-day period (or such earlier date, if any, as the Borrower or the relevant Subsidiary determines not to reinvest the Net Sale Proceeds from such Asset Sale as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 2.13(c) without regard to the immediately preceding proviso period and (II) if all or any portion of such Net Sale Proceeds are not required to be applied on the last day of such 365-day period referred to in clause (I) of this proviso because such amount is contractually committed within such period to be used and then either (A) subsequent to such date such contract is terminated or expires without such portion being so used or (B) such contractually committed portion is not so used within 180 days after the date of such commitment, such remaining portion, in the case of either of preceding clause (A) or (B), shall be applied as a mandatory repayment as provided above in this Section 2.13(c) without regard to the immediately preceding proviso. (d) In addition to any other mandatory repayments pursuant to this Section 2.13, on each Excess Cash Flow Payment Date, an amount equal to the remainder of (if positive) (i) the Applicable Excess Cash Flow Prepayment Percentage of the Excess Cash Flow for the related Excess Cash Flow Payment Period minus (ii) the aggregate amount of principal prepayments of Loans to the extent (and only to the extent) that such prepayments were made as a voluntary prepayment pursuant to Section 2.12(a) other than with proceeds of asset sales (other than from sales of inventory in the ordinary course of business), sales or issuances of Equity Interests, capital contributions, insurance or condemnation events or Indebtedness or other proceeds that would not be included in Adjusted Consolidated Net Income or utilizing the Available Amount (but in the case of a voluntary prepayment of Revolving Loans, only to the extent accompanied by a voluntary reduction to the Total Revolving Credit Commitment in an amount equal to such prepayment) during the relevant Excess Cash Flow Payment Period, shall be applied as a mandatory repayment in accordance with the requirements of Section 2.13(g). Notwithstanding the foregoing, at the option of the Borrower, all or any portion of any mandatory repayment required pursuant to this clause (d) for any Excess Cash Flow Payment Period may be paid or applied prior to the related Excess Cash Flow Payment Date (but no earlier than January 1 of the fiscal year in which the related Excess Cash Flow Payment Date occurs), provided that (x) no such mandatory repayment shall be added to the aggregate amount of principal prepayments described in subclause (ii) above for any succeeding Excess Cash Flow Payment Period and (y) the Borrower shall pay such additional amounts (if any) as necessary to pay the full amount of any mandatory repayment required pursuant to this clause (d) no later than the applicable Excess Cash Flow Payment Date (it being understood that if such initial prepayment exceeds such requirement, such excess shall be treated as a voluntary prepayment pursuant to Section 2.12(a) in the fiscal year in which such prepayment was made).   57 --------------------------------------------------------------------------------   (e) In addition to any other mandatory repayments pursuant to this Section 2.13, within one Business Day following each date on or after the Closing Date upon which the Borrower or any of its Subsidiaries receives any cash proceeds from any Recovery Event (other than Recovery Events where the Net Cash Proceeds therefrom do not exceed $50,000), an amount equal to 100% of the Net Cash Proceeds from such Recovery Event shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.13(g); provided, however, that such Net Cash Proceeds shall not be required to be so applied on such date so long as no Default or Event of Default then exists and the Borrower has delivered a certificate to the Administrative Agent on such date stating that such Net Cash Proceeds shall be used (or contractually committed to be used pursuant to a written binding agreement with a Person that is not an Affiliate of the Borrower or any Subsidiary) to replace or restore any properties or assets in respect of which such Net Cash Proceeds were paid within 365 days following the date of the receipt of such Net Cash Proceeds (which certificate shall set forth the estimates of the Net Cash Proceeds to be so expended), and provided further, that (I) if all or any portion of such Net Cash Proceeds not required to be so applied pursuant to the preceding proviso are not so used (or contractually committed to be so used) within 365 days after the date of the receipt of such Net Cash Proceeds (or such earlier date, if any, as the Borrower or the relevant Subsidiary determines not to reinvest the Net Cash Proceeds relating to such Recovery Event as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 2.13(e) without regard to the immediately preceding proviso and (II) if all or any portion of such proceeds are not required to be applied on the last day of such 365-day period referred to in clause (I) of this proviso because such amount is contractually committed to be used and then either (A) subsequent to such date such contract is terminated or expires without such portion being so used or (B) such contractually committed portion is not so used within 180 days after the date of such commitment, such remaining portion, in the case of either of preceding clause (A) or (B), shall be applied as a mandatory repayment as provided above in this Section 2.13(e) without regard to the immediately preceding proviso. (f) In addition to any other mandatory repayments pursuant to this Section 2.13, within one Business Day following each date on or after the Closing Date upon which an Equity Issuance occurs, an amount equal to the Applicable Equity Issuance Prepayment Percentage of the Net Equity Proceeds of such Equity Issuance (the “Equity Issuance Amount”) shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.13(g); provided, however, if no Default or Event of Default exists on the date of, and after giving effect to, such Equity Issuance and the Borrower has delivered a certificate to the Administrative Agent on such date stating that all or a portion of such Equity Issuance Amount shall be used (or contractually committed to be used pursuant to a written binding agreement with a Person that is not an Affiliate of the Borrower or any Subsidiary) to fund any Permitted Acquisition or Permitted Foreign Acquisition, any acquisition of Servicing Rights (including any associated obligation to fund servicing advances, including Delinquency Advances or Protective Advances) pursuant to Section 6.05(xx) or any Investment in the SerVertis Funds permitted by Section 6.05(ix)(C)(2) within 365 days following the date of such Equity Issuance (which certificate shall set forth the estimates of the Equity Issuance Amount to be so expended), then the amount so specified shall not be required to be   58 --------------------------------------------------------------------------------   applied pursuant to Section 2.13(g); and provided further, that (I) if all or any portion of such Equity Issuance Amount not required to be so applied pursuant to the preceding proviso is not so used (or contractually committed to be so used) within 365 days after the date of such Equity Issuance (or such earlier date, if any, as the Borrower or the relevant Subsidiary determines not to use the Equity Issuance Amount as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 2.13(f) without regard to the immediately preceding proviso and (II) if all or any portion of such proceeds are not required to be applied on the last day of such 365-day period referred to in clause (I) of this proviso because such amount is contractually committed to be used and then either (A) subsequent to such date such contract is terminated or expires without such portion being so used or (B) such contractually committed portion is not so used within 180 days after the date of such commitment, such remaining portion, in the case of either of preceding clause (A) or (B), shall be applied as a mandatory repayment as provided above in this Section 2.13(f) without regard to the immediately preceding proviso. (g) Each amount required to be applied pursuant to Section 2.13(b) through Section 2.13(f) in accordance with this Section 2.13(g) shall be applied pro rata against the remaining scheduled installments of principal due in respect of the Term Loans under Section 2.11(a) (or, if elected by the Borrower, in direct order of maturity against the next four scheduled installments of principal due and then pro rata against the remaining scheduled installments of principal due in each case in respect of the Term Loans under Section 2.11(a)). (h) The Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13, (i) a certificate signed by an Authorized Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) at least three Business Days prior written notice of such prepayment. Each notice of prepayment shall specify the prepayment date, the Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject to Section 2.16 and Section 2.12(d) (except prepayments of Borrowings under Sections 2.13(a) and 2.13(d) shall not be subject to Section 2.12(d)), but shall otherwise be without premium or penalty, and (other than prepayments of ABR Revolving Loans that are not made in connection with the termination or permanent reduction of the Revolving Credit Commitments) shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment. Section 2.14. Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision of this Agreement, if any Change in Law 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 any Lender or any Issuing Bank (except any such reserve requirement which is reflected in the Adjusted LIBO Rate), shall subject a Lender to Taxes (other than Indemnified Taxes and Excluded Taxes) on its loans, loan principal, letters of credit, commitments or other obligations, or on its deposits, reserves, other liabilities or capital attributable thereto or shall impose on such Lender or such Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender or such Issuing Bank of making or maintaining any Eurodollar Loan or increase the cost to any Lender or any Issuing Bank of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or such Issuing Bank to be material, then the Borrower will pay to such Lender or such Issuing Bank, as the case may be, upon demand such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.   59 --------------------------------------------------------------------------------   (b) If any Lender or any Issuing Bank shall have determined that any Change in Law regarding capital adequacy has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made or participations in Letters of Credit purchased by such Lender pursuant hereto or the Letters of Credit issued by such Issuing Bank pursuant hereto to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy) by an amount deemed by such Lender or such Issuing Bank to be material, then from time to time the Borrower shall pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered. (c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or such Issuing Bank the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same. (d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be under any obligation to compensate any Lender or any Issuing Bank under paragraph (a) or (b) above with respect to increased costs or reductions with respect to any period prior to the date that is 180 days prior to such request if such Lender or such Issuing Bank knew or could reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided further that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 180-day period. The protection of this Section shall be available to each Lender and each Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.   60 --------------------------------------------------------------------------------   Section 2.15. Change in Legality. (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent: (i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods) and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans, whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and (ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below. In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans. (b) For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower. Section 2.16. Breakage. The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this clause (a) being called a “Breakage Event”) or (b) any default in the making of any payment or prepayment required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i)its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrower and shall be conclusive absent manifest error.   61 --------------------------------------------------------------------------------   Section 2.17. Pro Rata Treatment. Subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders, and as permitted under Section 9.04(l) or required under Section 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Term Loan Commitments or the Revolving Credit Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole Dollar amount. Section 2.18. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower or any other Credit Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid principal portion of its Loans and participations in L/C Disbursements shall be proportionately less than the unpaid principal portion of the Loans and participations in L/C Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans and L/C Exposure of such other Lender, so that the aggregate unpaid principal amount of the Loans and L/C Exposure and participations in Loans and L/C Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding as the principal amount of its Loans and L/C Exposure prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans and L/C Exposure outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however, that (i) if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest, and (ii) the provisions of this Section 2.18 shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including any application of funds arising from the existence of a Defaulting Lender) or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than, unless such assignment was made pursuant to Section 9.04(l), to the Borrower or any of its Affiliates (it being understood that, unless such assignment was made pursuant to Section 9.04(l), the provisions of this Section 2.18 shall apply). The Borrower expressly consents to the foregoing arrangements and agree that any Lender holding a participation in a Loan or L/C Disbursement deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation.   62 --------------------------------------------------------------------------------   Section 2.19. Payments. (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any L/C Disbursement or any Fees or other amounts) hereunder and under any other Credit Document not later than 12:00 (noon), New York City time, on the date when due in immediately available Dollars, without setoff, defense or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Each such payment (other than Issuing Bank Fees, which shall be paid directly to the applicable Issuing Bank) shall be made to the Administrative Agent at its offices at Eleven Madison Avenue, New York, NY 10010. The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender. (b) Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Credit Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable. Section 2.20. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower or any other Credit Party hereunder or under any other Credit Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that, if the Borrower or any other Credit Party shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, each Lender and each Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Credit Party shall make such deductions and (iii) the Borrower or such Credit Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.   63 --------------------------------------------------------------------------------   (c) The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower or any other Credit Party hereunder or under any other Credit Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on behalf of itself, a Lender or an Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower or any other Credit Party to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) (i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any other Credit Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to any withholding (including backup withholding) or information reporting requirements. Upon the reasonable request of such Borrower or the Administrative Agent, any Lender shall update any form or certification previously delivered pursuant to this Section 2.20(e). If any form or certification previously delivered pursuant to this Section expires or becomes obsolete or inaccurate in any respect with respect to a Lender, such Lender shall promptly (and in any event within 10 days after such expiration, obsolescence or inaccuracy) notify such Borrower and the Administrative Agent in writing of such expiration, obsolescence or inaccuracy and update the form or certification if it is legally eligible to do so.   64 --------------------------------------------------------------------------------   (ii) Without limiting the generality of the foregoing, if the Borrower is a “United States person” within the meaning of Section 7701(a)(30) of the Code, any Lender with respect to such Borrower shall, if it is legally eligible to do so, deliver to such Borrower and the Administrative Agent (in such number of copies reasonably requested by such Borrower and the Administrative Agent) on or prior to the date on which such Lender becomes a party hereto, duly completed and executed copies of whichever of the following is applicable: (A) in the case of a Lender that is not a Foreign Lender, IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; (B) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (1) with respect to payments of interest under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (2) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (C) in the case of a Foreign Lender for which payments under any Credit Document constitute income that is effectively connected with such Lender’s conduct of a trade or business in the United States, IRS Form W-8ECI; (D) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN and (2) a certificate to the effect that such Lender is not (a) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code (c) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (d) conducting a trade or business in the United States with which the relevant interest payments are effectively connected; (E) in the case of a Foreign Lender that is not the beneficial owner of payments made under any Credit Document (including a partnership or a participating Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (e)(ii) that would be required of each such beneficial owner or partner of such partnership if such beneficial owner or partner were a Lender; provided, however, that if the Lender is a partnership and one or more of its partners are claiming the exemption for portfolio interest under Section 881(c) of the Code, such Lender may provide the certificate described in (D)(2) above on behalf of such partners; or (F) any other form prescribed by law as a basis for claiming exemption from, or a reduction of, U.S. federal withholding Tax together with such supplementary documentation necessary to enable the Borrower or the Administrative Agent to determine the amount of Tax (if any) required by law to be withheld.   65 --------------------------------------------------------------------------------   (iii) If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the applicable withholding agent, at the time or times prescribed by law and at such time or times reasonably requested by such withholding agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the withholding agent as may be necessary for the withholding agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.20(e)(iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. (f) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.20 (including additional amounts pursuant to this Section 2.20), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. Section 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or any Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or any Issuing Bank delivers a notice described in Section 2.15, (iii) the Borrower is required to pay any additional amount to any Lender or any Issuing Bank or any Governmental Authority on account of any Lender or any Issuing Bank pursuant to Section 2.20, (iv) any Lender refuses to consent to any amendment, waiver or other modification of any Credit Document requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, or (v) any Lender becomes a Defaulting Lender, then, in each case, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender or such Issuing Bank, as the case may be, and the Administrative Agent, require such Lender or such Issuing Bank to transfer and assign,   66 --------------------------------------------------------------------------------   without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement (or, in the case of clause (iv) above, all of its interests, rights and obligation with respect to the Class of Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iv) above, shall consent to such requested amendment, waiver or other modification of any Credit Documents (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Credit Commitment is being assigned, of each Issuing Bank), which consents shall not unreasonably be withheld or delayed, and (z) the Borrower or such assignee shall have paid to the affected Lender or the affected Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or L/C Disbursements of such Lender or such Issuing Bank, respectively, plus all Fees and other amounts accrued for the account of such Lender or such Issuing Bank hereunder with respect thereto (including any amounts under Sections 2.14 and 2.16 and, if applicable, the Prepayment Fee pursuant to Section 2.12(d) (with such assignment being deemed to be a voluntary prepayment for purposes of determining the applicability of Section 2.12(d), such amount to be payable by the Borrower)); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s or such Issuing Bank’s claim for compensation under Section 2.14, notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender or such Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender or such Issuing Bank pursuant to paragraph (b) below), or if such Lender or such Issuing Bank shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender or such Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder. Each Lender and each Issuing Bank hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender or such Issuing Bank, as the case may be, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s or such Issuing Bank’s interests hereunder in the circumstances contemplated by this Section 2.21(a). (b) If (i) any Lender or any Issuing Bank shall request compensation under Section 2.14, (ii) any Lender or any Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or any Issuing Bank or any Governmental Authority on account of any Lender or any Issuing Bank, pursuant to Section 2.20, then such Lender or such Issuing Bank shall use reasonable efforts (which shall not require such Lender or such Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or any Issuing Bank in connection with any such filing or assignment, delegation and transfer.   67 --------------------------------------------------------------------------------   Section 2.22. Letters of Credit. (a) General. The Borrower may request the issuance of a Letter of Credit for its own account or for the account of any of its Wholly Owned Subsidiaries (in which case the Borrower and such Wholly Owned Subsidiary shall be co-applicants with respect to such Letter of Credit), in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time while the L/C Commitment remains in effect as set forth in Section 2.09(a). This Section shall not be construed to impose an obligation upon any Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the Borrower shall deliver, e-mail or fax to the applicable Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit. 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 L/C Exposure shall not exceed $22,500,000 and (ii) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment. (c) Expiration Date. Each Letter of Credit shall expire at the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Revolving Credit Maturity Date, unless such Letter of Credit expires by its terms on an earlier date; provided, however, that a Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed automatically for additional consecutive periods of 12 months or less (but not beyond the date that is five Business Days prior to the Revolving Credit Maturity Date) unless the applicable Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.   68 --------------------------------------------------------------------------------   (d) Participations. By the issuance of a Letter of Credit and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Pro Rata Percentage of each L/C Disbursement made by such Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Credit Document) forthwith on the date due as provided in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If any Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall pay to the Administrative Agent an amount equal to such L/C Disbursement on the Business Day that the Borrower shall have received notice from such Issuing Bank that payment of such draft will be made, or, if the Borrower shall have received such notice later than 12:00 Noon, New York City time, or notice was not received on a Business Day, on the Business Day immediately following the day that the Borrower received such notice. (f) Obligations Absolute. The Borrower’s obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of: (i) any lack of validity or enforceability of any Letter of Credit or any Credit Document, or any term or provision therein; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Credit Document; (iii) the existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, the applicable Issuing Bank, the Administrative Agent or any Lender or any other Person, whether in connection with this Agreement, any other Credit Document or any other related or unrelated agreement or transaction; (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;   69 --------------------------------------------------------------------------------   (v) payment by the applicable Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and (vi) any other act or omission to act or delay of any kind of the applicable Issuing Bank, the Lenders, the Administrative Agent or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder. Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Borrower hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or willful misconduct of the applicable Issuing Bank. However, the foregoing shall not be construed to excuse such Issuing 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 such Issuing Bank’s gross negligence or willful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. It is further understood and agreed that the applicable Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit issued by such Issuing Bank (i) such Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute gross negligence or willful misconduct of such Issuing Bank. (g) Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall as promptly as possible give telephonic notification, confirmed by fax, to the Administrative Agent and the Borrower of such demand for payment and whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the Revolving Credit Lenders with respect to any such L/C Disbursement.   70 --------------------------------------------------------------------------------   (h) Interim Interest. If any Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit issued by such Issuing Bank, then, unless the Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of such Issuing Bank, for each day from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by the Borrower or the date on which interest shall commence to accrue thereon as provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount were an ABR Revolving Loan. (i) Resignation or Removal of an Issuing Bank. Any Issuing Bank may resign at any time by giving 30 days’ prior written notice to the Administrative Agent, the Lenders and the Borrower, and may be removed at any time by the Borrower by notice to such Issuing Bank, the Administrative Agent and the Lenders. Upon the acceptance of any appointment as an Issuing Bank hereunder by a Lender that shall agree to serve as a successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of such retiring Issuing Bank. At the time such removal or resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment as an Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of such previous Issuing Bank under this Agreement and the other Credit Documents and (ii) references herein and in the other Credit Documents to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of an Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If the Revolving Loans have become due and payable (whether at stated maturity, by acceleration or otherwise) and Letters of Credit are outstanding, the Borrower shall, following notice from the Administrative Agent or Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit) thereof and of the amount to be deposited, deposit in an account with the Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount in cash equal to 103% of L/C Exposure as of such date; provided that the obligation to deposit such cash will become effective immediately, and such deposit will become immediately payable in immediately available funds, without demand or notice of any kind, upon the occurrence of an Event of Default described in Section 7.01(e) with respect to the Borrower. Such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the Obligations. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Cash Equivalents, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse the applicable Issuing Bank for L/C Disbursements for which it has not been reimbursed, (ii) be held for the satisfaction of the reimbursement obligations of the Borrower for the L/C Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit), be applied to satisfy the Obligations. If 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 the earlier of (x) all Events of Default have been cured or waived and (y) all Letters of Credit have expired and the L/C Exposure has been reduced to zero.   71 --------------------------------------------------------------------------------   (k) Additional Issuing Banks. The Borrower may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement, subject to reporting requirements reasonably satisfactory to the Administrative Agent with respect to issuances, amendments, extensions and terminations of Letters of Credit by such additional issuing bank. Any Lender designated as an issuing bank pursuant to this paragraph (k) shall be deemed to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Bank and such Lender. Section 2.23. Cash Collateral. At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.24(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount. (a) The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Collateral Agent, for the benefit of the Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lender’s obligation to fund participations in respect of L/C Exposure, to be applied pursuant to clause (b) below. If at any time the Collateral Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Collateral Agent and the Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Collateral Agent, pay or provide to the Collateral Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender). (b) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.23 or Section 2.24 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of L/C Exposure (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.   72 --------------------------------------------------------------------------------   (c) Cash Collateral (or the appropriate portion thereof) provided to reduce any Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.23 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent and each Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.24 the Person providing Cash Collateral and each Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents. Section 2.24. Defaulting Lenders. (a) Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law: (i) Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders. (ii) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank hereunder; third, to Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.23; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.23; sixth, to the payment of any amounts owing to the Lenders or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this   73 --------------------------------------------------------------------------------   Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.01 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments under the applicable Credit Facility without giving effect to Section 2.24(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.24(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto. (iii) (A) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender). (B) Each Defaulting Lender shall be entitled to receive L/C Participation Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Pro Rata Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.23. (C) With respect to any Commitment Fee or L/C Participation Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Exposure that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee. (iv) All or any part of such Defaulting Lender’s participation in L/C Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.01 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.   74 --------------------------------------------------------------------------------   (v) If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 2.23. (b) If the Borrower, the Collateral Agent and each Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments under the applicable Credit Facility (without giving effect to Section 2.24(a)(iv), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. (c) So long as any Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto. ARTICLE 3 Representations and Warranties In order to induce the Lenders to enter into this Agreement and to make the Loans, and issue (or participate in) the Letters of Credit as provided herein, the Borrower makes the following representations and warranties, in each case after giving effect to the Transactions, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans and the issuance of the Letters of Credit, with the occurrence of each Credit Event on or after the Closing Date being deemed to constitute a representation and warranty that the matters specified in this Article 3 are true and correct in all material respects on and as of the Closing Date and on the date of each such other Credit Event (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).   75 --------------------------------------------------------------------------------   Section 3.01. Company Status. The Borrower and each of its Subsidiaries (i) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications, except to the extent all failures with respect to the foregoing clauses (i) and (ii) (other than, in the case of clauses (i) and (ii), with respect to the Borrower or any other material Credit Party) and (iii) could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 3.02. Power and Authority. Each Credit Party has the Company power and authority to execute, deliver and perform its obligations under each of the Credit Documents to which it is party and, in the case of the Borrower, to borrow hereunder, and has taken all necessary Company action to authorize the execution, delivery and performance by it of each of such Credit Documents. Each Credit Party has duly executed and delivered each of the Credit Documents to which it is party, and each of such Credit Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought by proceedings in equity or at law). Section 3.03. No Violation. The execution, delivery and performance of this Agreement and the other Credit Documents, the issuance of Letters of Credit hereunder, the borrowings hereunder and the use of the proceeds thereof will not (i) contravene any provision of any material law, statute, rule or regulation or any order, writ, injunction or decree of any court or Governmental Authority, (ii) violate or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or give rise to any right to accelerate or to require the prepayment, repurchase of redemption of any obligation under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and pursuant to the Second Lien Credit Documents) upon any of the property or assets of any Credit Party or any of its Subsidiaries pursuant to the terms of, any material indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, in each case to which any Credit Party or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject, or (iii) violate any provision of the certificate or articles of incorporation, certificate of formation, limited liability company agreement or by-laws (or equivalent organizational documents), as applicable, of any Credit Party or any of its Subsidiaries. Section 3.04. Approvals. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for (x) those that have otherwise been obtained or made on or prior to the Closing Date and which remain in full force and effect on the Closing Date and (y) filings which are necessary to perfect the security interests or liens created under the Security Documents), or exemption or other action by, any Governmental Authority is required to be obtained or made by, or on behalf of, any Credit Party to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party in connection with, the execution, delivery and performance of any Credit Document or the legality, validity, binding effect or enforceability of any such Credit Document.   76 --------------------------------------------------------------------------------   Section 3.05. Financial Statements; Financial Condition; Undisclosed Liabilities; Projections. (a) (i) The audited consolidated balance sheets of the Borrower and its Subsidiaries at December 31, 2008, December 31, 2009 and December 31, 2010 and the related consolidated statements of income and cash flows and changes in stockholder’s equity of the Borrower for the three fiscal years of the Borrower ended on such dates, in each case furnished to the Administrative Agent for delivery to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries at the dates of said financial statements and the results of operations for the respective periods covered thereby and (ii) the unaudited consolidated balance sheet of the Borrower as at March 31, 2011 and the related consolidated statements of income and cash flows and changes in stockholders’ equity of the Borrower for the three-month period ended on such date, in each case furnished to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial condition of the Borrower and its Subsidiaries at the date of said financial statements and the results of operations for the respective periods covered thereby, subject to normal year-end adjustments and the absence of footnotes. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes. (b) (i) The audited consolidated balance sheets of the Target and its subsidiaries at December 31, 2009 and December 31, 2010 and the related consolidated statements of income and cash flows and changes in members’ equity of the Target for the two fiscal years of the Target ended on such dates, in each case furnished to the Administrative Agent for delivery to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial position of the Target and its subsidiaries at the dates of said financial statements and the results of operations for the respective periods covered thereby and (ii) the unaudited consolidated balance sheet of the Target and its Subsidiaries at March 31, 2011 and the related consolidated statements of income and cash flows and changes in members’ equity of the Target for the three-month period ended on such date, in each case furnished to the Administrative Agent for delivery to non-Public Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial condition of the Target and its subsidiaries at the date of said financial statements and the results of operations for the respective periods covered thereby, subject to normal year-end adjustments and the absence of footnotes. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.   77 --------------------------------------------------------------------------------   (c) The Borrower has heretofore delivered to the Administrative Agent for delivery to the Lenders its (i) unaudited combined balance sheet as at December 31, 2010, (ii) unaudited combined statements of income for the fiscal year ended December 31, 2010, (iii) unaudited combined balance sheet as at March 31, 2011 and (iv) unaudited combined statements of income for the twelve-month period ended March 31, 2011, prepared giving effect to the Transactions as if they had occurred, with respect to such balance sheets, on such dates and, with respect to such other financial statements, on the first day of such period ending on such date. Such combined financial statements have been prepared in good faith by the Borrower, based on the assumptions used to prepare the financial information contained in the Confidential Information Memorandum (which assumptions are believed by the Borrower on the date thereof and on the Closing Date to be reasonable), are based on the best information available to the Borrower as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions and present fairly on a combined basis the estimated consolidated financial position of the Borrower and its consolidated Subsidiaries as of such date and for such period, assuming that the Transactions had actually occurred at such date or at the beginning of such period, as the case may be. (d) On and as of the Closing Date, and after giving effect to the Transactions and to all Indebtedness (including the Loans and loans under the Second Lien Credit Agreement) being incurred or assumed and Liens created by the Credit Parties in connection therewith, (i) the sum of the fair value of the assets, at a fair valuation, of the Credit Parties (taken as a whole) will exceed their debts, (ii) the sum of the present fair salable value of the assets of the Credit Parties (taken as a whole) will exceed the amount that will be required to pay their debts as such debts become absolute and matured, (iii) the Credit Parties (taken as a whole) have not incurred and do not intend to incur debts beyond their ability to pay such debts as such debts mature, and (iv) the Credit Parties (taken as a whole) will have sufficient capital with which to conduct their businesses. For purposes of this Section 3.05(d), “debt” means any liability on a claim, and “claim” means (a) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. (e) Except as reflected in the financial statements delivered pursuant to Section 3.05(a) and (b), and except for the Indebtedness incurred under this Agreement and under the Second Lien Credit Agreement or otherwise incurred in the ordinary course of business, there were as of the Closing Date no liabilities or obligations that would be required to be reflected in the consolidated financial statements of the Borrower and its Subsidiaries by GAAP with respect to the Borrower or any of its Subsidiaries, or of the Target and its Subsidiaries by GAAP with respect to the Target and its Subsidiaries, of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (f) The Projections delivered to the Administrative Agent and the Lenders prior to the Closing Date are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made and to be reasonable on the Closing Date, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections and that such differences may be material.   78 --------------------------------------------------------------------------------   (g) After giving effect to the Transactions, since December 31, 2010, there has been no change in the business, operations, property, assets or financial condition of the Borrower or any of its Subsidiaries that either, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect. Section 3.06. Litigation. Except as set forth on Schedule 3.06, there are no actions, suits or proceedings at law or in equity pending or, to the Knowledge of the Borrower, threatened (i) with respect to any Credit Document or (ii) that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Section 3.07. True and Complete Disclosure. The Confidential Information Memorandum and all other factual information (taken as a whole) other than the Projections furnished by or on behalf of the Borrower in writing to the Administrative Agent, any Lead Arranger or any Lender (including, without limitation, all information contained in the Credit Documents) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of the Borrower in writing to the Administrative Agent, any Lead Arranger or any Lender will be, complete and correct in all material respects on the date as of which such information is dated or certified and does not or will not contain any untrue statement of a material fact or omit a material fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided (giving effect to all supplements and updates provided thereto prior to the Closing Date); provided that no representation is made with respect to information of a general economic or general industry nature. Section 3.08. Use of Proceeds; Margin Regulations. (a) All proceeds of the Loans and all Letters of Credit will be used by the Borrower only for the purposes specified in the introductory statement to the Agreement. (b) No part of any Credit Event (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof nor the occurrence of any other Credit Event will, whether directly or indirectly, and whether immediately, incidentally or ultimately, violate or be inconsistent with the provisions of Regulation T, U or X. Section 3.09. Tax Returns and Payments. Except as set forth on Schedule 3.09, the Borrower and each of its Subsidiaries has timely filed or caused to be timely filed with the appropriate taxing authority all material federal, state, local and foreign returns, statements, forms and reports for taxes (the “Returns”) required to be filed by, or with respect to the income, properties or operations of, the Borrower and/or any of its Subsidiaries. The Borrower and each of its Subsidiaries has paid all material taxes and assessments payable by it which have become due, other than those that are being contested in good faith and adequately disclosed and fully provided for on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP. Except as set forth in Schedule 3.09, there is no action, suit, proceeding, investigation, audit or claim now pending or, to the Knowledge of the Borrower or any of its Subsidiaries, threatened by any authority regarding any material taxes relating to the Borrower or any of its Subsidiaries. For its taxable year ending December 31, 2010, the Borrower qualified for treatment as a “real estate investment trust” under Sections 856 through 860 of the Code.   79 --------------------------------------------------------------------------------   Section 3.10. Compliance with ERISA. Each Plan is in compliance in all material respects with the applicable provisions of ERISA and the Code except for non-compliance which, in the aggregate, would not have a Material Adverse Effect. No ERISA Event has occurred within the past five years or is reasonably expected to occur that, when taken together with all other ERISA Events that have occurred or are reasonably likely to occur, could reasonably be expected to have a Material Adverse Effect. Section 3.11. Security Documents. (a) The provisions of the Security Agreement are effective to create in favor of the Collateral Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and the Collateral Agent, for the benefit of the Secured Creditors, has (or within 30 days following the Closing Date (or within such longer period as the Collateral Agent may agree in its sole discretion) or, if later, upon the effectiveness of the recordings described herein will have) a fully perfected security interest in all right, title and interest in all of the Security Agreement Collateral described therein to the extent required thereunder (other than (i) any Security Agreement Collateral consisting of cash not contained in a deposit account or securities account not subject to the “control” (as defined under the UCC) of the Collateral Agent and (ii) any Security Agreement Collateral consisting of deposit accounts not subject to the “control” (as defined under the UCC) of the Collateral Agent), subject to no other Liens other than Permitted Liens. The recordation of (x) the Grant of Security Interest in U.S. Patents, if applicable and (y) the Grant of Security Interest in U.S. Trademarks, if applicable, in the respective form attached to the Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States trademarks and patents covered by the Security Agreement, and the recordation of the Grant of Security Interest in U.S. Copyrights, if applicable, in the form attached to the Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States copyrights covered by the Security Agreement. (b) The security interests created under the Pledge Agreement in favor of the Collateral Agent, as Pledgee, for the benefit of the Secured Creditors, constitute perfected security interests in the Pledge Agreement Collateral described in the Pledge Agreement, subject to no security interests of any other Person, other than subordinated liens in favor of the collateral agent under the Second Lien Credit Agreement.   80 --------------------------------------------------------------------------------   (c) After the execution, delivery and recordation thereof, in the offices specified on Schedule 3.11(c), or, if delivered pursuant to Section 5.12, in the recording office specified by Borrower, each Mortgage will create, as security for the obligations purported to be secured thereby, a valid and enforceable perfected security interest in and mortgage lien on all right, title and interest of the Credit Parties in and to the respective Mortgaged Property (to the extent such Mortgaged Property constitutes real property or any interest in real property) in favor of the Collateral Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Creditors, superior and prior to the rights of all third Persons (except that the security interest and mortgage lien created on such Mortgaged Property may be subject to the Permitted Encumbrances related thereto) and subject to no other Liens (other than Permitted Encumbrances related thereto). Section 3.12. Properties. All Real Property (other than REO Property) owned by a Credit Party as of the Closing Date, with a book value as of March 31, 2011 of at least $2,500,000, is set forth on Schedule 3.12. Except as set forth on Schedule 3.12, the Borrower and each of its Subsidiaries has a valid and marketable title to all material properties (and to all buildings, fixtures and improvements located thereon) owned by it, and a valid leasehold interest in the material properties leased by it, in each case free and clear of all Liens other than Permitted Liens. Section 3.13. Capitalization. The authorized Equity Interests of the Borrower consists solely of Qualified Equity Interests. All outstanding Equity Interests of the Borrower have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. Section 3.14. Subsidiaries. On and as of the Closing Date, (a) the Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule 3.14 and (b) Schedule 3.14 sets forth the percentage ownership (direct and indirect) of the Borrower in each class of Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding Equity Interests of each Subsidiary of the Borrower have been duly and validly issued and are fully paid (except as such rights may arise under mandatory provisions of applicable statutory law that may not be waived or otherwise agreed) and have been issued free of preemptive rights, and no Subsidiary of the Borrower has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights except as set forth on Schedule 3.14. Section 3.15. Compliance with Statutes, Etc. The Borrower and each of its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   81 --------------------------------------------------------------------------------   Section 3.16. Investment Company Act. Neither the Borrower nor any of its Subsidiaries is required to register as an “investment company”, or is subject to regulation, under the Investment Company Act of 1940, as amended. Section 3.17. Insurance. Schedule 3.17 sets forth a listing of all material insurance maintained by the Borrower and its Subsidiaries as of the Closing Date, with the amounts insured (and any deductibles) set forth therein. As of the Closing Date, such insurance is in full force and effect and all premiums have been duly paid. The Borrower and its Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice. Section 3.18. Environmental Matters. (a) The Borrower and each of its Subsidiaries is and has been in compliance with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws. There are no pending or, to the Knowledge of the Borrower, threatened Environmental Claims against the Borrower or any of its Subsidiaries or any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries (including any such claim arising out of the ownership, lease or operation by the Borrower or any of its Subsidiaries of any Real Property formerly owned, leased or operated by the Borrower or any of its Subsidiaries). To the Knowledge of the Borrower there are no facts, circumstances, conditions or occurrences with respect to the Borrower or any of its Subsidiaries, or any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries (including any Real Property formerly owned, leased or operated by the Borrower or any of its Subsidiaries) or any other property that could be reasonably expected (i) to form the basis of any liability under Environmental Law or an Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries or (ii) to cause any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries to be subject to any restrictions on the ownership, lease, occupancy, use or transferability of such Real Property by the Borrower or any of its Subsidiaries under any applicable Environmental Law. (b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, or Released on, to, or from, any Real Property presently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries or, to the Knowledge of the Borrower, any other property, where such generation, use, treatment, storage, transportation or Release has violated or could be reasonably expected to violate any applicable Environmental Law or give rise to an Environmental Claim or any liability under Environmental Law. (c) Notwithstanding anything to the contrary in this Section 3.18, the representations and warranties made in this Section 3.18 shall be untrue only if the effect of any or all facts, circumstances, occurrences, conditions, violations, claims, restrictions, failures, liabilities or noncompliances of the types described above could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   82 --------------------------------------------------------------------------------   Section 3.19. Employment and Labor Relations. Neither the Borrower nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries or, to the Knowledge of the Borrower, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the Knowledge of the Borrower, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Borrower or any of its Subsidiaries or, to the Knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries, (iii) no union representation question exists with respect to the employees of the Borrower or any of its Subsidiaries, (iv) no equal employment opportunity charges or other claims of employment discrimination are pending or, to the Knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries and (v) no wage and hour department investigation has been made of the Borrower or any of its Subsidiaries, except (with respect to any matter specified in clauses (i) — (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect. Section 3.20. Intellectual Property, Etc. The Borrower and each of its Subsidiaries owns or has the right to use all the patents, permits, trademarks, domain names, service marks, trade names, copyrights, licenses, franchises, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including, but not limited to, rights in computer programs and databases) and formulas, or rights with respect to the foregoing, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or have which, as the case may be, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. Section 3.21. Indebtedness. Schedule 3.21 sets forth a list of all Indebtedness (including Contingent Obligations, but excluding (i) intercompany Indebtedness solely between or among the Credit Parties and (ii) Indebtedness under the Existing Fannie Mae Credit Agreement, the Existing Receivables Loan Agreement and the Existing Warehouse Loan Agreement (it being understood that the representation set forth in this Section 3.21 shall not be deemed to be incorrect to the extent that Indebtedness in an aggregate amount not exceeding $10,000,000 is not reflected on Schedule 3.21)) of the Borrower and its Subsidiaries as of the Closing Date and which is to remain outstanding after giving effect to the Transactions (excluding the Loans and the Letters of Credit and Indebtedness under the Second Lien Credit Agreement, the “Existing Indebtedness”), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any Credit Party or any of its Subsidiaries which directly or indirectly guarantees such debt.   83 --------------------------------------------------------------------------------   Section 3.22. Anti-Terrorism Law. (a) Neither the Borrower nor any of its Subsidiaries is in violation of any legal requirement relating to any laws with respect to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”) and the USA PATRIOT Act. Neither the Borrower nor any of its Subsidiaries and, to the Knowledge of the Borrower, no agent of the Borrower or any of its Subsidiaries acting on behalf of the Borrower or any of its Subsidiaries or any director, officer, employee or Affiliate of the Borrower or any of its Subsidiaries, as the case may be, is any of the following: (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”) at its official website or any replacement website or other replacement official publication of such list. (b) Neither the Borrower nor any of its Subsidiaries and, to the Knowledge of the Borrower, no agent of the Borrower or any of its Subsidiaries acting on behalf of the Borrower or any of its Subsidiaries, as the case may be, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of a Person described in Section 3.22(a), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. (c) The Borrower will not directly or indirectly use the proceeds of the Loans or the Letters of Credit or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC. Section 3.23. Servicing Agreements. Except as set forth on Schedule 3.23, as of the Closing Date, none of the Servicing Agreements under which the Borrower or any Subsidiary of the Borrower acts as servicer or subservicer provides for the removal or termination of the Borrower or any such Subsidiary or any transfer, in whole or in part, of any mortgage servicing rights from the Borrower or any such Subsidiary upon the failure by the related pool of mortgage receivables to meet any specified loan performance criteria. Section 3.24. Agreements. None of the Borrower or any of its Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.   84 --------------------------------------------------------------------------------   Section 3.25. Transaction Documents. The Borrower has delivered to the Administrative Agent a complete and correct copy of the Purchase Agreement (including all schedules, exhibits, amendments, supplements and modifications thereto). As of the Closing Date, neither the Borrower nor any Credit Party or, to the Knowledge of the Borrower or each Credit Party, any other Person party thereto is in default in the performance or compliance with any material provisions thereof. All representations and warranties of each of the Credit Parties, set forth in the Purchase Agreement were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made). Section 3.26. Foreign Corrupt Practices Act. The Borrower and its directors, officers, agents, employees, and any person acting for or on behalf of the Borrower has complied with, and will comply with, the U.S. Foreign Corrupt Practices Act, as amended from time to time, or any other applicable antibribery or anticorruption law, and it and they have not made, offered, promised, or authorized, and will not make, offer, promise, or authorize, whether directly or indirectly, any payment, of anything of value to: (i) an executive, official, employee or agent of a governmental department, agency or instrumentality, (ii) a director, officer, employee or agent of a wholly or partially government-owned or -controlled company or business, (iii) a political party or official thereof, or candidate for political office, or (iv) an executive, official, employee or agent of a public international organization (e.g., the International Monetary Fund or the World Bank) (“Government Official”); while knowing or having a reasonable belief that all or some portion will be used for the purpose of: (a) influencing any act, decision or failure to act by a Government Official in his or her official capacity, (b) inducing a Government Official to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity, or (c) securing an improper advantage; in order to obtain, retain, or direct business. ARTICLE 4 Conditions of Lending The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions: Section 4.01. All Credit Events after the Closing Date. On the date of each Borrowing (other than a conversion or a continuation of a Borrowing), and on the date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being called a “Credit Event”), in each case after the Closing Date: (a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.02) or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.22(b).   85 --------------------------------------------------------------------------------   (b) Except in the case of any amendment to a Letter of Credit that is adverse to the beneficiary thereof or any extension or renewal of a Letter of Credit without any increase in the stated amount of such Letter of Credit, the representations and warranties set forth in Article 3 and in each other Credit Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (c) Except in the case of any amendment to a Letter of Credit that is adverse to the beneficiary thereof or any extension or renewal of a Letter of Credit without any increase in the stated amount of such Letter of Credit, at the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing. Each Credit Event (other than an amendment to a Letter of Credit that is adverse to the beneficiary thereof or any extension or renewal of a Letter of Credit without any increase in the stated amount of such Letter of Credit) after the Closing Date shall be deemed to constitute a representation and warranty by the Borrower on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01. Section 4.02. First Credit Event. On the Closing Date: (a) The Administrative Agent shall have received, on behalf of itself, the Lenders and the Issuing Banks, a favorable written opinion of (i) Simpson Thacher & Bartlett LLP, counsel for the Borrower, (ii) Stuart Boyd, the Vice President, General Counsel and Secretary of the Borrower, and (iii) each counsel listed on Schedule 4.02(a), each such opinion to be in form and substance reasonably satisfactory to the Administrative Agent, in each case (A) dated the Closing Date, (B) addressed to the Issuing Banks, the Administrative Agent and the Lenders, and (C) covering such matters relating to the Credit Documents and the Transactions as the Administrative Agent shall reasonably request, and the Borrower hereby requests such counsel to deliver such opinions. (b) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or other equivalent formation document, including all amendments thereto, of each Credit Party, certified as of a recent date by the Secretary of State (or other similar official) of the state of its organization, and a certificate as to the good standing of each Credit Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Credit Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws, partnership agreement, limited liability company agreement, memorandum and articles of association or other equivalent governing document of such Credit Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Credit Party   86 --------------------------------------------------------------------------------   authorizing the execution, delivery and performance of the Credit Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date, (C) that the certificate or articles of incorporation or other equivalent formation document of such Credit Party has not been amended since the date of the last amendment thereto furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of such Credit Party; and (iii) the certificate referred to in the foregoing clause (ii) shall contain a certification by an Authorized Officer of such Credit Party as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing such certificate pursuant to clause (ii) above. (c) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by an Authorized Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs (i), (j), (k) (second sentence only), (o), (p), (q) and (r) of Section 4.02. (d) The Administrative Agent, each Lead Arranger and each Lender shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder, under any other Credit Document or under the Commitment Letter or the Fee Letters referred to therein (including reasonable fees and expenses of counsel). (e) (i) The Borrower shall have duly authorized, executed and delivered this Agreement, and each other party to this Agreement shall have executed and delivered this Agreement, and this Agreement shall be in full force and effect and (ii) each Subsidiary Guarantor shall have duly authorized, executed and delivered the First Lien Subsidiaries Guaranty substantially in the form of Exhibit C (as amended, modified and/or supplemented from time to time, the “Subsidiaries Guaranty”), and the Subsidiaries Guaranty shall be in full force and effect. (f) Each Credit Party and each other Subsidiary of the Borrower which is an obligee or obligor with respect to any Intercompany Debt shall have duly authorized, executed and delivered the Intercompany Subordination Agreement substantially in the form of Exhibit F (as amended, modified, restated and/or supplemented from time to time, the “Intercompany Subordination Agreement”), and the Intercompany Subordination Agreement shall be in full force and effect. (g) Each Credit Party shall have duly authorized, executed and delivered the First Lien Pledge Agreement substantially in the form of Exhibit D (as amended, modified, restated and/or supplemented from time to time, the “Pledge Agreement”) and shall have delivered to the Collateral Agent, as Pledgee thereunder, all of the Pledge Agreement Collateral, if any, referred to therein and then owned by such Credit Party, (x) endorsed in blank in the case of promissory notes constituting Pledge Agreement Collateral and (y) together with executed and undated endorsements for transfer in the case of Equity Interests constituting certificated Pledge Agreement Collateral, along with evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Pledge Agreement have been taken, and the Pledge Agreement shall be in full force and effect.   87 --------------------------------------------------------------------------------   (h) Each Credit Party shall have duly authorized, executed and delivered the First Lien Security Agreement substantially in the form of Exhibit E (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”) covering all of such Credit Party’s Security Agreement Collateral, together with: (i) proper financing statements (Form UCC-1 or the equivalent) duly authorized for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement; (ii) certified copies of requests for information or copies (Form UCC-11), or equivalent reports as of a recent date, listing all effective financing statements that name the Borrower or any of its Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (i) above and in such other jurisdictions in which Collateral is located on the Closing Date, together with copies of such other financing statements that name the Borrower or any of its Subsidiaries as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law fully executed for filing); (iii) evidence of the completion of all other recordings and filings of, or with respect to, the Security Agreement (other than to the extent such actions are required or permitted to be performed after the Closing Date) as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests intended to be created by the Security Agreement; and (iv) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect and protect the security interests purported to be created by the Security Agreement have been taken (other than to the extent such actions are required or permitted to be performed after the Closing Date), and the Security Agreement shall be in full force and effect.   88 --------------------------------------------------------------------------------   (i) The Acquisition shall have been consummated substantially simultaneously with the funding of Loans on the Closing Date on the terms described in the Purchase Agreement (without any amendment, modification or waiver thereof or any consent thereunder which is materially adverse to the Borrower, the Lenders or the Lead Arrangers without the prior written consent of the Lead Arrangers (it being understood and agreed that (a) any reduction in the aggregate amount of cash and stock consideration payable by the Borrower pursuant to the Purchase Agreement as in effect on March 25, 2011 (the “Acquisition Consideration”) (other than any reductions that in the aggregate are (x) 10% or less of the Acquisition Consideration as of March 25, 2011 and (y) if such reductions are reductions in the cash portion of the Acquisition Consideration, allocated on a dollar-for-dollar basis, (i) in the case of the first $15,000,000 of such reductions, to reduce the principal amount of the loans under the Second Lien Credit Agreement and (ii) the remainder, 50% to reduce the aggregate principal amount of the Term Facility and the loans under the Second Lien Credit Agreement (allocated among such facilities as determined by the Lead Arrangers) and 50% to reduce the Acquisition Consideration paid by the Borrower or any of its Affiliates) and (b) any amendment or modification to (x) Section 10.1 or 10.7 of the Purchase Agreement or (y) any provision of the Purchase Agreement setting forth any liability cap or limitation on damages or remedies of which the Lead Arrangers and the Lenders are beneficiaries pursuant to Section 10.7 of the Purchase Agreement (including, without limitation, Sections 8.2, 10.11 and 10.15 and Article 9 thereof), shall in each case be deemed to be a modification which is materially adverse to the Lenders). (j) The Borrower shall have received gross cash proceeds of not less than $265,000,000 (subject to adjustment as provided in clause (i) above) from loans made under the Second Lien Credit Agreement. (k) All principal, premium, if any, interest, fees and other amounts due or outstanding under the Specified Credit Agreement shall have been (or substantially simultaneously with the funding of Loans on the Closing Date shall be) paid in full, the commitments thereunder terminated and all guarantees and security in support thereof discharged and released, and the Administrative Agent shall have received reasonably satisfactory evidence thereof. Immediately after giving effect to the Transactions and the other transactions contemplated hereby, the Borrower and the Subsidiaries shall have outstanding no Indebtedness for borrowed money or Preferred Equity other than (a) Indebtedness outstanding under this Agreement, (b) the loans under the Second Lien Credit Agreement (c)(i) debt of Green Tree Servicing LLC in an aggregate principal amount not to exceed $20,100,000 under the Existing Fannie Mae Credit Agreement, (ii) debt of Green Tree Advance Receivables II LLC in an aggregate principal amount not to exceed $75,000,000 under the Existing Receivables Loan Agreement, (iii) debt of Green Tree Servicing LLC in an aggregate principal amount not to exceed $5,000,000 under the Existing Warehouse Loan Agreement and (iv) non-recourse debt in an aggregate principal amount not to exceed $2,750,000,000 of Securitization Vehicles, (d) indebtedness listed on Schedule 3.21 and (e) Qualified Equity Interests. (l) The Lenders shall have received the financial statements referred to in Section 3.05. (m) The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower substantially in the form attached hereto as Exhibit K certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions to occur on the Closing Date, are solvent. (n) The Administrative Agent shall have received, at least five Business Days prior to the Closing Date, to the extent requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.   89 --------------------------------------------------------------------------------   (o) The Target’s consolidated EBITDA for the twelve-month period ending on March 31, 2011 (calculated in a manner consistent with the presentation of EBITDA set forth in the Project Cardinal Offering Memorandum provided to the Lead Arrangers prior to March 25, 2011, adjusted for provision expense on advances) shall not be less than $160,000,000. (p) Except as set forth on Schedule 3.7 to the Purchase Agreement as in effect on March 25, 2011, since December 31, 2010, there shall not have been, individually or in the aggregate, a Company Material Adverse Effect. For purposes of this clause, “Company Material Adverse Effect” means any change, development, circumstance, effect, event or fact (a) that has, or would reasonably be expected to have, a material adverse effect upon the financial condition, business, assets, liabilities or results of operations of the Group Companies, taken as a whole or (b) would reasonably be expected to prevent or materially impede or materially delay the performance in all material respects by the Seller and/or the Company of their respective obligations under the Purchase Agreement or the consummation of the transactions contemplated thereby; provided, however, that any adverse change, event or effect arising from or related to: (i) conditions affecting the United States economy generally, (ii) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (iii) changes after March 25, 2011 in financial, banking or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (iv) changes after March 25, 2011 in GAAP, (v) changes after March 25, 2011 in any Law or other binding directives issued by any Governmental Entity, (vi) changes after March 25, 2011 that are generally applicable to the industries or markets in which the Group Companies operate, (vii) the public announcement of the transactions contemplated by the Purchase Agreement, (viii) any material failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending on or after the date of the Purchase Agreement; provided that any change, effect, event or occurrence that caused or contributed to such failure to meet projections, forecasts or predictions shall not be excluded pursuant to this clause (viii), (ix) the taking of any action contemplated by the Purchase Agreement and the other agreements contemplated thereby, including the completion of the transactions contemplated thereby, (x) any adverse change in or effect on the business of the Group Companies that is cured prior to the Closing Date, or (xi) the matter set forth in Schedule I to the Commitment Letter, shall not (for purposes of clause (a) of this definition) be taken into account in determining whether a “Company Material Adverse Effect” has occurred; provided, further, however, that any change, event or effect referred to in clauses (i) through (vi) may be taken into account in determining whether or not there has been a “Company Material Adverse Effect” to the extent such change, event or effect has a disproportionate adverse affect on the Group Companies, taken as a whole, as compared to other participants in the industry in which the Group Companies operate (in which case only the incremental disproportionate impact or impacts may be taken into account in determining whether or not there has been or may be a “Company Material Adverse Effect”). Solely for purposes of this clause, any capitalized terms used in the clause shall have the same meaning as set forth in the Purchase Agreement as in effect on March 25, 2011.   90 --------------------------------------------------------------------------------   (q) The representations and warranties made by or on behalf of the GTH LLC, the Target and its subsidiaries in the Purchase Agreement as are material to the interests of the Lenders, but only to the extent that the Borrower (or an Affiliate thereof) has the right (determined without regard to any notice requirement) to terminate its obligations under the Purchase Agreement as a result of a breach of such representations in the Purchase Agreement shall be true and correct. The representations and warranties set forth in Section 3.01(i), Section 3.02, Section 3.03(i), Section 3.03(ii) (with respect to the Purchase Agreement, the Existing Fannie Mae Credit Agreement, the Existing Receivables Loan Agreement, non-recourse debt of Securitization Vehicles and indebtedness listed on Schedule 3.21), Section 3.03(iii), Section 3.05(d), Section 3.08(b), Section 3.11, Section 3.16 and Section 3.22 shall be true and correct. (r) No Default or Event of Default under Section 7.01(d)(i)(x) or Section 7.01(d)(ii) (with respect to the Existing Fannie Mae Credit Agreement, the Existing Receivables Loan Agreement, the Existing Warehouse Loan Agreement or any other Indebtedness (other than non-recourse debt of Securitization Vehicles) with an aggregate principal amount or termination or settlement value (as applicable) of at least $20,000,000) or Section 7.01(d)(i)(y) (as a result of any breach of a financial covenant or the occurrence of any termination event or event of default as a result of any failure to meet any specified financial condition or financial requirement under the Existing Receivables Loan Agreement) shall have occurred and be continuing. (s) The Administrative Agent shall have received a notice of such Credit Event as required by Section 2.03. (t) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.03 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance reasonably satisfactory to the Administrative Agent. Notwithstanding anything in clause (g) or (h) to the contrary, other than with respect to the pledge and perfection of security interests in Stock Certificates held by a Credit Party and perfection of security interests in UCC Filing Collateral, to the extent any Collateral cannot be delivered, or a security interest therein cannot be perfected, on the Closing Date after the use of commercially reasonable efforts by the Borrower to do so, the delivery of, or perfection of a security interest in, such Collateral shall not constitute a condition precedent to the availability of the Credit Facilities on the Closing Date, but such delivery and perfection shall instead be required to be completed within 60 days after the Closing Date (it being understood that failure to so complete such requirements by such date shall, unless otherwise consented to in writing by the Administrative Agent in its discretion, constitute an Event of Default); provided that with respect to perfection of security interests in UCC Filing Collateral, the Borrower’s sole obligation as a condition to the   91 --------------------------------------------------------------------------------   availability of the Credit Facilities on the Closing Date shall be to deliver, or cause to be delivered, necessary UCC financing statements to the Collateral Agent and to irrevocably authorize and to cause the applicable Subsidiary Guarantor to irrevocably authorize the Collateral Agent to file such UCC financing statements, and with respect to perfection of security interests in Stock Certificates, the Borrower’s sole obligation as a condition to the availability of the Credit Facilities on the Closing Date shall be to deliver to the Collateral Agent or its legal counsel Stock Certificates together with undated stock powers executed in blank. For purposes hereof, (1) “UCC Filing Collateral” means Collateral consisting of assets of the Target, the Borrower and their respective subsidiaries for which a security interest can be perfected by filing a Uniform Commercial Code financing statement and (2) “Stock Certificates” means Collateral consisting of stock certificates representing capital stock held by the Borrower and its subsidiaries required as Collateral under the Credit Documents. ARTICLE 5 Affirmative Covenants The Borrower covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Credit Document shall have been paid in full (other than contingent indemnification obligations for which no claim has been made) and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full or have been Cash Collateralized or backstopped in a manner reasonably satisfactory to the applicable Issuing Bank, unless the Required Lenders shall otherwise consent in writing: Section 5.01. Information Covenants. The Borrower will furnish to the Administrative Agent which will promptly furnish to each Lender: (a) Monthly Reporting. Within 30 days after the end of each fiscal month of the Borrower (other than the last fiscal month of each fiscal quarter of the Borrower), beginning with the Borrower’s fiscal month ending October, 2011, internally generated financial statements as at and for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month in the form used by management (it being understood that, notwithstanding anything to the contrary contained herein, no representation or warranty is made with respect to such internally generated financial statements). (b) Quarterly Financial Statements. Within 45 days after the end of each of the first three fiscal quarters in each fiscal year of the Borrower, (i) the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such quarterly period and the related consolidated statements of income and stockholders equity and statement of cash flows for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, in each case setting forth comparative figures where applicable for the corresponding quarterly period in the prior fiscal year, all of which shall be certified by an Authorized Officer of the Borrower that they fairly present in all material respects in accordance with GAAP the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, (ii) comparable budgeted figures for such quarterly period as set forth in the respective budget delivered pursuant to Section 5.01(e) and (iii) the information set forth on Schedule 5.01 for such quarterly period, which shall be certified as being true and correct in all material respects by an Authorized Officer of the Borrower.   92 --------------------------------------------------------------------------------   (c) Annual Financial Statements. Within 90 days after the end of each fiscal year of the Borrower, (i) the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and stockholders equity and statement of cash flows for such fiscal year setting forth comparative figures where applicable for the preceding fiscal year and reported on by Ernst & Young LLP or other independent certified public accountants of recognized national standing (which report shall be without a “going concern” or like qualification or exception and without any qualification or exception as to scope of audit), together with a report of such accounting firm stating that in the course of its regular audit of the financial statements of the Borrower and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm obtained no knowledge of any Default or an Event of Default relating to financial or accounting matters which has occurred and is continuing or, if such accounting firm obtained knowledge of such a Default or an Event of Default, a statement as to the nature thereof, in each case only to the extent that such accounting firm is not restricted or prohibited from doing so by its internal policies or accounting rules or guidelines generally) and (ii) the information set forth on Schedule 5.01 for such fiscal year, which shall be certified as being true and correct in all material respects by an Authorized Officer of the Borrower. (d) [Reserved]. (e) Budgets. No later than 75 days following the first day of each fiscal year of the Borrower, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income, sources and uses of cash and balance sheets for the Borrower and its Subsidiaries on a consolidated basis) for each of the four quarters of such fiscal year prepared in reasonable detail. (f) Officer’s Certificates. At the time of the delivery of the financial statements provided for in Sections 5.01(b) and (c), a compliance certificate from an Authorized Officer of the Borrower substantially in the form of Exhibit G certifying on behalf of the Borrower that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof, which certificate shall (i) set forth in reasonable detail the calculations required to establish whether the Borrower and its Subsidiaries were in compliance with the provisions of Sections 2.13(b), 2.13(c), 2.13(e), 2.13(f), 6.01(x), 6.01(xii), 6.01(xxvii), 6.02(iv), 6.03(iii), 6.03(v), 6.03(vi), 6.04(iv), 6.04(vi), 6.04(vii), 6.04(xiii) (as it relates to Short-Term Warehouse Debt that is not Non-Recourse Short-Term Warehouse Debt), 6.04(xvi), 6.04(xix), 6.05(v), 6.05(ix), 6.05(xxi), 6.05(xxii) and 6.07 through 6.09, inclusive, at the end of such fiscal quarter or year, as the case may be, (ii) if delivered with the financial statements required by Section 5.01(c), set forth in reasonable detail the amount   93 --------------------------------------------------------------------------------   of (and the calculations required to establish the amount of) Excess Cash Flow for the respective Excess Cash Flow Payment Period, (iii) set forth in reasonable detail the amount of (and the calculations required to establish the amount of) the Available Amount at the end of such fiscal quarter or year, as the case may be (which calculations also include the amount of transactions effected pursuant to Sections 6.05(ix)(C)(2), 6.05(xii), 6.05(xix), 6.05(xx) or 6.05(xxi) (to the extent utilizing the Available Amount), and 6.07(b)), and (iv) certify that there have been no changes to Schedules 1 through 8 of the Security Agreement and Annexes A through G of the Pledge Agreement, in each case since the Closing Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 5.01(f), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (iii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether the Borrower and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connections with any such changes. (g) Notice of Default, Litigation and Material Adverse Effect. Promptly, and in any event within three Business Days after any Authorized Officer obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto, (ii) any litigation or governmental investigation or proceeding pending, or any threat or notice of intention of any Person to file or commence any litigation or governmental investigation or proceeding, against the Borrower or any of its Subsidiaries (x) which, either individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect or (y) with respect to any Credit Document and (iii) any other event, change or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect. (h) Other Reports and Filings. Promptly after the filing or delivery thereof, copies of all financial information, proxy materials and reports, if any, which the Borrower or any of its Subsidiaries shall publicly file with the Securities and Exchange Commission or any successor thereto (the “SEC”) (which delivery requirement shall be deemed satisfied by the posting of such information, materials or reports on EDGAR or any successor website maintained by the SEC so long as the Administrative Agent shall have been promptly notified in writing by the Borrower of the posting thereof) or deliver to holders (or any trustee, agent or other representative therefor) of any Qualified Equity Interests of the Borrower, loans under the Second Lien Credit Agreement or any of its other material Indebtedness pursuant to the terms of the documentation governing the same. (i) Environmental Matters. Promptly after any Authorized Officer obtains knowledge thereof, notice of one or more of the following environmental matters to the extent that such environmental matters, either individually or when aggregated with all other such environmental matters, could reasonably be expected to have a Material Adverse Effect: (i) any pending or threatened Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries; (ii) any condition or occurrence on or arising from any Real Property currently or formerly owned, leased or operated by the Borrower or any of its Subsidiaries that (a) results in noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of a liability under Environmental Law or an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property;   94 --------------------------------------------------------------------------------   (iii) any condition or occurrence on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, lease, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real Property under any Environmental Law; and (iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency; provided that in any event the Borrower shall deliver to each Lender all notices received by the Borrower or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA which identify the Borrower or any of its Subsidiaries as potentially responsible parties for remediation costs or which otherwise notify the Borrower or any of its Subsidiaries of potential liability under CERCLA. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence, noncompliance, liability or removal or remedial action and the Borrower’s or such Subsidiary’s response thereto. (j) Patriot Act Information. Promptly following the Administrative Agent’s or any Lender’s request therefor, all documentation and other information that the Administrative Agent or any Lender reasonably requests in order to comply with its on-going obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act. (k) Notice of Termination of or Defaults under a Servicing Agreement and MSR Call Option. Promptly, and in any event within three Business Days after any Authorized Officer obtains knowledge thereof, notice of (i) the termination of (or the written intention to terminate) any Servicing Agreement, (ii) the occurrence of any event which constitutes an event of default or similar occurrence under a Servicing Agreement to the extent that such event of default or similar occurrence, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (iii) any MSR Call Option exercised by an MSR Lender. (l) Fannie Mae Servicer Entity Documents. Promptly after the formation and licensing of the Fannie Mae Servicer Entity, copies of all material agreements and arrangements entered into by the Fannie Mae Servicer Entity with Fannie Mae.   95 --------------------------------------------------------------------------------   (m) Second Lien Credit Agreement. Promptly provide copies of any material notices or reports provided to the administrative agent under the Second Lien Credit Agreement pursuant to Section 5.01 thereof not otherwise provided to the Administrative Agent under this Section 5.01. (n) Other Information. From time to time, such other information or documents (financial or otherwise) with respect to the Borrower or any of its Subsidiaries as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request. Section 5.02. Books, Records and Inspections. The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Administrative Agent or the Required Lenders to visit and inspect, under guidance of officers of the Borrower or such Subsidiary, any of the properties of the Borrower or such Subsidiary, and to examine the books of account of the Borrower or such Subsidiary and discuss the affairs, finances and accounts of the Borrower or such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable prior notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or the Required Lenders may reasonably request; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Administrative Agent and the Lenders under this sentence. Section 5.03. Maintenance of Property; Insurance. (a) The Borrower will, and will cause each of its Subsidiaries to, (i) keep all material property necessary to the business of the Borrower and its Subsidiaries in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty events, (ii) maintain with financially sound and reputable insurance companies insurance on all such property and against all such risks as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as the Borrower and its Subsidiaries, and (iii) furnish to the Administrative Agent, upon its request therefor, full information as to the insurance carried. Such insurance to the extent consistent with the foregoing shall include physical damage insurance on all real and personal property (whether now owned or hereafter acquired) on an all risk basis and business interruption insurance. (b) The Borrower will, and will cause each of its Subsidiaries to, at all times keep its property insured in favor of the Collateral Agent, and all policies or certificates (or certified copies thereof) with respect to such insurance (and any other insurance maintained by the Borrower and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agent’s reasonable satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as loss payee and/or additional insured), (ii) shall state that the insurers under such insurance policies shall endeavor to provide at least 15 days’ prior written notice of the cancellation thereof by the respective insurer to the Collateral Agent, (iii) shall provide that the respective insurers irrevocably waive any and all rights of subrogation with respect to the Collateral Agent and the other Secured Creditors, and (iv) shall be delivered to the Collateral Agent.   96 --------------------------------------------------------------------------------   (c) If the Borrower or any of its Subsidiaries shall fail to maintain insurance in accordance with this Section 5.03, or if the Borrower or any of its Subsidiaries shall fail to so endorse and deposit all policies or certificates with respect thereto, the Administrative Agent shall have the right (but shall be under no obligation) to procure such insurance and the Borrower agrees to reimburse the Administrative Agent for all costs and expenses of procuring such insurance, provided that the Administrative Agent shall furnish written notice to the Borrower of its intent to procure such insurance. (d) If at any time the area in which the buildings or other improvements (as defined in the applicable Mortgages) in respect of any Mortgaged Property are located is designated (1) a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), the Borrower shall obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time reasonably require, and otherwise comply with the NFIP as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time, or (2) a “Zone 1” area, the Borrower shall obtain earthquake insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time reasonably require. Following the Closing Date, the Borrower shall deliver to the Collateral Agent annual renewals of each flood insurance policy or annual renewals of each force-placed flood insurance policy, as applicable. In connection with any amendment to this Agreement pursuant to which any increase, extension, or renewal of Loans is contemplated, the Borrower shall cause to be delivered to the Collateral Agent for any Mortgaged Property, a Flood Determination Form, Borrower Notice and Evidence of Flood Insurance, as applicable. (e) With respect to any Mortgaged Property, carry and maintain commercial general liability insurance and coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella liability insurance against any and all claims, in no event for a combined single limit of less than that which is customary for companies in the same or similar businesses operating in the same or similar locations, naming the Collateral Agent as an additional insured, on forms reasonably satisfactory to the Collateral Agent. (f) The Borrower shall notify the Administrative Agent and the Collateral Agent promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.03 is taken out by any Credit Party; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.   97 --------------------------------------------------------------------------------   Section 5.04. Existence; Franchises. The Borrower will, and will cause each of its Subsidiaries to, (x) do or cause to be done all things necessary to preserve and keep in full force and effect its organizational existence and (y) take all reasonable action to maintain all rights, privileges, franchises, licenses, permits, copyrights, trademarks, and trade names necessary or desirable in the normal conduct of its business; provided, however, that nothing in this Section 5.04 shall prevent (i) sales of assets and other transactions by the Borrower or any of its Subsidiaries in accordance with Section 6.02, (ii) the discontinuation, abandonment or expiration of any right, franchise, license, permit, copyright, trademark or patent if such discontinuation, abandonment or expiration could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (iii) the withdrawal by the Borrower or any of its Subsidiaries of its qualification as a foreign Company in any jurisdiction if such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 5.05. Compliance with Statutes, Etc. The Borrower will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 5.06. Compliance with Environmental Laws. (a) The Borrower will comply, and will cause each of its Subsidiaries to comply, with all Environmental Laws and permits applicable to, or required by, the ownership, lease, occupancy, or use of its Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, except such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws except for Permitted Liens related thereto. Neither the Borrower nor any of its Subsidiaries will generate, use, treat, store, Release or dispose of Hazardous Materials on any Real Property now or hereafter owned, leased or operated by the Borrower or any of its Subsidiaries, or transport Hazardous Materials to or from any such Real Property, except for Hazardous Materials generated, used, treated, stored, Released or disposed of at any such Real Properties (x) in compliance in all respects with all applicable Environmental Laws and as required in connection with the normal operation, use and maintenance of the business or operations of the Borrower or any of its Subsidiaries or (y) as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) (i) After the receipt by the Administrative Agent or any Lender of any notice of the type described in Section 5.01(i), (ii) at any time that the Borrower or any of its Subsidiaries are not in compliance with Section 5.06(a), or (iii) in the event that the Administrative Agent or the Lenders have exercised any of the remedies pursuant to the last paragraph of Section 7.01, the Borrower will (in each case) provide, at the sole expense of the Borrower and at the request of the Administrative Agent, a non-invasive environmental site assessment report concerning the Real Property owned, leased or operated by the Borrower or any of its Subsidiaries that is in question, prepared by an environmental consulting firm reasonably approved by the Administrative Agent, indicating the presence or absence of Hazardous Materials and the potential cost of any removal or remedial action required by a Governmental Authority in connection with such Hazardous Materials on such Real Property. If the Borrower fails to provide the same within 60 days after such request was made, the Administrative Agent may order the same, the cost of which shall be borne by the Borrower, and the Borrower shall grant and hereby grants to the Administrative Agent and the Lenders and their respective agents access to such Real Property and specifically grants the Administrative Agent and the Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to the Borrower, all at the sole expense of the Borrower.   98 --------------------------------------------------------------------------------   Section 5.07. ERISA. (a) Furnish written notice to the Administrative Agent promptly, and in any event within ten days after any responsible officer of Borrower or any ERISA Affiliate knows, or has reason to know, that any ERISA Event has occurred or is reasonably likely to occur that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrower or any ERISA Affiliate in an aggregate amount exceeding $5,000,000. (b) The Borrower and each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans administered by it or into which it makes payments obtains or retains (as applicable) registered status under and as required by applicable law and is administered in a timely manner in all respects in compliance with all applicable laws except where the failure to do any of the foregoing, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Section 5.08. End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i) its and each of its Domestic Subsidiaries’ fiscal years to end on December 31 of each calendar year and (ii) its and each of its Domestic Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each calendar year. Section 5.09. Performance of Obligations. The Borrower will, and will cause each of its Subsidiaries (other than a Securitization Vehicle) to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except for such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 5.10. Payment of Taxes. The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all material lawful claims which, if unpaid, might become a Lien or charge upon any properties of the Borrower or any of its Subsidiaries not otherwise permitted under Section 6.01(i); provided that neither the Borrower nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.   99 --------------------------------------------------------------------------------   Section 5.11. Use of Proceeds. The Borrower will use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes specified in the introductory statement to this Agreement. Section 5.12. Additional Security; Further Assurances; Etc. (a) The Borrower will, and will cause each other Credit Party to, grant to the Collateral Agent for the benefit of the Secured Creditors security interests and Mortgages in such assets and Real Property of the Borrower and such other Credit Party as are not covered by the original Security Documents and as may be reasonably requested from time to time by the Administrative Agent or the Required Lenders (collectively, the “Additional Security Documents”). All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests, hypothecations and Mortgages superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens except for Permitted Liens or, in the case of Real Property, the Permitted Encumbrances related thereto. The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full. Notwithstanding the foregoing, this Section 5.12(a) shall not (i) apply to any Excluded Collateral or (ii) require any Credit Party to grant a Mortgage in (x) any Leasehold, (y) any owned Real Property the book value of which is less than $2,500,000 or (z) any REO Property. (b) The Borrower will, and will cause each of the other Credit Parties to, at the expense of the Borrower, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports, landlord waivers, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, the Borrower will, and will cause the other Credit Parties that are Subsidiaries of the Borrower to, deliver to the Collateral Agent such opinions of counsel and other related documents as may be reasonably requested by the Administrative Agent to assure itself that this Section 5.12 has been complied with. (c) With respect to any owned Real Property with respect to which a Mortgage is delivered pursuant to this Section 5.12, Borrower will promptly (i) if requested by the Collateral Agent, provide the Lenders with a Mortgage Policy covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Collateral Agent) as well as an ALTA survey thereof certified to the Collateral Agent in form reasonably satisfactory to the Collateral Agent and (ii) if requested by the Collateral Agent, deliver to the Collateral Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent.   100 --------------------------------------------------------------------------------   No later than three Business Days prior to the date on which a Mortgage is executed and delivered pursuant to this Section 5.12(c), in order to comply with the Flood Laws, the Collateral Agent shall have received the following documents (collectively, the “Flood Documents”): (A) a completed standard “life of loan” flood hazard determination form (a “Flood Determination Form”), (B) if the improvement(s) to the applicable improved real property is located in a special flood hazard area, a notification to the Borrower (“Borrower Notice”) and (if applicable) notification to the Borrower that flood insurance coverage under the National Flood Insurance Program (“NFIP”) is not available because the community does not participate in the NFIP, (C) documentation evidencing the Borrower’s receipt of the Borrower Notice (e.g., countersigned Borrower Notice, return receipt of certified U.S. Mail, or overnight delivery), and (D) if the Borrower Notice is required to be given and flood insurance is available in the community in which the property is located, a copy of one of the following: the flood insurance policy, the borrower’s application for a flood insurance policy plus proof of premium payment, a declaration page confirming that flood insurance has been issued, or such other evidence of flood insurance reasonably satisfactory to the Collateral Agent (any of the foregoing being “Evidence of Flood Insurance”). (d) The Borrower agrees that each action required by clauses (a) through (c) of this Section 5.12 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by the Administrative Agent or the Required Lenders; provided that, in no event will the Borrower or any of its Subsidiaries be required to take any action, other than using its commercially reasonable efforts, to obtain consents from third parties with respect to its compliance with this Section 5.12. Section 5.13. [Reserved]. Section 5.14. [Reserved]. Section 5.15. [Reserved]. Section 5.16. [Reserved]. Section 5.17. [Reserved]. Section 5.18. Maintenance of Company Separateness. The Borrower will cause each of the Non-Recourse Entities and the Fannie Mae Servicer Entity to satisfy customary formalities for such entity, including, as applicable, (i) to the extent required by law, the holding of regular board of directors’ and shareholders’ meetings or action by directors or shareholders without a meeting, (ii) the maintenance of separate records and (iii) the maintenance of separate bank accounts in its own name. Neither the Borrower nor any other of its Subsidiaries shall make any payment to a creditor of any Non-Recourse Entity or the Fannie Mae Servicer Entity in respect of any liability of any Non-Recourse Entity or the Fannie Mae Servicer Entity, and no bank account of any Non-Recourse Entity or the Fannie Mae Servicer Entity shall be commingled with any bank account of the Borrower or any of its other Subsidiaries. Any financial statements distributed to any creditors of any Non-Recourse Entity or the Fannie Mae Servicer Entity shall clearly establish or indicate the corporate separateness of such Non-Recourse Entity or the Fannie Mae Servicer Entity from the Borrower and its other Subsidiaries. Neither the Borrower nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, which is likely to result in the separate legal existence of the Borrower or any of its Subsidiaries being ignored, or in the assets and liabilities of the Borrower or any of its Subsidiaries being substantively consolidated with those of any other Person in a bankruptcy, reorganization or other insolvency proceeding.   101 --------------------------------------------------------------------------------   Section 5.19. Certain Required Dividends. To the extent that (i) a Non-Recourse Servicer Advance Debt Entity holds Unrestricted cash and/or Cash Equivalents in excess of an aggregate amount equal to the lesser of (x) $10,000,000 and (y) 10% of the aggregate unused commitments under all Non-Recourse Servicer Advance Debt of such Non-Recourse Servicer Advance Debt Entity (net of amounts retained for bona fide business purposes which will be required to be satisfied within the immediately succeeding 30 days) as of the last Business Day of any fiscal month of the Borrower, then, within one Business Day thereafter, the Borrower will cause such Non-Recourse Servicer Advance Debt Entity to distribute such excess cash and Cash Equivalents to the Borrower or a Subsidiary Guarantor as a Dividend, and (ii) a Non-Recourse Warehouse Debt Entity holds Unrestricted cash and/or Cash Equivalents in excess of an aggregate amount equal to the lesser of (x) $10,000,000 and (y) 10% of the aggregate unused commitments under all Non-Recourse Short-Term Warehouse Debt of such Non-Recourse Warehouse Debt Entity (net of amounts retained for bona fide business purposes which will be required to be satisfied within the immediately succeeding 30 days) as of the last Business Day of any fiscal month of the Borrower, then, within one Business Day thereafter, the Borrower will cause such Non-Recourse Warehouse Debt Entity to distribute such excess cash and Cash Equivalents to the Borrower or a Subsidiary Guarantor as a Dividend, in each case to the extent permitted to do so under the requirements of the documents governing any Indebtedness of such Non-Recourse Entity (and net of any amounts that the Borrower acting reasonably and in good faith determines should be retained by such Non-Recourse Entity to ensure continued compliance with and the ability to service such Indebtedness in accordance with its terms). Section 5.20. Maintenance of Ratings. The Borrower will use its commercially reasonable efforts to maintain at all times public ratings (of any level) for the Credit Facilities and public corporate ratings or corporate family ratings (as applicable) of any level with respect to the Borrower, in each case from each of S&P and Moody’s. Section 5.21. Post-Closing Items. Notwithstanding anything herein or in the other Credit Documents to the contrary, the Credit Parties shall be permitted to deliver, and the Borrower shall, or shall cause each other Credit Party to, take all necessary actions to deliver, to the Collateral Agent or its legal counsel within 30 days following the Closing Date (or such longer period agreed to by the Collateral Agent in its reasonable discretion), stock certificates representing (x) 100% of the Equity Interests of Hanover Capital Securities, Inc. and (y) 66% of the voting Equity Interests and 100% of the non-voting Equity Interests of Green Tree Insurance Agency Reinsurance Limited, in each case together with undated stock powers executed in blank.   102 --------------------------------------------------------------------------------   ARTICLE 6 Negative Covenants The Borrower covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Credit Document have been paid in full (other than contingent indemnification obligations for which no claim has been made) and all Letters of Credit have been cancelled or have expired and all amounts drawn thereunder have been reimbursed in full or have been Cash Collateralized or backstopped in a manner reasonably satisfactory to the applicable Issuing Bank, unless the Required Lenders shall otherwise consent in writing: Section 6.01. Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible and including Equity Interests or other securities of any Person, including any Subsidiary) of the Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or on any income or revenues or rights in respect of any thereof; provided that the provisions of this Section 6.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “Permitted Liens”): (i) Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (ii) Liens in respect of property or assets of the Borrower or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and in each case (x) which are for amounts that are not past-due and do not in the aggregate materially detract from the value of the Borrower’s or such Subsidiary’s property or assets or materially impair the use thereof in the operation of the business of the Borrower or such Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien, and for which adequate reserves have been established in accordance with GAAP; (iii) Liens in existence on the Closing Date which are listed, and the property subject thereto described, in Schedule 6.01, plus renewals, replacements and extensions of such Liens, provided that (x) the aggregate principal amount of the Indebtedness, if any, or obligations secured by such Liens does not increase from that amount outstanding at the time of any such renewal, replacement or extension and (y) any such renewal, replacement or extension does not encumber any additional assets or properties of the Borrower or any of its Subsidiaries;   103 --------------------------------------------------------------------------------   (iv) Liens created by or pursuant to this Agreement and the Security Documents; (v) (x) licenses, sublicenses, leases or subleases granted by the Borrower or any of its Subsidiaries to other Persons in the ordinary course of business and not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries or materially detracting from the value of the Borrower’s or such Subsidiary’s property, rights or assets and (y) any interest or title of a lessor, sublessor or licensor under any operating lease or license agreement entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (vi) Liens upon assets of the Borrower or any of its Subsidiaries subject to Capitalized Lease Obligations to the extent such Capitalized Lease Obligations are permitted by Section 6.04(iv), provided that (x) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation and (y) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any other asset of the Borrower or any Subsidiary of the Borrower; (vii) Liens placed upon fixed or capital assets used in the ordinary course of business of the Borrower or any of its Subsidiaries and placed at the time of the acquisition thereof by the Borrower or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such assets, or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (x) the Indebtedness secured by such Liens is permitted by Section 6.04(iv) and (y) in all events, the Lien encumbering the assets so acquired does not encumber any other asset of the Borrower or such Subsidiary; (viii) easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries; (ix) Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business; (x) Liens arising out of the existence of judgments or awards not constituting an Event of Default under Section 7.01(i) and in respect of which the Borrower or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review and in respect of which there shall have been secured a subsisting stay of execution pending such appeal or proceedings; (xi) statutory and common law landlords’ liens under leases entered into in the ordinary course of business by the Borrower or any of its Subsidiaries;   104 --------------------------------------------------------------------------------   (xii) (A) Liens (other than Liens imposed under ERISA) incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance and other social security legislation and (B) Liens securing the performance of bids, trade contracts, performance and completion guarantees, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business (in each case exclusive of obligations in respect of Indebtedness), provided that the aggregate amount of all cash and the Fair Market Value of all other property subject to all Liens permitted by this sub-clause (B) shall not at any time exceed $5,000,000; (xiii) Permitted Encumbrances; (xiv) Liens on property or assets acquired pursuant to a Permitted Acquisition or Permitted Foreign Acquisition, or on property or assets of a Subsidiary of the Borrower in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition or Permitted Foreign Acquisition, provided that (x) any Indebtedness that is secured by such Liens is permitted to exist under Section 6.04(vii), and (y) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition or Permitted Foreign Acquisition and do not attach to any other asset of the Borrower or any of its Subsidiaries; (xv) Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements; (xvi) Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) 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 in the ordinary course of business; (xvii) (A) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Borrower or any Subsidiary of the Borrower, in each case granted in the ordinary course of business and are customary in the banking industry in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements and (B) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;   105 --------------------------------------------------------------------------------   (xviii) Liens placed upon Servicing Rights acquired by the Borrower or any of its Subsidiaries and placed at the time of the acquisition thereof by the Borrower or such Subsidiary to secure MSR Loans incurred solely for the purpose of financing the acquisition of any such Servicing Rights, provided that (x) the MSR Loans secured by such Liens are permitted by Section 6.04(xi) and (y) in all events, the Lien encumbering such Servicing Rights so acquired does not encumber any other asset of the Borrower or any Subsidiary of the Borrower (including other Servicing Rights then owned or thereafter acquired by the Borrower or any of its Subsidiaries); (xix) Liens placed upon Transferred Assets acquired by any Non-Recourse Servicer Advance Debt Entity and placed at the time of the acquisition thereof by such Non-Recourse Servicer Advance Debt Entity to secure Non-Recourse Servicer Advance Debt incurred by such Non-Recourse Servicer Advance Debt Entity solely for the purpose of financing the acquisition of any such Transferred Assets from the applicable Seller, provided that (x) the Non-Recourse Servicer Advance Debt secured by such Liens is permitted by Section 6.04(xii) and (y) in all events, the Lien encumbering such Transferred Assets so acquired does not encumber any other asset of the Borrower or any of its Subsidiaries; (xx) Liens placed upon Residential Mortgage Loans originated and owned by any Subsidiary of the Borrower and placed at the time of the origination of such Residential Mortgage Loans by such Subsidiary to secure Short-Term Warehouse Debt incurred solely for the purpose of financing the origination of such Residential Mortgage Loans, provided that (x) the Short-Term Warehouse Debt secured by such Liens is permitted by Section 6.04(xiii) and (y) in all events, the Lien encumbering such Residential Mortgage Loans does not encumber any other asset of the Borrower or any Subsidiary of the Borrower (including other Residential Mortgage Loans then owned or thereafter acquired by any Subsidiary of the Borrower); (xxi) encumbrances on Servicing Rights and the Equity Interests of the Fannie Mae Servicer Entity, as applicable, in the form of an MSR Call Option; (xxii) Liens on the Collateral securing obligations under the Second Lien Credit Agreement and any Permitted Refinancing thereof and having the same (or junior) priority of Liens afforded thereto; provided that such Liens are at all times subordinated to the Liens securing the Obligations in accordance with, and otherwise subject to, the terms of the Intercreditor Agreement or any other intercreditor agreement that is in substantially the form of Exhibit B hereto (mutatis mutandis); (xxiii) Liens on insurance policies and the proceeds thereof securing the financing of premiums with respect thereto; provided such Liens shall not exceed the amount of such premiums so financed; (xxiv) Liens on any cash earnest money deposits made by the Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;   106 --------------------------------------------------------------------------------   (xxv) Liens on assets of any Securitization Vehicle securing Non-Recourse Securitization Debt; (xxvi) Liens on REO Property; and (xxvii) additional Liens of the Borrower or any Subsidiary of the Borrower not otherwise permitted by this Section 6.01 so long as neither the aggregate Fair Market Value (determined as of the date such Lien is incurred) of the assets subject thereto nor the aggregate outstanding principal amount of the obligations secured thereby exceed $5,000,000 in the aggregate for all such Liens at any time. In connection with the granting of Liens of the type described in clauses (iii), (vi), (vii), (xiv), (xviii), (xix) and (xx) of this Section 6.01 by the Borrower of any of its Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien releases or lien subordination agreements in favor of the holder or holders of such Liens, in either case solely with respect to the item or items of equipment or other assets subject to such Liens). Section 6.02. Consolidation, Merger, Purchase or Sale of Assets, Etc. The Borrower will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than sales of inventory in the ordinary course of business), or enter into any sale-leaseback transactions with any Person (or agree to do any of the foregoing at any future time), except that: (i) Capital Expenditures by the Borrower and its Subsidiaries shall be permitted to the extent not in violation of Section 6.07; (ii) the Borrower and its Subsidiaries may liquidate or otherwise dispose of obsolete or worn-out property in the ordinary course of business; (iii) Investments may be made to the extent permitted by Section 6.05; (iv) the Borrower and its Subsidiaries may sell assets (other than the capital stock or other Equity Interests of any Wholly-Owned Subsidiary, unless all of the capital stock or other Equity Interests of such Wholly-Owned Subsidiary are sold in accordance with this clause (iv)), so long as (u) no Default or Event of Default then exists or would result therefrom, (v) each such sale is in an arm’s-length transaction and the Borrower or the respective Subsidiary receives at least Fair Market Value, (w) the consideration received by the Borrower or such Subsidiary consists of at least 75% cash and is paid at the time of the closing of such sale, (x) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 2.13(c), (y) the aggregate amount of the cash and non-cash proceeds received from all assets sold pursuant to this clause (iv) shall not exceed $25,000,000 in any fiscal year of the Borrower (for this purpose, using the Fair Market Value of property other than cash); provided that any unused portion of this basket in any fiscal year of the Borrower may be utilized in the immediately succeeding fiscal year of the Borrower (but not in any fiscal year of the Borrower thereafter), with the portion so carried forward to be deemed utilized last in such immediately succeeding fiscal year of the Borrower and (z) the aggregate amount of the cash and non-cash proceeds received from all assets sold pursuant to this clause (iv) shall not exceed $50,000,000 (for this purpose, using the Fair Market Value of property other than cash);   107 --------------------------------------------------------------------------------   (v) the Borrower and each of its Subsidiaries may lease (as lessee) or license (as licensee) real or personal property in the ordinary course of business (so long as any such lease or license does not create a Capitalized Lease Obligation except to the extent permitted by Section 6.04(iv)); (vi) the Borrower and each of its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and not as part of any financing transaction; (vii) the Borrower and each of its Subsidiaries may grant licenses, sublicenses, leases or subleases to other Persons in the ordinary course of business and not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries; (viii) the Borrower or any Subsidiary of the Borrower may convey, sell or otherwise transfer all or any part of its business, properties and assets to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor; (ix) any Subsidiary of the Borrower (other than a Non-Recourse Entity or the Fannie Mae Servicer Entity) may merge or consolidate with and into, or be dissolved or liquidated into, the Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor, so long as (A) in the case of any such merger, consolidation, dissolution or liquidation involving the Borrower, the Borrower is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation and (B) in all other cases, a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation; (x) any Foreign Subsidiary of the Borrower may be merged, consolidated or amalgamated with and into, or be dissolved or liquidated into, or transfer any of its assets to, any Wholly-Owned Foreign Subsidiary of the Borrower, so long as such Wholly-Owned Foreign Subsidiary of the Borrower is the surviving or continuing entity of any such merger, consolidation, amalgamation, dissolution or liquidation;   108 --------------------------------------------------------------------------------   (xi) Permitted Acquisitions may be consummated in accordance with the requirements of Section 6.05(xii) and Permitted Foreign Acquisitions may be consummated in accordance with the requirements of Section 6.05(xxi); (xii) the Borrower and its Subsidiaries may liquidate or otherwise dispose of Cash Equivalents in the ordinary course of business for cash or Cash Equivalents; (xiii) the Borrower and its Subsidiaries may convey, sell or otherwise transfer any Servicing Rights with respect to Residential Mortgage Loans owned or controlled by Fannie Mae to the Fannie Mae Servicer Entity; (xiv) to the extent that an MSR Lender which is a Government Sponsored Entity exercises its MSR Call Option, the Borrower or the applicable Subsidiary of the Borrower may sell the Servicing Rights or all of the Equity Interests of the Fannie Mae Servicer Entity, as the case may be, that are subject to such MSR Call Option so long as the Net Sale Proceeds therefrom are applied in accordance with Section 2.13(c); (xv) Subsidiaries of the Borrower may convey, sell or otherwise transfer any Residential Mortgage Loans originated and owned by such Subsidiary to an Approved Takeout Investor in accordance with the terms of the respective Short-Term Warehouse Documents; (xvi) any Seller may sell Transferred Assets to a Non-Recourse Servicer Advance Debt Entity in accordance with the terms of the applicable Receivables Purchase Agreement in connection with the incurrence by such Non-Recourse Servicer Advance Debt Entity of Indebtedness permitted by Section 6.04(xii); provided that such Seller shall have received aggregate cash proceeds from such Non-Recourse Servicer Advance Debt Entity at the time of the respective transfer of not less than 70% of the face amount of the Transferred Receivables that constitute Transferred Assets and with the balance of such purchase price to be paid through the issuance by such Non-Recourse Servicer Advance Debt Entity of a Subordinated Seller Advance Note; (xvii) Green Tree SerVertis Acquisition LLC or a similarly structured Subsidiary of the Borrower may acquire Residential Mortgage Loans for the sole purpose of, simultaneously with such acquisition, assigning (and may assign) all of its right, title and interest in such Residential Mortgage Loans to either (x) a trust or other securitization entity or a similarly structured entity created on behalf of the SerVertis Funds or a similarly structured entity or (y) any Affiliate of the SerVertis Funds or a similarly structured entity (other than the Borrower or any of its Subsidiaries), including without limitation, SerVertis REO LLC, a Delaware limited liability company, provided that such acquisition is funded solely with cash or other proceeds received, either directly or indirectly, by Green Tree SerVertis Acquisition LLC or such other similarly structured Subsidiary of the Borrower from the SerVertis Funds or any Affiliate of the SerVertis Funds or a similarly structured entity (other than the Borrower or any of its Subsidiaries); and (xviii) the Borrower or any Subsidiary may in the ordinary course of business convey, sell or otherwise dispose of REO Property.   109 --------------------------------------------------------------------------------   To the extent the Required Lenders waive the provisions of this Section 6.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.02 (other than to the Borrower or a Subsidiary thereof), such Collateral shall be sold free and clear of the Liens created by the Security Documents and, in the case of the sale of all of the Equity Interests of a Subsidiary Guarantor permitted by this Section 6.02 (other than to the Borrower or a Subsidiary thereof), such Subsidiary Guarantor shall be released from the Subsidiaries Guaranty, and the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing. Section 6.03. Dividends. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, authorize, declare or pay any Dividends with respect to the Borrower or any of its Subsidiaries, except that: (i) any Subsidiary of the Borrower may pay Dividends to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower and any Foreign Subsidiary of the Borrower also may pay Dividends to any Wholly-Owned Foreign Subsidiary of the Borrower; (ii) any Non-Wholly-Owned Subsidiary of the Borrower may pay Dividends to its shareholders, members or partners generally so long as the Borrower or its respective Subsidiary which owns the Equity Interests in the Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holding of the Equity Interests in the Subsidiary paying such Dividends and taking into account the relative preferences, if any, of the various classes of Equity Interests of such Subsidiary); (iii) the Borrower may redeem, repurchase or otherwise acquire for value, outstanding shares of its Qualified Equity Interests (or options or warrants to purchase its Qualified Equity Interests) following the death, disability or termination of employment of officers, directors or employees of the Borrower or any of its Subsidiaries, provided that (x) the aggregate amount of all Dividends paid or made pursuant to this clause (iii) shall not exceed $5,000,000 in any fiscal year of the Borrower and (y) at the time of any Dividend permitted to be made pursuant to this clause (iii), no Default or Event of Default shall then exist or would result therefrom; (iv) the Borrower may pay Dividends on its Qualified Equity Interests solely through the issuance of additional shares of Qualified Equity Interests of the Borrower (but not in cash), provided that in lieu of issuing additional shares of Qualified Equity Interests as Dividends, the Borrower may increase the liquidation preference of the shares of Qualified Equity Interests in respect of which such Dividends have accrued;   110 --------------------------------------------------------------------------------   (v) the Borrower may pay cash Dividends on its common stock so long as (A) the aggregate amount of Dividends paid pursuant to this clause (v) does not exceed $2,000,000 in any fiscal year of the Borrower and (B) no Default or Event of Default then exists or would result therefrom; and (vi) the Borrower may pay cash Dividends on its common stock in any fiscal year of the Borrower in an aggregate amount for Dividends paid pursuant to this clause (vi) not to exceed 5% of Adjusted Consolidated Net Income for the preceding fiscal year, so long as (A) no Default or Event of Default then exists or would result therefrom, (B) the Total Leverage Ratio at the time such Dividend is declared and immediately after giving effect thereto, on a Pro Forma Basis, is less than 2.50 to 1.00, (C) any such dividend payable pursuant to this clause (vi) is paid (x) in the case of any dividend declared on or prior to December 31, 2011, within 90 days and (y) in the case of any dividend declared thereafter, within 60 days, in each case of the date of its declaration and (D) prior to the payment of such Dividend, the Borrower shall have delivered to the Administrative Agent a certificate of an Authorized Officer of the Borrower certifying compliance with preceding sub-clauses (A), (B) and (C) and containing the calculations (in reasonable detail) required to establish compliance with preceding sub clause (B). Section 6.04. Indebtedness. The Borrower will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except: (i) Indebtedness incurred pursuant to this Agreement and the other Credit Documents; (ii) Existing Indebtedness outstanding on the Closing Date and listed on Schedule 3.21 (as reduced by any permanent repayments of principal thereof) and in respect of any Continuing Letter of Credit and, in each case, any subsequent extension, renewal or refinancing thereof, provided that the aggregate principal amount of the Indebtedness to be extended, renewed or refinanced does not increase from that amount outstanding (or, in the case of a revolving line of credit, the amount committed on the Closing Date (as reduced by any permanent commitment reductions thereunder)) at the time of any such extension, renewal or refinancing, and neither the final maturity nor the weighted average life to maturity of such Indebtedness is decreased, such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and the original obligors in respect of such Indebtedness remain the only obligors thereon; (iii) Indebtedness of the Borrower and its Subsidiaries under Interest Rate Protection Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary, in each case so long as the entering into of such Interest Rate Protection Agreements are bona fide hedging activities and are not for speculative purposes;   111 --------------------------------------------------------------------------------   (iv) Indebtedness of the Borrower and its Subsidiaries evidenced by Capitalized Lease Obligations (to the extent permitted pursuant to Section 6.07) and purchase money Indebtedness described in Section 6.01(vii), provided that in no event shall the sum of the aggregate principal amount of all Capitalized Lease Obligations and purchase money Indebtedness permitted by this clause (iv) exceed $10,000,000 at any time outstanding; (v) Indebtedness constituting Intercompany Loans to the extent permitted by Section 6.05(viii); (vi) Indebtedness consisting of guaranties (x) by the Borrower and the Wholly-Owned Domestic Subsidiaries of the Borrower that are Subsidiary Guarantors of each other’s Indebtedness and other obligations permitted under this Agreement (other than obligations in respect of (A) any Short-Term Warehouse Debt, (B) any Non-Recourse Servicer Advance Debt, (C) any MSR Loans, (D) the Fannie Mae Servicer Entity, (E) any Servicing Agreements or (F) any Indebtedness permitted under Section 6.04(xvii)), (y) by Wholly-Owned Foreign Subsidiaries of the Borrower of each other’s Indebtedness and other contractual obligations permitted under this Agreement and (z) by the Borrower of Indebtedness and other obligations of Wholly-Owned Foreign Subsidiaries permitted under this Agreement so long as such guaranty is otherwise permitted as an Investment under Section 6.05; provided that the aggregate amount of obligations guaranteed pursuant to clause (z) plus the aggregate amount of Indebtedness incurred pursuant to Section 6.04(xvi) shall not exceed $10,000,000 at any one time; (vii) Indebtedness of a Subsidiary of the Borrower acquired pursuant to a Permitted Acquisition or Permitted Foreign Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition or Permitted Foreign Acquisition of an asset securing such Indebtedness), provided that (x) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition or Permitted Foreign Acquisition, (y) such Indebtedness does not constitute debt for borrowed money, it being understood and agreed that Capitalized Lease Obligations and purchase money Indebtedness shall not constitute debt for borrowed money for purposes of this clause (y) and (z) the aggregate principal amount of all Indebtedness permitted by this clause (vii) shall not exceed $15,000,000 at any one time outstanding; (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is extinguished within three Business Days of its incurrence; (ix) Indebtedness of the Borrower and its Subsidiaries with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or any of its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default;   112 --------------------------------------------------------------------------------   (x) Indebtedness of the Borrower or any of its Subsidiaries which may be deemed to exist in connection with customary agreements providing for indemnification, purchase price adjustments and similar obligations in connection with the acquisition or disposition of assets in connection with transactions otherwise permitted hereunder, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person except as permitted by Section 6.04(vi); (xi) Indebtedness of Subsidiaries of the Borrower under the MSR Documents in respect of the MSR Loans incurred by such Subsidiaries so long as (A) no Default or Event of Default then exists or would result therefrom, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective incurrence of such Indebtedness (as well as all other MSR Loans and other Indebtedness theretofore incurred after the first day of such Calculation Period) had occurred on the first day of (and had remained outstanding throughout) such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period, (C) the proceeds of such MSR Loans are used solely to finance the acquisition of Servicing Rights by such Subsidiaries and (D) prior to the incurrence of such Indebtedness, the Borrower shall have delivered to the Administrative Agent a certificate from an Authorized Officer of the Borrower certifying as to compliance with the requirements of preceding sub-clauses (A), (B) and (C) and containing the calculations (in reasonable detail) required to establish compliance with preceding sub-clause (B); (xii) Non-Recourse Servicer Advance Debt and Subordinated Seller Advance Loans incurred by a Non-Recourse Servicer Advance Debt Entity so long as (A) no Default or Event of Default then exists or would result therefrom, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective incurrence of such Indebtedness (as well as all other Non-Recourse Servicer Advance Debt, Subordinated Seller Advance Loans and other Indebtedness theretofore incurred after the first day of such Calculation Period) had occurred on the first day of (and had remained outstanding throughout) such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period, (C) the proceeds of such Indebtedness are used to purchase Transferred Receivables from a Seller pursuant to a Receivables Purchase Agreement to enable such Seller to fund Delinquency Advances or Protective Advances and (D) prior to the incurrence of such Indebtedness, the Borrower shall have delivered to the Administrative Agent a certificate from an Authorized Officer of the Borrower certifying as to compliance with the requirements of preceding sub-clauses (A), (B)and (C) and containing the calculations (in reasonable detail) required to establish compliance with preceding sub clause (B);   113 --------------------------------------------------------------------------------   (xiii) Short-Term Warehouse Debt incurred by a Subsidiary of the Borrower so long as (A) no Default or Event of Default then exists or would result therefrom, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective incurrence of such Indebtedness (as well as all other Short-Term Warehouse Debt and other Indebtedness theretofore incurred after the first day of such Calculation Period) had occurred on the first day of (and had remained outstanding throughout) such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period, (C) the proceeds of such Indebtedness are used to originate Residential Mortgage Loans and at, or prior to, the time of the incurrence of such Short Term Warehouse Debt, such Subsidiary has entered into an irrevocable binding written agreement pursuant to which an Approved Takeout Investor has agreed to purchase such originated Residential Mortgage Loans within 90 days of the origination thereof for a cash sale price of not less than the aggregate amount of the Short-Term Warehouse Debt incurred by such Subsidiary to originate such Residential Mortgage Loans, (D) no Short-Term Warehouse Debt is outstanding for more than 90 days from the date that the respective Residential Mortgage Loans are originated, (E) the aggregate investment of the Borrower and its Subsidiaries in the Residential Mortgage Loans that are being financed with the proceeds of Short-Term Warehouse Debt (including the Indebtedness of Green Tree Servicing LLC under the Existing Warehouse Loan Agreement, but excluding Non-Recourse Short Term Warehouse Debt) permitted by this clause (xiii) shall not exceed $30,000,000 at any one time (net of the related Short-Term Warehouse Debt), and (F) prior to the incurrence of such Indebtedness, the Borrower shall have delivered to the Administrative Agent a certificate from an Authorized Officer of the Borrower certifying as to compliance with the requirements of preceding sub-clauses (A), (B), (C), (D) and (E) and containing the calculations (in reasonable detail) required to establish compliance with preceding sub-clauses (B) and (E); (xiv) Indebtedness of the Borrower or any of its Subsidiaries which may be deemed to exist pursuant to earn-out arrangements upon the achievement of certain future performance goals of the respective Acquired Entity or Business in connection with Permitted Acquisitions, so long as any such obligations are those of the Person making the respective Permitted Acquisition and are not guaranteed by any other Person except as permitted by Section 6.04(vi); (xv) Indebtedness of the Credit Parties in respect of the Second Lien Credit Agreement in an aggregate principal amount of up to $265,000,000 at any time outstanding, less the aggregate amount of any principal payments made thereon after the Closing Date (other than in connection with a refinancing or replacement thereof permitted hereunder and under the Intercreditor Agreement), and any Permitted Refinancing thereof; (xvi) Indebtedness of Foreign Subsidiaries; provided that the aggregate amount of obligations guaranteed pursuant to clause (z) of Section 6.04(vi) plus the aggregate amount of Indebtedness incurred pursuant to this clause (xvi) shall not exceed $10,000,000 at any one time;   114 --------------------------------------------------------------------------------   (xvii) Indebtedness of any Subsidiary of the Borrower that is a general partner of a SerVertis Fund solely as a result of such Subsidiary being a general partner of a SerVertis Fund but only so long as such Subsidiary is in compliance with Section 6.13(d); (xviii) Non-Recourse Securitization Debt; and (xix) so long as no Default or Event of Default then exists or would result therefrom, additional unsecured Indebtedness incurred by the Borrower and its Subsidiaries (other than a Non-Recourse Entity or the Fannie Mae Servicer Entity) in an aggregate principal amount not to exceed $15,000,000 at any one time outstanding. Section 6.05. Advances, Investments and Loans. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, make or permit to exist any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase, hold or acquire any Equity Interest, bonds, notes, debentures, evidence of indebtedness or other securities of, or acquire any assets constituting all or substantially all of the assets of or assets constituting all or substantially all of the assets of a business, division or product line of, or make or permit to exist any investment or any other interest in, any Person (each of the foregoing an “Investment” and, collectively, “Investments”), except that the following shall be permitted: (i) the Borrower and its Subsidiaries may acquire and hold accounts or notes receivables owing to any of them, if created or acquired in the ordinary course of business; (ii) the Borrower and its Subsidiaries may acquire and hold cash and Cash Equivalents; (iii) the Borrower and its Subsidiaries may consummate the Acquisition and the other Transactions; (iv) the Borrower and its Subsidiaries may acquire and own REO Property and other investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (v) the Borrower and its Subsidiaries may make loans and advances to their officers and employees in the ordinary course of business (including for travel, entertainment and relocation expenses) in an aggregate amount not to exceed $3,500,000 at any time outstanding; (vi) the Borrower and its Subsidiaries may acquire and hold obligations of their officers and employees in connection with such officers’ and employees’ acquisition of shares of Qualified Equity Interests of the Borrower (so long as no cash is actually advanced by the Borrower or any of its Subsidiaries in connection with the acquisition of such obligations);   115 --------------------------------------------------------------------------------   (vii) the Borrower and its Subsidiaries may enter into Interest Rate Protection Agreements to the extent permitted by Section 6.04(iii); (viii) (A) the Borrower and the Subsidiary Guarantors may make intercompany loans and advances between or among one another, (B) any Subsidiary of the Borrower which is not a Credit Party may make intercompany loans and advances to the Borrower or a Subsidiary Guarantor and (C) any Foreign Subsidiary may make intercompany loans and advances to any Wholly-Owned Foreign Subsidiary (such intercompany loans and advances referred to in preceding clauses (A) through (C), collectively, the “Intercompany Loans”), provided that (v) each Intercompany Loan made by a Credit Party shall be evidenced by an Intercompany Note, (w) each such Intercompany Note owned or held by a Credit Party shall be pledged to the Collateral Agent pursuant to the Pledge Agreement, (x) each Intercompany Loan made by any Subsidiary of the Borrower that is not a Credit Party to a Credit Party shall be subject to the subordination provisions contained in the Intercompany Subordination Agreement, (y) any Intercompany Loans made to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (viii) shall cease to be permitted by this clause (viii) if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary or a Wholly-Owned Foreign Subsidiary, as the case may be and (z) any loans and advances made to the Fannie Mae Servicer Entity shall not exceed that amount necessary for the Fannie Mae Servicer Entity to maintain a minimum capital amount in compliance with any minimum net worth test (or similar minimum capital requirements) required by Fannie Mae or any other Governmental Authority (if any); (ix) (A) the Borrower and any Subsidiary Guarantor may make capital contributions to, or acquire Equity Interests of, any Subsidiary Guarantor which is a Wholly-Owned Domestic Subsidiary, (B) any Wholly-Owned Foreign Subsidiary may make capital contributions to, or acquire Equity Interests of, any other Wholly-Owned Foreign Subsidiary, and may capitalize or forgive any Indebtedness owed to it by a Wholly-Owned Foreign Subsidiary and (C) the Borrower and any Subsidiary may make capital contributions to, or acquire Equity Interests of, any (1) Wholly-Owned Foreign Subsidiary or (2) any SerVertis Fund; provided that (x) the aggregate amount of Investments made after the Closing Date pursuant to (I) the preceding subclause (C)(1) shall not exceed $10,000,000 and (II) the preceding subclause (C)(2) shall not exceed $10,000,000 plus any theretofore unused or unapplied portion of any Equity Issuance Amount allocated for Investment in SerVertis Funds pursuant to Section 2.13(f) at any time (net of any portion of such Investment (but not in excess of the amount of the Investment originally made) which has been returned to the Borrower or a Subsidiary Guarantor), (y) any Investment made in or to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (ix) shall cease to be permitted hereunder if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, and (z) any cash equity Investment made in or to the Fannie Mae Servicer Entity shall not exceed that amount necessary for the Fannie Mae Servicer Entity to maintain a minimum capital amount in compliance with any minimum net worth test (or similar minimum capital requirements) required by Fannie Mae or any other Governmental Authority (if any);   116 --------------------------------------------------------------------------------   (x) the Borrower and its Subsidiaries may own the Equity Interests of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another provision of this Section 6.05); (xi) Contingent Obligations permitted by Section 6.04, to the extent constituting Investments; (xii) the Borrower and any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor may make Permitted Acquisitions; provided that (A) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed Permitted Acquisition or immediately after giving effect thereto, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period (assuming, for purposes of pro forma compliance with Section 6.09, that the maximum Total Leverage Ratio permitted at the time by such Section was in fact 0.25 to 1.00 less than the ratio actually provided for in such Section at such time), (C) after giving effect to such Permitted Acquisition, there must be at least $22,500,000 of unused and available Revolving Credit Commitments, (D) in the case of any Permitted Acquisition with respect to which the aggregate consideration (including any Indebtedness that is assumed by the Borrower or any Subsidiary following such Permitted Acquisition and any payments following such Permitted Acquisition pursuant to earn-out provisions or similar obligations) to be incurred is expected to be $10,000,000 or more, the Borrower shall have (x) given to the Administrative Agent at least three Business Days’ prior written notice of such Permitted Acquisition (or such shorter period of time as may be reasonably acceptable to the Administrative Agent), which notice shall describe in reasonable detail the principal terms and conditions of such Permitted Acquisition and (y) delivered to the Administrative Agent a certificate executed by an Authorized Officer, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (A) through (C), inclusive, and containing the calculations (in reasonable detail) required to establish compliance with preceding clause (B) and (E) the Borrower will cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver all of the documentation as and to the extent required by, Section 5.12 and 6.14;   117 --------------------------------------------------------------------------------   (xiii) the Borrower and its Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 6.02(iv); (xiv) the Borrower and its Subsidiaries may in the ordinary course of business make advances in the form of a prepayment of expenses to vendors, suppliers and trade creditors, so long as such expenses were incurred in the ordinary course of business of the Borrower or such Subsidiary; (xv) Sellers may make Subordinated Seller Advance Loans to a Non-Recourse Servicer Advance Debt Entity so long as (i) each such Subordinated Seller Advance Loan shall be evidenced by a Subordinated Seller Advance Note which shall be pledged to the Collateral Agent pursuant to the Pledge Agreement and (ii) the aggregate principal amount of each such Subordinated Seller Advance Loan shall not exceed 30% of the aggregate purchase price for the respective Transferred Receivables then being purchased by such Non Recourse Servicer Advance Debt Entity; (xvi) the Borrower and its Subsidiaries may make Residential Mortgage Loans to, and hold Residential Mortgage Loans of, their respective customers so long as the proceeds used to make such Residential Mortgage Loans are incurred from proceeds of Short-Term Warehouse Debt permitted to be incurred pursuant to this Agreement or such Residential Mortgage Loans are financed solely with existing Non-Recourse Securitization Debt and constitute Securitization Vehicle Assets or such Residential Mortgage Loans are originated in connection with the sale of REO Property; (xvii) the Borrower and its Subsidiaries may fund Delinquency Advances and Protective Advances in the ordinary course of business to the extent required by, and in accordance with, any Servicing Agreements; (xviii) Green Tree SerVertis Acquisition LLC or a similarly structured Subsidiary of the Borrower may assign all of its right, title and interest in Residential Mortgage Loans simultaneously with the purchase of such Residential Mortgage Loans permitted by Section 6.02(xvii) to either (x) a trust or other securitization entity or a similarly structured entity created on behalf of the SerVertis Funds or a similarly structured entity, or (y) any Affiliate of the SerVertis Funds or a similarly structured entity (other than the Borrower or any of its Subsidiaries), including without limitation, SerVertis REO LLC; (xix) the Borrower and its Subsidiaries may make additional Investments in an aggregate amount not to exceed at any time outstanding (determined without regard to any write-downs or write-offs of such Investments) the Available Amount at such time (as determined immediately before giving effect to the making of such Investment) so long as (A) no Default or Event of Default then exists or would result therefrom, (B) the Total Leverage Ratio at the time of such Investment, determined on a Pro Forma Basis, is no greater than the ratio required to be complied with under Section 6.09 for the respective Calculation Period so that no Default or Event of Default will exist and (C) prior to the making of such Investment, the Borrower shall have delivered to the Administrative Agent a certificate of an Authorized Officer of the Borrower certifying compliance with preceding sub-clauses (A)and (B) and containing the calculations (in reasonable detail) required to establish compliance with preceding sub-clause (B);   118 --------------------------------------------------------------------------------   (xx) any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor may acquire Servicing Rights in the ordinary course of business; provided that if such acquisition is financed, in whole or in part, with the proceeds of any Indebtedness other than MSR Loans then (A) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed acquisition or immediately after giving effect thereto, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective acquisition (as well as all other acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period (assuming, for purposes of pro forma compliance with Section 6.09, that the maximum Total Leverage Ratio permitted at the time by such Section was in fact 0.25 to 1.00 less than the ratio actually provided for in such Section at such time) and (C) after giving effect to such acquisition, there must be at least $22,500,000 of unused and available Revolving Credit Commitments; (xxi) any Wholly-Owned Subsidiary of the Borrower which is not a Subsidiary Guarantor may make Permitted Foreign Acquisitions; provided that (A) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed Permitted Foreign Acquisition or immediately after giving effect thereto, (B) calculations are made by the Borrower with respect to the financial covenants contained in Section 6.08 and 6.09 for the respective Calculation Period on a Pro Forma Basis as if the respective Permitted Foreign Acquisition (as well as all other Permitted Foreign Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that such financial covenants would have been complied with as of the last day of such Calculation Period (assuming, for purposes of pro forma compliance with Section 6.09, that the maximum Total Leverage Ratio permitted at the time by such Section was in fact 0.25 to 1.00 less than the ratio actually provided for in such Section at such time), (C) after giving effect to such Permitted Foreign Acquisition, there must be at least $22,500,000 of unused and available Revolving Credit Commitments and (D) the aggregate consideration (including any Indebtedness that is assumed following such Permitted Foreign Acquisition and any payments following such Permitted Foreign Acquisition pursuant to earn-out provisions or similar obligations) for all Permitted Foreign Acquisitions during the term of this Agreement shall not exceed $10,000,000;   119 --------------------------------------------------------------------------------   (xxii) in addition to Investments permitted by clauses (i) through (xxi) of this Section 6.05, the Borrower and its Subsidiaries may make additional loans, advances and other Investments to or in a Person (other than a Non-Recourse Entity) in an aggregate amount for all loans, advances and other Investments made pursuant to this clause (xxii) (determined without regard to any write-downs or write-offs thereof), net of cash repayments of principal in the case of loans, sale proceeds in the case of Investments in the form of debt instruments and cash equity returns (whether as a distribution, dividend, redemption or sale) in the case of equity investments, not to exceed $50,000,000; (xxiii) Investments by the Borrower or any Subsidiary existing on the date hereof and set forth on Schedule 6.05; and (xxiv) the Borrower and its Subsidiaries may acquire Residential Mortgage Loans that were Securitization Vehicle Assets pursuant to the exercise of clean-up calls in the ordinary course of business. Section 6.06. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions with any Affiliate (other than the Borrower or any Wholly-Owned Subsidiary), other than in the ordinary course of business and on terms and conditions substantially as favorable to the Borrower or such Subsidiary as would reasonably be obtained by the Borrower or such Subsidiary at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that the following in any event shall be permitted: (i) Dividends may be paid to the extent provided in Section 6.03; (ii) loans may be made and other transactions may be entered into by the Borrower and its Subsidiaries to the extent permitted by Section 6.02, 6.04 and 6.05 (other than Section 6.05(ix)(C)(2)); (iii) customary fees, indemnities and reimbursements may be paid to non-officer directors of the Borrower and its Subsidiaries; and (iv) the Borrower and its Subsidiaries may enter into, and may make payments under, employment agreements, employee benefits plans, stock option plans, indemnification provisions and other similar compensatory arrangements with officers, employees and directors of the Borrower and its Subsidiaries in the ordinary course of business. Section 6.07. Capital Expenditures. (a) The Borrower will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that (i) during the period from the Closing Date through and including December 31, 2011, the Borrower and its Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed $7,500,000, and (ii) during any fiscal year of the Borrower thereafter (taken as one accounting period), the Borrower and its Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed $15,000,000 in any such fiscal year of the Borrower; provided that (x) up to 100% of any such amount referred to in clauses (i) and (ii) above, if not expended in the period for which it is permitted, may be carried over for expenditure in the next succeeding fiscal year referred to in clause (ii) (but not any fiscal year of the Borrower thereafter) and (y) Capital Expenditures made pursuant to this Section 6.07 during any fiscal year shall be deemed made, first, in respect of amounts permitted for such fiscal year as provided above without giving effect to this proviso and, second, in respect of the amounts carried over from the prior fiscal period pursuant to clause (x).   120 --------------------------------------------------------------------------------   (b) In addition to the foregoing, the Borrower and its Subsidiaries may make additional Capital Expenditures in an aggregate amount not to exceed at any time outstanding the Available Amount at such time (as determined immediately before giving effect to the making of such Capital Expenditure) (which Capital Expenditures will not be included in any determination under Section 6.07(a)) so long as (i) no Default or Event of Default then exists or would result therefrom and (ii) the Total Leverage Ratio at the time of such Capital Expenditure, determined on a Pro Forma Basis, is no greater than the ratio required to be complied with under Section 6.09 for the respective Calculation Period so that no Default or Event of Default will exist. (c) In addition to the foregoing, the Borrower and its Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 6.07(a) or (b)) with the amount of Net Sale Proceeds received by the Borrower or any of its Subsidiaries from any Asset Sale, but only to the extent that such Net Sale Proceeds are not otherwise required to be applied as a mandatory repayment pursuant to Section 2.13(c). (d) In addition to the foregoing, the Borrower and its Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 6.07(a) or (b)) with the amount of Net Cash Proceeds received by the Borrower or any of its Subsidiaries from any Recovery Event, but only to the extent that such Net Cash Proceeds are not otherwise required to be applied as a mandatory repayment pursuant to Section 2.13(e). (e) In addition to the foregoing, the Borrower and its Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 6.07(a) or (b)) constituting Permitted Acquisitions or Permitted Foreign Acquisitions effected in accordance with the requirements of Section 6.05. Section 6.08. Interest Expense Coverage Ratio. The Borrower will not permit the Interest Expense Coverage Ratio for any Test Period ending on the last day of any fiscal quarter of the Borrower set forth below to be less than the ratio set forth below opposite such fiscal quarter:           Fiscal Quarter Ending   Ratio   September 30, 2011     2.25:1.00   December 31, 2011     2.25:1.00   March 31, 2012     2.25:1.00   June 30, 2012     2.25:1.00   September 30, 2012     2.25:1.00   December 31, 2012     2.25:1.00   March 31, 2013     2.50:1.00   June 30, 2013     2.50:1.00   September 30, 2013     2.50:1.00   December 31, 2013     2.50:1.00   March 31, 2014     2.50:1.00   June 30, 2014     2.50:1.00   September 30, 2014 and the last day of each fiscal quarter of the Borrower thereafter     2.75:1.00     121 --------------------------------------------------------------------------------   Any provision of this Agreement that requires the Borrower to be in compliance or compliance on a Pro Forma Basis with this Section 6.08 prior to the time that this covenant is otherwise applicable shall be deemed to require that the Interest Expense Coverage Ratio for the applicable period not be less than 2.25:1.00. Section 6.09. Total Leverage Ratio. The Borrower will not permit the Total Leverage Ratio as determined on the last day of any Test Period ending on the last day of a fiscal quarter of the Borrower set forth below to be greater than the ratio set forth opposite such fiscal quarter below:           Fiscal Quarter Ending   Ratio   September 30, 2011     4.50:1.00   December 31, 2011     4.50:1.00   March 31, 2012     4.50:1.00   June 30, 2012     4.50:1.00   September 30, 2012     4.25:1.00   December 31, 2012     4.25:1.00   March 31, 2013     4.00:1.00   June 30, 2013     4.00:1.00   September 30, 2013     3.75:1.00   December 31, 2013     3.75:1.00   March 31, 2014     3.50:1.00   June 30, 2014     3.50:1.00   September 30, 2014     3.25:1.00   December 31, 2014     3.25:1.00   March 31, 2015 and the last day of each fiscal quarter of the Borrower thereafter     3.00:1.00   Any provision of this Agreement that requires the Borrower to be in compliance or compliance on a Pro Forma Basis with this Section 6.09 prior to the time that this covenant is otherwise applicable shall be deemed to require that the Total Leverage Ratio not be greater than 4.50:1.00.   122 --------------------------------------------------------------------------------   Section 6.10. Modifications of Certain Agreements. The Borrower will not, and will not permit any of its Subsidiaries to: (i) amend, modify, change or waive any term or provision of any MSR Document, any Non-Recourse Servicer Advance Document or any Short-Term Warehouse Document, unless any such amendment, modification, change or waiver could not reasonably be expected to be adverse to the interests of the Lenders in any material respect or be more restrictive in any material respect on the Borrower or any of its Subsidiaries (without regard to pricing, advance rates, maturity, fees or other economic terms of such document); or (ii) amend, modify, change or waive any term or provision of any Second Lien Credit Document (except in connection with any Permitted Refinancing thereof) unless such amendment, modification, change or waiver is permitted by the Intercreditor Agreement. Section 6.11. Limitation on Certain Restrictions on Subsidiaries. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other Equity Interest or participation in its profits owned by the Borrower or any of its Subsidiaries, or pay any Indebtedness owed to the Borrower or any of its Subsidiaries, (b) make loans or advances to the Borrower or any of its Subsidiaries or (c) transfer any of its properties or assets to the Borrower or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) agreements which (x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 6.11) are listed on Schedule 6.11 and (y) to the extent agreements permitted by preceding sub-clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted renewal, extension or refinancing of such Indebtedness so long as such renewal, extension or refinancing does not expand the scope of the restrictions described in clause (a), (b) or (c) that are contained in such existing agreement, (iv) agreements that are binding on a Subsidiary of the Borrower at the time such Subsidiary is acquired by the Borrower or any of its Subsidiaries, so long as such agreements were not entered into in contemplation of such Person becoming a Subsidiary, (v) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Borrower or any of its Subsidiaries, (vi) customary provisions restricting assignment of any licensing agreement (in which the Borrower or any of its Subsidiaries is the licensee) or other contract entered into by the Borrower or any of its Subsidiaries in the ordinary course of business, (vii) restrictions on the transfer of any asset or any Subsidiary pending the close of the sale of such asset or such Subsidiary, (viii) restrictions on the transfer of any asset subject to a Lien permitted by Section 6.01(iii), (vi), (vii), (xv), (xvi), (xviii), (xix), (xx), (xxvi) and (xxvii) and (ix) the Second Lien Credit Agreement and the Second Lien Credit Documents.   123 --------------------------------------------------------------------------------   Section 6.12. Limitation on Issuance of Equity Interests. (a) The Borrower will not, and will not permit any of its Subsidiaries to, issue (i) any Preferred Equity (other than (x) in the case of the Borrower, Preferred Equity that constitutes Qualified Equity Interests and (y) in the case of any such Subsidiary, Preferred Equity issued to the Borrower or a Subsidiary Guarantor) or (ii) any redeemable common stock or other redeemable common Equity Interests other than (x) in the case of the Borrower, common Qualified Equity Interests and (y) in the case of any such Subsidiary, common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of such Subsidiary. (b) The Borrower will not permit any of its Subsidiaries to issue any capital stock or other Equity Interests (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock or other Equity Interests, except (i) for transfers and replacements of then outstanding shares of capital stock or other Equity Interests, (ii) for stock splits, stock dividends and other issuances which do not decrease the percentage ownership of the Borrower or any of its Subsidiaries in any class of the capital stock or other Equity Interests of such Subsidiary, (iii) in the case of Foreign Subsidiaries of the Borrower, to qualify directors to the extent required by applicable law and for other nominal share issuances and to Persons other than the Borrower and its Subsidiaries to the extent required under applicable law and (iv) for issuances by Subsidiaries of the Borrower which are newly created or acquired in accordance with the terms of this Agreement. Section 6.13. Business; Etc. (a) The Borrower will not, and will not permit any of its Subsidiaries to, engage directly or indirectly in any business other than the businesses engaged in by the Borrower and its Subsidiaries as of the Closing Date and reasonable extensions and developments thereof and businesses reasonably similar, ancillary or complimentary thereto. Notwithstanding the foregoing or anything else in this Agreement to the contrary, the Borrower will not, and will not permit any of its Subsidiaries to, acquire (whether pursuant to a Permitted Acquisition, a Permitted Foreign Acquisition or otherwise) any Residential Mortgage Loans or otherwise engage in the business of acquiring such loans unless (x) pursuant to a transaction permitted under Section 6.05(xvi), 6.05(xviii) or 6.05(xxiv) or (y) the acquisition of such loans is in the ordinary course of business and incidental to the Borrower or any of its Subsidiaries servicing Securitization Vehicle Assets or other similar servicing arrangements. Nothing in this Section 6.13(a) shall restrict the Borrower and its Subsidiaries (i) from providing services to any SerVertis Fund or any other third party that engages in the business of originating, acquiring or owning Residential Mortgage Loans, including establishing a platform for facilitating any such business, (ii) from otherwise facilitating the conduct of any such business by a SerVertis Fund or any such third party or (iii) from making any investment otherwise permitted hereunder in connection with activities not prohibited by the preceding sentence. (b) Notwithstanding the foregoing or anything else in this Agreement to the contrary, no Non-Recourse Entity will engage in any business or own any significant assets or have any material liabilities other than (i) its ownership of (A) in the case of a Non-Recourse Servicer Advance Debt Entity, the Transferred Assets purchased by it, and (B) in the case of a Non-Recourse Warehouse Debt Entity, the Residential Mortgage Loans originated by such Non-Recourse Warehouse Debt Entity, and (ii) those liabilities which it is responsible for under the Non-Recourse Servicer Advance Documents or Short-Term Warehouse Documents to which it is a party, as the case may be, provided that a Non-Recourse Entity may engage in those activities that are incidental to (x) the entry into, and performance of the obligations under, the Non-Recourse Servicer Advance Documents and Short-Term Warehouse Documents to which it is a party, (y) the maintenance of its existence in compliance with applicable law and (z) legal, tax and accounting matters in connection with any of the foregoing activities, including nonconsensual obligations imposed by operation of law.   124 --------------------------------------------------------------------------------   (c) Notwithstanding the foregoing or anything else in this Agreement to the contrary, the Fannie Mae Servicer Entity will not engage in any business or own any significant assets or have any material liabilities other than (i) ownership of those assets in connection with, and performing servicing and sub-servicing functions for, Residential Mortgage Loans owned or controlled by Fannie Mae, (ii) its incurrence of Fannie Mae Loans, and (iii) those liabilities which it is responsible for under the Credit Documents, the Second Lien Credit Documents and the Fannie Mae Documents to which it is a party and in connection with performing the foregoing servicing and sub-servicing functions for such Residential Mortgage Loans, provided that the Fannie Mae Servicer Entity may engage in those activities that are incidental to (x) the maintenance of its existence in compliance with applicable law and (y) legal, tax and accounting matters in connection with any of the foregoing activities, including nonconsensual obligations imposed by operation of law. (d) Notwithstanding the foregoing or anything else in this Agreement to the contrary, the Borrower shall not be a general partner in any SerVertis Fund and any Subsidiary of the Borrower that is a general partner in any SerVertis Fund will not engage in any business or own any significant assets other than ownership of the Equity Interests in the SerVertis Funds, provided that such Subsidiary may engage in those activities that are incidental to (x) the maintenance of its existence in compliance with applicable law and (y) legal, tax and accounting matters in connection with any of the foregoing activities. Section 6.14. Limitation on Creation of Subsidiaries. (a) The Borrower will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Closing Date any Subsidiary, provided that the Borrower and its Wholly-Owned Subsidiaries (other than Non-Recourse Entities and the Fannie Mae Servicer Entity) shall be permitted to establish, create and, to the extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries, so long as, in each case, (i) the capital stock or other Equity Interests of such new Subsidiary are promptly pledged pursuant to, and to the extent required by, the Pledge Agreement and the certificates, if any, representing such stock or other Equity Interests, together with stock or other appropriate powers duly executed in blank, are delivered to the Collateral Agent, (ii) each such new Wholly-Owned Domestic Subsidiary (other than an Excluded Subsidiary) executes a counterpart of the Subsidiaries Guaranty, the Security Agreement and the Pledge Agreement, (iii) each such new Wholly-Owned Domestic Subsidiary (other than any Non-Recourse Entity or Securitization Vehicle) executes a counterpart of the Intercompany Subordination Agreement and (iv) each such new Wholly-Owned Domestic Subsidiary (other than an Excluded Subsidiary), to the extent requested by the Administrative Agent or the Required Lenders, takes all actions required pursuant to Section 5.12. In addition, each new Wholly-Owned Subsidiary that is required to execute any Credit Document shall execute and deliver, or cause to be executed and delivered, all other relevant documentation (including opinions of counsel) of the type described in Section 4.02 as such new Subsidiary would have had to deliver if such new Subsidiary were a Credit Party on the Closing Date, in each case to the extent requested by the Administrative Agent; provided further that Non-Wholly Owned Subsidiaries may be established, created or acquired in accordance with the requirements of Section 6.14(b).   125 --------------------------------------------------------------------------------   (b) In addition to Subsidiaries of the Borrower created pursuant to preceding clause (a), the Borrower and its Subsidiaries may establish, acquire or create, and make Investments in, Non-Wholly Owned Subsidiaries after the Closing Date as a result of Permitted Acquisitions or Permitted Foreign Acquisitions (subject to the limitations contained in the definitions thereof) and Investments expressly permitted to be made pursuant to Section 6.05, provided that all of the capital stock or other Equity Interests of each such Non-Wholly Owned Subsidiary shall be pledged by any Credit Party which owns same as, and to the extent, required by the Pledge Agreement. Section 6.15. Prepayments of Other Indebtedness. So long as any Term Loans remain outstanding, the Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, voluntarily or optionally prepay, repurchase, redeem or otherwise optionally or voluntarily satisfy or defease, whether in cash, property, securities or a combination thereof, or otherwise acquire for consideration (including as a result of any asset sale, change of control or similar event or any purchase or assignment pursuant to any provision similar to Section 9.04(l) hereunder), or set apart any sum for the aforesaid purposes, any Indebtedness outstanding under the Second Lien Credit Agreement, except pursuant to a Permitted Refinancing thereof. ARTICLE 7 Events of Default Section 7.01. Events of Default. Upon the occurrence of any of the following specified events (each, an “Event of Default”): (a) Payments. (i) Default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise or (ii) default shall be made in the payment of any interest on any Loan or any Fee or L/C Disbursement or any other amount (other than an amount referred to in clause (i)) due under any Credit Document, when and as the same shall become due and payable, and in the case of this clause (ii) such default shall continue unremedied for a period of three Business Days; or (b) Representations, etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or in any report, certificate, financial statement or other instrument delivered to the Administrative Agent or any Lender pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made or delivered; or   126 --------------------------------------------------------------------------------   (c) Covenants. The Borrower or any of its Subsidiaries shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 5.01(g)(i), 5.04 (with respect to the existence of the Borrower or any material Subsidiary Guarantor), 5.11, 5.18 or Article 6, or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Section 7.01(a) and 7.01(b)) and such default shall continue unremedied for a period of 30 days after the earlier of (x) written notice thereof to the Borrower by the Administrative Agent or the Required Lenders and (y) knowledge thereof by the Borrower or any Authorized Officer of the Borrower; or (d) Default Under Other Agreements. (i) The Borrower or any of its Subsidiaries (other than a Securitization Vehicle) shall (x) default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in an instrument or agreement under which such Indebtedness was created or (y) default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined (x) in the case of the Second Lien Credit Agreement, after giving effect to any cure or grace period provided therein and (y) in all other cases, without regard to whether any notice is required and without regard to the passage of time), any such Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its stated maturity, or (ii) any Indebtedness (other than the Obligations) of the Borrower or any of its Subsidiaries shall be declared to be (or shall become) due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof, provided that it shall not be a Default or an Event of Default under this Section 7.01(d) unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) and (ii) is at least $20,000,000; or (e) Bankruptcy, etc. (i) An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (x) relief in respect of the Borrower or any Subsidiary (other than a Securitization Vehicle), or of a substantial part of the property or assets of the Borrower or a Subsidiary (other than a Securitization Vehicle), under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (y) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary (other than a Securitization Vehicle) or for a substantial part of the property or assets of the Borrower or a Subsidiary (other than a Securitization Vehicle) or (z) the winding-up or liquidation of the Borrower or any Subsidiary (other than a Securitization Vehicle); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or (ii) the Borrower or any Subsidiary (other than a Securitization Vehicle) shall (t) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (u) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (i) above, (v) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any such Subsidiary or for a substantial part of the property or assets of the Borrower or any such Subsidiary, (w) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (x) make a general assignment for the benefit of creditors, (y) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (z) take any action for the purpose of effecting any of the foregoing; or   127 --------------------------------------------------------------------------------   (f) ERISA. An ERISA Event shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other such ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; or (g) Security Documents. Any of the Security Documents shall cease to be in full force and effect, or shall cease to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral (other than, in the aggregate, immaterial portions of the Collateral), in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 6.01), and subject to no other Liens (except as permitted by Section 6.01), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Security Document or the Borrower or any other Credit Party shall assert that any security interest purported to be created by any Security Document is not a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby; or (h) Guaranties. Any Subsidiaries Guaranty or any provision thereof shall cease to be in full force or effect as to any Subsidiary Guarantor (except as a result of a release of any Subsidiary Guarantor in accordance with the terms thereof), or any Subsidiary Guarantor or any Person acting for or on behalf of such Subsidiary Guarantor shall deny or disaffirm such Subsidiary Guarantor’s obligations under the Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Subsidiaries Guaranty; or (i) Judgments. One or more judgments or decrees shall be entered against the Borrower or any Subsidiary of the Borrower (other than any Securitization Vehicle) involving in the aggregate for the Borrower and its Subsidiaries a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate amount of all such judgments equals or exceeds $20,000,000; or (j) Intercreditor Agreement. The Intercreditor Agreement shall, in whole or in part, cease to be effective or cease to be legally valid, binding and enforceable against the holders of any Indebtedness under the Second Lien Credit Agreement; or (k) Change of Control. A Change of Control shall occur;   128 --------------------------------------------------------------------------------   then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may, and upon the written request of the Required Lenders shall, by written notice to the Borrower, take any or all of the following actions (provided that, if an Event of Default specified in Section 7.01(e) shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Commitments terminated, whereupon all Commitments of each Lender shall forthwith terminate immediately and any Commitment Fees shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest and Fees in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party, anything contained herein or in any other Credit Document to the contrary notwithstanding; (iii) terminate any Letter of Credit which may be terminated in accordance with its terms; (iv) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 7.01(e) with respect to the Borrower, it will pay) to the Collateral Agent cash or Cash Equivalents, to be held as security by the Collateral Agent as contemplated in Section 2.22(j); (v) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents; (vi) enforce the Subsidiaries Guaranty; and (vii) apply any cash collateral held by the Administrative Agent pursuant to Section 2.22 or Section 2.23 to the repayment of the Obligations. ARTICLE 8 The Administrative Agent and the Collateral Agent Each Lender and each Issuing Bank hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article 8, the Administrative Agent and the Collateral Agent are referred to collectively as the “Agents”) its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agents by the terms of the Credit Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to (i) execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Creditors with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) negotiate, enforce or settle any claim, action or proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which negotiation, enforcement or settlement will be binding upon each Lender. Without limiting the generality of the foregoing, the Lenders hereby specifically authorize the Agents to enter into one or more Servicing Rights Acknowledgement Agreements in connection with the Agents’ security interest, for the benefit of the Secured Creditors, in those Servicing Rights relating to Residential Mortgage Loans owned or held by the respective owner of the Residential   129 --------------------------------------------------------------------------------   Mortgage Loans to which such Servicing Rights relate (in each case to the extent required to do so by such owner). Each of the Lenders and the Issuing Bank acknowledges and agrees that the Agents shall also act, subject to and in accordance with the terms of the Intercreditor Agreement, as the collateral agent for the lenders under the Second Lien Credit Agreement. Each Lender and the Issuing Bank further acknowledges that it has received a copy of the Intercreditor Agreement, authorizes the Agents to enter into the same, and agrees to be bound by its terms. Each of the Lenders and the Issuing Bank hereby agrees that Credit Suisse AG, in its various capacities thereunder, may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement. Each Lender and the Issuing Bank hereby (i) acknowledges that Credit Suisse AG is acting under the Intercreditor Agreement in multiple capacities as the Administrative Agent, the Collateral Agent and the administrative agent and the collateral agent pursuant to the Second Lien Credit Documents and (ii) waives any conflict of interest, now contemplated or arising hereafter, in connection therewith and agrees not to assert against Credit Suisse AG or any of its Related Parties any claims, causes of action, damages or liabilities of whatever kind or nature relating thereto. The Administrative Agent may perform any of its respective duties hereunder by or through its officers, directors, agents, employees or affiliates. The institution serving as the Administrative Agent and/or the Collateral 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 an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder. Neither Agent shall have any duties or obligations except those expressly set forth in the Credit Documents. Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Credit Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law, and (c) except as expressly set forth in the Credit Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct. Neither Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and neither Agent shall 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 Credit Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Credit Document, (iv) the validity, enforceability, effectiveness or genuineness of any Credit Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 4 or elsewhere in any Credit Document, other than to confirm receipt of items expressly required to be delivered to such Agent.   130 --------------------------------------------------------------------------------   Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Each 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 it. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facilities as well as activities as Agent. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Agent which shall be a bank with an office in the United States, or an Affiliate of any such bank. If no successor Agent has been appointed pursuant to the immediately preceding sentence by the 30th day after the date such notice of resignation was given by such Agent, such Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of such Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent and/or Collateral Agent, as the case may be. Any such resignation by such Agent hereunder shall also constitute, to the extent applicable, its resignation as an Issuing Bank, in which case such resigning Agent (x) shall not be required to issue any further Letters of Credit hereunder and (y) shall maintain all of its rights as Issuing Bank with respect to any Letters of Credit issued by it prior to the date of such resignation. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent’s resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.   131 --------------------------------------------------------------------------------   Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Credit Document, any related agreement or any document furnished hereunder or thereunder. Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents. The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 6.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 9.08) or (iv) as otherwise may be expressly provided in the relevant Security Documents. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Article 9.   132 --------------------------------------------------------------------------------   Notwithstanding any other provision of this Agreement or any provision of any other Credit Document, each of the Lead Arrangers and the Joint Bookrunners, the Syndication Agent and each of the Co-Documentation Agents are named as such for recognition purposes only, and in their respective capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Credit Document; it being understood and agreed that each of the Lead Arrangers and the Joint Bookrunners, the Syndication Agent and each of the Co-Documentation Agents shall be entitled to all indemnification and reimbursement rights in favor of the Agents provided herein and in the other Credit Documents. Without limitation of the foregoing, none of the Lead Arrangers, the Joint Bookrunners, the Syndication Agent or the Co-Documentation Agents in their respective capacities as such shall, by reason of this Agreement or any other Credit Document, have any fiduciary relationship in respect of any Lender, Credit Party or any other Person. ARTICLE 9 Miscellaneous Section 9.01. Notices; Electronic Communications. 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 transmission, as follows: (a) if to the Borrower, to Walter Investment Management Corp., Attention of: Kimberly Perez, 3000 Bayport Drive, Suite 1100, Tampa, Florida 33607, Fax Number 813-281-5635, Email: kperez@walterinvestment.com; (b) if to the Administrative Agent, to Credit Suisse AG, Attention of: Sean Portrait, Eleven Madison Avenue, New York, NY 10010, Fax Number 212-322-2291, Email: agency.loanops@credit-suisse.com; and (c) if to a Lender, to it at its address (including email address or facsimile number) set forth on Schedule 1.01(b) or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by facsimile transmission (except 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) or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. As agreed to among the Borrower, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person.   133 --------------------------------------------------------------------------------   The Borrower hereby agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrower, that it will, or will cause its Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Credit Documents or to the Lenders under Article 5, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Borrowing Request, a notice pursuant to Section 2.10 or a notice requesting the issuance, amendment, extension or renewal of a Letter of Credit pursuant to Section 2.22, (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default under this Agreement or any other Credit Document or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent. In addition, the Borrower agrees, and agrees to cause its Subsidiaries, to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Credit Documents but only to the extent requested by the Administrative Agent. The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.16); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (1) the Credit Documents and (2) notification of changes in the terms of the Credit Facilities.   134 --------------------------------------------------------------------------------   Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States federal or state securities laws. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Credit Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Credit Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address. Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Credit Document in any other manner specified in such Credit Document.   135 --------------------------------------------------------------------------------   Section 9.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the Lenders and the Issuing Banks and shall survive the making by the Lenders of the Loans and the issuance of Letters of Credit by the Issuing Banks, regardless of any investigation made by the Lenders or the Issuing Banks or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Credit Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank. Section 9.03. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, the Agents, the Lenders and the Issuing Bank and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto. Section 9.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Administrative Agent, the Collateral Agent, the Issuing Banks or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. (b) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with notice to the Borrower (failure to provide or delay in providing such notice shall not invalidate such assignment) and the Administrative Agent and, in the case of any assigment of a Revolving Credit Commitment, the prior written consent of the Administrative Agent (not to be unreasonably withheld or delayed); provided, however, that (i) in the case of an assignment of a Revolving Credit Commitment, the Borrower and each Issuing Bank must also give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) (provided, that the consent of the Borrower (1) shall not be required to any such assignment made (x) to another Revolving Credit Lender, an Affiliate of a Revolving Credit Lender or a Related Fund of a Revolving Credit Lender, (y) in connection with the initial syndication of the Credit Facilities or (z) after the occurrence and during the continuance of any Event of Default and (2) shall be deemed to have been given if the Borrower has not responded with seven Business Days of a request for such consent), (ii) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 in the case of Term Loans and in an integral multiple of $500,000 and not less than $2,500,000 in the case of Revolving Credit Commitments (or, if less, the entire remaining amount of such Lender’s Commitment or Loans of the   136 --------------------------------------------------------------------------------   relevant Class); provided that simultaneous assignments by two or more Related Funds shall be combined for purposes of determining whether the minimum assignment requirement is met, (iii) the parties to each assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (B) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent), and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Credit Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws) and all applicable forms described in Section 2.20(e). Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid); provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each Issuing Bank and each Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Pro Rata Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.   137 --------------------------------------------------------------------------------   (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Term Loan Commitment and Revolving Credit Commitment, and the outstanding balances of its Term Loans and Revolving Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Credit Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Credit Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 or delivered pursuant to Section 5.01, the Intercreditor Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; (vii) such assignee agrees to be bound by the terms of the Intercreditor Agreement; and (viii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive and the Borrower, the Administrative Agent, the Issuing Banks, the Collateral Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, any Issuing Bank, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.   138 --------------------------------------------------------------------------------   (e) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower and each Issuing Bank to such assignment and any applicable forms described in Section 2.20(e), the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e). (f) Each Lender may without the consent of the Borrower, any Issuing Bank or the Administrative Agent sell participations to one or more banks or other Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 (subject to the requirements and limitations therein, including the requirements under Section 2.20(e) (it being understood that the documentation required under Section 2.20(e) shall be delivered to the participating Lender)) to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant) and (iv) the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans or L/C Disbursements and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or Person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or Person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or Person has an interest, increasing or extending the Commitments in which such participating bank or Person has an interest or releasing any Subsidiary Guarantor (other than in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.02) or all or substantially all of the Collateral). To the extent permitted by law, each participating bank or other Person also shall be entitled to the benefits of Section 9.06 as though it were a Lender, provided such participating bank or other Person agrees to be subject to Section 2.18 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and the Borrower, the Lenders and the Administrative Agent shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement, notwithstanding any notice to the contrary.   139 --------------------------------------------------------------------------------   (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16. (h) Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender (including any such assignment or pledge in support of obligations owed to a Federal Reserve Bank); provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto. (i) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other Person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPV may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV.   140 --------------------------------------------------------------------------------   (j) The Borrower shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent, each Issuing Bank and each Lender, and any attempted assignment without such consent shall be null and void. (k) In the event that any Revolving Credit Lender shall become a Defaulting Lender or S&P, Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best’s Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender becomes a Revolving Credit Lender, downgrade the long term certificate deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)) (or, with respect to any Revolving Credit Lender that is not rated by any such ratings service or provider, any Issuing Bank shall have reasonably determined that there has occurred a material adverse change in the financial condition of any such Lender, or a material impairment of the ability of any such Lender to perform its obligations hereunder, as compared to such condition or ability as of the date that any such Lender became a Revolving Credit Lender) then such Issuing Bank shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Credit Commitment to such assignee; provided, however, that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) such Issuing Bank or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Lender hereunder and all other amounts accrued for such Lender’s account or owed to it hereunder. (l) So long as no Default or Event of Default has occurred or is continuing or would result therefrom, any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement in respect of its Term Loans to the Borrower on a non-pro rata basis through (and solely through) Dutch Auctions open to all Lenders, subject to the following limitations and other provisions: (i) the maximum principal amount (calculated on the face amount thereof) of all Term Loans that the Borrower may offer to purchase or take assignment of shall not exceed 10% of the aggregate principal amount of Term Loans made on the Closing Date; (ii) the Borrower will not be entitled to receive, and will not receive, information provided solely to Lenders by the Administrative Agent or any Lender and will not be permitted to attend or participate in, and will not attend or participate in, meetings or conference calls attended solely by the Lenders and the Administrative Agent;   141 --------------------------------------------------------------------------------   (iii) no proceeds of any Revolving Loans may be used to directly or indirectly fund any such purchase or assignment; (iv) any Term Loans purchased by the Borrower shall be automatically and permanently cancelled immediately upon acquisition by the Borrower; (v) notwithstanding anything to the contrary contained herein (including in the definitions of “Consolidated Net Income” and “Consolidated EBITDA”) any noncash gains in respect of “cancellation of indebtedness” resulting from the cancellation of any Term Loans purchased by the Borrower shall be excluded from the determination of Consolidated Net Income and Consolidated EBITDA; (vi) the cancellation of Term Loans in connection with a Dutch Auction shall not constitute a voluntary or mandatory prepayment for purposes of Section 2.12 or Section 2.13, but the face amount of Term Loans cancelled as provided for in clause (iv) above shall be applied on a pro rata basis to the remaining scheduled installments of principal due in respect of the Term Loans; (vii) the Borrower shall represent and warrant as of the date of any such purchase and assignment that neither the Borrower nor any of its officers has any material non-public information with respect to the Borrower or any of its Subsidiaries or securities that has not been disclosed to the assigning Lender (other than because such assigning Lender does not wish to receive material non-public information with respect to the Borrower and its Subsidiaries or securities) prior to such date to the extent such information could reasonably be expected to have a material effect upon, or otherwise be material, to a Term Lender’s decision to assign Term Loans to the Borrower; (viii) after giving effect to any purchase or assignment of Term Loans pursuant to this Section 9.04(l), the sum of (x) the excess of the Revolving Credit Commitments over the Aggregate Revolving Credit Exposure as of such date and (y) the aggregate amount of all Unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries as of such date shall not be less than $15,000,000; and (ix) at the time of the consummation of each purchase and assignment of Term Loans pursuant to this Section 9.04(l), the Borrower shall have delivered to the Administrative Agent a certificate of an Authorized Officer as to compliance with the preceding clauses (iii), (vii) and (viii).   142 --------------------------------------------------------------------------------   Section 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, each Issuing Bank, each Lead Arranger and each Related Party of any of the foregoing Persons in connection with the syndication of the Credit Facilities and the preparation, execution, delivery and administration of this Agreement and the other Credit Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent, any Issuing Bank, any Lender or any of their respective Related Parties (and whether or not reasonable) in connection with the enforcement or protection of its rights in connection with this Agreement and the other Credit Documents or in connection with the Loans made or Letters of Credit issued hereunder or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings, including the fees, charges and disbursements of Davis Polk & Wardwell LLP, counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement, protection, refinancing or restructuring, the fees, charges and disbursements of any other counsel for the Administrative Agent, the Collateral Agent, any Issuing Bank, any Lender or any of their respective Related Parties. (b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lead Arranger, each Lender, each Issuing Bank and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, penalties, claims, damages, liabilities, obligations, fines and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of or by reason of (i) the execution or delivery of this Agreement or any other Credit Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby (including the syndication of the Credit Facilities), (ii) the use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Credit Party or any of their respective Affiliates) or (iv) the actual or alleged presence of or exposure to Hazardous Materials in the indoor or outdoor air, surface water or groundwater or on the surface or subsurface of any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries, the generation, storage, transportation, handling, Release or disposal of Hazardous Materials by the Borrower or any of its Subsidiaries at any location, whether or not owned, leased or operated by the Borrower or any of its Subsidiaries, the non-compliance by the Borrower, any of its Subsidiaries or any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries with any Environmental Law (including applicable permits thereunder), or any Environmental Claim threatened or asserted against the Borrower, any of its Subsidiaries or any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee.   143 --------------------------------------------------------------------------------   (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lead Arranger under paragraph (a) or (b) of this Section (including, without limitation, as a result of entering into of one or more Servicing Rights Acknowledgement Agreements and one or more “control agreements” pursuant to the Security Agreement), each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent, such Issuing Bank or such Lead Arranger, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent, such Issuing Bank or such Lead Arranger in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the Aggregate Revolving Credit Exposure, outstanding Term Loans and unused Commitments at the time (in each case, determined as if no Lender were a Defaulting Lender). (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential, incidental or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) All amounts due under this Section 9.05 shall be payable on written demand therefor. Section 9.06. Right of Setoff. (a) If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender (including, without limitation, by branches and agencies of such Lender wherever located) to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement and other Credit Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Credit Document and although such obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.24 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Banks and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.   144 --------------------------------------------------------------------------------   (b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE UNLESS IT IS TAKEN WITH THE CONSENT OF THE REQUIRED LENDERS OR APPROVED IN WRITING BY THE ADMINISTRATIVE AGENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED LENDERS OR THE ADMINISTRATIVE AGENT SHALL BE NULL AND VOID. THIS SUBSECTION (B) IS FOR THE SOLE BENEFIT OF THE LENDERS AND SHALL NOT AFFORD ANY RIGHT TO, OR CONSTITUTE A DEFENSE AVAILABLE TO, ANY CREDIT PARTY. Section 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER CREDIT DOCUMENTS) AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT OR ANY SUCH OTHER CREDIT DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK. Section 9.08. Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank in exercising any power or right hereunder or under any other Credit Document and no course of dealing between the Borrower or any other Credit Party and the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Credit Document or consent to any departure by the Borrower or any other Credit Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.   145 --------------------------------------------------------------------------------   (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or any date for the payment of any interest on any Loan or any date for reimbursement of an L/C Disbursement, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or L/C Disbursement, without the prior written consent of each Lender directly adversely affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the provisions of Section 9.04(j) or the provisions of this Section or release any Subsidiary Guarantor (other than in connection with the sale of such Subsidiary Guarantor in a transaction permitted by Section 6.02) or all or substantially all of the Collateral, without the prior written consent of each Lender, (iv) change the provisions of any Credit Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class, (v) modify the protections afforded to an SPV pursuant to the provisions of Section 9.04(i) without the written consent of such SPV or (vi) reduce the percentage contained in the definition of the term “Required Lenders” without the prior written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent or any Issuing Bank hereunder or under any other Credit Document without the prior written consent of the Administrative Agent, the Collateral Agent or such Issuing Bank. (c) Notwithstanding the foregoing, (x) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Term Loans and Revolving Credit Exposure and the accrued interest and fees in respect thereof, (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and (iii) to permit any such additional credit facilities which are term facilities to share ratably with the Term Loans in the application of prepayments and to permit any such credit facilities which are revolving credit facilities to share ratably with the any revolving credit facility hereunder in the application of prepayments and (y) this Agreement may be amended with the written consent of the Required Lenders, the Extending Lenders (as defined below), the Administrative Agent and the Borrower to extend maturity of the Revolving Credit Commitments with respect to one or more Lenders (each such Lender, an “Extending Lender”).   146 --------------------------------------------------------------------------------   (d) In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans (the “Refinanced Term Loans”) with a replacement term loan or loans hereunder (the “Replacement Term Loans”); provided that (i) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans, (ii) the weighted average Applicable Margin for such Replacement Term Loans shall not be higher than the weighted average Applicable Margin for such Refinanced Term Loans, (iii) the Weighted Average Life to Maturity of such Replacement Term Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Term Loans at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the Refinanced Term Loans) and (iv) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Refinanced Term Loans in effect immediately prior to such refinancing. (e) In addition, notwithstanding the foregoing, if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature in any provision of the Credit Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Credit Document if the same is not objected to in writing by the Required Lenders within five Business Days after notice thereof. Section 9.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any L/C Disbursement, together with all fees, charges and other amounts which are treated as interest on such Loan or participation in such L/C Disbursement under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.   147 --------------------------------------------------------------------------------   Section 9.10. Entire Agreement. This Agreement, the Fee Letters referred to in the Commitment Letter and the other Credit Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Credit Documents. Nothing in this Agreement or in the other Credit Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder (including any Affiliate of any Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Issuing Banks, the Lead Arrangers and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Credit Documents. Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11. Section 9.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Credit Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. Section 9.13. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03. Delivery of an executed signature page to this Agreement by facsimile or other form of electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. Section 9.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.   148 --------------------------------------------------------------------------------   Section 9.15. Jurisdiction; Consent to Service of Process. (a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York state court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Credit Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York state or, to the extent permitted by law, in such federal court; provided that suit for the recognition or enforcement of any judgment obtained in any such New York state or federal court may be brought in any other court of competent jurisdiction. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Credit Documents against the Borrower or its properties in the courts of any jurisdiction. (b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Credit Documents in any New York state or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. Section 9.16. Confidentiality. Each of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel and other advisors, and to numbering, administration and settlement service providers (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Credit Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.16 to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Credit Documents (it being agreed that any such actual or prospective assignee or participant shall be deemed to have entered into such an agreement if such assignee or participant “clicks through” or takes other affirmative action to electronically acknowledge   149 --------------------------------------------------------------------------------   its agreement to any electronic notification containing provisions substantially the same as those in this Section 9.16 in accordance with the standard syndication processes of the Person disclosing such Information or customary market standards for dissemination of such type of information) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary or any of their respective obligations, (f) with the consent of the Borrower or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16. For the purposes of this Section, “Information” shall mean all information received from the Borrower and related to the Borrower or its business, other than any such information that was available to the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to its disclosure by the Borrower; provided that, in the case of Information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 9.16 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 its own confidential information. Section 9.17. Lender Action. Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Credit Party or any other obligor under any of the Credit Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Credit Party, unless expressly provided for herein or in any other Credit Document, without the prior written consent of the Administrative Agent. The provisions of this Section 9.17 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Credit Party. Section 9.18. USA PATRIOT Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the USA PATRIOT Act.   150 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.             WALTER INVESTMENT MANAGEMENT CORP., as Borrower       By:   /s/ Denmar J. Dixon         Name:   Denmar J. Dixon        Title:   Vice Chairman and Executive Vice President    STATE OF NORTH CAROLINA (COUNTY OF MECKLENBURG) I, Peggy W. Matte, a Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY, that Denmar J. Dixon of Walter Investment Management Corp. (the “Company”), personally known to me to be the same person whose name is subscribed to the foregoing instrument appeared before me this day in person and acknowledged that he signed, executed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act of said Company, for the uses and purposes therein set forth being duly authorized so to do. GIVEN under my hand and Notarial Seal this 29th day of June, 2011. [Seal]       /s/ Peggy W. Matte   Signature of notary public     MY COMMISSION EXPIRES JULY 15, 2013     --------------------------------------------------------------------------------               CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent, Collateral Agent and Issuing Bank       By:   /s/ Robert Hetu         Name:   Robert Hetu        Title:   Managing Director                      By:   /s/ Rahul Parmar         Name:   Rahul Parmar        Title:   Associate        --------------------------------------------------------------------------------               THE ROYAL BANK OF SCOTLAND PLC       By:   /s/ Michael Cavounis         Name:   Michael Cavounis        Title:   Authorized Signatory        --------------------------------------------------------------------------------               MORGAN STANLEY BANK, N.A.       By:   /s/ Wissam B. Kairouz         Name:   Wissam B. Kairouz        Title:   Authorized Signatory        --------------------------------------------------------------------------------               BANK OF AMERICA, N.A.       By:   /s/ William Soo         Name:   William Soo        Title:   Vice President
Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 I. Purpose of the TSR Program The purpose of the TSR Program is to align Boston Scientific’s executive compensation program with the interests of shareholders and to reinforce the concept of pay for performance by comparing the Total Shareholder Return (“TSR”) of shares of Boston Scientific Common Stock (the “Common Stock”) to the TSR of companies included in the S&P 500 Healthcare Index over a three-year period beginning on January 1, 2018. The TSR Program entails the grant of Deferred Stock Units, and the program shall be administered, under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “2011 LTIP”). Terms not defined in this TSR Program document but defined in the 2011 LTIP shall have the same meaning as in the 2011 LTIP. For Covered Employees, the TSR Program is established under section 4.a.(8) of the 2011 LTIP and is intended to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code (“Code”). II. Eligible Participants The TSR Program covers members of the Executive Committee on the date that awards are granted under the TSR Program as determined and in the amounts established by the Executive Compensation and Human Resources Committee of the Board of Directors (the “Committee”). The Committee may review TSR Program eligibility criteria for participants in the TSR Program from time to time and may revise such criteria at any time, even within a TSR Program year, with or without notice and within its sole discretion. III.    Performance Share Units The Deferred Stock Units awarded under the TSR Program (the “Performance Share Units”) shall vest only upon satisfaction of both the performance criteria described in this Section III and the payment eligibility criteria described in Section VII. The applicable performance criteria are based on the TSR of the Common Stock relative to the TSR of companies in the S&P 500 Healthcare Index. The TSR for Boston Scientific and all other companies in the S&P 500 Healthcare Index will be measured over a three-year period beginning January 1, 2018 and ending on December 31, 2020 (the “Performance Period”). The number of Performance Share Units as to which the performance criteria under this program shall be determined to have been satisfied will be in a range of 0% to 200% of the target number of Performance Share Units awarded to the participant as follows: TSR Performance Percentile Rank Performance Share Units as a Percent of Target 90th Percentile or above 200% 80th Percentile 150% 50th Percentile 100% 30th Percentile 40% Below 30th Percentile 0% If the minimum level of performance is achieved, the number of Performance Share Units will be calculated linearly between each set of data points. -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 Following the end of the Performance Period, the Committee shall determine the number of Performance Share Units as to which the performance criteria of this program have been satisfied, which determination shall be final and binding. Shares of Common Stock will be delivered or otherwise made available to the participant no later than March 15, 2021 in settlement of the Performance Share Units as to which the performance criteria of this program have been satisfied if and to the extent the payment eligibility criteria of Section VII below are also satisfied. Any Performance Share Units as to which the performance criteria of this Section III have not been satisfied will be forfeited in their entirety. I. Calculation of Total Shareholder Return and Definitions The TSR for Boston Scientific and each other company in the S&P 500 Healthcare Index shall include any cash dividends paid during the Performance Period and shall be determined as follows: Total Shareholder Return for the Performance Period = (Change in Stock Price + Dividends Paid) / Beginning Stock Price “Beginning Stock Price” means the daily average closing price as quoted on the New York Stock Exchange or the NASDAQ Global Select Market, as applicable, of one (1) share of common stock for the two calendar months prior to the beginning of the Performance Period. “Change in Stock Price” means the difference between the Beginning Stock Price and the Ending Stock Price. “Dividends Paid” means the total of all cash dividends paid on one (1) share of stock during the Performance Period. “Ending Stock Price” means the daily average closing price as quoted on the New York Stock Exchange or the NASDAQ Global Select Market, as applicable, of one (1) share of common stock for the last two calendar months of the Performance Period. Example: If the Beginning Stock Price for a company was $25.00 per share, and the company paid $2.50 in dividends over the Performance Period, and the Ending Stock Price was $30.00 per share (thereby making the Change in Stock Price $5.00 ($30.00 minus $25.00)), then the TSR for that company would be thirty percent (30%). The calculation is as follows: 0.30 = ($5.00 + $2.50) / $25.00 II. Calculation of Percentile Performance Following the calculation of the TSR for the Performance Period for Boston Scientific and each of the other companies in the S&P 500 Healthcare Index, Boston Scientific and the other companies in the S&P 500 Healthcare Index will be ranked, in order of maximum to minimum, according to their respective TSR for the Performance Period. After this ranking, the percentile performance of Boston Scientific as compared to the other companies in the S&P 500 Healthcare Index shall be determined by the following formula: a102bostonscientificc_image1.gif [a102bostonscientificc_image1.gif] -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 “P” represents the percentile performance which will be rounded, if necessary, to the nearest whole percentile by application of standard scientific rounding conventions. “N” represents the number of companies in the S&P 500 Healthcare Index, including Boston Scientific. “R” represents Boston Scientific’s ranking versus the other companies in the S&P 500 Healthcare Index. Example: If Boston Scientific ranked 10th out of 54 companies, the performance (“P”) therefore will be in the 83rd percentile. This calculation is as follows:     0.83 = 1 – (10 – 1) / (54 – 1) III. S&P 500 Healthcare Index The companies currently included in the S&P 500 Healthcare Index can be found in Appendix A attached hereto. Only companies in the S&P 500 Healthcare Index for an entire Performance Period will be used to determine the TSR percentile rank. If two companies in the S&P 500 Healthcare Index merge, the surviving company shall remain in the S&P 500 Healthcare Index. If a company in the S&P 500 Healthcare Index merges with, or is acquired by, a company that is not in the S&P 500 Healthcare Index, and the company in the S&P 500 Healthcare Index is the surviving company, then the surviving company shall be included in the S&P 500 Healthcare Index. If a company in the S&P 500 Healthcare Index merges with, or is acquired by, a company that is not in the S&P 500 Healthcare Index, and the company in the S&P 500 Healthcare Index is not the surviving company or the surviving company is no longer publicly traded, then the surviving company shall not be included in the S&P 500 Healthcare Index. Notwithstanding the foregoing, if a company in the S&P 500 Healthcare Index ceases to be listed in the Healthcare Sector under the Standard & Poor’s Global Industry Classification Standard (GICS) at any time during the Performance Period (including after a merger, acquisition or other business transaction described above), then it shall not be included in the S&P 500 Healthcare Index. IV. Payment Eligibility Criteria Except as set forth below with respect to a Change in Control, no Performance Share Units shall vest prior to the end of the Performance Period (December 31,2020). If a participant’s employment with Boston Scientific and its Affiliates (the “Company”) terminates before January 1, 2019, all of his or her Performance Share Units shall be forfeited in their entirety except as set forth below with respect to a termination of employment due to death or Disability. -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 If a participant’s employment with the Company terminates after December 31, 2018 but before the end of the Performance Period, all of his or her Performance Share Units shall be forfeited, except in connection with Retirement, death, Disability or upon a Change of Control as outlined below. Participants on military, sick or other bona fide leave of absence on December 31, 2020 will not be deemed to have terminated employment with the Company if such absence does not exceed 180 days or, if longer, the period the participant retains the right by statute or by contract to return to employment with the Company. Subject to the terms of any separate Change in Control or similar agreement to which a participant is bound, if there is a Change in Control after December 31, 2018 but before the end of the Performance Period, shares of Common Stock shall be issued in respect of the Performance Share Units as to which the performance criteria of this program have been satisfied using the last day of the month preceding the date on which the Change in Control is consummated as the ending date of the Performance Period in lieu of December 31, 2020, as determined by the Committee immediately prior to the consummation of the Change in Control. Such issuance shall occur within 70 days of the effective date of the termination or Change in Control, on a prorated basis. The number of shares to be issued on a prorated basis shall be determined as follows: (# Performance Share Units achieved pursuant to the table in Section III * ((# of full and partial months during the Performance Period, rounded up to the nearest whole month/36)). The number of prorated shares to be issued to the participant, if any, will be approved by the Committee at its next regular meeting. In the event a Change in Control occurs prior to January 1, 2018, the Performance Share Units will be forfeited in their entirety. If a participant’s employment with the Company terminates due to Retirement after December 31, 2018 but before the end of the Performance Period, shares of Common Stock shall be issued in respect of the Performance Share Units as to which the performance criteria of this program have been satisfied at the end of the Performance Period, but no later than March 15, 2021, on a prorated basis using the effective date of the participant’s termination of employment. The number of shares to be issued on a prorated basis shall be determined as follows: (# Performance Share Units achieved pursuant to the table in Section III * ((# of full and partial months worked during the Performance Period, rounded up to nearest whole month) / 36)). The number of prorated shares to be issued to the participant, if any, will be approved by the Committee at its next regular meeting. If a participant’s employment with the Company terminates due to death or Disability before the end of the Performance Period, all of his or her Performance Share Units shall accelerate vesting and shares of Common Stock shall be issued in respect of the Performance Share Units as to which the performance criteria of this program have been satisfied at the end of the Performance Period, but no later than March 15, 2021. The number of shares to be issued to the participant, if any, will be approved by the Committee at its next regular meeting. V. Termination, Suspension or Modification and Interpretation of the TSR Program The Committee has sole authority over administration and interpretation of the TSR Program and retains its right to exercise discretion as it sees fit, except that, with respect to Covered Employees, the Committee shall have no discretion to increase the number of shares of Common Stock in which a participant may vest above the amount described in Section III. The Committee -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 may terminate, suspend or modify and if suspended, may reinstate with or without modification all or part of the TSR Program at any time, with or without notice to the participant. The Committee reserves the exclusive right to determine eligibility to participate in this TSR Program and to interpret all applicable terms and conditions, including eligibility criteria. VI. Recoupment Policy General Recoupment Policy. To the extent permitted by governing law, the Board, in its discretion, may seek Recovery of Performance Share Units granted to a Current Executive Officer or Former Executive Officer if, in the judgment of the Board, such Executive Officer commits misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in capacity as Executive Officer. Definitions. The following terms shall have the meaning set forth below: (1)    "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. (2)    "Executive Officer" means any Current Executive Officer or Former Executive Officer. (3)    "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. (4)    "Recovery" means the forfeiture or cancellation of unvested Performance Share Units. Provisions Required by Law. If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Performance Share Units, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to the Performance Share Units, as applicable, as if it had been included on the date the Performance Share Units were granted and the Company shall notify the participant of such additional provision. VII. Other This document sets forth the terms of the TSR Program and is not intended to be a contract or employment agreement between the participant and the Company. As applicable, it is understood that both the participant and the Company have the right to terminate the participant’s employment with the Company at any time, with or without cause and with or without notice, in acknowledgement of the fact that their employment relationship is “at will.” To the extent section 409A of the Internal Revenue Code (“Code”) applies to any award under this TSR Program, the award shall be interpreted in a manner consistent with Code section 409A. Where section 409A applies, in the case of any payment made on termination of employment, a termination of employment shall not be deemed to have occurred unless such termination is also a “separation from service” within the meaning of Code section 409A and, for purposes of any such provision, references to a “termination,” “termination of employment,” or like terms shall mean “separation from service.” Where section 409A applies, in the case of a payment made upon a Change in Control, a Change in Control shall not be deemed to have occurred unless there is a change in the ownership or effective control of Boston Scientific, or in the ownership of a substantial portion of the assets of Boston Scientific, as defined in Code section 409A. Where required by section 409A in the case of a specified employee (as determined under Code section -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 409A), payments on termination shall be made on the first business day of the seventh month following termination. -------------------------------------------------------------------------------- Exhibit 10.2   Boston Scientific Corporation (“Boston Scientific”) Total Shareholder Return Performance Share Program (“TSR Program”) Performance Period January 1, 2018 - December 31, 2020 Appendix A Annual Executive LTIP Program S&P 500 Healthcare Index – 62 Companies Company Name Company Name Agilent Technologies, Inc. Henry Schein, Inc. AbbVie Inc. Humana Inc. AmerisourceBergen Corporation IDEXX Laboratories, Inc. Abbott Laboratories Illumina, Inc. Aetna Inc. Incyte Corporation Allergan plc Intuitive Surgical, Inc. Align Technology, Inc. Johnson & Johnson Alexion Pharmaceuticals, Inc. Laboratory Corporation of America Holdings Amgen Inc. Eli Lilly and Company Anthem, Inc. McKesson Corporation Baxter International Inc. Medtronic plc C. R. Bard, Inc. Merck & Co., Inc. Becton, Dickinson and Company Mettler-Toledo International Inc. Biogen Inc. Mylan N.V. Bristol-Myers Squibb Company Patterson Companies, Inc. Boston Scientific Corporation Pfizer Inc. Cardinal Health, Inc. PerkinElmer, Inc. Celgene Corporation Perrigo Company plc Cerner Corporation Quintiles IMS Holdings, Inc. Cigna Corporation Regeneron Pharmaceuticals, Inc. Centene Corporation ResMed Inc. The Cooper Companies, Inc. Stryker Corporation Quest Diagnostics Incorporated Thermo Fisher Scientific Inc. Danaher Corporation Universal Health Services, Inc. DaVita Inc. UnitedHealth Group Incorporated Express Scripts Holding Company Varian Medical Systems, Inc. Envision Healthcare Corporation Vertex Pharmaceuticals Incorporated Edwards Lifesciences Corporation Waters Corporation Gilead Sciences, Inc. DENTSPLY SIRONA Inc. HCA Healthcare, Inc. Zimmer Biomet Holdings, Inc.
Exhibit 10.39 2010 PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN Purpose This 2010 Performance-Based Incentive Plan (the “2010 Incentive Plan”) is being established by the Compensation Committee (the “Committee”) of the Board of Directors of NightHawk Radiology Holdings, Inc. (the “Company”) in order to tie a portion of an Eligible Employee’s compensation for 2010 to the Company’s financial performance. This 2010 Incentive Plan will be applicable to all employees of the Company, including all officers of vice president level and above of the Company (each, an “Eligible Employee”). Funding of 2010 Incentive Plan Pool The 2010 Incentive Plan will be funded based upon the Company’s financial performance for 2010, as measured by the Company’s 2010 adjusted EBITDA (“EBITDA”). Specifically, if the Company’s adjusted EBITDA exceeds a threshold percentage of the Company’s budgeted EBITDA (as established by the Compensation Committee), the amount of incentive compensation available to be paid out pursuant to the 2010 Incentive Plan will increase by a specified percentage of the target pool amount (subject to a cap determined by the Committee). Payment to Individual Employees Once the overall funding percentage is established, payments will be made to the Eligible Employees equal to the Eligible Employee’s targeted incentive compensation amount multiplied by the Funded Percentage; provided, however, that an Eligible Employee’s overall incentive compensation for 2010 can be reduced by the Chief Executive Officer by up to 40% based upon the individual’s overall performance and the Company’s performance on its Customer-Driven Focus and Operational Excellence goals (subject to approval by the Committee). To be clear, in no event, however, will an Eligible Employee’s 2010 incentive compensation exceed the funded percentage based upon the Company’s adjusted EBITDA. Further, the Chief Executive Officer’s overall incentive compensation will also be subject to a 40% reduction using the same criteria as are used by the Chief Executive Officer for the other Eligible Employees; provided, however, that the determination of what percentage the Chief Executive Officer’s overall incentive compensation will be reduced by shall be subject to final approval by the Committee.
Exhibit 10.5 ENCORE® MEDICAL CORPORATION 1997 SURGEON ADVISORY PANEL STOCK OPTION PLAN      1. Purpose. This 1997 Surgeon Advisory Panel Stock Option Plan (the “Plan”) of Encore Medical Corporation, a Delaware corporation (the “Company”), for surgeons affiliated with the Company, is intended to advance the best interest of the Company by providing such individuals, who have substantial responsibility for educating potential users of the Company’s or the Company’s affiliates products and giving the Company or its affiliates advice on the design of its products, with compensation and by increasing their proprietary interest in the success of the Company — thereby encouraging them to remain involved in the Company’s surgeon advisory panel.      2. Administration. The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (the “Committee”); and all questions of interpretation and application of the Plan, or of options granted hereunder (the “Options”), shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. The Committee shall consist of not less than three (3) members. Meetings shall be held at such times and places as shall be determined by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. In addition, the Committee may take any action otherwise proper under the Plan by the unanimous written consent of its members. The determinations of the Committee on all matters referred to in this Plan shall be conclusive. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his or her own part, including, but not limited to, the exercise of any power or discretion given to him or her under the Plan, except those resulting from his or her own gross negligence or willful misconduct.      3. Option Shares. The shares subject to the Options and other provisions of the Plan shall be shares of the Company’s Common Stock, ($0.001) par value (the “Common Stock”). The total amount of the Common Stock with respect to which Options may be granted under the Plan shall not exceed, in the aggregate, four hundred twenty-five thousand (425,000) shares; provided, however, that such aggregate number of shares shall be subject to adjustment in accordance with the provisions of Paragraph 16 hereof. Such shares may be treasury shares or authorized but unissued shares. In the event that any outstanding Option granted under the Plan shall expire or terminate, the shares of Common Stock allocable to the unexercised portion of such Option may again be subject to an Option under the Plan.      4. Authority to Grant Options. The Committee may grant from time to time, as it shall from time to time determine, to an eligible person, an Option or Options to buy a stated number of shares of Common Stock under the terms and conditions of the Plan. Subject only to As amended March 16, 2001   --------------------------------------------------------------------------------   any applicable limitations set forth in the Plan, the number of shares of Common Stock to be covered by any Option shall be as determined by the Committee. No tandem Options may be issued, that is, no Option may be granted the exercise of which would affect the exercisability of any other outstanding Option held by the optionee.      5. Eligibility. The individuals who shall be eligible to participate in the Plan shall be those surgeons who are serving as members of the Company’s or the Company’s affiliates’ Surgeon Advisory Panel.      6. Grants to Surgeons. All surgeons who have entered into Consulting, Designing or Clinical Study Agreements with the Company or an affiliate of the Company shall be eligible to participate in the Plan and shall be granted Options as determined by the Committee.      7. Option Price. The price at which shares may be purchased pursuant to Options may be equal to, less than or greater than the fair market value of the shares of Common Stock on the date the Option is granted, as the Committee in its discretion may provide. The term “fair market value” shall mean such amount determined in good faith by the Board of Directors of the Company or, in absence of a determination by the Board, by the Committee; provided, however, that during such time as the Common Stock is traded in the over-the-counter market, but is not listed upon the NASDAQ quotation system or an established stock exchange, the fair market value per share shall be the mean between dealer “bid” and “ask” prices of the Common Stock in the New York over-the-counter market on the day the Option is granted, as reported by the National Association of Securities Dealers, Inc.; and provided further, that if the Common Stock is traded on the NASDAQ quotation system or is listed on an established stock exchange or exchanges, such fair market value shall be deemed to be the closing price of the Common Stock as reported for that day in The Wall Street Journal listing of composite transactions for such stock exchange or exchanges on the day the Option is granted, or if no sale of Common Stock shall have been made on any stock exchange on that day, on the preceding day on which there was a sale of such stock as reported.      8. Duration of Options. No Option shall be exercisable after the expiration of ten (10) years from the date such Option is granted. The Committee in its discretion may provide that an Option shall be exercisable during such ten (10)-year period or any lesser period of time, and each Option shall be subject to earlier termination as hereinafter provided.      9. Amount Exercisable.           (a) Each Option may be exercised, so long as it is valid and outstanding, from time to time, in part or as a whole, subject to the provisions of Paragraph 10 hereof and to such other conditions as the Committee, in its sole discretion, may provide.           (b) A “Change of Control” for purposes of this Plan shall mean the acquisition by a single entity or group of affiliated entities of more than eighty percent (80%) of the Common Stock of the Company issued and outstanding immediately prior to such acquisition; or the dissolution or liquidation of the Company, or the consummation of any merger or As amended March 16, 2001 -2- --------------------------------------------------------------------------------   consolidation of the Company or any sale or other disposition of all or substantially all of its assets, if the shareholders of the Company immediately before such transaction own, immediately after consummation of such transaction, equity securities (other than options and other rights to acquire equity securities) possessing less than twenty percent (20%) of the voting power of the surviving or acquiring corporation.                (i) Change of Control with Provision Being Made Therefor. If provision be made in writing in connection with a Change of Control for the assumption and continuance of any Option granted under the Plan, or the substitution for such Option of a new Option covering the shares of the successor corporation, with the appropriate adjustment as to number and kind of shares and prices, the Option granted under the Plan, or the new Option substituted therefor, as the case may be, shall continue in the manner and under the terms provided.                (ii) Change of Control Without Provision Being Made Therefor. In the event provision is not made in connection with a Change of Control for the continuance and assumption of Options granted under the Plan or for the substitution of any Option covering the shares of the successor corporation, then if the Committee waives any limitations set forth in, or imposed pursuant to Paragraph 9(a) hereof, the holder of any such vested Option shall be entitled, prior to the effective date of any such Change of Control, to purchase the full number of shares not previously exercised under such vested Option, without regard to the determination as to the periods and installments of exercisability made pursuant to Paragraph 9(a) if (and only if) such Option has not at that time expired or been terminated, failing which purchase, any unexercised portion shall be deemed canceled as of the effective date of such Change of Control.                (iii) All adjustments under this Paragraph 9(b) shall be made by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive for all purposes of the Plan.      10. Exercise of Options. Options shall be exercised by the delivery of written notice to the Company setting forth the number of shares with respect to which the Option is to be exercised and specifying the address to which the certificates for such shares are to be mailed, together with full payment of the Option price of such shares and such other items as may be required pursuant to Paragraph 13 hereof. “Full payment” shall mean the full exercise price in cash, certified check, bank draft, or postal or express money order payable to the order of the Company. Payment in full or part may also be made in the form of shares of Common Stock not then subject to restrictions. Shares of Common Stock so surrendered shall be valued at fair market value on the exercise date. No options shall be exercisable except in respect of whole shares of Stock. Not less than five hundred (500) shares of Common Stock may be purchased at one time unless the number purchased is the total number at the time available for purchase under the terms of the Option. As promptly as practicable after receipt of such written notification and payment, the Company shall deliver to the optionee a certificate for the number of shares with respect to which such Option has been so exercised, issued in the optionee’s name; provided that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited such certificate in the United States mail, addressed to the As amended March 16, 2001 -3- --------------------------------------------------------------------------------   optionee, at the address specified pursuant to this Paragraph 10. The delivery of a certificate upon the exercise of Options may, in the discretion of the Committee, be conditioned upon payment to the Company by the person exercising such Option of the amount, determined by the Company, of any tax liability of the Company resulting from such exercise. The Company shall have the right to deduct any sums that the Committee reasonably determines that federal, state or local tax law requires to be withheld with respect to the exercise of any Option or as otherwise may be required by those laws. The Company may require as a condition to issuing shares of Common Stock upon exercise of the Option that the optionee or other person exercising the Option pay any sums that federal, state or local tax law requires to be withheld with respect to the exercise. The Company shall not be obligated to advise any optionee of the existence of the tax or the amount which the Company will be so required to withhold.      11. Non-Transferability of Options; Stock Transfer Restrictions. Except with the prior written consent of the Company in its sole discretion, Options shall not be transferable by the optionee otherwise than by will or under the laws of descent and distribution and shall be exercisable, during his or her lifetime, only by him or her or by the optionee’s duly appointed guardian or personal representative.      12. Termination of Service on Advisory Board or Death of Optionee. Except as may be otherwise expressly provided herein, or unless otherwise provided for by the Committee, any unvested Options shall terminate on the earlier of the date specified pursuant to Paragraph 8 hereof or no later than one (1) day less than one (1) month following termination of affiliation between the Company and the optionee for any reason, for or without cause. In the event of termination because of the death or disability of the holder of an Option before the date of expiration of such Option, such Option shall terminate on the earlier of such date of expiration or one (1) year following the date of such death. After the death of the optionee, his or her executors, administrators, or any person or persons to whom his or her Option may be transferred, by will or by the laws of descent and distribution, shall have the right to exercise the Option, in whole or in part (subject to any limitations set forth in, or imposed pursuant to, Paragraph 9(a) hereof).      13. Requirements of Law.           (a) The Company shall not be required to sell or issue any shares pursuant to any Option if the issuance of such shares shall constitute a violation by the optionee or the Company of any provisions of any law or regulation of any governmental authority. If a registration statement under the Securities Act of 1933, as amended, and any applicable state securities or Blue Sky laws (the “Securities Laws”) is not in effect with respect to the shares of Common Stock issuable pursuant to any Option, the Company may require the optionee to make certain representations and may require an opinion of counsel satisfactory to the Company to the effect that such registration is not required. Any determination in this connection by the Company shall be final, binding, and conclusive.           (b) Upon exercise of any Option, the Company shall not be required to issue such shares unless the Company has received evidence satisfactory to it to the effect that the As amended March 16, 2001 -4- --------------------------------------------------------------------------------   holder of such Option will not transfer such shares except pursuant to a registration statement in effect under the Securities Laws or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Company shall be final, binding, and conclusive.           (c) In the event the shares issuable on exercise of an Option are not registered under the Securities Laws, the Company may imprint the following legend or any other legend that counsel for the Company considers necessary or advisable to comply with the Securities Laws: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE APPLICABLE STATE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.           (d) The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Laws, and in the event any shares are so registered, the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority.      14. No Rights as Stockholder. No optionee shall have rights as a stockholder with respect to shares covered by his or her Option until the date of issuance of a stock certificate for such shares; no adjustment for dividends (other than stock dividends under Paragraph 16) or otherwise shall be made if the record date therefor is prior to the date of issuance of such certificate.      15. Engagement Obligations. The granting of any Option shall not impose upon the Company or any affiliate of the Company any obligation to engage or continue to engage any optionee, and the right of the Company or any affiliate of the Company to terminate the engagement of any surgeon shall not be diminished or affected by reason of the fact that an Option has been granted to him or her.      16. Changes in the Company’s Capital Structure. As amended March 16, 2001 -5- --------------------------------------------------------------------------------             (a) The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred, or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.           (b) If, while there are outstanding Options, the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Common Stock outstanding without receiving compensation therefor in money, services, or property, then: (i) in the event of an increase in the number of such shares outstanding, the number of shares of Common Stock then subject to Options hereunder shall be proportionately increased, and the cash consideration payable per share shall be proportionately reduced; (ii) in the event of a reduction in the number of such shares outstanding, the number of shares of Common Stock then subject to Options hereunder shall be proportionately reduced, and the cash consideration payable per share shall be proportionately increased; and (iii) the number of shares then available for Options hereunder shall be proportionately increased or decreased, as the case may be.           (c) After a merger of one or more corporations into the Company, each holder of an outstanding Option shall, at no additional cost, be entitled upon exercise of such Option to receive (subject to any required action by stockholders) in lieu of the number of shares as to which such Option shall then be so exercisable, the number and class of shares of stock or other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger if, immediately prior to such merger, such holder had been the holder of record of a number of shares of Common Stock equal to the number of shares as to which such Option shall be so exercised.           (d) If the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation or where the Company will be a wholly owned subsidiary of another corporation, or if the Company sells or otherwise disposes of all or substantially all of its property or assets to another corporation while unexercised, vested Options remain outstanding under the Plan, then:                (i) subject to the provisions of clause (ii) below, after the effective date of such merger, consolidation, or sale, as the case may be, each holder of an outstanding vested Option shall be entitled, upon exercise of such vested Option, to receive, in lieu of shares of Common Stock, the number and class of shares of such stock, other securities, cash, and other property or rights as the holders of shares of Common Stock received pursuant to the terms of the merger, consolidation, or sale and to which he or she would have been entitled if, immediately prior to such merger, consolidation, or sale, he or she had been the holder of record of a number of shares of Common Stock equal to the number of shares as to which such vested Option shall be so exercised; and As amended March 16, 2001 -6- --------------------------------------------------------------------------------                  (ii) all outstanding Options may be canceled by the Board of Directors of the Company as of the effective date of any such merger, consolidation, or sale, provided that (x) written notice of such cancellation is given to each holder of a vested or non-vested Option not later than thirty (30) days prior to such effective date and (y) each holder of a vested Option shall have the right to exercise such vested Option in full (without regard to any limitations set forth in or imposed pursuant to Paragraph 9(a) hereof) during the said thirty (30)-day period preceding the effective date of such merger, consolidation, or sale.           (e) Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, 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 shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding Options.      17. Amendment or Termination of Plan. The Board may at any time suspend, amend or terminate the Plan and may, with the consent of the holder of an Option, make such modifications of the terms and conditions of such holder’s Option as it shall deem advisable. No Option may be granted during any suspension of the Plan or after such termination. The amendment, suspension or termination of the Plan shall not, without the consent of the optionee, alter or impair any rights or obligations under any Option theretofore granted under the Plan.      18. Written Agreement. Each Option granted hereunder shall be embodied in a written option agreement that shall be subject to the terms and conditions prescribed above, and shall be signed by the optionee and by the Chairman of the Board, the President, or any Vice President of the Company for and in the name and on behalf of the Company. Such an option agreement shall contain such other provisions as the Committee in its discretion shall deem advisable.      19. Indemnification of Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further act on his or her part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts of paid to the Company itself) reasonably incurred by him or her in connection with or arising out of any action, suit, or proceeding in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee (i) in respect of matters as to which he or she shall be finally adjudged in any such action, suit, or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his or her duty as such member of the Committee or (ii) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Company on the advise of its legal counsel; and provided As amended March 16, 2001 -7- --------------------------------------------------------------------------------   further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee unless, within sixty (60) days after institution of any such action, suit, or proceeding, he or she shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors, or administrators of each such member of the Committee and shall be in addition to all other rights to which such member of the Committee may be entitled as a matter of law, contract, or otherwise.      20. Time of Grant and Exercise.           (a) The granting of an Option pursuant to the Plan shall take place at the time of the Committee’s action, as described in Paragraph 2 hereof; provided, however, that if the appropriate resolutions of the Committee indicate that an Option is to be granted as of and at some future date, the date of grant shall be such future date. In the event action by the Committee is taken by written consent of its members, the action by the Committee shall be deemed to have been taken at the time the last member required for a valid action of the Committee signs the consent.           (b) An Option shall be deemed to be exercised when the Secretary of the Company receives written notice of such exercise from the person entitled to exercise the Option together with payment of the purchase price made in accordance with Paragraph 10 of the Plan.      21. Information Confidential. As partial consideration for the granting of each Option hereunder, the optionee shall agree with the Company that he will keep confidential all information and knowledge which he has relating to the manner and amount of his participation in the Plan; provided, however, that such information may be given in confidence to the optionee’s spouse or to a financial institution to the extent that such information is necessary in order to secure a loan. In the event any breach of this promise comes to the attention of the Board of Directors, it shall take into consideration such breach, in determining whether to recommend the grant of any future Option or Options to such optionee, as a factor militating against the advisability of granting any such future Option or Options to such optionee.      22. Execution of Receipts and Releases. Any payment or any issuance or transfer of shares of Common Stock to the optionee, or to his legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Board of Directors may require any optionee, legal representative, heir, legatee or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine.      23. No Guarantee of Interests. Neither the Board of Directors nor the Company guarantees the Common Stock of the Company from loss or depreciation.      24. Payment of Expenses. All expenses incident to the administration, termination or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company. As amended March 16, 2001 -8- --------------------------------------------------------------------------------        25. Severability. In the event any provision of this Plan shall be held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein.      26. Notice. Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Except as otherwise provided in Paragraph 20 of this Plan, any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered or, whether actually received or not, on the third (3rd) business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or an optionee may change, at any time and from time to time, by written notice to the other, the address which it or he had theretofore specified for receiving notices.      27. Waiver of Notices. Any person entitled to notice hereunder may waive such notice.      28. Successors. The Plan shall be binding upon the Optionee, his heirs, legatees and legal representatives, upon the Company, its successors and assigns and upon the Board of Directors and its successors.      29. Headings. The titles and headings of sections and paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof.      30. Word Usage. Words used in the masculine shall apply to the feminine where applicable and, wherever the context of this Plan dictates, the plural shall be read as the singular and the singular as the plural.      31. Effective Date of Plan. The Plan shall become effective and shall be deemed to have been adopted on April 4, 1997. No Option shall be granted pursuant to the Plan after December 31, 2006. As amended March 16, 2001 -9-
Exhibit 10.42     SECOND AMENDED AND RESTATED   DEFERRED COMPENSATION PLAN   OF   TEXAS ROADHOUSE MANAGEMENT CORP.     July 5, 2007   --------------------------------------------------------------------------------   TABLE OF CONTENTS   Section   Page       1. Purposes 1         1.1 Purposes 1       2. Eligibility and Participation 1         2.1 Eligibility 1           2.2 Participation 1       3. Administration 1         3.1 The Committee 1           3.2 Authority of the Committee 1           3.3 Costs and Expenses 2           3.4 Indemnification 2       4. Deferral Election 2         4.1 Making of Election 2           4.2 Participant Account 3       5. Discretionary Contributions 3         5.1 Discretionary Contributions 3           5.2 Vesting 4       6. Deemed Investments 4         6.1 Investment Options 4           6.2 Selection of Investment Options 4           6.3 Earnings on Deemed Investments 4       7. Payment of Deferred Amounts 4         7.1 Limitation on Payment of Deferred Amounts 4           7.2 Payment Upon Separation from Service 4           7.3 Death or Disability 5           7.4 Scheduled In-Service Distributions 5           7.5 Hardship Withdrawals 5           7.6 Installment Payments 6       8. Change in Control 6         8.1 Benefits Upon a Change in Control 6           8.2 Definition of Change in Control 6       9. Designation of Beneficiary 6         9.1 Designation of Beneficiary 6           i --------------------------------------------------------------------------------   TABLE OF CONTENTS   Section   Page       10. Rabbi Trust 6         10.1 Rabbi Trust 6       11. Plan Year 7         11.1 Plan Year 7       12. Withholding 7         12.1 Withholding 7       13. Miscellaneous 7         13.1 Assignability 7           13.2 Amendment or Termination 7           13.3 Continued Employment 7           13.4 Participant’s Rights Unsecured 7           13.5 Governing Law 7           13.6 ERISA 7           13.7 Construction 8   ii --------------------------------------------------------------------------------   GLOSSARY OF DEFINED TERMS   Defined Term   Section       Beneficiary   9.1 Board   3.1 Change in Control   8.2 Code   7.2 Committee   3.1 Company   1.1 Compensation   4.1(a) Disabled   7.6 Discretionary Contributions   5.1 Election Form   4.1(a) Eligible Employee   2.1 ERISA   3.1 Newly Eligible Employees   4.1(b)(2) Participant   2.2 Participant Account   4.2 Plan   1.1 Plan Year   11.1 Rabbi Trust   10.1 Scheduled Distribution   7.4 Specified Investments   6.1   iii --------------------------------------------------------------------------------   SECOND AMENDED AND RESTATED DEFERRED COMPENSATION PLAN OF TEXAS ROADHOUSE MANAGEMENT CORP.   RECITALS:   A.                                    Texas Roadhouse Management Corp., a Kentucky corporation (“Company”), adopted the Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp. (“Plan”) as of December 12, 2005.   B.                                    It is desired to further amend the Plan in certain respects.   C.                                    The Company therefore desires to amend and restate the Plan in its entirety.   NOW, THEREFORE, the Plan is hereby amended and restated in its entirety to read as follows:   1.    PURPOSES.   1.1  Purposes. The purposes of Plan are to provide a means for a select group of highly compensated employees of the Company to defer a portion of their compensation and to provide flexibility to the Company in attracting and retaining new highly compensated employees.   2.    ELIGIBILITY AND PARTICIPATION.   2.1  Eligibility. Any employee of the Company selected by the Committee (as hereinafter defined) to be a Participant (as hereinafter defined) (“Eligible Employee”) is eligible to participate in the Plan. Key employees selected by the Committee shall be notified by the Committee that they are entitled to be a Participant under the Plan.   2.2  Participation. An Eligible Employee may become a participant in the Plan (“Participant”) by filing an Election Form in accordance with the provisions of Section 4.1. A Participant shall remain a Participant until such time as the Participant has received all payments to which the Participant is entitled under the terms of the Plan or as otherwise provided herein.   3.    ADMINISTRATION.   3.1  The Committee. The Plan shall be administered by a Committee (“Committee”) appointed by the Board of Directors of the Company (“Board”). For purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Committee is the Plan administrator. Any claim for benefits under the Plan shall be made in writing to the Committee. The Committee and the claimant shall follow the claims procedures set forth in Department of Labor Regulation § 2560.503-1.   3.2  Authority of the Committee. The Committee shall have sole discretion to make all determinations which may be necessary or advisable for the administration of the Plan including, but not limited to, selecting key employees of the Company to be Participants,   --------------------------------------------------------------------------------   construing and interpreting the Plan and establishing, amending and rescinding rules and regulations for the Plan’s administration. The Committee may delegate its authority as identified hereunder. All determinations and decisions made by the Committee pursuant to the provisions of the Plan, and all related orders or resolutions of the Board, shall be final, conclusive and binding upon all persons, including the Company, Participants and their Beneficiaries (as hereinafter defined).   3.3  Costs and Expenses. In discharging its duties under the Plan, the Committee may employ such counsel, accountants and consults as it deems necessary or appropriate. The Company shall pay all costs of such third parties and any other expenses incurred by the Committee with respect to the Plan.   3.4  Indemnification. No member of the Committee, nor any officer or employee acting on behalf of the Committee or the Company, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee, and each and every officer or employee of the Company acting on their behalf, shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination or interpretation.   4.   DEFERRAL ELECTION.   4.1  Making of Election.   (a) Except as otherwise provided herein, each Eligible Employee may elect in writing, in the manner and on the form (“Election Form”) prescribed by the Committee, to defer payment of all or any part of the Compensation (as hereinafter defined) which would otherwise be paid to such Eligible Employee by the Company for services rendered. The amount to be deferred shall be expressed as a whole percentage of the Participant’s Compensation, but in no event may such percentage be less than 4%. Notwithstanding the foregoing, no deferral election may reduce a Participant’s compensation from the Company to an amount less than the sum of (i) the applicable employment taxes payable by the Participant with respect to the amount deferred, (ii) withholding from compensation required under the Company’s other benefit plans, and (iii) the income taxes which the Company is required to withhold on the Participant’s taxable compensation. All amounts deferred in accordance with the provisions of this Section 4.1(a), together with the net earnings resulting from the deemed investment of such deferred amounts, shall be fully vested. For purposes of the Plan, the term “Compensation” shall mean all compensation paid to a Participant which is includible on the Participant’s Form W-2, other than automobile allowances and income attributable to options.   (b) An election shall be effective as follows:   (1) Except as provided in Section 4.1(b)(2), if the election is filed on or before 15 days prior to the close of a Plan Year (as hereinafter defined), the election shall be effective with respect to Compensation for the first pay period or bonus period, as applicable, beginning in the following Plan Year.   (2) In the case of a newly hired Eligible Employee, or an employee who newly became an Eligible Employee (“Newly Eligible Employees”), if the election is   2 --------------------------------------------------------------------------------   made within 30 days of the date the person became a Newly Eligible Employee, the election shall be effective (i) with respect to Compensation other than bonuses, with the first pay period beginning on or after the making of the election, and (ii) with respect to bonuses, for any bonus earned for a bonus period beginning after the election is made.   Once an election has been made with respect to Compensation, it shall remain in effect with respect to all future Compensation which would otherwise be paid to the Participant until changed by the filing of a new election by the Participant in the manner provided in Section 4.1(c) or terminated as provided in Section 4.1(d).   (c) If a Participant desires to change (as opposed to terminate) any deferral election, the Participant may do so by the filing of a new Election Form with the Committee at any time on or before 15 days prior to the close of a Plan Year. Such election shall be effective as of the first day of the following Plan Year.   (d) A Participant may terminate the Participant’s deferral election with respect to Compensation (including bonuses) by giving written notice thereof to the Committee at any time on or before 15 days prior to the close of a Plan Year. Such termination shall be effective as of the first day of the following Plan Year. If a Participant has elected to terminate the Participant’s deferral election with respect to Compensation (including bonuses), the Eligible Employee may not again have Compensation deferred until the Plan Year beginning after the Plan Year in which such termination was effective.   4.2  Participant Account. A Participant account (“Participant Account”) shall be established for each Participant. Deferred Compensation will be credited to the Participant’s Participant Account as of the close of the month in which such Compensation would otherwise be payable to the Participant. A Participant Account shall be credited or debited, as applicable, with the net investment return or loss of the deemed investment of the amount in the Participant Account in accordance with the provisions of Section 6.3, and shall be debited for all payments made to the Participant or the Participant’s Beneficiaries. If a Participant elects pursuant to Section 7.6 to receive the payout of their Participant Account other than in a lump sum, the Participant Account may be debited with the additional cost incurred by the Company as a result of such election as determined by the Company in its sole discretion. If the Company, in its sole discretion, decides to make Discretionary Contributions (as hereinafter defined) on behalf of any Participant in accordance with the provisions of Section 5.1, the Participant Account shall also be credited with such Discretionary Contributions.   5.    DISCRETIONARY CONTRIBUTIONS.   5.1  Discretionary Contributions. The Company, in its sole and absolute discretion, may determine to make discretionary contributions (“Discretionary Contributions”) to the Participant Account of one or more Participants. Except with respect to vesting, Discretionary Contributions shall be treated in the same manner as a Participant’s elective deferrals. All Discretionary Contributions shall be deemed invested in the same manner as the balance of the Participant’s Participant Account is invested unless the Participant elects otherwise by notice to the Committee given in the manner provided in Section 6.2.   3 --------------------------------------------------------------------------------   5.2 Vesting. If the Company determines to make Discretionary Contributions with respect to any Participants in accordance with the provisions of Section 5.1, the Committee shall determine, at the time of the making of such Discretionary Contributions, the manner in which such Discretionary Contributions, together with the net earnings resulting from the deemed investment of such Discretionary Contributions, shall vest. Vesting may be based upon years of service, obtaining of performance criteria or any other method that the Committee shall determine.   6.    DEEMED INVESTMENTS.   6.1  Investment Options. The Committee, from time to time, shall determine the investments which the Participants may select to have the amounts in their Participant Accounts deemed invested (“Specified Investments”). The Committee shall have the right to change the Specified Investments in its sole discretion.   6.2  Selection of Investment Options. Participants, at the time of their initial deferral election, shall specify on the Election Form the Specified Investments in which the amounts in their Participant Accounts will be deemed invested. Participants may elect to have all of the amount in their Participant Accounts deemed invested in one Specified Investment or in multiple Specified Investments. All selections of Specified Investments shall be in whole percentages. The Specified Investments selected may be changed by the Participant from time to time. If notice of a change in the selected Specified Investment is received by the Committee prior to the 15th day of the last month of a calendar quarter, the change shall be effective as of the first day of the following calendar quarter, and if received after the 15th day of the last month of the calendar quarter, shall be effective as of the first day of the second following calendar quarter.   6.3  Earnings on Deemed Investments. The earnings on Participants’ deemed investments will be credited to their Participant Accounts as earned. If a Participant changes the Specified Investments in which the amount in the Participant’s Participant Account is deemed invested, such change will be treated as a sale of the former Specified Investment and the profit or loss resulting therefrom debited or credited to the Participant Account as of the effective date of the deemed sale.   7.    PAYMENT OF DEFERRED AMOUNTS.   7.1  Limitation on Payment of Deferred Amounts. No payment may be made from any Participant Account except as provided in this Section 7.   7.2  Payment Upon Separation from Service. Payment of the amount (if Discretionary Contributions have been made, the vested amount) in a Participant Account shall be made to the Participant as soon as administratively possible following the end of the calendar quarter in which the Participant separates from service with the Company (within the meaning of section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (“Code”), and the Regulations promulgated thereunder) for reasons other than death or the Participant becoming Disabled (as hereinafter defined), but in no event later than the close of the second calendar quarter following the separation from service; provided, however, that in the case of a Participant who as of the date of separation from service is a specified employee of the Company within the   4 --------------------------------------------------------------------------------   meaning of section 409A(a)(2)(B)(i) of the Code and the Regulations promulgated thereunder (a key employee of the Company within the meaning of section 416(i) of the Code (without regard to section 416(i)(5) of the Code) during the relevant 12-month period referred to in Treas. Reg. § 1.409A-1(i)(1)), such payment may in no event be made earlier than six months following the date of separation from service. Except as otherwise provided herein, payment shall be made in the form of a lump sum.   7.3  Death or Disability. If a Participant separates from service with the Company by reason of death or becoming Disabled, the amount (if Discretionary Contributions have been made, the vested amount) in such Participant’s Participant Account shall be paid to such Participant or the Participant’s Beneficiary as soon as administratively possible following the end of the calendar quarter in which the death or Disability occurs, but no later than the close of the second calendar quarter following the date of death or Disability. For purposes of the Plan, the term “Disabled” shall have the meaning given such term in section 409A(a)(2)(C) of the Code and the Regulations promulgated thereunder.   7.4  Scheduled In-Service Distributions. A Participant may elect to receive a lump sum distribution of all, but not less than all, of the vested amount in the Participant’s Participant Account by specifying on an Election Form the January 1 of any year which is subsequent to the date the Participant became 59 ½ years old on which the Participant wishes to receive such distribution, which date must be at least one year after the date such Election Form is delivered to the Committee (“Scheduled Distribution”). With respect to amounts in a Participant’s Participant Account as of December 31, 2004, the election must be made, or if an election had been made under this Section 7.4 prior to December 31, 2004, may be changed, at any time prior to December 31, 2005. With respect to amounts deferred subsequent to December 31, 2004, the election must be made prior to any amounts being credited to the Participant’s Participant Account. A Participant may change the date for a Scheduled Distribution to a later date provided that (i) notice thereof is given to the Committee at least one year prior to the previously selected Scheduled Distribution date, and (ii) the new Scheduled Distribution date is at least five years later than the previous Scheduled Distribution date. If a Participant has made an election pursuant to this Section 7.4 and separates from service prior to the Scheduled Distribution date, the distribution shall be made in accordance with the provisions of Sections 7.2 or 7.3, as applicable.   7.5  Hardship Withdrawals. A Participant may request that a distribution be made of some or all of the amount in the Participant’s Participant Account if the Participant is faced with a severe financial hardship due to an unforeseeable emergency. For purposes of the Plan, the term “unforeseeable emergency” shall have the meaning given such term in section 409A(a)(2)(B)(ii)(I) of the Code and the Regulations promulgated thereunder. The Committee shall decide, in its sole and absolute discretion, whether a distribution shall be made pursuant to the provisions of this Section 7.5. In no event will such a distribution be made to the extent the emergency is or may be relieved (i) through reimbursements or compensation from insurance or otherwise, (ii) by liquidation of the Participant’s assets, to the extent such liquidation would not itself cause severe financial hardship, or (iii) cessation of deferrals under the Plan. Furthermore, the amount distributed will in no event exceed the sum of (i) the amount necessary to satisfy the emergency plus (ii) amounts necessary to pay taxes reasonably anticipated as a result of the distribution pursuant to this Section 7.5.   5 --------------------------------------------------------------------------------   7.6  Installment Payments. If (i) at the time a Participant separates from service with the Company (A) the balance in the Participant’s Participant Account equals or exceeds $100,000, and (B) the Participant has been an employee of the Company for at least five years, or (ii) the Participant separates from service with the Company because the Participant was Disabled and (iii) the Participant has timely filed an election with the Committee in accordance with the provisions of this Section 7.6 requesting that the amount in such Participant’s Participant Account be paid in installments, then the amount in such Participant’s Participant Account, or that portion with respect to which an installment election is in effect, as applicable, shall be paid in quarterly installments (not to exceed 20) as shall have been elected by the Participant. If a Participant dies prior to receiving all of the installments to which the Participant is entitled, the remaining installments shall be paid to the Participant’s Beneficiary. With respect to amounts in a Participant’s Participant Account as of December 31, 2004, an election to receive installment payments must be made, or if an election had been made under this Section 7.6 prior to December 31, 2004, may be changed or terminated, at any time prior to December 31, 2005. With respect to amounts deferred subsequent to December 31, 2004, the election under this Section 7.6 must be made at the time the election to defer the Compensation is made.   8.    CHANGE IN CONTROL.   8.1  Benefits Upon a Change in Control. Upon a Change in Control (as hereinafter defined), the amount in the Participant Accounts shall be paid out as soon as administratively feasible (but in no event later than 30 days following the Change in Control) in a single lump sum.   8.2  Definition of Change in Control. For purposes of the Plan, the term “Change in Control” shall have the meaning given the term “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” in the Regulations promulgated under section 409A(a)(2)(A)(v) of the Code.   9.    DESIGNATION OF BENEFICIARY.   9.1  Designation of Beneficiary. A Participant shall be entitled to designate a beneficiary or beneficiaries to receive the payments of the amount in the Participant’s Participant Account in the case of the Participant’s death (“Beneficiary”). Such designation may include a designation of a contingent Beneficiary or Beneficiaries. The Participant may, from time to time, change such designation of Beneficiary or Beneficiaries as the Participant shall desire. Notice of the designation shall be given in writing by the Participant to the Committee and the trustee of the Rabbi Trust (as hereinafter defined). If no Beneficiary is designated, the Beneficiary shall be deemed to be the Participant’s estate.   10.    RABBI TRUST.   10.1 Rabbi Trust. All amounts deferred by a Participant shall be contributed by the Company at least monthly to a trust (“Rabbi Trust”) of which the Company will be considered the owner for Federal income tax purposes. The Rabbi Trust will be established to provide a source of funds to enable the Company to make payments to the Participants and their Beneficiaries pursuant to the terms of the Plan. Payments to which Participants are entitled   6 --------------------------------------------------------------------------------   under the terms of the Plan shall be paid out of the Rabbi Trust to the extent of the assets therein. The assets of the Rabbi Trust will be subject to the claims of general creditors of the Company.   11.           PLAN YEAR.   11.1     Plan Year. The fiscal year of the Plan (“Plan Year”) shall be the fiscal year of the Company, which is currently a fiscal year ending on the last Tuesday in December.   12.           WITHHOLDING.   12.1       Withholding. The Company shall be entitled to withhold from all amounts otherwise payable to a Participant or Beneficiary hereunder such amount as the Company is required by law to withhold with respect to such payments. The Company recognizes that amounts deferred pursuant to the Plan will be treated as wages for Social Security and Medicare tax purposes when such amounts are credited to a Participant Account. As a condition to becoming a Participant, an Eligible Employee shall be deemed to have agreed that the Company shall be entitled to withhold from the Participant’s Compensation all amounts required to be withheld by law with respect to amounts deferred under the Plan.   13.           MISCELLANEOUS.   13.1        Assignability. No right to receive payments hereunder shall be transferable or assignable by a Participant except by will or by the laws of descent and distribution.   13.2        Amendment or Termination. The Plan may be amended, modified or terminated by the Board at any time or from time to time. No amendment, modification or termination shall, without the consent of a Participant, adversely affect such Participant’s existing rights under the Plan.   13.3        Continued Employment. Nothing in the Plan, nor any action taken under the Plan, shall be construed as giving any Participant a right to continue as an employee of the Company.   13.4        Participant’s Rights Unsecured. The right of any Participant to receive payment of deferred amounts under the provisions of the Plan shall be an unsecured claim against the general assets of the Company. The maintenance of individual Participant Accounts is for bookkeeping purposes only. The Company is not obligated to acquire or set aside any particular assets for the discharge of its obligations, nor shall any Participant have any property rights in any particular assets held by the Company, whether or not held for the purpose of funding the Company’s obligations hereunder.   13.5        Governing Law. To the extent not preempted by ERISA, the Plan shall be governed by, and construed in accordance with, the laws of the Commonwealth of Kentucky without regard to its conflict of laws rules.   13.6        ERISA. It is intended that the Plan be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees of the Company. As such, the Plan is intended to be exempt from certain otherwise   7 --------------------------------------------------------------------------------   applicable provisions of Title I of ERISA, and any ambiguities in construction shall be resolved in favor of an interpretation which will effectuate such intentions.   13.7         Construction. The Plan is intended to meet the requirements of section 409A of the Code and the Regulations promulgated thereunder, and any ambiguities in construction shall be resolved in favor of an interpretation which will effectuate such intention.   IN WITNESS WHEREOF, the Company has caused this Second Amended and Restated Plan to be executed as of the 5 day of July, 2007, being the date this Second Amended and Restated Plan was approved by the Board.     TEXAS ROADHOUSE MANAGEMENT CORP.           By: /s/ W. Kent Taylor   Title: Chairman   8 --------------------------------------------------------------------------------   FIRST AMENDMENT TO SECOND AMENDED AND RESTATED DEFERRED COMPENSATION PLAN OF TEXAS ROADHOUSE MANAGEMENT CORP.   RECITALS:   A.                                    Texas Roadhouse Management Corp., a Kentucky corporation (“Company”), adopted the Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp. (“Plan”) as of July 5, 2007.   B.                                    It is desired to further amend the Plan in certain respects.   NOW, THEREFORE, the Plan is hereby amended as follows:   1. Section 4.1(b)(1) is hereby amended in its entirety to read as follows:   “Except as provided in Section 4.1(b)(2), if the election is filed prior to the close of a Plan Year (as hereinafter defined), the election shall be effective with respect to Compensation for the first pay period or bonus period, as applicable, beginning in the following Plan Year.”   2. Section 11.1 of the Plan is hereby amended in its entirety to read as follows:   “The fiscal year of the Plan (“Plan Year”) shall be the calendar year.”   IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed as of the 19th day of December, 2007, being the date this First Amendment was approved by the Board of Directors of the Company.     TEXAS ROADHOUSE MANAGEMENT CORP.           By: /s/ W. Kent Taylor   Title: Chairman   --------------------------------------------------------------------------------   SECOND AMENDMENT TO SECOND AMENDED AND RESTATED DEFERRED COMPENSATION PLAN OF TEXAS ROADHOUSE MANAGEMENT CORP.   RECITALS:   A.                                    Texas Roadhouse Management Corp., a Kentucky corporation (“Company”), adopted the Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp. as of July 5, 2007, which was amended by a First Amendment thereto (“Plan”).   B.                                    It is desired to further amend the Plan to provide Participants with an opportunity to revise installment elections in accordance with the 2008 transition relief under section 409A of the Code authorized by the Internal Revenue Service in Notice 2007-86.   Now, THEREFORE, the Plan is hereby amended as follows:   1. Section 7.6 of the Plan is hereby amended by adding at the end thereof the following:   “Notwithstanding anything in this Section 7.6 to the contrary, prior to December 31, 2008, a Participant shall be entitled to make an election to have the amount in such Participant’s Participant Account paid in installments, or, if an installment election was previously made by such Participant, to change the number of quarterly installments.”   IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed as of the 31 day of December, 2008, being the date this Second Amendment was approved by the Board of Directors of the Company.     TEXAS ROADHOUSE MANAGEMENT CORP.           By: /s/ Scott M. Colosi   Title: Scott M. Colosi, President, CFO   --------------------------------------------------------------------------------
Exhibit 10.32 PURCHASE AGREEMENT (TRANCHE 3 OF 4)      PURCHASE AGREEMENT, dated as of October 24, 2007 (the “Agreement”), by and between Cincinnati Financial Corporation (the “Issuer”), and UBS AG, London Branch (“UBS”) acting through UBS Securities LLC (“Agent”) as agent. W I T N E S S E T H      WHEREAS, the Issuer has publicly announced its intention to repurchase shares of its common stock, par value $2.00 per share (the “Common Stock”), from time to time (the “Repurchase Program”); and      WHEREAS, the Issuer desires to enter into the Agreement with UBS in order to effect the Repurchase Program;      NOW, THEREFORE, in consideration of the premises, the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:      Section 1. Definitions.      As used herein the following terms shall have the meanings set forth below:      “Announcement Date” means in respect of a Merger Event, the date of the first public announcement of a firm intention to merge or to make an offer that leads to the Merger Event, as determined by the Calculation Agent.      “Bankruptcy” means the Issuer is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured   --------------------------------------------------------------------------------   party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.      “Bloomberg Screen Volume at Price Page” shall mean the display designated as page “CINF Equity AQR” on the Bloomberg Financial Service or such page as may replace the Volume at Price page on that service for the purpose of displaying daily volume and volume-weighted trading prices of equity securities during the normal trading hours of 9:30 a.m. to 4:00 p.m., New York Time or, if such service does not then publish daily volume and volume-weighted trading prices of the Common Stock, such other page and services selected by the Calculation Agent that reports daily volume and weighted trading prices of the Common Stock.      “Borrowed Shares” means, as of any date, the number of Shares borrowed by UBS in connection with this Transaction, as determined by the Calculation Agent.      “Calculation Agent” shall mean UBS Securities LLC.      “Calculation Date” means the first Trading Day after the Last Averaging Date.      “Closing Price” of the Common Stock on any day shall mean the last reported sales price regular way on such day or, in case no such sales price is reported on such day, the average of the reported closing bid and asked prices regular way of the Common Stock, in each case on the Exchange, or, if not then traded on the Exchange, the principal securities exchange or quotation system on which the Common Stock is then listed or admitted to trading, or, if not then listed or admitted to trading on a securities exchange or quotation system, the average of the closing bid and asked prices of the Common Stock in the over-the-counter market on the day in question as reported by the National Quotations Bureau Incorporated, or a similarly generally accepted reporting service, or, if not so available in such manner, as furnished by any New York Stock Exchange member firm selected by the Calculation Agent.      “Combined Consideration” means New Shares in combination with Other Consideration.      “Cross Default” means the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of the Issuer under one or more agreements or instruments relating to the payment of money in an aggregate amount of not less than $10 million which has resulted in such agreement or instrument becoming, or becoming capable at such time of being declared, due and payable before it would otherwise have been due and payable or (2) a default by the Issuer in making one or more payments on the due date thereof in an aggregate amount of not less than $10 million 2 --------------------------------------------------------------------------------   under such agreements or instruments (after giving effect to any applicable notice requirement or grace period).      “Determined Amount” has the meaning ascribed to it in Section 3(d).      “Discount” means the product of (a) 1.30%, and (b) the arithmetic average of daily volume-weighted average prices of Shares on each Trading Day from the First Averaging Date up to and including the Last Averaging Date, as listed on Bloomberg Screen Volume at Price Page.      “Dividend Amount” shall mean, as of each of the dates set out below (each a “Dividend Adjustment Date”), the amount set forth opposite such Dividend Adjustment Date:           Dividend Adjustment Date   Dividend Amount The date immediately preceding the ex-dividend date for the Issuer’s regularly scheduled fourth quarter 2007 dividend, (such ex-dividend date currently anticipated to be December 20, 2007)   $ 0.355        “Dividend Event” means the payment of an ordinary or extraordinary dividend of distribution by the Issuer in any of the time periods specified above with a value, as determined by the Calculation Agent in good faith, that exceeds the amount specified above for such period by $0.01 or more.      “Early Closure” means the closure on any Trading Day of the Exchange or any Related Exchange(s) prior to its regularly scheduled closing time.      “Excess Shares” means the number of Shares (if any) equal to (a)(i) the Settlement Amount divided by (ii) the Reference Price minus (b) the Determined Amount.      “Exchange” means the NASDAQ Global Select Market or any successor thereto or any substitute exchange or quotation system to which trading in the Shares has temporarily relocated (provided that the Calculation Agent has determined that there is comparable liquidity relative to the Shares on such temporary substitute exchange or quotation system as on the original Exchange).      “Exchange Disruption” means any event (other than an Early Closure) that disrupts or impairs (as determined by the Calculation Agent) the ability of market participants in general (i) to effect transactions in, or obtain market values for, the Shares on the Exchange, or (ii) to effect transactions in, or obtain market values for, futures or options contracts relating to the Shares on the Related Exchange(s). 3 --------------------------------------------------------------------------------        “Execution Period” shall mean the period commencing on the First Averaging Date and ending on the earliest of (i) the Last Averaging Date, (ii) the Termination Date or (iii) the Termination Event Termination Date.      “Failure to Pay or Deliver” means failure by the Issuer to make, when due, any payment under this Agreement or any delivery of Shares under this Agreement required to be made by it if such failure is not remedied on or before the third Trading Day after notice of such failure is given to the Issuer by UBS or the Agent.      “Final VWAP-Minus Price” means (i) the arithmetic average of daily volume-weighted average prices of Shares on each Trading Day from the First Averaging Date up to and including the Last Averaging Date, as listed on Bloomberg Screen Volume at Price Page, minus (ii) the Discount.      “First Averaging Date” means October 25, 2007; provided, however, that the First Averaging Date may be extended by the Calculation Agent in its discretion by one Trading Day for each Scheduled Trading Day following the date hereof and prior to the First Averaging Date that ceases to be a Scheduled Trading Day or is not a Trading Day due to the occurrence of a Market Disruption Event.      “Hedge Account Shares” means, as of any date, the Number of Shares minus the Borrowed Shares.      “Last Averaging Date” means a trading day between and including December 5, 2007 and January 30, 2008, as determined by UBS; provided, however, that each of such dates may be extended by the Calculation Agent in its discretion by one Trading Day for each Scheduled Trading Day during the Execution Period that ceases to be a Scheduled Trading Day or is not a Trading Day due to the occurrence of a Market Disruption Event. Notice of the Last Averaging Date shall be given by UBS not later than 8:00 pm New York time on the Trading Day following the Last Averaging Date. Notice shall be irrevocable once provided to Issuer. If no notice is provided, then the Last Averaging Date shall be January 30, 2008.      “Market Disruption Event” means the occurrence or existence of (i) a Trading Disruption, (ii) an Exchange Disruption or (iii) an Early Closure, which in each case the Calculation Agent determines is material.      “Merger Event” means, in respect of any relevant Shares, any (i) reclassification or change of such Shares that results in a transfer of or an irrevocable commitment to transfer all of such Shares outstanding, (ii) consolidation, amalgamation or merger of the Issuer with or into another entity (other than a consolidation, amalgamation or merger in which such Issuer is the continuing entity and which does not result in any such reclassification or change of all of such Shares outstanding) or (iii) other takeover offer for such Shares that results in a transfer or an irrevocable commitment to transfer all such Shares (other than such Shares owned or controlled by the offeror), in each case if the Merger Date is on or before the Last Averaging Date. 4 --------------------------------------------------------------------------------        “Net Share Settlement” shall mean settlement by the Issuer of its obligations hereunder in accordance with Section 3(c).      “New Shares” means shares (whether of the offeror or a third party).      “Number of Shares” has the meaning ascribed to it in Section 2.      “Other Consideration” means cash and/or any securities (other than New Shares) or assets (whether of the offeror or a third party).      “Payment Date” has the meaning ascribed to it in Section 3(b).      “Principal Account” means the notional principal account referred to in Section 3(a).      “Purchase Price” means the product of (a) the Number of Shares and (b) the Closing Price of the Common Stock on October 24, 2007.      “Purchasing Date” means any Trading Day during the Execution Period.      “Reference Price” means the Closing Price of the Common Stock on the last Trading Day of the Execution Period.      “Related Exchange(s)” means each exchange or quotation system where trading has a material effect (as determined by the Calculation Agent) on the overall market for futures or options contracts relating to the Shares.      “Scheduled Trading Day” means any day on which the Exchange and each Related Exchange are scheduled to be open for trading for their respective regular trading sessions.      “Settlement Amount” shall mean (i) in the case of the Issuer, the amount of any negative balance in the Principal Account as of the Calculation Date, and (ii) in the case of UBS, the amount of any positive balance in the Principal Account as of the Calculation Date, in each case as determined by the Calculation Agent, and as adjusted by the Calculation Agent to reflect the accrual of interest thereon at the rate set forth for that day opposite the caption “Open” under the caption “Federal Funds” as displayed on Bloomberg Page BTMM, from and excluding the third Trading Day following the Calculation Date hereunder to and including the actual Payment Date, if the Payment Date occurs following the third Trading Day following the Calculation Date hereunder.      “Share-for-Combined” means, in respect of a Merger Event, that the consideration for the relevant Shares consists of Combined Consideration.      “Share-for-Other” means, in respect of a Merger Event, that the consideration for the relevant Shares consists solely of Other Consideration. 5 --------------------------------------------------------------------------------        “Share-for-Share” means, in respect of a Merger Event, that the consideration for the relevant Shares consists (or, at the option of the holder of such Shares, may consist) solely of New Shares.      “Shelf Registration” means a registration statement in form and substance reasonably acceptable to UBS for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act, registering UBS’s resale, in any manner or manners designated by UBS, of all the Stock Settlement Shares, any Make-Whole Shares, and any other Shares held by UBS in connection with this transaction which, in the opinion of counsel to UBS, are required to be included in the Shelf Registration to be resold by UBS to the public.      “Short Squeeze” shall mean a situation where (i) UBS has determined, in its judgment, that it is unable to hedge its exposure to the transaction contemplated hereby because of the lack of sufficient shares of Common Stock being made available for borrowing from lenders, including without limitation UBS’s being required to redeliver shares of Common Stock to any lender at the demand of such lender and not being able to meet such obligation in full in a timely manner by reasonable efforts to borrow shares of Common Stock from another lender or lenders, or (ii) UBS would incur a cost to borrow shares of Common Stock to hedge its exposure to the transaction contemplated hereby that is greater than a rate equal to 50 basis points per annum.      “Stock Settlement Amount” shall mean (i) in the case that the Issuer is required to pay the Settlement Amount to UBS and has elected to pay the Settlement Amount by delivery of shares of Common Stock to UBS pursuant to Section 3(c), an amount, determined by the Calculation Agent, equal to the Settlement Amount to be paid by the Issuer pursuant to Section 3(b), divided by the Reference Price, and (ii) in the case that UBS is required to pay the Settlement Amount to the Issuer and the Issuer has elected to require UBS to satisfy the obligation by delivery of shares of Common Stock to the Issuer pursuant to Section 3(h), an amount, determined by the Calculation Agent, equal to the Settlement Amount to be paid by UBS pursuant to Section 3(b), divided by the weighted average price per share actually paid by UBS to purchase such Stock Settlement Shares.      “Stock Settlement Shares” shall mean such whole number of shares included in the Stock Settlement Amount.      “Termination Date” has the meaning ascribed to it in Section 4(b).      “Termination Event” shall mean the occurrence of a (i) Bankruptcy, (ii) Cross Default, (iii) Failure to Pay or Deliver, (iv) Short Squeeze or (v) Dividend Event.      “Termination Event Termination Date” has the meaning ascribed to it in Section 8 below.      “Trading Day” shall mean any day on which the Common Stock is traded on the Exchange or, if not then traded on the Exchange, the principal securities exchange or quotation 6 --------------------------------------------------------------------------------   system on which such securities are then traded or, if not then traded on a securities exchange or quotation system, in the over-the-counter market, and on which no Market Disruption Event occurs.      “Trading Disruption” means any suspension of or limitation imposed on trading by the Exchange or Related Exchange or otherwise and whether by reason of movements in price exceeding limits permitted by the Exchange or Related Exchange or otherwise (i) relating to the Shares on the Exchange or (ii) in futures or options contracts relating to the Shares on any Related Exchange.      Section 2. Purchase and Sale.      Subject to the terms and conditions set forth herein, UBS agrees to sell to the Issuer, and the Issuer agrees to purchase from UBS, 1,000,000 shares (the “Number of Shares”) of Common Stock (the “Shares”) at a purchase price per Share equal to the Closing Price of the Common Stock on October 24, 2007 or on such other date and at such other time as the parties may mutually agree (the “Execution Date”). At 4:00 P.M. on the third Trading Day after the Execution Date (the “Settlement Date”), UBS shall deliver or cause to be delivered the Shares through the facilities of The Depository Trust Company to the Issuer against payment by the Issuer of the Purchase Price by wire transfer of immediately available funds. The parties understand and agree that the delivery of the Shares by or on behalf of UBS upon the payment of the aggregate Purchase Price by the Issuer is irrevocable and that as of the Settlement Date the Issuer will be the sole beneficial owner of the Shares for all purposes.      As compensation to UBS for its commitment and services hereunder, the Issuer on the Settlement Date will pay to UBS by wire transfer of immediately available funds an additional amount equal to $143,642.36. This amount payable to UBS shall not be subject to refund.      Section 3. Settlement.      (a) On the Settlement Date, the Calculation Agent shall establish a notional Principal Account in an amount equal to the Purchase Price. The Calculation Agent shall adjust the Principal Account daily as follows: The Principal Account shall be reduced on the third day following the Last Averaging Date in an amount equal to the product of (x) the Number of Shares and (y) the Final VWAP-Minus Price. On the first Trading Day immediately following the last day of the Execution Period, the Calculation Agent will calculate the Settlement Amount and, if applicable, the Stock Settlement Amount, notify (the “Settlement Amount Notification”) the Issuer of the Settlement Amount and, if applicable, the Stock Settlement Amount and provide a schedule of its calculations thereof. The Calculation Agent shall respond promptly to all questions raised by the Issuer relating to such calculations. If the Issuer objects to the calculation of the Settlement 7 --------------------------------------------------------------------------------   Amount, the Issuer shall promptly notify the Calculation Agent, and the Issuer and UBS agree to use their good faith best efforts to reach an agreement as to the Settlement Amount. In the further event that the Issuer and UBS are not able to reach an agreement, the Issuer and UBS shall appoint a third party with sufficient expertise to determine the calculation of the Settlement Amount, and such calculations shall be binding on both parties.      (b) On the third Trading Day immediately following the Calculation Date (the “Payment Date”), if the Settlement Amount is positive, UBS shall pay the Settlement Amount to the Issuer and, if the Settlement Amount is negative, the Issuer shall pay the absolute value of such Settlement Amount to UBS. Except as provided in paragraphs (c) and (d) of this Section, all payments to be made under this Section 3 shall be made on the Payment Date by wire transfer of immediately available funds.      (c) If the Issuer is required to pay the Settlement Amount to UBS pursuant to paragraph (b) of this Section, the Issuer may, at its option, satisfy the obligation by the delivery to UBS of a number of whole shares of Common Stock (and a payment of cash in lieu of fractional shares, if any) equal to the Stock Settlement Amount. In order to exercise this option, the Issuer must (each, a “Condition on Net Share Settlement”) (i) notify UBS of its election to have any Settlement Amount payable in shares of Common Stock no later than 10 days prior to December 5, 2007 (the “Stock Election Notice”), (ii) enter into a registration rights agreement with UBS in form and substance acceptable to UBS (the “Registration Rights Agreement”) not later than 7 days prior to December 5, 2007, which agreement will contain, among other things, customary representations and warranties and indemnification and other rights, including rights to customary opinions of counsel and accountant’s “comfort letters,” relating to the registration of the Stock Settlement Shares, the Make-whole Shares and any additional shares of Common Stock as to which UBS is named as a selling securityholder in the Shelf Registration (the “Registered Shares”); (iii) the Shelf Registration shall have been filed with the Securities and Exchange Commission not less than five Trading Days prior to December 5, 2007; and (iv) maintain the effectiveness of the Shelf Registration until all Registered Shares have been sold by UBS. Subject to paragraph 3(g) below, if any of the conditions in the preceding sentence are not met, the provisions of this paragraph (c) shall be inoperative and the Issuer shall be obligated to pay any applicable Settlement Amount by wire transfer of immediately available funds. If the Issuer complies with all of its obligations under this paragraph (c), then at 9:30 A.M. on the Payment Date, the Issuer shall deliver to UBS (i) a certificate or certificates representing the fully paid and nonassessable Stock Settlement Shares, in such denominations and in such names as UBS may specify and (ii) the cash payment, if any, in lieu of fractional shares by wire transfer of immediately available funds. The parties understand and agree that the deliveries made pursuant to the preceding sentence and the following paragraph shall be irrevocable and shall satisfy in full the Issuer’s obligations under this Section 3. If the Issuer delivers Stock Settlement Shares to UBS pursuant to this paragraph (c) and within ten Trading Days after the Payment Date, UBS resells all or any portion of the Stock Settlement Shares and the net proceeds received by UBS upon resale of such shares exceeds the Settlement Amount (or if less than all of the Stock Settlement Shares are resold, the applicable pro rata portion of the Settlement Amount), UBS shall promptly refund in cash such 8 --------------------------------------------------------------------------------   difference to the Issuer; provided that UBS may, at its option, satisfy its obligation under this sentence by returning to the Issuer any portion of the Stock Settlement Shares that would, if sold, have resulted in net proceeds in excess of the Settlement Amount. In the event that such net proceeds are less than the Settlement Amount (or if less than all of the Stock Settlement Shares are resold, the applicable pro rata portion of the Settlement Amount), the Issuer shall pay in cash or additional shares of Common Stock (the “Make-whole Shares”) such difference (the “Make-whole Amount”) to UBS promptly after receipt of notice thereof. In the event that Issuer elects to pay the Make-whole Amount in additional shares of Common Stock, the requirements set forth in this paragraph (c) with respect to payment of the Settlement Amount in Shares, including Make-whole requirements, shall apply, such that UBS shall pay to the Issuer any such excess and the Issuer shall pay to UBS in cash or Make-Whole Shares any additional Make-Whole Amount. In calculating the net proceeds from the resale of any Stock Settlement Shares there shall be deducted from such proceeds any amount equal to the customary underwriting discount or commission for underwritten offerings of common stock by companies comparable to the Issuer multiplied by the total number of Shares sold for the account of UBS pursuant to a Shelf Registration.      (d) Notwithstanding any other provision in this Agreement, if Issuer exercises its right pursuant to Section 3(c) above, Issuer shall not be obliged to deliver, in connection with this Agreement, in excess of 3,000,000 shares of Common Stock, as recalculated from time to time (the “Determined Amount”). In the event that, but for this Section 3, Issuer would be obliged to deliver a number of shares of Common Stock equal to the Determined Amount plus the Excess Shares, Issuer agrees to (x) satisfy its remaining obligation by cash payment or; (y) (i) use its best efforts to increase its number of authorized shares, thereby increasing the Determined Amount, to the extent necessary so that, but for this Section 3, the number of shares of Common Stock Issuer would be obliged to deliver does not exceed the (recalculated) Determined Amount and (ii) allocate such newly authorized shares of Common Stock in satisfaction of Issuer’s delivery obligations under this Agreement in priority to any other use of such Common Stock. For the avoidance of doubt, the obligation of Issuer to so use its best efforts is an ongoing obligation.      (e) Issuer hereby represents and warrants that it will: (i) calculate the Determined Amount based on the maximum amount able to be calculated in accordance with EITF 00-19 or any successor financial statement guidance; and (ii) in respect of all equity derivative transactions in respect of which Issuer’s equity securities constitute (all or part of) the instruments underlying such transactions (the “Derivative Trades”), use the same methodology to derive the Determined Amount (howsoever described) applicable to each Derivative Trade as is used to derive the Determined Amount for this Agreement.      (f) UBS agrees that, in respect of any obligations Issuer has duly elected be satisfied pursuant to Section 3(c) above, in the event of Issuer’s bankruptcy, UBS 9 --------------------------------------------------------------------------------   shall not have rights in bankruptcy that rank senior to the rights in bankruptcy of common shareholders of Issuer.      (g) If the Issuer has used its best efforts to satisfy the Conditions on Net Share Settlement but has been unable to because the Shelf Registration is not declared effective by the SEC within the time set out in paragraph 3(c) (or, where UBS has previously agreed to extend such period based on a request by the Issuer pursuant to paragraph 3(g)(ii), within such period as extended pursuant to paragraph 3(g)(ii)), then the Issuer may elect to:           (i) deliver the relevant number of Shares to UBS in which case:                (A) the day on which the Issuer makes such an election to deliver such Shares is the “Issuer Election Date”, and                (B) Issuer shall withdraw any Registration Statement filed with the SEC in connection with the Shares, and                (C) Issuer will enter into a private placement purchase agreement with UBS in form and substance acceptable to UBS no later than the next Trading Day following the Issuer Election Date, and                (D) Issuer shall deliver to UBS such Shares on the Settlement Date which, for the purposes of this paragraph 3(g)(i)(D), shall be the third Trading Day following the Issuer Election Date, and                (E) in addition to any Make-whole Amount payable by Issuer pursuant to paragraph 3(c) herein, Issuer shall deliver to UBS such additional Shares until UBS has realized actual net proceeds upon resale of such Shares equal to the Settlement Amount. At its election, UBS may by a written notice to Issuer retain a number of Shares delivered by Issuer pursuant to this paragraph 3(g)(i). If UBS so elects, UBS shall be deemed to have sold each such retained Share for an amount equal to the price per Share obtained by UBS for the last Share sold by UBS prior to sending written notice of its intention to retain Shares to Issuer. In no event will UBS be obligated to exercise its right to retain Shares; or           (ii) request UBS to extend the period within which the Registration Statement is to be declared effective by the SEC for a further period specified in writing by UBS at the time of such extension.      (h) If UBS is required to pay the Settlement Amount to the Issuer pursuant to paragraph (b) of this Section, the Issuer may, at its option, elect that UBS satisfy the obligation by the delivery to the Issuer of a number of whole shares of Common Stock (and a payment of cash in lieu of fractional shares, if any) equal to the Stock Settlement Amount. In order to exercise this option, the Issuer must notify UBS of its election to have any Settlement Amount payable in shares of Common Stock no later than 15 days prior to the Payment Date (the “Stock Election Notice”). If the condition in the preceding sentence is not met, the provisions of this paragraph (h) shall be inoperative and UBS shall be obligated to pay any applicable Settlement Amount by wire transfer of immediately available funds. If the Issuer complies with all of its obligations under this paragraph (h), then at 9:30 A.M. on the Payment Date, UBS shall deliver to the Issuer (i) a certificate or certificates representing the fully paid and nonassessable Stock Settlement Shares, and (ii) the cash payment, if any, in lieu of 10 --------------------------------------------------------------------------------   fractional shares by wire transfer of immediately available funds. The parties understand and agree that the deliveries made pursuant to the preceding sentence shall be irrevocable and shall satisfy in full UBS’ obligations under this Section 3.      Section 4. Anti-dilution Adjustments.      (a) Subdivisions and Combinations of Common Stock. In the event that the outstanding shares of the Common Stock shall be subdivided or split into a greater number of shares of Common Stock where the effective date of such subdivision or the record date for such split occurs during the Execution Period, the number of shares of Common Stock referred to herein shall be deemed to be proportionately increased and the Final VWAP-Minus Price and Discount shall be deemed to be proportionately decreased; conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock through a combination of shares of Common Stock or a reverse stock split where the effective date of such combination or the record date for such reverse stock split occurs during the Execution Period, the number of shares of Common Stock referred to herein shall be deemed to be proportionately decreased and the Final VWAP-Minus Price and Discount shall be deemed to be proportionately increased. Any adjustment pursuant to this paragraph (a) shall become effective (i) in the case of a subdivision or combination of the Common Stock, at the close of business on the record date for such subdivision or combination or (ii) in the case of a stock split or reverse stock split, at the split, at the close of business on the record date for such stock split or reverse stock split.      (b) Merger Events. In respect of each Merger Event, UBS and the Issuer or the person formed by such consolidation or resulting from such merger or which acquired such assets or which acquires the Issuer’s Common Stock, as the case may be, shall negotiate in good faith to amend this Agreement to give appropriate effect to such transaction. In the event that the parties are unable to reach an agreement ten (10) Trading Days prior to the effective date of such transaction (the “Termination Date”), (i) the Execution Period shall terminate on the Termination Date, (ii) the Principal Account shall be reduced on such date by an amount equal to the product of (x) an amount equal to the cash and fair market value (as determined by the Issuer’s Board of Directors whose good faith determination shall be conclusive and binding) of the securities and/or property payable or distributable upon such transaction in respect of one share of Common Stock and (y) the number of Borrowed Shares as of such date, and (iii) the Settlement Amount shall be further adjusted by the Calculation Agent by the amount that the Calculation Agent reasonably determines in good faith to be UBS’s total losses and costs in connection with the early termination of this Agreement, including any loss of bargain, cost of funding, or loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position.      If payment is required of Issuer in connection with a Merger Event, the Issuer shall have the right, in its sole discretion, to elect (the “Extraordinary Transaction Election”) to satisfy any such payment obligation by Net Share Settlement of this Transaction PROVIDED THAT, in connection with a “Share-for-Combined” Merger Event or “Share-for-Other” Merger Event, the Extraordinary Transaction Election is available to satisfy only the percentage of such payment obligation equal to the percentage of the non-cash consideration over the total 11 --------------------------------------------------------------------------------   Combined Consideration (in the case of a “Share-for-Combined” Merger Event) or total Other Consideration (in the case of a “Share-for-Other” Merger Event). The remaining percentage of such payment obligation must be satisfied in cash. The Issuer shall make any election to settle the Transaction by way of Net Share Settlement within two Trading Days of the Announcement Date but in any event not less than twenty Trading Days prior to the effective date of such merger.      (c) Tender Offers. In the event an offer is made to the holders of Common Stock to tender shares of Common Stock for cash, UBS may, in its discretion (i) accelerate the Last Averaging Date or (ii) adjust the Number of Shares. UBS shall notify the Issuer in writing as to the terms of any adjustment made pursuant to this Section 4(c) no later than 5 days after the tender offer is made.      (d) Other Events. In the event of any corporate event involving the Issuer or the Common Stock not specifically addressed in subsections (a), (b) or (c) of this Section 4 or in the event that the Calculation Agent, in its good faith judgment, determines that the adjustments described in subsections (a), (b) or (c) of this Section 4 will not result in an equitable adjustment of the terms of the transaction described herein, and provided that, in each case, such corporate event impacts the rights or obligations of a holder of Common Stock, the terms of the transaction described herein shall be subject to adjustment by the Calculation Agent (including, without limitation, the First Averaging Date, the Last Averaging Date and the Number of Shares) as in the exercise of its good faith judgment it deems appropriate under the circumstances in order to result in an equitable adjustment to this transaction. In the event that the Issuer objects to the adjustments, the Issuer shall promptly so notify the Calculation Agent and UBS, and the Issuer and UBS agree to use their good faith best efforts to reach an agreement as to the adjustment. In the further event that the Issuer and UBS are not able to reach an agreement, the Issuer and UBS shall appoint a third party with sufficient expertise to determine the adjustment and such adjustment shall be binding on both parties.      Section 5. Acknowledgement.      The Issuer acknowledges and agrees that it is not relying, and has not relied, upon UBS or Agent with respect to the legal, accounting, tax or other implications of this Agreement and that it has conducted its own analysis of the legal, accounting, tax and other implications of this Agreement. The Issuer further acknowledges and agrees that neither UBS nor Agent have acted as its advisor in any capacity in connection with this Agreement or the transactions contemplated by this Agreement. The Issuer acknowledges that neither UBS nor Agent is acting as the agent for the Issuer in effecting any purchase of Common Stock pursuant to this Agreement. The Issuer understands and acknowledges that UBS and its affiliates may from time to time effect transactions, for their own account or the account of customers, and hold positions, in securities or options on securities of the Issuer and that UBS and its affiliates may continue to conduct such transactions during the Execution Period. The Issuer understands and acknowledges that UBS and its affiliates intend to engage in hedging activity that could affect the market for such securities and/or the Common Stock that is the subject of this transaction, and consequently the cost or proceeds to the Issuer hereunder. 12 --------------------------------------------------------------------------------        Section 6. Representations and Warranties.      (a) The Issuer hereby represents and warrants to UBS that:           (i) it has (or, in the case of the Registration Rights Agreement, will have when and if executed) all power and authority to enter into this Agreement and the Registration Rights Agreement and the transactions contemplated hereby and thereby;           (ii) this Agreement has been duly authorized, validly executed and delivered by the Issuer and constitutes a valid and legally binding obligation of the Issuer enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles;           (iii) the Registration Rights Agreement, when and if executed and delivered pursuant to Section 3(c) hereof, shall have been duly authorized, validly executed and delivered by the Issuer and shall constitute a valid and legally binding obligation of the Issuer enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles;           (iv) if Stock Settlement Shares are delivered pursuant to Section 3(c) or Section 3(g), as the case may be, the Stock Settlement Shares, when delivered to UBS or to the Issuer, as the case may be, will have been duly authorized and will be duly and validly issued, fully paid and nonassessable and free of preemptive and other rights;           (v) the transactions contemplated by this Agreement, including the delivery of the Stock Settlement Shares pursuant to Section 3(c) or Section 3(g), as the case may be, are consistent with the authorization of the Repurchase Program;           (vi) the Issuer is not entering into this Agreement to facilitate a distribution of the Common Stock (or any security convertible into or exchangeable for Common Stock) or in connection with a future issuance of securities;           (vii) the Issuer is not entering into this Agreement to create actual or apparent trading activity in the Common Stock (or any security convertible into or exchangeable for Common Stock) or to raise or depress the price of the Common Stock (or any security convertible into or exchangeable for Common Stock);           (viii) as of the date hereof and as of the date of any Stock Election Notice hereunder, (i) none of the Issuer and its executive officers and directors is, or will be, as the case may be, aware of any material nonpublic information regarding the Issuer or the Common Stock and (ii) all reports and other documents filed by the Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, when considered as a whole (with the more recent such reports and documents deemed to 13 --------------------------------------------------------------------------------   amend inconsistent statements contained in any earlier such reports and documents), do not or will not, as the case may be, contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading;           (ix) the repurchase of the Shares by the Issuer, the compliance by the Issuer with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach (each, a “Breach”) of any of the terms or provisions of, or constitute a default (each a “Default”) under, any indenture, mortgage, deed of trust, loan agreement or any other agreement or instrument to which the Issuer or any of its subsidiaries is a party (collectively, “Contracts”) or by which the Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Issuer or any of its subsidiaries is subject (except such Breach or Default as would not reasonably be expected to materially adversely affect the ability of the Issuer to perform its obligations under any Contract), nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Issuer or any of its subsidiaries is subject, nor will such action result in any violation of the Certificate of Incorporation or By-laws of the Issuer or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or any of its properties; and           (x) no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body having jurisdiction over the Issuer or any of its properties is required for the repurchase of the Shares by the Issuer, the compliance by the Issuer with all the terms of this Agreement, or the consummation by the Issuer of the transactions contemplated by this Agreement, other than the registration of the Stock Settlement Shares and any Make-whole Shares under the Securities Act in accordance with the provisions of Section 3(c), which registration shall be completed not less than five Trading Days prior to December 5, 2007, and such authorizations, orders, registrations and qualifications as may be required under state securities or blue sky laws in connection with the resale by UBS of the Registered Shares.      (b) UBS hereby represents and warrants to the Issuer:           (i) it has all power and authority to enter into this Agreement and the Registration Rights Agreement and the transactions contemplated hereby and thereby;           (ii) this Agreement has been duly authorized, validly executed and delivered by UBS and constitutes a valid and legally binding obligation of UBS enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; and           (iii) the Registration Rights Agreement, when and if executed and delivered pursuant to Section 3(c) hereof, shall have been duly authorized, validly executed and delivered by UBS and shall constitute a valid and legally binding obligation of UBS enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, 14 --------------------------------------------------------------------------------   fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.      (c) The Issuer and UBS hereto acknowledge that this transaction is not secured by any collateral that would otherwise secure the obligations of the Issuer.      Section 7. Indemnification.      In the event that UBS becomes involved in any capacity in any action, proceeding or investigation brought by or against any person in connection with any matter referred to in this Agreement, the Issuer periodically will reimburse UBS for its legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Issuer also will indemnify and hold UBS harmless against any losses, claims, damages or liabilities to which UBS may become subject in connection with any matter referred to in this Agreement, except to the extent that any such loss, claim, damage or liability results from the gross negligence or bad faith of UBS in effecting the transactions which are the subject of this Agreement. If for any reason the foregoing indemnification is unavailable to UBS or insufficient to hold it harmless, then the Issuer shall contribute to the amount paid or payable by UBS as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative benefits received by the Issuer on the one hand and UBS on the other hand in the matters contemplated by this Agreement as well as the relative fault of the Issuer and UBS with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The relative benefits to the Issuer, on the one hand, and UBS, on the other hand, shall be in the same proportion as the aggregate Purchase Price bears to the commissions received by UBS pursuant to the last paragraph of Section 2. The reimbursement, indemnity and contribution obligations of the Issuer under this Section 7 shall be in addition to any liability which the Issuer may otherwise have, shall extend upon the same terms and conditions to any affiliate of UBS and the partners, directors, officers, agents, employees and controlling persons (if any), as the case may be, of UBS and any such affiliate and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Issuer, UBS, any such affiliate and any such person. The Issuer also agrees that neither UBS nor any of such affiliates, partners, directors, officers, agents, employees or controlling persons shall have any liability to the Issuer for or, in connection with any matter referred to in this Agreement except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Issuer result from the gross negligence or bad faith of UBS in effecting the transactions that are the subject of this Agreement. The foregoing provisions shall survive any termination or completion of this Agreement.      Section 8. Termination Event.      Upon the occurrence of a Termination Event and so long as such Termination Event shall be continuing, UBS may, in its discretion, by notice to the Issuer (the date of such notice and the notice referred to in the succeeding clause being referred to herein as the “Notice Date”), direct that the Execution Period shall forthwith terminate on the date specified in such notice (the “Termination Event Termination Date”). In such an event, (i) the Execution Period 15 --------------------------------------------------------------------------------   shall terminate on the Termination Event Termination Date, (ii) the Principal Account shall be reduced on such date by an amount equal to the sum of (A) the product of (x) the number of Hedge Account Shares and (y) the arithmetic average of daily volume-weighted average prices of Shares in each Trading Day from the First Averaging Date up to and excluding the Notice Date, as listed on Bloomberg Screen Volume at Price Page and (B) the total purchase price paid by UBS for the Shares of Common Stock that are purchased by UBS during the period commencing on and including the Notice Date to and including the Termination Event Termination Date in order to cover the remaining number of Borrowed Shares, (iii) the Principal Account shall be increased to reflect an appropriate accrual of interest at the Federal Funds Open Rate, as determined by the Calculation Agent, to reflect interest earned by UBS in respect of the aggregate Purchase Price received from the Issuer, (iv) the Principal Account shall be decreased to reflect UBS’s actual cost of borrowing shares of Common Stock to hedge its obligations hereunder, and (v) the Settlement Amount shall be further adjusted by the amount that UBS reasonably determines in good faith to be its total losses and costs in connection with the early termination of this Agreement, including any loss of bargain, cost of funding, or loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position.      Section 9. Miscellaneous.      (a) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and obligations set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated.      (b) Assignment. Neither the rights under this Agreement nor the obligations created by this Agreement shall be assignable or delegable, in whole or in part, by either party hereto without the prior written consent of the other (which consent shall not be unreasonably withheld), and any attempt to assign or delegate any rights or obligations arising under this Agreement without such consent shall be void.      (c) Waivers, etc. No failure or delay on the part of either party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No amendment, modification or waiver of any provision of this Agreement nor consent to any departure by either party therefrom shall in any event be effective unless the same shall be in writing and, in the case of a waiver or consent, shall be effective only in the specific instance and for the purpose for which given.      (d) Beneficiaries. This Agreement shall be binding upon, and inure solely to the benefit of, the Issuer, UBS and, to the extent provided in Section 7 hereof, the affiliates, partners, directors, officers, agents, employees and controlling persons, if any, of UBS, and their respective successors, assigns, heirs and personal representatives, and no other person shall acquire any rights hereunder. 16 --------------------------------------------------------------------------------        (e) Rights of Set-Off. In addition to any rights of set-off a party may have as a matter of law or otherwise, upon occurrence of an Event of Default with respect to the Issuer, UBS shall have the right, without prior notice to the Issuer or any other person, to (i) set off any obligation of the Issuer owing to UBS or any affiliate of UBS against any obligations of UBS or any affiliate of UBS owing to the Issuer, or (ii) for the purpose of cross-currency set-off, convert any obligation to another currency at the market rate determined by UBS, or (iii) if an obligation is unascertained, in good faith estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 9(e) will have the effect of creating a charge or other security interest.      (f) Changes of Law. If, due to any change in applicable law or regulations or the interpretation thereof by any court of law or other body having jurisdiction subsequent to the date of this Agreement, performance of any provision of this Agreement or any transaction contemplated thereby shall become impracticable or impossible, the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as contemplated by such provision.      (g) Confidentiality. Subject to Section 5(a), to any contrary requirement of law and to the right of each party to enforce its rights hereunder in any legal action, each party shall keep strictly confidential and shall cause its employees and agents to keep strictly confidential the terms of this Agreement and any information of or concerning the other party which it or any of its agents or employees may acquire pursuant to, or in the course of performing its obligations under, any provision of this Agreement. In the event disclosure is permitted pursuant to the preceding sentence, the disclosing party shall (i) provide prior notice of such disclosure to the other party, (ii) use its best efforts to minimize the extent of such disclosure and (iii) comply with all reasonable requests of the other party to minimize the extent of such disclosure. This Section 9(g) shall not prevent either party from disclosing information as necessary to third-party advisors in connection with the transactions contemplated hereby provided that such advisors agree in writing to be bound by this Section 9(g) as if a party hereto.      (h) Agent. UBS Securities LLC shall act as “agent” for UBS and the Issuer within the meaning of Rule 15a-6 under the Exchange Act. The Agent is not a principal to this Agreement and shall have no responsibility or liability to UBS or the Issuer in respect of this Agreement, including, without limitation, in respect of the failure of UBS or the Issuer to pay or perform under this Agreement. Each of UBS and the Issuer agrees to proceed solely against the other to collect or recover any securities or money owing to it in connection with or as a result of this Agreement. The Agent shall otherwise have no liability in respect of this Agreement, except for its gross negligence or willful misconduct in performing its duties as Agent hereunder. As a broker-dealer registered with the Securities and Exchange Commission, UBS Securities LLC, in its capacity as agent, will be responsible for (i) effecting the transaction contemplated in this Agreement, (ii) issuing all required notices, confirmations and statements to Buyer and Seller and (iii) maintaining books and records relating to this Agreement. 17 --------------------------------------------------------------------------------        (i) Headings. Descriptive headings herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.      (j) Counterparts. This Agreement may be executed by the parties hereto in counterparts, and each such executed counterpart shall be, and shall be deemed to be, an original instrument and all such counterparts, taken together, shall constitute one and the same instrument.      (k) Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein shall be validly given, made or served if in writing and delivered personally, by telegram, by telecopy or sent by overnight courier, postage prepaid, to: UBS AG, London Branch at: c/o UBS Securities LLC 299 Park Avenue New York, NY 10171 Attention of: Paul Stowell and Sanjeet Dewal Fax Number: 212-821-4610 With a copy to such address to attention of: Legal and External Affairs the Issuer at: Cincinnati Financial Corporation 6200 South Gilmore Road Fairfield, OH 45014 Attention of: Martin F. Hollenbeck, Investment Department Fax Number: 513-870-0609 With a copy to such address to attention of: Legal Department—Corporate Division or to such other address as any party may, from time to time, designate in a written notice given in a like manner. Notice given by telegram or telecopy shall be deemed delivered when evidence of the transmission is received by the sender and shall be confirmed in writing by overnight courier, postage prepaid. Notice given by overnight courier as set out above shall be deemed delivered the business day after the date the same is mailed. 18 --------------------------------------------------------------------------------        (l) Account Details. UBS: Cash Payments for Stock Purchase Citibank, New York ABA# 021 000 089 A/C# 4065 2556 UBS Securities, LLC Cash Payments for Settlement UBS AG Stamford f/o UBS AG London Branch ABA# 026-007-993 AC# 101-WA-140007-000 Issuer: (To be provided)      (m) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state of New York without reference to conflict of law principles. Each party hereto irrevocably submits to the extent permitted under applicable law to the non-exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, State of New York. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement. 19 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, UBS and the Issuer have caused this Agreement to be duly authorized, executed and delivered as of the date first written above.             UBS AG, LONDON BRANCH       By:           Name:           Title:                 By:           Name:           Title:           UBS SECURITIES LLC       By:           Name:           Title:                 By:           Name:           Title:           CINCINNATI FINANCIAL CORPORATION       By:           Name:           Title:         20
EXHIBIT 10.1 CONFIDENTIAL TREATMENT REQUESTED THIS DOCUMENT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. REDACTED MATERIAL IS MARKED WITH A [****] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AMENDMENT NO. TWO TO AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PLAN AGREEMENT BETWEEN COMENITY BANK AND STAGE STORES, INC. SPECIALTY RETAILERS, INC. THIS AMENDMENT NO. TWO (“Amendment No. 2”) to that certain AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PLAN AGREEMENT entered into as of the 8th day of August, 2012 and effective as of the 1st day of August 2012 (the “Agreement”) by and between Stage Stores, Inc. (“SSI”) and Specialty Retailers, Inc. (“SRI”) (with SSI and SRI hereinafter collectively referred to as “Stage”) and Comenity Bank (formerly known as World Financial Network Bank) (“Bank”), is entered into by and between Bank and SSI and will be effective as of February 13, 2014 (the “Amendment No. 2 Effective Date”). WHEREAS, Stage and Bank previously entered into the Agreement pursuant to which, among other things, Stage requested Bank to, and Bank agreed to, extend credit to qualifying individuals in the form of private label open-ended credit card accounts for the purchase of Goods and/or Services from Stage through designated Sales Channels and to issue Credit Cards to qualifying individuals under the Stage Nameplates. WHEREAS, SRI, the wholly owned operating subsidiary of SSI and currently the employer of all Stage employees, signed the Agreement solely for purposes of Section 13.1(a) of the Agreement, thereby agreeing that the Amended and Restated Private Label Credit Card Program Agreement dated March 5, 2004 by and among SSI, SRI and Bank was terminated in its entirety upon the full execution of the Agreement and thereby terminating SRI’s status as a separate party to the Agreement effective August 1, 2012. WHEREAS, SSI and Bank entered into Amendment No. One to the Agreement effective as of February 1, 2013 WHEREAS, SSI and Bank now desire to amend the Agreement as set forth herein. -------------------------------------------------------------------------------- NOW, THEREFORE, in consideration of the terms and conditions hereof, and for other good and valuable consideration, the receipt of which is hereby mutually acknowledged by the parties, SSI and Bank agree as follows: 1. Definitions; References. Capitalized terms not otherwise defined in this Amendment No. 2 are used herein as defined in the Agreement. 2. Section 3.6(b) Credit Decisions - Test Credit Program. Pursuant to Section 3.6(b) of the Agreement, Bank hereby agrees to make available under the Plan the Test Credit Program described in Schedule 3.6(b)-1 attached hereto, subject to the terms and conditions contained therein. 3. Consideration; Fees. SSI and Bank agree that SSI shall pay [****] per Account opened under the Test Credit Program (the "Test Program Fee"). 4. Counterparts; Effectiveness. This Amendment No. 2 may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute one and the same instrument. 5. General. This Amendment No. 2 shall not be changed, modified or amended except in writing and signed by both of the parties hereto. Except as specifically amended in this Amendment No. 2, the provisions of the Agreement, as amended, remain unaffected and in full force and effect. The provisions of this Amendment No. 2 shall prevail in the event of any conflict between the provisions hereof and the provisions of the Agreement. IN WITNESS WHEREOF, SSI and Bank have executed this Amendment No. 2 in manner and form sufficient to bind them as of the Amendment No. 2 Effective Date. STAGE STORES, INC.   COMENITY BANK (formerly known as WORLD FINANCIAL NETWORK BANK)           By: /s/ Oded Shein n   By: /s/ John J. Coane n             Oded Shein n     John J. Coane n Printed Name   Printed Name             EVP - CFO n     President n Title   Title 2 -------------------------------------------------------------------------------- Schedule 3.6(b)-1 Test Credit Program (Employee Plan) (a)    The Employee Plan. Bank shall establish a test Account program pursuant to and subject to the terms and conditions of this Schedule 3.6(b)-1 (the “Employee Plan”). Accounts issued under the Employee Plan shall be referred to as “Employee Plan Accounts” and, for purposes of this Schedule 3.6(b)-1, shall continue to be Employee Plan Accounts irrespective of any termination, retirement or other change of status of such Employee. (b)    Establishment of Employee Plan Accounts. Subject to the terms and conditions of this Schedule 3.6(b)-1, the Employee Plan shall be available to each Employee of Stage who (i) submits a completed application to Bank on a form specially designated by Bank as an Employee application and by a delivery method (as agreed upon by the parties) that signifies to Bank that the applicant is an Employee of Stage (each, an “Employee Plan Account Application”); and (ii) meets the Employee Plan Account Application Criteria (defined below). For purposes of this Schedule 3.6(b)-1, the term “Employee” shall mean (i) any full-time or part-time employee of Stage after the Amendment No. 2 Effective Date; and (ii) any person who was a full-time or part-time employee of Stage prior to the Amendment No. 2 Effective Date and who retired from Stage, but applies for a Card prior to March 31, 2014. (c)    Applications for Employee Plan Accounts. Notwithstanding Section 3.5 of the Agreement, Employee-Applicants must submit Employee Plan Account Applications in order to qualify for the Employee Plan. For clarity, Employee Plan Account Applications shall be treated in a manner that is consistent with the treatment of mail-in applications for purposes of calculating the measurement periods, penetration rates and targets set forth on Schedule 1.3(e) and Schedule 3.5(e) of the Agreement. For further clarity, Employee Plan Account Applications that meet the criteria for a Valid Application as defined in Schedule 3.5(e) shall be considered Valid Applications for purposes of Schedule 3.6. If the Employee-Applicant satisfies the Employee Plan Account Application Criteria set forth in Section (d), below, then Bank shall issue an Employee Plan Account to such Employee-Applicant. (d)    Employee Plan Account Application Criteria. The “Employee Plan Account Application Criteria” shall be comprised of the following: (i)    The Employee-Applicant delivers to Bank an Employee Plan Account Application that includes all of the information requested by Bank in such application; and (ii)    Bank verifies the identity of the Employee-Applicant in accordance with its then-current policies and procedures and requirements of Applicable Law (e.g., US PATRIOT ACT); and (iii)    The Employee Plan Account Application passes the Bank’s then-current security screening procedures, including those required by Applicable Law and for detecting fraudulent applications; and 3 -------------------------------------------------------------------------------- (iv)    Bank’s underwriting of the Employee Plan Account satisfies requirements of Applicable Law including requirements of the CARD ACT and its implementing regulations (e.g., satisfaction of requirements regarding applicants for a credit card who have not attained the age of 21, consideration of the applicant’s ability to repay., etc.); and (v)    The Employee-Applicant accepts the terms and conditions of the Credit Card Agreement applicable to her/his Employee Plan Account. (e)    Plan Committee. The parties acknowledge and agree that the Plan Committee provisions set forth in Schedule 3.1 of the Agreement shall apply to the Employee Plan, subject to the specific provisions set forth in this Schedule 3.6(b)-1, including Section (g) below, which shall control. Without limiting the generality of the foregoing, Operating Procedures, including the Employee Plan Account Application Criteria shall be a Bank Matter. (f)    Treatment of Employee Plan Accounts. Except as otherwise provided in this Schedule 3.6(b)-1, each reference to “Account(s)” in the Agreement shall include “Employee Plan Account(s)” and the parties respective rights and obligations hereunder relative to the Plan shall also apply to the Employee Plan. (g)    Term and Termination of the Employee Plan (i)    Bank agrees to test the Employee Plan for [****] consecutive months from the Amendment No. 2 Effective Date (the “Employee Plan Initial Term”) and to evaluate the Employee Plan to help determine if Bank desires to continue the Employee Plan after the Employee Plan Initial Term. (ii)    Notwithstanding the foregoing, Bank may notify SSI in writing at any time: (i) after the end of the [****] month of the Employee Plan Initial Term and before thirty (30) days after the end of the Employee Plan Initial Term of its desire to alter or discontinue the Employee Plan for any reason. The parties will discuss the disposition of the Employee Plan at the next regularly scheduled Plan Committee meeting, or if the next Plan Committee meeting will not occur for more than thirty (30) days, then the parties agree to hold a special Plan Committee meeting within thirty (30) days of SSI’s receipt of Bank’s notice. The following shall apply in the event of a notice by Bank pursuant to this Section (g)(ii): (x) Bank shall provide to the Plan Committee in writing Bank's basis for altering or desire to terminate the Employee Plan to address any concern the Bank may have with respect to the Employee Plan. The Plan Committee shall endeavor to deliberate on the Bank's proposal, if applicable, and endeavor to mutually agree upon the alteration or disposition of the Employee Plan, including the timing of such disposition. (y) If the Plan Committee does not reach agreement on the alteration or disposition of the Employee Plan within thirty days after the Plan Committee meeting in which the matter was discussed, the parties shall follow the escalation process set forth in Section D of Schedule 3.1 to resolve the matter unless the Bank has requested termination of the Employee Plan. 4 -------------------------------------------------------------------------------- (z) If after the escalation process set forth in Section D of Schedule 3.1 has been exhausted and the parties have failed to agree to the terms of continuing the Employee Plan, or if the Bank has requested the termination of the Employee Plan, the parties shall cooperate in good faith to wind down the Employee Plan and the Bank shall cease accepting new Employee Plan account applications once the Employee Plan is terminated. (iii)    In the event the Employee Plan is not terminated pursuant to Section (g)(ii) then, within thirty (30) days (before or after) each twelve (12) month anniversary date of the last day of the Employee Plan Initial Term, the Bank may notify SSI in writing at any time of its desire to alter or discontinue the Employee Plan as a result of the profitability of the Employee Plan in accordance with the following procedure: (x) Bank shall provide to the Plan Committee in writing Bank’s basis for altering the Employee Plan to address profitability of the Employee Plan, and the Plan Committee shall deliberate on Bank’s proposal(s). The Plan Committee shall endeavor to mutually agree upon the alteration or disposition of the Employee Plan, including the timing of such disposition. (y) If the Plan Committee does not reach agreement on the alteration or disposition of the Employee Plan within thirty (30) days after the Plan Committee meeting in which the matter was discussed, then the parties shall follow the escalation process set forth in Section D of Schedule 3.1 to resolve the matter. (z) If after the escalation process set forth in Section D of Schedule 3.1 has been exhausted and the parties have failed to agree to the terms of continuing the Employee Plan, the parties shall cooperate in good faith to timely wind down the Employee Plan. At a minimum, Bank shall cease accepting new Employee Plan Account Applications once the Employee Plan is terminated. (iv)    Notwithstanding anything in this Schedule 3.6(b)-1 or Schedule 3.1 to the contrary: (A) Bank may discontinue the Employee Plan immediately by written notice on the basis of Bank’s belief that the continued offering of the Employee Plan violates Applicable Law (including any court or agency decisions and orders and staff interpretations and guidance from applicable regulatory agencies, all as determined by the reasonable opinion of Bank’s counsel) and (B) SSI may terminate the Employee Plan immediately by written notice to Bank on the basis of SSI’s belief that the continued offering of the Employee Plan violates Applicable Law (including any court or agency decisions and orders and staff interpretations and guidance from applicable regulatory agencies, all as determined by the reasonable opinion of SSI’s counsel). (v)    Following the discontinuation or termination of the Employee Plan, in accordance with the terms of this Schedule 3.6(b), Bank shall (A) cease to accept new Employee Plan Account applications pursuant to the terms of this Schedule 3.6(b); and (B) continue to support Accounts opened under the Employee Plan prior to the discontinuation or termination of the Employee Plan. 5 -------------------------------------------------------------------------------- (vi)    For clarity, Bank will continue to offer the Employee Plan after expiration of the Employee Plan Initial Term unless and until the Employee Plan is discontinued or terminated in accordance with the terms of this Schedule 3.6(b)-1. 6
-------------------------------------------------------------------------------- Portions of this agreement have been omitted and separately filed with the SEC with a request for confidential treatment.  The location of those omissions have been noted by  [**]. Exhibit 10.2 AMENDMENT   AMENDMENT, dated as of November 29, 2009 (this “Amendment”), to the Credit Agreement dated as of September 5, 2008 (the “Credit Agreement”) among Henry Schein, Inc., as borrower (the “Borrower”), the several lenders party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), and HSBC Bank USA, N.A., The Bank of New York Mellon, and UniCredit Markets and Investment Banking, acting through Bayerische Hypo- und Vereinsbank AG, New York Branch, as co-syndication agents. RECITALS   A.            WHEREAS, a newly-formed joint venture in which the Borrower will hold a majority ownership interest intends to acquire certain assets of the Borrower (the “Winslow Acquisition”) and incur indebtedness in connection therewith;   B.             WHEREAS, in connection with the Winslow Acquisition, the Borrower is requesting that the Lenders agree to certain amendments relating to the Credit Agreement; and   C.             WHEREAS, the Lenders are willing to agree to such amendments subject to the terms and conditions set forth herein.   NOW, THEREFORE, in consideration of the foregoing Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:   AGREEMENT   1.            Defined Terms.  Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, as amended by this Amendment. As used in this Amendment, the following terms shall have the following meanings:   “Effective Date”: as defined in Section 11. “Winslow Acquisition”: as defined in the Preamble hereto. “Winslow Acquisition Documents”: the Omnibus Agreement, dated as of November 29, 2009, by and among the Borrower, National Logistics Services, LLC, Winslow Acquisition Company, Butler Animal Health Holding Company LLC, Butler Animal Health Supply, LLC, Oak Hill Capital Partners II, L.P., Oak Hill Capital Management Partners II, L.P., W.A. Butler Company, Burns Veterinary Supply, Inc., and the Management Members (as defined therein), and all documents and agreements executed and delivered in connection with the consummation of the transactions contemplated thereby. “Winslow Transaction Documents”: the Winslow Acquisition Documents and the Winslow Credit Documents.   [**] - Confidential or proprietary information redacted.     --------------------------------------------------------------------------------     2.           Amendments to Section 1.1.  Section 1.1 of the Credit Agreement is hereby amended by:   (a)           amending the definition of “Guarantor” by inserting the words “(other than the Joint Venture and its Subsidiaries)” after the words “any Subsidiary of the Borrower” in the first line thereof; and   (b)           adding the following definitions in the appropriate alphabetical order:   “Joint Venture”: W.A. Butler Company, a Delaware corporation (currently known as Winslow Acquisition Company, together with its permitted successors and assigns). “Permitted JV Refinancing Indebtedness” means Indebtedness of the Joint Venture and its Subsidiaries which satisfies each of the following conditions:  (a) to the extent that such Indebtedness is to be secured by a Lien on any assets or property, or the Equity Interests, of the Joint Venture and its Subsidiaries, the terms of such Indebtedness (including the Liens that secure such Indebtedness) shall be substantially similar to those provided in the Winslow Credit Documents (other than changes which extend the maturity thereof, decrease the interest rate applicable thereto, release a portion of the assets subject to such Liens or otherwise amend the terms in a manner that could not reasonably be expected to be materially adverse to the interests of the Lenders taken as a whole) and any Liens that secure such Indebtedness do not cover any additional assets, property or Equity Interests ; (b) such Indebtedness shall consist of (i) a secured facility which satisfies the requirements of clause (a) above or (ii) an unsecured or subordinated facility (and guarantees in respect thereof provided by any Subsidiary of the Joint Venture) with terms customary for facilities of such type at such time; (c) no Default or Event of Default shall have occurred and be continuing or would result from the incurrence of such Indebtedness; (d) such Indebtedness shall not be subject to any amortization or required repayment obligations (other than, in the case of a secured facility, as contemplated by clause (a) above or, in the case of an unsecured or subordinated facility, as then reflects the customary terms for facilities of such type at such time) on or prior to the Termination Date; (e) the net proceeds of such Indebtedness (other than any revolving Indebtedness) are concurrently applied to the prepayment of the Indebtedness to be refinanced; and (f) the Administrative Agent shall have received (x) a certificate of a Responsible Officer of the Joint Venture certifying compliance with the conditions set forth in this definition (and attaching any other information reasonably required by the Administrative Agent) and (y) copies of all the loan documents relating to such Indebtedness at least three Business Days prior to the funding of any such Indebtedness. “Winslow Credit Agreement”: the credit agreement to be entered into in connection with the Winslow Acquisition between Butler Animal Health Supply, LLC, a Delaware limited liability company, as borrower, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (as amended, waived, modified or supplemented from time to time; provided that any renewal, replacement or refinancing thereof shall satisfy the requirements set forth in paragraphs (a) through (f) of the definition of “Permitted JV Refinancing Indebtedness”). “Winslow Credit Documents”: the Winslow Credit Agreement and any agreement, document or instrument creating any security interest or other encumbrance, or guaranty, entered into in connection therewith and any other agreement, document or instrument ancillary or otherwise related thereto (as amended, waived, modified or supplemented from time to time; provided that any renewal, replacement or refinancing thereof shall satisfy the requirements set forth in paragraphs (a) through (f) of the definition of “Permitted JV Refinancing Indebtedness”). 3.             Amendment to Section 7.4. Clause (c) of Section 7.4 of the Credit Agreement is hereby amended by inserting the words “(other than Indebtedness permitted under Section 8.3(b)(viii))” after the word “Indebtedness” in the first line thereof.   [**] - Confidential or proprietary information redacted.     --------------------------------------------------------------------------------     4.             Amendment to Section 7.12. Section 7.12 of the Credit Agreement is hereby amended by inserting the words “(other than the Joint Venture and its Subsidiaries)” after the word “Subsidiary” in the first line thereof.   5.            Amendment to Section 8.2.  Section 8.2 of the Credit Agreement is hereby amended by:   (i) deleting the word “or” from the end of clause (m);   (ii) deleting the period from the end of clause (n) and substituting therefor a semicolon; and   (iii) adding the following at the end thereof:   “(o) any Lien over the assets, property or Equity Interests of the Joint Venture and its Subsidiaries that secures Indebtedness permitted under Section 8.3(b)(viii); provided that such Lien does not at any time cover any additional assets or property other than products or proceeds thereof; or (p) Liens granted by any Subsidiary of the Borrower that are contractual rights of set-off or netting arrangements relating to pooled deposit or sweep accounts of such Subsidiary to permit satisfaction of overdraft or similar obligations (including with respect to netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements) incurred in the ordinary course of business of such Subsidiary.” 6.           Amendment to Section 8.3.  Clause (b) of Section 8.3 of the Credit Agreement is hereby amended by:    (i)           deleting the word “and” from the end of clause (vi);    (ii)          deleting the period from the end of clause (vii) and substituting therefor a comma; and   (iii)          adding the following words at the end thereof:   “(viii) (A) Indebtedness of the Joint Venture and its Subsidiaries under the Winslow Credit Agreement in a principal amount not to exceed $330,000,000 at any time, and (B) Permitted JV Refinancing Indebtedness in respect thereof, (ix) Indebtedness of any Subsidiary of the Borrower in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements in each case in connection with deposit accounts in the ordinary course of business, and (x) any Guarantee Obligation of the Borrower in respect of Indebtedness incurred by any Subsidiary under clause (ix) hereof up to an aggregate principal amount not to exceed $25,000,000 at any time outstanding.” 7.            Amendment to Section 8.8. Section 8.8 of the Credit Agreement is hereby amended by:   (i)           deleting clause (i) of the proviso in its entirety and replacing it with the following:   [**] - Confidential or proprietary information redacted.     --------------------------------------------------------------------------------     “(i) the foregoing shall not apply to prohibitions, restrictions and conditions (x) imposed by law, (y) contained in any of the Loan Documents or (z) contained in the organizational documents of the Joint Venture and its Subsidiaries (including their respective operating, management or partnership agreements, as applicable) to the extent that such prohibition, restriction or condition applies only to the property, assets or Equity Interests of, or dividends, distributions, loans, advances, repayments or guarantees by, the Joint Venture and its Subsidiaries,”    (ii)          deleting clause (iv) of the proviso  in its entirety and replacing it  with the following:   “(iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness (including the Winslow Credit Documents and the loan documentation with respect to any Permitted JV Refinancing Indebtedness) permitted by this Agreement if such restrictions or conditions apply only to the property, assets or Equity Interests securing any such Indebtedness and, in the case of the Winslow Credit Documents and any loan documentation with respect to Permitted JV Refinancing Indebtedness, such restrictions or conditions apply only to the property, assets or Equity Interests of the Joint Venture and its Subsidiaries, and”.   8.             Amendment to Section 9. Section 9 is hereby amended by (i) inserting the words “(other than Indebtedness permitted under Section 8.3(b)(viii))” after the words “Material Indebtedness” where such words appear in subsections (d) and (e) thereof, and (ii) inserting the words “(other than the Joint Venture and its Subsidiaries)” after the words “Significant Subsidiary” where such words appear in subsections (f) and (g) thereof.   9.            Schedule 5.14 to the Credit Agreement.  Schedule 5.14 to the Credit Agreement is hereby supplemented with the information provided in Schedule 5.14 to this Amendment.   10.           Conditions to Effectiveness. This Amendment shall become effective on the date (the “Effective Date”) on which the following conditions shall have been satisfied or waived:   (a)           the Administrative Agent shall have received this Amendment, duly executed and delivered by the Borrower and the Majority Lenders;   (b)           the Administrative Agent shall have received executed copies of the Winslow Transaction Documents, each certified by an officer of the Borrower to be true and correct and in full force and effect as of the date hereof, and no provision thereof shall have been amended, waived or otherwise modified without the consent of the Administrative Agent;   (c)           the Winslow Acquisition shall have been consummated in accordance with the Winslow Acquisition Documents;   (d)           the Administrative Agent shall have received customary legal opinions from counsel to the Borrower and its Subsidiaries in form and substance reasonably satisfactory to the Administrative Agent; and   (e)           the Administrative Agent shall have received such customary certificates as may be reasonably requested by the Administrative Agent including confirmation that the Borrower is in compliance with the requirements of Section 8.1 of the Credit Agreement both prior to and immediately after the consummation of the Winslow Acquisition.   [**] - Confidential or proprietary information redacted.     --------------------------------------------------------------------------------     11.           Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed signature page of this Amendment by email or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.   12.          Representations and Warranties. The Borrower hereby represents and warrants to the Lenders and the Administrative Agent as follows:   (a)           The Borrower has the corporate power and authority and the legal right to execute, deliver and perform this Amendment and has taken all necessary corporate action to authorize the execution, delivery and performance of this Amendment. This Amendment has been duly executed and delivered on behalf of the Borrower and constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.   (b)           The representations and warranties of the Borrower set forth in Section 5 of the Credit Agreement as amended hereby (excluding the representations made in subsections 5.2 and 5.6 thereof) are true and correct in all material respects on and as of the date hereof as if made on and as of such date (or, if such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).   13.           Fees, Costs and Expenses.  The Borrower agrees to (i) pay to the Administrative Agent any arrangement fees previously agreed in writing in connection with this Amendment and (ii) reimburse the Administrative Agent for all reasonable fees, costs and expenses incurred by it in connection with this Amendment, including but not limited to the reasonable fees, costs and expenses of counsel and invoiced at least one Business Day prior to the Effective Date.   14.           Governing Law.  This Amendment 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.   15.           Loan Document. This Amendment shall be designated a Loan Document for all purposes of the Credit Agreement, as amended hereby, and the terms and conditions set forth therein.   [Signature pages follow]     [**] - Confidential or proprietary information redacted.     --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.     HENRY SCHEIN, INC.       By:   /s/Mark E. Mlotek     Name:Mark E. Mlotek     Title:Executive Vice President     --------------------------------------------------------------------------------       JPMORGAN CHASE BANK, N.A., as Administrative   Agent and a Lender       By:   /s/Jules Panno     Name:Jules Panno     Title:Vice President       --------------------------------------------------------------------------------       William Street LLC, as a Lender       By:   /s/Tom Halverson     Name:Tom Halverson     Title:Authorized Signatory       --------------------------------------------------------------------------------     BANK OF TOKYO-MITSUBISHI UFJ TRUST COMPANY   as a Lender               By:   /s/B. McNany     Name:B. McNANY     Title:ASST. VICE PRESIDENT     --------------------------------------------------------------------------------     US BANK, N.A. as a Lender               By: /s/Nathan M. Hall     Name:Nathan M. Hall     Title:AVP       --------------------------------------------------------------------------------     THE ROYAL BANK OF SCOTLAND, PLC as a   Lender         By:   /s/Scott MacVicar     Name:Scott MacVicar     Title:Vice President       --------------------------------------------------------------------------------     HSBC Bank USA, National Association               By:   /s/Brian S. Dossie     Name:Brian S. Dossie     Title:Vice President       --------------------------------------------------------------------------------     DE LAGE LANDEN FINANCIAL SERVICES, INC.   as a Lender               By: /s/Kenneth Guest     Name:Kenneth Guest     Title:VP, Commercial Operations     --------------------------------------------------------------------------------     The Bank of New York Mellon as a Lender               By:   /s/Kenneth P. Sneider, Jr.     Name:Kenneth P. Sneider, Jr.     Title:Vice President     --------------------------------------------------------------------------------     Bank of America, N.A., as a Lender               By:   /s/Steven J. Melicharek     Name:Steven J. Melicharek     Title:Senior Vice President       --------------------------------------------------------------------------------     Wells Fargo Bank as a Lender               By:   /s/Eric Frandson     Name:Eric Frandson     Title:Senior Relationship Manager     --------------------------------------------------------------------------------     Portioins of this schedule have been omitted and separately filed with the SEC with a request for confidential treatment.  The location of those omissions have been noted by [**].   CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership ACE Surgical Supply Co., Inc. D Massachusetts 04/27/67 51% owned by Henry Schein, Inc. 26.5% owned by J. Edward Carchidi through ACE Surgical Partners LLC 7.5% Craig Carchidi 7.5% Christopher Carchidi 7.5% Alan R. Balfour AD Holdings General Partnership D Texas 08/11/03 AD-LB Supply Corp. 99% interest and S&S Discount Supply, Inc. - 1% interest AD Interests, LLC D Delaware 07/07/09 100% owned by AD-LB Supply Corp. AD-LB Supply Corp. D New York 05/10/91 100% owned by Henry Schein, Inc. All-Star Orthodontics, Inc. D Indiana 08/16/02 100% owned by Ortho Organizers, Inc. Alta Medica Biotechnologies SARL I France 08/11/06 100% owned by Henry Schein France Services SARL Altatec GmbH I Germany 10/13/1981 100% owned by Camlog Holding GmbH Anthos Impianti S.r.l. I Italy 2/10/1982 100% by Henry Schein Italia S.r.l. BA Dental Europa, SA I Spain 1/8/1998 78% owned by BA International Ltd. 22% owned by José Luis Arias Tabernilla BA FRANCE Eurl I France 11/23/2004 100% owned by Henry Schein France Services SARL BA International, Limited I United Kingdom 11/18/1991 100% Henry Schein UK Holdings Limited [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] Becker-Parkin Dental Supply Co., Inc. D New York 7/25/1973 100% owned by S & S Discount Supply, Inc. Blitz HH02-650 GmbH HRB 43277 AG Offenbach I Germany 3/5/2002 98.04% Henry Schein Holding GmbH, 1.96% Henry Schein GmbH Budget Dental Supplies Limited Company Number: 2253738 I United Kingdom 4/22/1988 100% owned by Henry Schein UK Holdings Limited Butler Animal Health Holding Company LLC (to be renamed Butler Schein Animal Health Holding LLC) I Delaware 3/13/2005 *20.56360% owned by Burns Veterinary Supply, Inc. *71.05640% owned by Winslow Acquisition Company *0.36300% owned by Oak Hill Capital Management Partners II, L.P. *7.26120% owned by certain management members   *Approximate ownership; actual amounts to be determined at closing. Butler Animal Health Supply, LLC (to be renamed Butler Schein Animal Health Supply, LLC) I Delaware 3/31/2005 100% owned by Butler Animal Health Holding Company LLC. Camlog Biotechnologies AG I Switzerland 4/11/2003 100% owned by Camlog Holdings AG Camlog Consulting GmbH I Germany 6/14/1995 100% owned by Camlog Holding GmbH Camlog Espana SA. I Spain 11/23/2006 100% owned by Camlog Holding AG Camlog Holding AG I Switzerland 3/29/2003 Henry Schein Europe, Inc. 64.8416% Dr. Peter Kernen 7.4028% Jurg Eichenberger 20.3528% Vincenzo Gottardo 7.4028% Camlog Holding GmbH I Germany 8/14/2003 100% owned by Camlog Holding AG   [**] - Confidential or proprietary information redacted.   1 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership Camlog Schweiz AG I Switzerland 8/29/2006 100% owned by Camlog Holding AG Camlog USA, Inc. D Delaware 10/8/2003 100% owned by Henry Schein, Inc. Camlog Vertriebs GmbH I Germany 1/13/2004 100% owned by Camlog Holding GmbH CFB Handels GmbH, Wien I Austria 1/7/1998 100% owned by Heiland Medical Vertriebs-GmbH Wien Corporate Sureties Limited (N2) ATF Mediconsumables Pty Limited I Australia   100% owned by Medi-Consumables Custom Milling Center, Inc. D Colorado 8/31/2005 50% owned by Henry Schein, Inc. and 50% owned by Robert P. Miller Dentina GmbH HRB 700731 AG Freiburg i. Br. I Germany 8/10/1973 100% owned by FIRST MED Erste Verwaltungs GmbH Desty Estates s.r.o. ID No.: 28433092 (Limited Liability Company) I Czech Republic 12/4/2008 85.99% owned by Henry Schein European Holding B.V., 0.01% owned by Henry Schein C.V., 10% owned by Jaromir Koudela and 4% owned by Karel Badalik Encable Limited I United Kingdom England, Wales 8/4/2009 100% owned by Veterinary Solutions Limited Ethicare Limited Company Number: 3096242 I United Kingdom 8/29/1995 100% owned by Henry Schein UK Holdings Limited Euro Dental Holding GmbH HRB 34839 AG Offenbach I Germany 6/8/2000 100% owned by Blitz HH 02-650 GmbH FIRST MED Erste Verwaltungs GmbH HRB 67186 AG Hamburg I Germany 2/24/1998 100% owned by Henry Schein GmbH FIRST MED Zweite Verwaltungs GmbH HRB 67187 AG Hamburg I Germany 2/24/1998 100% owned by Henry Schein GmbH Gaudent-Sanitaria s.r.o. ID No.: 480 41 823 (Limited Liability Company) I Czech Republic 12/16/1992 99% owned by Desty Estates s.r.o., 1% owned by Henry Schein C.V. Gem Medical Acquisition Corp. D Delaware 7/30/2008 100% owned by Henry Schein, Inc. General Injectables & Vaccines, Inc. D Virginia 11/2/1983 100% owned by GIV Holdings, Inc. GIV Holdings, Inc. D Delaware 11/28/1995 100% owned by Henry Schein, Inc. Halas Dental Pty Ltd. ACN #000 403 618 I Australia 6/29/1962 100% owned by HSR Holdings Pty Ltd Handpiece Parts & Repairs, Inc. D Delaware 9/22/2003 100% owned by Henry Schein, Inc. Heiland Medical Vertriebs-GmbH FN 102456X Handelsgericht Wien I Austria 11/27/1979 100% owned by Henry Schein Austria GmbH Heiland Schweiz AG I Switzeland, Lyssach 12/24/1997 100% owned by Provet Holding AG Heiland Vet GmbH Commercial Register of Lower Court of Hamburg HRB 94775 I Germany 8/24/2005 100% owned by FIRST MED Zweite Verwaltungs GmbH Heitech Medizintechnik und Service GmbH & Co. KG HRA 92124 AG Hamburg I Germany 8/25/1998 General Partner: FIRST MED Erste Verw. GmbH; Limited Partner: Henry Schein GmbH Henry Schein (Lancaster, PA.) Inc. D Pennsylvania 1/8/1998 100% owned by Henry Schein, Inc.     [**] - Confidential or proprietary information redacted.   2 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14 Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership Henry Schein (Malaysia) SDN, BHD Company No.: 773023-X I Malaysia 5/14/2007 100% owned by Henry Schein Global Sourcing, Inc. Henry Schein Australia Holdings Pty Limited ACN# 082 998 696 I Australia 6/16/1998 100% owned by Henry Schein Latin America Pacific Rim Inc. Henry Schein Australia Pty Limited ACN# 082 998 598 I Australia 6/16/1998 100% owned by Henry Schein Australia Holdings Pty Limited Henry Schein Austria GmbH FN 238321 y Wien I Austria (Vienna) 8/1/2003 100% owned by Henry Schein GmbH Henry Schein B.V. ID No.: 39053828 I Netherlands 12/31/1992 100% owned by Sirona Dental Systems B.V. Henry Schein C.V. ID - No.: 39100868 (Limited Partnership) I Netherlands 9/17/2007 99% of units owned by Henry Schein Europe, Inc. (General Partner) and 1% owned by Henry Schein Italy LLC (Limited Partner) Henry Schein Canada, Inc. I Canada, Ontario 12/27/2003 registered corporation 100% owned by Henry Schein Practice Solutions Inc. Henry Schein Cares Foundation, Inc. D New York 1/30/2008 100% owned by Henry Schein, Inc.  No shareholders due to Not-For-Profit status. Henry Schein China Services Limited Company No.: 1288640 I Hong Kong 11/20/2008 51% owned by Henry Schein Latin America Pacific Rim Inc., 49% owned by Best Winner (China) Limited Henry Schein Dental Austria GmbH FN 45564 g Wien I Austria 12/02/80 100% owned by Henry Schein Austria GmbH Henry Schein Dental Depot GmbH HRB 35008 AG Offenbach I Germany 2/18/2000 100% owned by Henry Schein Dental Holding GmbH Henry Schein Dental Holding GmbH HRB 34827 AG Offenbach I Germany 4/19/1999 100% owned by Blitz HH 02-650 GmbH Henry Schein España Holdings, S.L. I Spain 3/21/2005 100% owned by Henry Schein Europe, Inc. Henry Schein España SA I Spain 11/13/1990 75% owned by Henry Schein Espana Holdings, S.L. 25% owned by Benzadόn Acciones, S.A. Henry Schein Europe Limited I United Kingdom 4/5/2001 100% by Henry Schein UK Finance Limited Henry Schein Europe, B.V. ID – No.: 30126259 I Netherlands 1/22/1999 100% Henry Schein BV f/k/a demedis dental B.V. Henry Schein Europe, Inc. 11-3035229 D Delaware 10/30/1990 100% by Henry Schein, Inc. Henry Schein European Finance B.V. (private limited liability company) Registration No.: 321436230000 I Netherlands 12/2/2008 100% owned by Henry Schein European Holding B.V. Henry Schein European Holding B.V. ID - No.: 30082267 I Netherlands 5/27/1987 100% owned by Henry Schein C.V. Henry Schein European Services B.V. ID No.: 32150436 (Private Limited Liability Company) I Netherlands 4/14/2009 100% owned by Henry Schein European Holdings B.V. Henry Schein Financial Services, Inc. D Delaware 7/22/1991 100% owned by Henry Schein, Inc. Henry Schein France Holding EURL I France 11/20/2003 100% owned by Henry Schein France Holdings Inc. Henry Schein France Holdings, Inc. D Delaware 7/21/1992 100% owned  by Henry Schein Europe, Inc.     [**] - Confidential or proprietary information redacted.   3 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership Henry Schein France SCA I France 4/3/1998 98.67% owned by Henry Schein France Services SARL; 1.33% owned by Henry Schein France Holdings, Inc. Henry Schein France Services SARL I France 12/3/2003 99.99% owned by Henry Schein France Holding EURL, .01% owned by Henry Schein France Holdings Inc. Henry Schein Funding Group (partnership) I Canada, Ontario   99% owned by Henry Schein, Inc., 1% owned by Henry Schein Europe. Non-resident Canadian Partnership. Henry Schein Global Sourcing, Inc. D Delaware 1/12/2007 100% owned by Henry Schein, Inc. Henry Schein GmbH HRB 43302 AG Offenbach I Germany 2/25/1997 100%  owned by Henry Schein Holding GmbH Henry Schein Grundstucks-Vermietungsgesgesellschaft mbH & Co. Objekt Zarrentin OHG HRA 40987 AG Offenbach I Germany 2/9/1996 98% owned by HLZ Logistik GmbH,  2% owned by Henry Schein GmbH Henry Schein Holding GmbH HRB 43352 AG Offenbach I Germany 4/23/1998 100% owned by Henry Schein Europe, Inc. Henry Schein Hong Kong Limited Company No: 1269375 I Hong Kong 9/1/2008 51% owned by Henry Schein Latin America Pacific Rim Inc., 49% owned by Grand Winner Corporation Limited Henry Schein International LLC D Delaware 1/22/2008 100% owned by Henry Schein, Inc. Henry Schein Ireland Limited Company Number: 232667 I Ireland 5/3/1995 100% owned by Henry Schein (KM) Limited Henry Schein Italia Srl I Italy 9/18/2007 100% owned by Henry Schein European Holding B.V. Henry Schein Italy LLC D Delaware 9/13/2007 100% owned by Henry Schein Europe, Inc. (sole  member) Henry Schein Luxembourg Services S.àr.l. I Grand Duchy of Luxembourg 12/07/09 100% owned by Henry Schein, Inc. Henry Schein Medical GmbH HRB 84871 AG Hamburg I Germany 8/27/2002 100% owned by FIRST MED Zweite Verwaltungs GmbH Henry Schein Medical Systems, Inc. 34-1559113 D Ohio 7/30/1987 55% owned by Henry Schein, Inc. and 45% owned by the Ajit and Sangita Kumar Revocable Trust Henry Schein Medical Technologies Ltd. I Israel   100% owned by Henry Schein Latin America Pacific Rim Inc. Henry Schein New Zealand Company Nos. 1950272 I New Zealand 6/8/2007 100% owned by Henry Schein New Zealand Holding Co. Henry Schein NV Tax ID:  BB 0403.138.334 I Belgium 1/1/1948 31.04% by Sirona Dental Systems BV / 68.96% Henry Schein Europe Inc. Henry Schein Portugal, Unipessoal LDA I Portugal 5/16/2006 100% owned by Henry Schein Espana, S.A. Henry Schein PPT, Inc. D Wisconsin 11/1/1995 100% owned by Henry Schein, Inc. Henry Schein Practice Solutions Inc. D Utah 9/16/1985 100% owned by Henry Schein, Inc. Henry Schein Puerto Rico, Inc. D Puerto Rico 8/13/2003 100% owned by Henry Schein, Inc. Henry Schein Regional Limited Company No.: 911614 I New Zealand 6/15/1998 63.9% owned by Henry Schein Latin America Pacific Rim Inc., 30.53% by Regional Health Limited, 5.57% by Macro Health Limited Henry Schein Regional Pty Limited (Unit Trust) ACN #:  003 770 321 I Australia 5/10/1989 50.1% owned by Henry Schein Australia Pty Limited, 49.9% owned by Medi-Consumables Pty Ltd. (Bernie and Maurie Stang)   [**] - Confidential or proprietary information redacted.   4 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership Henry Schein Shvadent (2009) Ltd. I Israel 5/24/2009 Henry Schein Latin America Pacific Rim, Inc. owns 70% and Shlomo Trokman owns 30% Henry Schein Software of Excellence Finance Ltd. (Exempted Company) I Cayman Islands 7/15/2008 100% owned by Henry Schein C.V. Henry Schein Systems B.V. ID-No.: 30070331 I Netherlands 10/1/1983 72.7% owned by Henry Schein Europe, Inc. and 27.3% owned by Henry Schien Service GmbH Henry Schein Technologies (Ireland) Limited Company Number: NI 032999 I United Kingdom 9/26/1997 100% owned by Henry Schein Technologies Limited Henry Schein UK Finance Limited Company Number: 3587006 I United Kingdom 6/25/1998 100% owned by Henry Schein Europe, Inc. Henry Schein UK Holdings Limited Company Number: 2579457 I United Kingdom 2/4/1991 100% owned by Henry Schein UK Finance Limited Henry Schein Wigro van der Kuip B.V. ID – No.: 30144606 I Netherlands 9/16/1997 100% owned by Henry Schein BV Henry Schein, Inc. Tx ID #11-3136595 Charter No.: 2320192 D Delaware 12/23/1992 Publicly owned HF Acquisition Co. LLC D Delaware 7/13/2009 100% owned by Camlog USA, Inc. HLZ Logistik GmbH Commercial Register of Lower Court of Schwerin HRB 8895 I Germany 8/24/2005 100% owned by Henry Schein GmbH HPR Holdings I, LLC D Delaware 12/29/2005 100% owned by Handpiece Parts & Repairs, Inc. Converted to an LLC on 6/28/06 HPR TM, LLC D Delaware 12/29/2005 100% owned by HPR Holdings I, LLC. Converted to an LLC on 6/28/06. HS Beneficiary Services, LLC D Delaware 11/15/2007 100% owned by HS Financial, Inc., as sole member HS Brand Management, Inc. D Delaware 9/29/2005 100% owned by Henry Schein, Inc. HS Finance Company, LLC D Delaware 11/15/2007 100% owned by HS Trust, (was 100% owned by HS Financial, Inc., as sole member, then HS Financial, Inc. contributed HS Finance Company, LLC to HS Trust) HS Financial Holdings, Inc. D Delaware 9/29/2005 100% owned by Henry Schein, Inc. HS Financial, Inc. D Delaware 9/29/2005 100% owned by HS Financial Holdings, Inc. HS France Finance, LLC D Delaware 3/23/2004 100% owned by Henry Schein France Holdings, Inc., as sole member HS Manager Services, LLC D Delaware 11/15/2007 100% owned by HS Financial, Inc., as sole member HS TM Holdings, LLC D Delaware 9/29/2005 100% owned by Henry Schein, Inc. HS TM, LLC D Delaware 9/29/2005 100% owned by HS TM Holdings, LLC.  Converted to an LLC on 6/28/06. HS Trust I British Virgin Islands 12/6/2007 Nerine Trust Company (BVI) Limited = Trustee, 100% owned by HS Beneficiary Services, LLC = beneficiary HSI Gloves, Inc. D Delaware 10/24/2003 100% owned by Henry Schein, Inc. HSI RE I, LLC D Delaware 6/4/2001 100% owned by Henry Schein, Inc. HSLA Unit Trust ABN #83 132 312 515 I Australia 4/13/2004 100% owned by Henry Schein Regional Pty Ltd. (Unit Trust) (Kraft No. 3 is the trustee company of HSLA Unit Trust. Kraft No. 3 is owned by Jacob Selinger pursuant to a Declaration Trust) HSR Holdings Pty Limited ACN # 114 233 671 I Australia 5/12/2005 100% owned by Henry Schein Regional Pty Limited (Unit Trust)     [**] - Confidential or proprietary information redacted.   5 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership Insource, Inc. D Virginia 5/10/1991 100% by General Injectables & Vaccines, Inc. Kent Express Limited Company Number: 3819137 I United Kingdom 8/3/1999 100% owned by Henry Schein UK Holdings Limited. Krugg S.p.A. I Italy 79 100% owned by Henry Schein Italia Srl [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] MBM Hospital Supply Corp. D New York 11/20/1987 100% owned by Micro Bio-Medics, Inc. MediConsumables Pty Limited I Australia   Henry Schein Australia Pty Limited owns 58 Class A Shares and 58 Class B Shares or 58% of the company, 14% is owned by 247 Church Street Pty Limited and 28% by Stangcrop Pty Limited Medka Medizinprodukte GmbH ID No.: HRB 95560B I Germany 12/17/2004 100% owned by Heiland Med Vertriebsgesellschaft mbH Megadental SAS I France 10/14/1996 35% owned by Megaindustries SARL 49.92% owned by Henry Schein France SCA 14.98% owned by Henry Schein France Services SARL 0.10% owned by Henry Schein France Holdings, Inc. Micro Bio-Medics, Inc. D New York 7/2/1971 100% owned by Henry Schein, Inc. Note: Caligor Physicians & Hospital Supply Corp. which was incorpoated on 1/21/82 (sep. from Caligor entity of the same name incorporated on 12/4/84) was merged into Micro Bio-Medics, Inc. on 11/30/84. Minerva Dental Limited Company Number: 3856630 I United Kingdom 10/11/1999 100% Henry Schein UK Holding Limited National Logistics Services, LLC EIN #52-2063341 D Delaware 11/10/1997 100% by Henry Schein, Inc. Nordenta Handelsgesellschaft mbH HRB 85039 AG Hamburg I Germany 8/27/2002 100% owned by FIRST MED Erste Verwaltungs GmbH Noviko a.s. ID No.: 25316800 I Czech Republic 11/12/1996 100% owned by Desty Estates s.r.o. Ortho Organizers Holdings, Inc. D Delaware 5/18/2005 98.29% owned by Becker-Parkin Dental Supply Co. Inc., 1.71% owned by George W. Guttroff , Trustee of the George W. Guttroff and Judi A. Guttroff AB Living Trust dated 5/3/05 Ortho Organizers, Inc. D California 6/11/1981 100% owned by Ortho Organizers Holdings, Inc. Petco AG I Switzerland 11/19/1982 100% owned by Provet Holding AG Prolavi S.L. Tax Identification No.: B78359650 I Spain 10/27/1986 100% owned by Henry Schein Espana S.A. Promed Vertriebsgesellschaft mbH & Co.  KG HRA 73311 AG Munchen I Germany 12/8/1998 General Partner: FIRST MED Zweite Verw, GmbH; Limited Partner: HLZ Logistik GmbH Protec Australia Pty Limited ACN #108 829 750 I Australia 4/23/2004 100% owned by Kraft No. 3 Pty Limited, Kraft No. 3 Pty Limited Director is Jacob Selinger. 100% of the shares in Kraft No. 3 Pty Ltd are held in Trust for HSLA Unit Trust pursuant to Declaration of Trust.  100% of the units in HSLA Unit Trust are owned by Henry Schein Regional Pty Limited (Unit Trust) (trustee for Henry Schein Regional Unit Trust.) Provet AG I Switzerland 12/14/1993 100% Provet Holding AG Provet Holding AG I Switzerland 12/28/1973 100% owned by Henry Schein Holding GmbH     [**] - Confidential or proprietary information redacted.   6 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership PxD Praxis-Discount GmbH, Commercial Register of Lower Court of Osnabruck HRB 111162   I Germany 8/24/2005 100% owned by FIRST MED Zweite Verwaltungs GmbH [**] [**] [**] [**] [**] RHL Holdings Limited I New Zealand   90% Corporate Sureties Limited (N2) ATF MediConsumables Pty Limited, 10% Macro Health Limited S & S Discount Supply, Inc. D Delaware 1/18/1996 100% owned by Henry Schein, Inc. S-DENT SLOVAKIA, s.r.o. ID No.: 34 126 678 Commercial Register of the Districk Court in Trencin I Slovakia 8/13/1995 92.68% owned by S-Dent spol. s.r.o., 7.32% owned by Henry Schein Austria GmbH S-Dent spol. s r.o. ID No.: 469 77 830 (Limited Liability Company)  Commercial Register of the Regional Court in Brno Section C Inset 7861 I Czech Republic 11/10/1992 100% owned by Gaudent-Sanitaria s.r.o. Shalfoon Bros Limited Company No.: 107175 I New Zealand 12/22/1947 100% owned by Henry Schein Regional Limited Sherman Specialty LLC D New York 1/28/1999 51% owned by Toy Products Corp. – 49% owned by Sherman Specialty, Inc. Sirona Dental Systems B.V. ID No.: 30070331 I Netherlands 10/1/1983 72.7% owned by Henry Schein Europe, Inc. (1595 shares) and 27.3% owned by Henry Schein Dental Holding GmbH (600 shares) Soluciones y Equipos Dentales, S.A. I Spain 12/13/1999 100% owned by Henry Schein Espana S.A. Software of Excellence Asia Pacific Limited Company No.: 1130136 I New Zealand 4/9/2001 100% owned by Software of Excellence International Limited Software of Excellence Australia Limited Company No.: 1008243 I New Zealand 12/16/1999 100% owned by Software of Excellence International Limited Software of Excellence International Limited Company No.: 496073 I New Zealand 12/24/1990 100% owned by Henry Schein New Zealand Software of Excellence UK Holdings Limited Company No. 06590221 I United Kingdom 5/12/2008 100% owned Henry Schein C.V. Software of Excellence United Kingdom Limited Company No.:  02940919 I United Kingdom 6/21/1994 100% owned by Software of Excellence UK Holdings Limited Spain Dental Express S.A. I Spain 2/25/1997 100% owned by Henry Schein Espana SA Tierarztebedarf Jochen Lehnecke GmbH HRB 131653 AG Oldenburg I Germany 8/4/2004 100% owned by FIRST MED Zweite Verwaltungs GmbH Toy Products Corp. D Delaware 1/21/1999 100% owned by Henry Schein, Inc. Universal Footcare Holdings Corp. D Delaware 4/19/1994 100% owned by Henry Schein, Inc. Universal Footcare Products, Inc. D Delaware 4/19/1994 100% owned Universal Footcare Holdings Corp. Veterinary Solutions Limited Company No.: 04207571 I Scotland (United Kingdom) 4/27/2001 100% owned by Software of Excellence United Kingdom Limited Winslow Acquisition Company (to be renamed WA Butler Company) D Delaware 11/19/2009 *70.5074% owned by Henry Schein, Inc. *29.4926% owned by Oak Hill Capital Partners II, L.P.   *Approximate ownership; actual amounts to be determined at closing.     [**] - Confidential or proprietary information redacted.   7 --------------------------------------------------------------------------------     CONFIDENTIAL Schedule 5.14   Entity *Denotes confidential relationship I/D Jurisdiction of Formation Formation  Date Ownership W. & J. Dunlop Limited Company No. SC011600 I Scotland  (United Kingdom) 1/27/1921 100% owned by Henry Schein UK Holdings Limited Henry Schein New Zealand Holding Co. D Delaware 5/25/2007 100% owned by Henry Schein Latin America Pacific Rim Inc. MediQuick Arzt- und, Krankenhausbedarfshandel GmbH HRB 110796 AG Osnabrueck I Germany 8/22/2001 100% owned by FIRST MED Zweite Verwaltungs GmbH           b)                   D4D Technologies, LLC D Delaware 6/12/2006 15.33 % owned by Henry Schein, Inc., 24% owned by 3M, 24% owned by Ivoclar, 36.67% owned by D4D founders [**] [**] [**] [**] [**] DES Dental Events GmbH I Germany 3/22/1999 33.3% owned by Henry Schein Dental Depot GmbH Hippocampe Bressuire I France 10/23/1978 96.99% held by Hippocampe Caen, 3.01% held by minorities Hippocampe Caen I France 6/4/1987 Hippocampe EVI 68.59%, 173 other shareholders 31.41% Hippocampe EVI I France 6/14/1995 Outstanding shares:  Henry Schein France Services SARL: 40.8%, MegaIndustries SARL: 40.8%; Hippocampe Nevers: 9.76%; (non-voting), Hippocampe Bressuire: 8.61% non-voting). Voting shares: Henry Schein France Services SARL: 50%, Mega Industrie: 50% Hippocampe Nevers I France 4/21/1995 95% held by Hippocampe Caen, 4.5% held by Medicavet Quality Clinical Reagents Limited Company No.: 03942554 I United Kingdom (England, Wales) 8/3/2000 25% owned by Veterinary Solutions Limited, 70% owned by Stephen Michael Alford and 5% owned by John Edmond Daniell Trio Diagnostics Limited Company No.: 01997360 I United Kingdom (England, Wales) 3/7/1986 100% owned by Quality Clinical Reagents Limited     [**] - Confidential or proprietary information redacted.   8 --------------------------------------------------------------------------------
Exhibit 10.7 PREPARED BY AND WHEN RECORDED RETURN TO:   LATIMER LEVAY FYOCK LLC 55 W. Monroe Street, Suite 1100 Chicago, IL 60603 Attn.: Janet Wagner, Esq. LLF File No.: 72001-381   Parcel/ID: 15-15-313-003   Property Address: 1255 Town Center Road Vernon Hills, Illinois (Lake County)   MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING (Illinois)   THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING (as the same may from time to time hereafter be modified, supplemented or amended, this “Mortgage”) is made as of May 3, 2017, by IRESI VERNON HILLS COMMONS, L.L.C., a Delaware limited liability company (“Mortgagor”), having its principal place of business and mailing address at 2901 Butterfield Road, Oak Brook, Illinois 60523, to and for the benefit of PARKWAY BANK AND TRUST COMPANY, an Illinois banking corporation, having a principal place of business and mailing address at 4800 N. Harlem Avenue, Harwood Heights, IL 60706, as “Lender”.   WITNESSETH:   Mortgagor is justly indebted to Lender for money borrowed (the “Loan”) in the original principal sum of Thirteen Million Eight Hundred Thousand and 00/100 Dollars ($13,800,000.00) (the “Loan Amount”) made pursuant to the Loan Agreement of even date herewith (as amended, restated or otherwise modified from time to time, the “Loan Agreement”) and evidenced by a Secured Promissory Note of even date herewith executed by Mortgagor, made payable and delivered to Lender (as may be modified, amended, supplemented, extended or consolidated in writing and any note(s) issued in exchange therefor or replacement thereof, the “Note”), in which Note the Mortgagor 1    promises to pay to Lender the Loan Amount, together with all accrued and unpaid interest thereon, interest accrued at the Default Rate (if any), Late Charges (if any) and all other obligations and liabilities due or to become due to Lender pursuant to the Loan Documents and all other amounts, sums and expenses paid by or payable to Lender pursuant to the Loan Documents (as defined in the Loan Agreement) (collectively the “Indebtedness”) until the Indebtedness has been paid in accordance with the Note and other Loan Documents. Capitalized terms used herein and not otherwise defined shall have those meanings given to them in the other Loan Documents.   The Note is in the original principal amount of $13,800,000.00 and matures May 3, 2024.   NOW, THEREFORE, to secure the payment of the Indebtedness in accordance with the terms and conditions of the Loan Documents, and all extensions, modifications, and renewals thereof and the performance of the covenants and agreements contained therein, and also to secure the payment of any and all other Indebtedness, direct or contingent, that may now or hereafter become owing from Mortgagor to Lender in connection with the Loan Documents, and in consideration of the Loan Amount in hand paid, receipt of which is hereby acknowledged, Mortgagor does by these presents hereby grant, bargain, sell, alien, convey, mortgage, warrant, assign, transfer, hypothecate, pledge, deliver, set over and confirm, remise and release unto Lender, its successors and assigns forever, with power of sale, that certain real estate and all of Mortgagor’s estate, right, title and interest therein, located in the County of Lake, State of Illinois, more particularly described in Exhibit ”A” attached hereto and made a part hereof (the “Land”), which Land, together with the following described property, rights and interests, is collectively referred to herein as the “Premises,” together with:   A.Mortgagor’s interest as lessor in and to all Leases and all Rents, which are pledged primarily and on a parity with the Land and not secondarily; and   B.All and singular the tenements, hereditaments, easements, appurtenances, passages, waters, water courses, riparian rights, direct flow, ditch, reservoir, well and other water rights, whether or not adjudicated, whether tributary or nontributary and whether evidenced by deed, water stock, permit or otherwise, sewer rights, rights in trade names (excluding however, the “Inland” name and logo), licenses, permits and contracts, and all other rights, liberties and privileges of any kind or character in any way now or hereafter appertaining to the Land, including but not limited to, homestead and any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and the right in the case of foreclosure hereunder of the encumbered property for Lender to take and use the name by which the buildings and all other improvements situated on the Premises are commonly known and the right to manage and operate the said buildings under any such name and variants thereof; and 2    C.All right, title and interest of Mortgagor in any and all buildings and improvements of every kind and description now or hereafter erected or placed on the said Land and all materials intended for construction, reconstruction, alteration and repairs of such buildings and improvements now or hereafter erected thereon, all of which materials shall be deemed to be included within the Premises immediately upon the delivery thereof to the Premises, and a security interest in all fixtures now or hereafter owned by Mortgagor and attached to or contained in and used in connection with the Premises including, but not limited to, all machinery, motors, elevators, fittings, radiators, awnings, shades, screens, and all plumbing, heating, lighting, ventilating, refrigerating, incinerating, air-conditioning and sprinkler equipment and fixtures and appurtenances thereto; all items of furniture, furnishings, equipment and personal property owned by Mortgagor used or useful in the operation of the Premises; and all renewals or replacements of all of the aforesaid property owned by Mortgagor or articles in substitution therefor, whether or not the same are or shall be attached to said buildings or improvements in any manner (collectively, the “Improvements”). Mortgagor and Lender mutually agree, intend and declare that all the Improvements owned by Mortgagor and placed by it on the Land or used in connection with the operation or maintenance of the Premises shall, so far as permitted by law, be deemed to form a part and parcel of the Land and, for the purpose of this Mortgage, to be Land and covered by this Mortgage, and as to any of the Improvements which do not form a part and parcel of the Land or do not constitute a “fixture” (as such term is defined in the Uniform Commercial Code in effect in the state where the Premises is located, as amended, modified and/or recodified from time to time, the “UCC”), this Mortgage and the other Loan Documents (the terms of which grant a security interest in personal property or real property, the proceeds of which may become personal property) are each hereby deemed to be, as well, a security agreement under the UCC for the purpose of creating a security interest in all items, including, but not limited to all property and rights which Mortgagor may grant, assign, bargain, sell, transfer, set over, deliver, or otherwise convey to Lender, as secured party, under the terms of this Mortgage or any of the other Loan Documents, including any and all proceeds thereof. Mortgagor hereby appoints Lender as its attorney-in-fact, effective upon the occurrence of any Event of Default, to execute such documents necessary to perfect Lender’s security interest and authorizes Lender at any time until the Indebtedness is paid in full, to prepare and file, at Mortgagor’s expense, any and all UCC financing statements, amendments, assignments, terminations and the like, reasonably necessary to create and/or maintain a prior security interest in such property all without Mortgagor’s execution of the same. Furthermore, upon the occurrence of any Event of Default under the Loan Documents, Lender will, in addition to all other remedies provided for in the Loan Documents, have the 3    remedies provided for under the UCC. Mortgagor warrants that, to its knowledge, the location of such property is upon the real estate. Mortgagor covenants and agrees that Mortgagor will furnish Lender with notice of any change in Mortgagor’s name, identity, entity, structure, organization identification number and residence or principal place of business within thirty (30) days of the effective date of any such change. Mortgagor, as debtor, hereby grants to Lender, as secured party, a security interest in all Improvements (to the extent Improvements include any personal property pursuant to the UCC) as security for the Loan and Indebtedness and Borrower hereby authorizes Lender to file any financing statements as Lender may reasonably require in order to perfect such grant of security interest. This Mortgage is being recorded as a Fixture Filing (as defined in the UCC), and for this purpose, the name and address of the debtor is the name and address of Mortgagor as set forth in this Mortgage, and the name and address of the secured party is the name and address of Lender as set forth in this Mortgage; and   D.All right, title and interest of Mortgagor, now or hereafter acquired, in and to any and all strips and gores of land adjacent to and used in connection with the Premises and all right, title and interest of Mortgagor, now owned or hereafter acquired, in, to, over and under the ways, streets, sidewalks and alleys adjoining the Premises; and   E.All funds now or hereafter held by Lender under any property reserves agreement (including any proceeds derived from any letter of credit) or escrow security agreement or under any of the terms hereof or of the Loan Documents, including but not limited to funds held under the provisions of the Loan Agreement; and   F.All of Mortgagor’s payment intangibles, letter of credit rights, interest rate cap agreements, tenant in common agreement rights, and any other contract rights of Mortgagor related in any manner to the ownership, operation, or management of the Premises, as well as any and all supporting obligations, and all proceeds, renewals, replacements and substitutions thereof; and   4    G.All funds, accounts and proceeds thereof relating to the Premises whether or not such funds, accounts or proceeds thereof are held by Lender under the terms of any of the Loan Documents, including, but not limited to bankruptcy claims of Mortgagor against any tenant at the Premises, and any proceeds thereof; proceeds of any Rents, insurance proceeds from all insurance policies required to be maintained by Mortgagor under the Loan Documents (subject to the balance of the terms of this Mortgage); all refunds and rebates with respect to any tax or utility payments; and all awards, decrees, proceeds, settlements or claims for damage now or hereafter made to or for the benefit of Mortgagor by reason of any damage to, destruction of or taking of the Premises or any part thereof, whether the same shall be made by reason of the exercise of the right of eminent domain or by condemnation or otherwise (a “Taking”).   TO HAVE AND TO HOLD the same unto Lender, its successors and assigns, upon the uses, covenants and agreements herein expressed; PROVIDED, HOWEVER, that should the Indebtedness be paid according to the tenor and effect thereof when the same shall become due and payable as provided for in the Loan Documents, and should Mortgagor perform all covenants contained in the Loan Documents in a timely manner, then this Mortgage shall be cancelled and released.   Mortgagor represents that it shall forever warrant and defend the title to the Premises against all claims and demands of all persons whomsoever and will on demand execute any additional instrument which may be required to give Lender a valid first lien on all of the Premises, subject to the Permitted Encumbrances.   Mortgagor further represents that (i) the Premises is not subject to any casualty damage; (ii) Mortgagor has not received any written notice of any eminent domain or condemnation proceeding affecting the Premises; (iii) all leasing broker fees and commissions payable by Mortgagor with respect to the Lease(s) have been paid in full, in cash or other form of immediately available funds; and (iv) to the best of Mortgagor’s knowledge, following due and diligent inquiry, there are no actions, suits or proceedings pending, completed or threatened against or affecting Mortgagor or any Person owning an interest (directly or indirectly) in Mortgagor (“Interest Owner(s)”) or any property of Mortgagor or any Interest Owner in any court or before any arbitrator of any kind or before or by any governmental authority (whether local, state, federal or foreign) that, individually or in the aggregate, could reasonably be expected by Lender to be material to the transaction contemplated hereby. Notwithstanding the foregoing, no representation is made concerning holders of interests in Mortgagor who are Interest Owners solely by virtue of their ownership interest in the Mortgagor.     5    Mortgagor further represents, warrants and covenants that as of the date hereof and until the Indebtedness is paid in full:   (a)Mortgagor and each Person owning an interest in Mortgagor and/or any guarantor is not (i) identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), (ii) a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of the laws and regulations of the United States of America or any Executive Order of the President of the United States of America;   (b)none of the funds or other assets of Mortgagor constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined);   (c)no Embargoed Person has any interest of any nature whatsoever in Mortgagor (whether directly or indirectly);   (d)none of the funds of Mortgagor have been derived from any unlawful activity with the result that the investment in Mortgagor is prohibited by law or that the Loan Documents are in or will be in violation of law,   (e)Mortgagor has and will continue to implement procedures, and has consistently and will continue to consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. The term “Embargoed Person” means any person, entity or government subject to trade restrictions under the laws of the United States of America, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the result that the investment in Mortgagor is prohibited by law or Mortgagor is in violation of law;   (f)Mortgagor has complied and will continue to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect; and 6    (g)Mortgagor has not and will not use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Lender under the Loan Documents.   Mortgagor will immediately notify Lender in writing if any of the representations, warranties or covenants in this Mortgage are no longer true or have been breached or if Mortgagor has a reasonable basis to believe that they may no longer be true or have been breached. In addition, Mortgagor will, at the request of Lender, provide such information as may be requested by Lender to determine Mortgagor’s compliance with the terms hereof.   Mortgagor COVENANTS AND AGREES AS FOLLOWS:   1.       Mortgagor shall:   (a)       pay each item of Indebtedness secured by this Mortgage when due according to the terms of the Loan Documents;   (b)       pay, to the extent permitted by law, a Late Charge on any payment of principal, interest or Indebtedness which is not paid on or before the due date as required under the Note;   (c)       pay, on or before the due date thereof any indebtedness permitted to be incurred by Mortgagor pursuant to the Loan Documents and any other claims which could become a lien on the Premises (unless otherwise specifically addressed in paragraph 1(e) hereof), and upon request of Lender exhibit satisfactory evidence of the discharge thereof;   (d)       complete within a reasonable time, the construction of any Improvements now or at any time in process of construction upon the Land which are required to be performed by Mortgagor;     7    (e)       manage, operate and maintain the Premises and keep the Premises, including, but not limited to, the Improvements, in good condition and repair and free from mechanics liens or other liens or claims for liens, provided, however, that Mortgagor may in good faith, with reasonable diligence and upon written Notice to Lender within thirty (30) days after Mortgagor has knowledge of such lien or claim, contest the validity or amount of any such lien or claim and defer payment and discharge thereof during the pendency of such contest in the manner provided by law, provided that (i) such contest may be made without the payment thereof; (ii) such contest shall prevent the sale or forfeiture of the Premises or any part thereof, or any interest therein, to satisfy such lien or claim; (iii) Mortgagor shall have obtained a bond over such lien or claim from a bonding company acceptable to Lender which has the effect of removing such lien or collection of the claim or lien so contested; (iv) Mortgagor shall pay all costs and expenses incidental to such contest; and (v) in the event of a final, non-appealable ruling or adjudication adverse to Mortgagor or the Premises and provided the court of jurisdiction has not granted a stay of the enforcement of the ruling or judgment, Mortgagor shall promptly pay such claim or lien, shall indemnify and hold Lender and the Premises harmless from any loss or damage arising from such contest and shall take whatever action necessary to prevent sale, forfeiture or any other loss or damage to the Premises or to Lender.   (f)       comply, and cause each lessee or other user of the Premises to comply, with all requirements of law and ordinance, and all rules and regulations, now or hereafter enacted, by authorities having jurisdiction of the Premises and the use thereof, including but not limited to all covenants, conditions and restrictions of record pertaining to the Premises, the Improvements, and the use thereof (collectively, “Legal Requirements”);   (g)       subject to the provisions of Paragraph 5 hereof, promptly repair, restore or rebuild any Improvements now or hereafter a part of the Premises which may become damaged or be destroyed by any cause whatsoever, so that upon completion of the repair, restoration and rebuilding of such Improvements, there will be no liens of any nature arising out of the construction and the Premises will be of substantially the same character and quality as it was prior to the damage or destruction;   (h)       if other than a natural person, do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges under the laws of the state of its formation and, if other than its state of formation, the state where the Premises is located. Mortgagor shall notify Lender at least thirty (30) days prior to any relocation of Mortgagor’s principal place of business to a different state or any change in Mortgagor’s state of formation;     8    (i)       do all things necessary to preserve and keep in full force and effect Lender’s title insurance coverage insuring the lien of this Mortgage as a first and prior lien, subject only to the Permitted Encumbrances and any other exceptions after the date of this Mortgage approved in writing by Lender, including without limitation, delivering to Lender not less than 30 days prior to the effective date of any rate adjustment, modification or extension of the Note or any other Loan Document, any new policy or endorsement which may be reasonably required to assure Lender of such continuing coverage;   (j)       execute any and all documents which may be required to perfect the security interest granted by this Mortgage; and   (k)       remain a Limited-Asset Entity.   2.        Mortgagor shall not:   (a)       construct any building or structure nor make any alteration or addition (other than normal repair and maintenance) to (i) the roof or any structural component of any Improvements on the Premises or (ii) the building operating systems, including, but not limited to, the mechanical, electrical, heating, cooling, or ventilation systems (other than replacement with equal or better quality and capacity), in each case except to the extent that such activity is required by applicable Legal Requirements;   Notwithstanding anything hereinabove to the contrary, the restrictions set forth in this Paragraph 2(a) shall not be applicable if such activity is (i) required by applicable Legal Requirements or (ii) specifically provided for in a Lease approved by Lender prior to closing of the Loan or thereafter, in which a tenant has the right to complete any of the above without Mortgagor’s prior consent in its capacity as landlord under such Lease. With respect to any Lease in which the above activities require Mortgagor’s prior consent (in its capacity as landlord under such Lease), Mortgagor shall also obtain Lender’s prior written consent, not to be unreasonably withheld;   (b)       remove or demolish any material Improvements, or any portion thereof, which at any time constitute a part of the Premises;     9    Notwithstanding anything hereinabove to the contrary, Mortgagor may construct, remove or demolish tenant improvements within the then-existing building(s) or other structures to the extent such work is required solely under the terms of any Leases approved by Lender provided (i) no Event of Default exists under the Loan Documents; (ii) the work is completed on a timely basis, in a good, workmanlike, lien-free manner and in accordance with all Legal Requirements; and (iii) such work does not negatively affect the structural integrity of the Improvements or the value of the Premises.   (c)       cause or permit any change to be made in the general use of the Premises without Lender’s prior written consent;   (d)       initiate any or acquiesce to a zoning reclassification or material change in zoning of the Premises without Lender’s prior written consent. Mortgagor shall use all reasonable efforts to contest any such zoning reclassification or change;   (e)       make or permit any use of the Premises that could with the passage of time result in the creation of any right of use, or any claim of adverse possession or easement on, to or against any part of the Premises in favor of any Person or the public;   (f)       except for the Permitted Transfers described in Section 6.19 of the Loan Agreement, Leases permitted by the terms of the Assignment of Leases or to the extent permitted elsewhere in the Loan Documents, permit, acquiesce to or allow any of the following to occur: (i) a sale, conveyance, assignment, transfer, encumbrance (other than the lien hereof, the Lease(s), the Permitted Encumbrances and those liens which Mortgagor is contesting in accordance with this Mortgage), alienation, pledge or other disposition (whether directly or indirectly, voluntary or involuntary, or by operation of law) of all or any portion of the Premises or an interest in the Premises or direct or indirect ownership interests in the Mortgagor; (ii) the reconstitution or conversion of Mortgagor and/or any Interest Owner from one entity to another type of entity except in connection with a Permitted Transfer; (iii) the issuance or other creation of ownership interests in the Mortgagor and/or any Interest Owner, except as otherwise expressly permitted by the Loan Agreement; (iv) a merger, consolidation, reorganization or any other business combination with respect to Mortgagor and/or any Interest Owner that is not an Interest Owner solely by virtue of its ownership interest in the Mortgagor; (v) a conversion to or operation of all or any portion of the Premises as a cooperative or condominium form of ownership; or (vi) if Mortgagor is a trust, the addition, deletion or substitution of a signatory trustee of such trust. For the purposes of this provision, any of the events described above shall be defined as a “Transfer”. If any such Transfer occurs without the prior written consent of Lender, it shall be null and void and shall constitute an immediate Event of Default under the Loan Documents. Lender may, in its commercially reasonable discretion, consent to a Transfer (not otherwise expressly permitted by the terms hereof), and any such consent shall not constitute a consent as to any other Transfer; 10    (g) cause, permit or allow: (i) any Person to own an interest in Mortgagor who is (A) identified on the Specially Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other similar list maintained by OFAC, or (B) a party with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States; (ii) any of the funds or other assets of Mortgagor to constitute property of, or be beneficially owned, directly or indirectly, by any Embargoed Person; (iii) an Embargoed Person to have any interest of any nature whatsoever in Mortgagor (whether directly or indirectly); or (iv) any of its funds to be derived from any unlawful activity with the result that the investment in Mortgagor is prohibited by law or that the Loan Documents are in or will be in violation of law.   3. (a) Mortgagor shall pay, or cause to be paid when due, and before any penalty attaches or interest accrues, all general taxes, special taxes, assessments (including assessments for benefits from public works or improvements whenever begun or completed), utility charges, water charges, sewer service charges, common area maintenance charges, if any, vault or space charges and all other like charges against or affecting the Premises or against any property or equipment located on the Premises, or which might become a lien on the Premises, and shall, within ten (10) days following Lender’s request, furnish to Lender a duplicate receipt of such payment. If any such tax, assessment or charge may legally be paid in installments, Mortgagor may, at its option, pay such tax, assessment or charge in installments.   (b)       If Mortgagor desires to contest any tax, assessment or charge relating to the Premises, Mortgagor may do so by paying the same in full, under protest, in the manner provided by law; provided, however, that (i) if contest of any tax, assessment or charge may be made without the payment thereof, and (ii) such contest shall have the effect of preventing the collection of the tax, assessment or charge so contested and the sale or forfeiture of the Premises or any part thereof or any interest therein to satisfy the same, then Mortgagor may, in its discretion and upon the giving of Notice to Lender of its intended action and upon the furnishing to Lender of such security or bond as Lender may require, contest any such tax, assessment or charge in good faith and in the manner provided by law. All costs and expenses incidental to such contest shall be paid by Mortgagor. In the event of a ruling or adjudication adverse to Mortgagor, Mortgagor shall promptly pay such tax, assessment or charge. Mortgagor shall indemnify and save harmless the Lender and the Premises from any loss or damage arising from any such contest and shall, if necessary to prevent sale, forfeiture or any other loss or damage to the Premises or to Lender, pay such tax, assessment or charge or take whatever action is necessary to prevent any sale, forfeiture or loss.     11    4. (a) Mortgagor shall at all times keep or cause to be kept in force (i) property insurance insuring all Improvements which now are or hereafter become a part of the Premises for perils covered by a Standard “All Risk” insurance policy (to include Basic and Broad Form causes of loss), including coverage against terrorism containing both replacement cost and agreed amount endorsements or equivalent coverage; (ii) commercial general liability insurance naming Lender as an additional insured protecting Mortgagor and Lender against liability for bodily injury or property damage occurring in, on or adjacent to the Premises in commercially reasonable amounts; (iii) boiler and machinery insurance if the property has a boiler or is an office building; (iv) rental value insurance for the perils specified herein for one hundred percent (100%) of the Rents (including operating expenses, real estate taxes, assessments and insurance costs which are lessee’s liability) for a period of twelve (12) months; (v) builders risk insurance during all periods of construction; and (vi) insurance against all other hazards as may be reasonably required by Lender, including, without limitation, insurance against loss or damage by flood, hurricane and windstorm. Notwithstanding anything herein above to the contrary, if neither: (i) property insurance without an exclusion for terrorism, terrorist acts or similar perils (“Terrorism”) nor (ii) a separate policy insuring specifically against Terrorism is available at a cost which is in Lender’s opinion commercially reasonable, taking into consideration, among other things, (A) how properties similar in type, size, quality and location are insured with respect to Terrorism and (B) the amount of coverage, premium and deductible applicable to such insurance, then Lender agrees to waive the requirement to provide insurance covering Terrorism until such coverage again becomes available at a cost that is commercially reasonable in Lender’s opinion.   (b)       All insurance (including deductibles and exclusions) shall be in form, content and amounts approved by Lender and written by an insurance company or companies approved by Lender and rated A-, class size VIII or better in the most current issue of Best’s Insurance Reports and which is licensed to do business in the state in which the Premises are located or a governmental agency or instrumentality approved by Lender. The policies for such insurance shall have attached thereto standard mortgagee clauses in favor of and permitting Lender to collect any and all proceeds payable thereunder and shall include a thirty (30) day (except for nonpayment of premium, in which case, a ten (10) day) notice of cancellation clause in favor of Lender. All certificates of insurance (or policies if requested by Lender) shall be delivered to and held by Lender as further security for the payment of the Note and any other obligations arising under the Loan Documents, with evidence of renewal coverage delivered to Lender at least thirty (30) days before the expiration date of any policy. Mortgagor shall not carry or permit to be carried separate insurance, concurrent in kind or form and contributing in the event of loss, with any insurance required in the Loan Documents.   12    5.       In the event of any damage to or destruction of the Premises, or any part thereof (and subject to the provisions of Paragraph 5(e) below):   (a)       Mortgagor shall immediately give Lender Notice thereof. Lender shall have the right (which may be waived by Lender in writing) to settle and adjust any claim in excess of $100,000 under such insurance policies required to be maintained by Mortgagor. In all circumstances, the proceeds thereof shall be paid to Lender and Lender is authorized to collect and to give receipts therefor; provided that proceeds of claims not exceeding $100,000 shall be paid to Mortgagor so long as there is no then existing Event of Default. Mortgagor agrees and acknowledges that such proceeds shall be held by Lender without any allowance of interest and that in any bankruptcy proceeding of Mortgagor, all such proceeds shall be deemed to be “Cash Collateral” as that term is defined in Section 363 of the Bankruptcy Code. Provided that no Event of Default exists, Mortgagor shall have the right to participate in any settlement or adjustment; provided, however, that any settlement or adjustment shall be subject to the written approval of Lender, not to be unreasonably withheld, conditioned or delayed.   (b)       Such proceeds, after deducting therefrom any reasonable expenses incurred by Lender in the collection thereof (including but not limited to reasonable attorneys’ fees and costs), shall be applied by Lender to pay the Indebtedness secured hereby, whether or not then due and payable, without prepayment penalty.   Notwithstanding anything hereinabove to the contrary (but subject to the provisions of Paragraph 5(e) below),   (i)       in the event the casualty occurs more than six (6) months prior to the maturity date of the Note and no Event of Default exists, Lender shall apply such proceeds as follows:   (A)       If the aggregate amount of such proceeds is less than $100,000, Lender shall pay such proceeds directly to Mortgagor, to be held in trust for Lender and applied to the cost of rebuilding and restoring the Premises. If there is an existing Event of Default, such proceeds shall be paid to Lender.   (B)       If the aggregate amount of such proceeds equals or exceeds $100,000, such proceeds shall be paid to Lender, and Lender shall disburse such amounts of the proceeds as Lender reasonably deems necessary for the repair or replacement of the Premises, subject to the conditions set forth in paragraph 5(c) below. 13      (ii)       in the event (x) an Event of Default exists, or (y) the casualty occurs during the last six (6) months prior to the maturity date of the Note and Lender determines that the repair and restoration of such casualty cannot be completed prior to the maturity date of the Note, or (z) the conditions set forth in paragraph 5(c) are not met, then Lender, in its sole and absolute discretion may either:   (A)       declare the entire Indebtedness to be immediately due and payable without prepayment penalty. In such event, all proceeds shall be applied toward payment of the Indebtedness in such priority as Lender elects; or   (B)       disburse such proceeds as Lender reasonably deems necessary for the repair or replacement of the Premises subject to those conditions set forth in paragraph 5(c) which Lender in its sole and absolute discretion may require.   (c) (i) In the event that Mortgagor is to be reimbursed out of the insurance proceeds or out of any award or payment received with respect to a Taking, Lender shall from time to time make available such proceeds, subject to the following conditions: (A) there continues to exist no Event of Default; (B) the delivery to Lender of satisfactory evidence of the estimated cost of completion of such repair and restoration work and any architect’s certificates, waivers of lien, contractor’s sworn statements, and other evidence of cost and of payment and of the continued priority of the lien hereof over any potential liens of mechanics and materialmen (including, without limitation, title policy endorsements) as Lender may reasonably require and approve; (C) the time required to complete the repair and restoration work and for the income from the Premises to return to the level it was prior to the loss will not exceed the coverage period of the rental value insurance required hereunder; (D) Lender approves the plans and specifications of such work before such work is commenced if the estimated cost of rebuilding and restoration exceeds 25% of the Indebtedness or involves any structural changes or modifications (if said plans and specifications substantially comply with those previously approved by Lender, Lender’s approval shall not be unreasonably withheld); (E) if the amount of any insurance proceeds, award or other payment is insufficient to cover the cost of restoring and rebuilding the Premises, Mortgagor shall pay such cost in excess of such proceeds, award or other payment before being entitled to reimbursement out of such funds; (F) Mortgagor pays to Lender a non-refundable processing fee equal to the greater of $5,000.00 or .25% of the amount of such proceeds within sixty (60) days of the occurrence of any such damage 14    or destruction and before Lender disburses any proceeds; and (G) such other conditions to such disbursements that, in Lender’s reasonable discretion, would be customarily required by a construction lender doing business in the area where the Premises is located or which are otherwise required by any rating agency rating a Securitization Transaction.   (ii)       No payment made by Lender prior to the final completion of the repair or restoration work shall, together with all payments theretofore made, exceed 90% of the cost of such work performed to the time of payment, and at all times the undisbursed balance of said proceeds shall be at least sufficient to pay for the cost of completion of such work free and clear of all liens. Any proceeds remaining after payment of the cost of rebuilding and restoration shall, at the option of Lender, either be (a) applied in reduction of the Indebtedness secured hereby, or (b) paid to Mortgagor.   (iii)       Repair and restoration of the Premises shall be commenced promptly after the occurrence of the loss and shall be prosecuted to completion diligently, and the Premises shall be so restored and rebuilt to substantially the same character and quality as prior to such damage and destruction and shall comply with all Legal Requirements.   (d)       Should such damage or destruction occur after foreclosure or sale proceedings have been instituted, the proceeds of any such insurance policy or policies, if not applied in rebuilding or restoration of the Improvements, shall be used to pay (i) the Indebtedness then due and owing in the event of a non-judicial sale in such priority as Lender elects, or (ii) the amount due in accordance with any decree of foreclosure or deficiency judgment that may be entered in connection with such proceedings, and the balance, if any, shall be paid to the owner of the equity of redemption if it shall then be entitled to the same, or otherwise as any court having jurisdiction may direct.   6.       In the event of the commencement of a Taking affecting the Premises:   (a)       Mortgagor shall give Lender Notice thereof. Lender may participate in such proceeding, and Mortgagor shall deliver to Lender all documents requested by it to permit such participation. 15      (b)       Mortgagor shall cause the proceeds of any award or other payment made relating to a Taking, to be paid directly to Lender. Lender, in its sole and absolute discretion: (i) may apply all such proceeds to pay the Indebtedness in such priority as Lender elects without prepayment penalty; or (ii) subject to and in accordance with the provisions set forth in paragraph 5(c) above, may disburse such amounts of the proceeds as Lender reasonably deems necessary for the repair or replacement of the Premises.   (c)       Notwithstanding anything herein above to the contrary, provided no Event of Default exists, Lender agrees to disburse the proceeds received from any Inconsequential Taking, as hereinafter defined, to Mortgagor for the repair and/or replacement of the Premises. An “Inconsequential Taking” shall be a Taking which (i) results in less than $100,000 in proceeds; (ii) does not, in Lender’s determination, materially or adversely affect the Improvements, parking, access, ingress, egress or use of the Premises; and (iii) does not trigger any rights or options of tenants under the Leases.   7.     If by the laws of the United States of America or of any state or governmental subdivision having jurisdiction over Mortgagor or of the Premises or of the Loan evidenced by the Loan Documents or any amendments or modifications thereof, any tax or fee is due or becomes due or is imposed upon Lender or Mortgagor in respect of the issuance or the making, executing, delivering, recording and/or registration of this Mortgage or the Note or otherwise in connection with the Loan Documents or the Loan, except for Lender’s income or franchise tax, Mortgagor covenants and agrees to pay such tax or fee in the manner required by such law and to hold harmless and indemnify Lender, its successors and assigns, against any liability incurred by reason of the imposition of any such tax or fee, and any and all penalties, interest, attorneys’ fees or other costs due in connection therewith. In the event of a failure by Mortgagor to pay any such tax or fee, or applicable penalties, interest, attorneys’ fees or other costs, as set forth herein, the same shall, without limitation of any other remedies herein, constitute an Event of Default under this Mortgage, and, should Lender elect to pay the same, all such taxes, fees, penalties, interest, attorneys’ fees or other charges, in addition to being due and owing to Lender upon demand, shall be secured by the lien of this Mortgage and shall bear interest at the Default Rate as hereinafter provided from the date of advance by Lender until paid by Mortgagor. Notwithstanding anything to the contrary in this Mortgage, the Note or any of the Loan Documents, this paragraph 7 shall survive repayment of the Note and satisfaction of this Mortgage.   16    8.(a)       Upon the occurrence of any Event of Default, Lender may, but need not, make any payment or perform any act herein required of Mortgagor, in any form and manner deemed expedient and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting said Premises, or contest any tax or assessment. All moneys paid for any of the purposes herein authorized and all reasonable expenses paid or incurred in connection therewith, including but not limited to, reasonable attorneys’ fees and costs and reasonable attorneys’ fees and costs on appeal, and any other money advanced by Lender to protect the Premises and the lien hereof, shall be so much additional Indebtedness secured hereby and shall become immediately due and payable without notice and with interest thereon at the Default Rate from the date of expenditure or advance until paid.   (b)       In making any payment hereby authorized relating to taxes or assessments or for the purchase, discharge, compromise or settlement of any prior lien, Lender may make such payment according to any bill, statement or estimate secured from the appropriate public office without inquiry into the accuracy thereof or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof or without inquiry as to the validity or amount of any claim for lien which may be asserted.   9.     If one or more of the following events (herein called an “Event of Default” or “Events of Default” as the context so requires) shall have occurred:   (a)       failure to pay when due any principal of or interest on the Note or any other Indebtedness, utilities, taxes or assessments or insurance premiums required pursuant to the Loan Documents and continuance of such failure for five (5) days after payment of any such amount is due; or   (b)       the failure of Mortgagor to duly observe or perform any of the covenants, conditions and agreements of the Mortgagor contained in paragraph 2(f) of this Mortgage; or,   17    (c)       with respect to matters not described in the other subsections of this Section 9, failure to duly observe or perform any covenant, condition or agreement of the Mortgagor contained in this Mortgage, and such failure shall have continued for thirty (30) days after Notice specifying such failure is given by Lender to Mortgagor; provided that if any such failure to observe or perform shall be of such nature that it can be cured, but cannot be cured or remedied within thirty (30) days, Mortgagor shall be entitled to a reasonable period of time to cure or remedy such failure (not to exceed ninety (90) days following the giving of Notice), provided Mortgagor commences the cure or remedy thereof within the thirty (30) day period following the giving of Notice and thereafter proceeds with diligence, as determined by Lender, to complete such cure or remedy; or   (d)       with respect to matters not described in the other subsections of this Section 9, failure to duly observe or perform any covenant, condition or agreement of the Mortgagor contained in any of the Loan Documents which continues beyond any applicable grace of cure period;   then, in each and every such case, the whole of said principal sum hereby secured shall, at the option of the Lender and without further notice to Mortgagor, become immediately due and payable together with accrued interest thereon and all other Indebtedness, and whether or not Lender has exercised said option, interest shall accrue on the entire principal balance and any interest or other Indebtedness then due, at the Default Rate until fully paid or, if Lender has not exercised said option, for the duration of any Event of Default.   10.     Upon the occurrence of any Event of Default, whether or not such Event of Default has been subsequently remedied by Mortgagor or others, but such remedy, if any, has not been accepted by Lender in writing, Lender may elect to declare, without notice, all sums secured hereby immediately due and payable, including any charge provided for herein or in the Note, whereupon interest shall accrue on all such sums at the Default Rate. Lender is authorized and empowered to exercise any remedy available to it under applicable law, including, without limitation, filing of a foreclosure action under applicable law, and, to the extent permitted by applicable law, is authorized and empowered without oath or bond to enter upon and take possession of the Premises, and before or after such entry, pursuant to power of sale or otherwise, sell the Premises (or such part or parts thereof or leasehold, subleasehold or other interest therein encumbered hereby as the Lender may from time to time elect to sell), in the manner provided under applicable law. Mortgagor, in case of any sale under this Mortgage, or upon default in any interest or principal payment, or breach of any covenant contained herein, will, upon demand, surrender possession of the Premises and will from that moment become and be a tenant holding over, removable by process as upon a forcible and unlawful detainer and will pay the said purchaser or Lender the reasonable rental value of the 18    Premises from and after said sale or after such default or breach of covenant. Lender may become the purchaser at any sale hereunder and may bid at said sale in the form of cash, cash equivalents and/or cancellation of all or any part of the Indebtedness or any combination thereof. The Lender may, to the extent permitted by law, act either in person or through the agency of an auctioneer. In the event of any sale under this Mortgage by virtue of the exercise of the powers herein granted, or pursuant to any order in any judicial proceedings or otherwise, the Premises may be sold as an entirety or in separate parcels and in such manner or order as Lender in its sole discretion may elect, and if Lender so elects, Lender may sell the personal property covered by this Mortgage at one or more separate sales in any manner permitted by the UCC, and one or more exercises of the powers herein granted shall not extinguish or exhaust such powers, until the entire Premises is sold or the Indebtedness is paid in full.   11.       Upon such sale, Lender shall make, execute, and after due payment is made, deliver to the purchaser or purchasers a deed or deeds for the Premises or part thereof sold and shall apply the proceeds of the sale, at the election of Lender first, to all of the expenses of such sale including the reasonable expenses of Lender and the reasonable fees and costs of any attorneys for Lender, all of which shall accrue and become due from and after any Event of Default, together with any sums which Lender shall have paid for procuring any abstract, certificate or report of title to the Premises and, second, to principal, interest and any other Indebtedness and all other sums or amounts due under the Note or agreed or provided to be paid by Mortgagor herein or by Mortgagor in any other Loan Documents, all in such order as Lender may determine. The remainder of such proceeds, if any, shall be paid to Mortgagor or Mortgagor’s successors or assigns, as their rights may appear.   12.       In the event of such a sale of the Premises or any part thereof and the execution of a deed or deeds therefore under this Mortgage, any recital therein of the occurrence of an Event of Default or of the giving or recording of any notice or demand by Lender regarding such sale shall be conclusive proof thereof, and the receipt of the purchase money recited therein shall fully discharge the purchaser from any obligation for the proper application of the proceeds of sale in accordance with these trusts.   19    13.       Following the occurrence of an Event of Default, unless the same has been specifically waived in writing, subject to the rights of tenants under Leases then in effect, Mortgagor shall forthwith upon demand of Lender surrender to Lender possession of the Premises, and Lender shall be entitled to take actual possession of the Premises or any part thereof personally or by its agents or attorneys, and Lender in its discretion may, with or without force and with or without process of law, enter upon and take and maintain possession of all or any part of the Premises together with all documents, books, records, papers and accounts of the Mortgagor or the then owner of the Premises relating thereto, and may exclude Mortgagor, its agents or assigns wholly therefrom, and may as attorney-in-fact or agent of the Mortgagor, or in its own name as Lender and under the powers herein granted:   (a)       hold, operate, maintain, repair, rebuild, replace, alter, improve, manage or control the Premises as it deems judicious, insure and reinsure the same and any risks related to Lender’s possession, operation and management thereof and receive all Rents, either personally or by its agents, and with full power to use such measures, legal or equitable, as in its discretion it deems proper or necessary to enforce the payment or security of the Rents, including actions for the recovery of Rent, actions in forcible detainer and actions in distress for Rents, hereby granting full power and authority to exercise each and every of the rights, privileges and powers herein granted at any and all times hereafter, without notice to Mortgagor; and   (b)       conduct any leasing activity pursuant to the provisions of the Assignment of Leases.   Lender shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability under any Lease. Except to the extent that the same is caused solely by Lender’s gross negligence or willful misconduct, should Lender incur any liability, loss or damage under any Lease, or under or by reason of the Assignment of Leases, or in the defense of any claims or demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements in any Lease, the amount thereof, including costs, expenses and reasonable attorneys’ fees and costs, including reasonable attorneys’ fees and costs on appeal, shall be added to the Indebtedness and secured hereby.   14.       Upon the occurrence of an Event of Default, Lender, in the exercise of the rights and powers conferred upon it, shall have the full power to use and apply the Rents, less costs and expenses of collection to the payment of or on account of the items listed in (a) - (c) below, at the election of Lender and in such order as Lender may determine as follows:   20    (a)       to the payment of (i) the expenses of operating and maintaining the Premises, including, but not limited to, the cost of management, leasing (which shall include reasonable compensation to Lender and its respective agent or agents if management and/or leasing is delegated to an agent or agents), repairing, rebuilding, replacing, altering and improving the Premises, (ii) premiums on insurance as hereinabove authorized, (iii) taxes and special assessments now due or which may hereafter become due on the Premises, and (iv) expenses of placing the Premises in such condition as will, in the sole judgment of Lender, make it readily rentable;   (b)       to the payment of any principal, interest or any other Indebtedness secured hereby or any deficiency which may result from any foreclosure sale;   (c)       to the payment of established claims for damages, if any, reasonable attorneys’ fees and costs and reasonable attorneys’ fees and costs on appeal.   The manner of the application of Rents, the reasonableness of the costs and charges to which such Rents are applied and the item or items which shall be credited thereby shall be within the sole and unlimited discretion of Lender. To the extent that the costs and expenses in (a) and (c) above exceed the amounts collected, the excess shall be added to the Indebtedness and secured hereby.   15.       Upon the occurrence of any Event of Default, unless the same has been specifically waived in writing, Lender may apply to any court having jurisdiction for the appointment of a receiver of the Premises. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the then value of the Premises or the adequacy of Lender’s security. Lender may be appointed as such receiver. The receiver shall have power to collect the Rents during the pendency of any foreclosure proceedings and, in case of a sale, during the full statutory period of redemption, if any, as well as during any further times when Mortgagor, except for the intervention of such receiver, would be entitled to collect such Rents. In addition, the receiver shall have all other powers which shall be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during the whole of said period. The court from time to time may authorize the receiver to apply the net income in its possession at Lender’s election and in such order as Lender may determine in payment in full or in part of those items listed in Paragraph 14.   21    16. (a) Mortgagor agrees that all reasonable costs, charges and expenses, including but not limited to reasonable attorneys’ fees and costs incurred or expended by Lender arising out of or in connection with any action, proceeding or hearing, legal, equitable or quasi-legal, including the preparation therefor and any appeal therefrom, in any way affecting or pertaining to the Loan Documents or the Premises, shall be promptly paid by Mortgagor. All such sums not promptly paid by Mortgagor shall be added to the Indebtedness secured hereby and shall bear interest at the Default Rate from the date of such advance and shall be due and payable on demand.   (b)       Mortgagor hereby agrees that upon the occurrence of an Event of Default and the acceleration of the principal sum secured hereby pursuant to this Mortgage, to the full extent that such rights can be lawfully waived, Mortgagor hereby waives and agrees not to insist upon, plead, or in any manner take advantage of, any notice of acceleration, any stay, extension, exemption, homestead, marshaling or moratorium law or any law providing for the valuation or appraisement of all or any part of the Premises prior to any sale or sales thereof under any provision of this Mortgage or before or after any decree, judgment or order of any court or confirmation thereof, or claim or exercise any right to redeem all or any part of the Premises so sold and hereby expressly waives to the full extent permitted by applicable law on behalf of itself and each and every Person acquiring any right, title or interest in or to all or any part of the Premises, all benefit and advantage of any such laws which would otherwise be available to Mortgagor or any such Person, and agrees that neither Mortgagor nor any such Person will invoke or utilize any such law to otherwise hinder, delay or impede the exercise of any remedy granted or delegated to Lender herein but will permit the exercise of such remedy as though any such laws had not been enacted.   17.       In accordance with and subject to the terms and conditions of the Assignment of Leases, Mortgagor hereby assigns to Lender directly and absolutely, and not merely collaterally, the interest of Mortgagor as lessor under the Leases of the Premises and the Rents payable under any Lease and/or with respect to the use of the Premises, or portion thereof, including any oil, gas or mineral lease, or any installments of money payable pursuant to any agreement or any sale of the Premises or any part thereof, subject only to a license, if any, granted by Lender to Mortgagor with respect thereto prior to the occurrence of an Event of Default. Mortgagor has executed and delivered the Assignment of Leases which grants to Lender specific rights and remedies in respect of said Leases and governs the collection of Rents thereunder and from the use of the Premises, and such rights and remedies so granted shall be cumulative of those granted herein.   22    The collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default or notice of default hereunder or invalidate any act done pursuant to such notice, except to the extent any such Event of Default is fully cured. Failure or discontinuance of Lender at any time, or from time to time, to collect any such moneys shall not impair in any manner the subsequent enforcement by Lender of the right, power and authority herein conferred on Lender. Nothing contained herein, including the exercise of any right, power or authority herein granted to Lender, shall be, or be construed to be, an affirmation by Lender of any tenancy, Lease or option, or an assumption of liability under, or the subordination of the lien or charge of this Mortgage to any such tenancy, Lease or option. Mortgagor hereby agrees that, in the event Lender exercises its rights as provided for in this paragraph or in the Assignment of Leases, Mortgagor waives any right to compensation for the use of Mortgagor’s furniture, furnishings or equipment in the Premises for the period such assignment of rents or receivership is in effect, it being understood that the Rents derived from the use of any such items shall be applied to Mortgagor’s obligations hereunder as above provided.   18.       All rights and remedies granted to Lender in the Loan Documents shall be in addition to and not in limitation of any rights and remedies to which it is entitled in equity, at law or by statute, and the invalidity of any right or remedy herein provided by reason of its conflict with applicable law or statute shall not affect any other valid right or remedy afforded to Lender. No waiver of any default or Event of Default under any of the Loan Documents shall at any time thereafter be held to be a waiver of any rights of Lender hereunder, nor shall any waiver of a prior Event of Default or default operate to waive any subsequent Event of Default or default. All remedies provided for in the Loan Documents are cumulative and may, at the election of Lender, be exercised alternatively, successively or concurrently. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision or to proceed against one portion of the Premises to the exclusion of any other portion. Time is of the essence under this Mortgage and the Loan Documents.   19.       By accepting payment of any sum secured hereby after its due date, Lender does not waive its right either to require prompt payment when due of all other sums or installments so secured or to declare a default for failure to pay such other sums or installments.   20.       The usury provisions of Paragraph 6 of the Note are fully incorporated herein by reference as if the same were specifically stated herein.   21.       In the event one or more provisions of the Loan Documents shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and the Loan Documents shall be construed as if any such provision had never been contained herein. 23    22.       If the payment of the Indebtedness secured hereby or of any part thereof shall be extended or varied, or if any part of the security be released, all persons now or at any time hereafter liable therefor, or interested in said Premises, shall be held to assent to such extension, variation or release, and their liability and the lien and all provisions hereof shall continue in full force, the right of recourse against all such persons being expressly reserved by Lender notwithstanding such variation or release.   23.       Upon payment in full of the principal sum, interest and other Indebtedness secured by the Loan Documents (the “Secured Obligations”), these presents shall be null and void, and Lender shall release this Mortgage and the lien hereof by proper instrument executed in recordable form at the expense of the Mortgagor. The term “Secured Obligations” shall include, without limitation, any judgment(s) or final decree(s) rendered to collect any money obligations of Mortgagor to Lender and/or to enforce the performance or collection of all covenants, agreements, other obligations and liabilities of the Mortgagor under this Mortgage, the Note or the other Loan Documents; provided, however, such Secured Obligations shall not include any judgment(s) or final decree(s) rendered in another jurisdiction, which judgment(s) or final decree(s) would be unenforceable by an Indiana court pursuant to Indiana Code 34-54-3-4. The obtaining of any judgment by Lender (other than a judgment foreclosing this Mortgage) and any levy of any execution under any such judgment upon the Premises shall not affect in any manner or to any extent the lien of this Mortgage upon the Premises or any part thereof, or any liens, powers, rights and remedies of Lender, but such liens, powers, rights and remedies shall continue unimpaired as before until the judgment or levy is satisfied.   24. (a) Mortgagor hereby grants to Lender and its respective agents, attorneys, employees, consultants, contractors and assigns an irrevocable license and authorization to enter upon and inspect the Premises and all facilities located thereon at reasonable times, subject to the inspection rights provisions afforded to Mortgagor under the Leases. Lender shall make reasonable efforts to ensure that the tenants under any Leases are not disturbed.   (b)       In connection with any sale or conveyance of this Mortgage, Mortgagor grants to Lender and its respective agents, attorneys, employees, consultants, contractors and assigns an irrevocable license and authorization to conduct, at Lender’s expense, a Phase I environmental audit of the Premises, subject to the inspection rights provisions afforded to Mortgagor under the Leases.   24    (c)       In the event there has been an Event of Default or in the event Lender has formed a reasonable belief, based on its inspection of the Premises or other factors known to it, that Hazardous Materials may be present on the Premises, then, subject to the rights of the lessees under any Leases, Mortgagor grants to Lender and its respective agents, attorneys, employees, consultants, contractors and assigns an irrevocable license and authorization to conduct, at Mortgagor’s expense using the firm of Mortgagor’s choice, subject to Lender’s reasonable approval, environmental tests of the Premises, including, without limitation, a Phase I environmental audit, subsurface testing, soil and ground water testing, and other tests which may physically invade the Premises or facilities (the “Tests”). The scope of the Tests shall be such as Lender, in its sole discretion, determines is necessary to (i) investigate the condition of the Premises, (ii) protect the security interests created under this Mortgage, or (iii) determine compliance with Environmental Laws, the provisions of the Loan Documents and other matters relating thereto. Lender shall make reasonable efforts to ensure that the tenants under any Leases are not disturbed.   (d)       Provided no Event of Default has occurred, Lender will provide Mortgagor with reasonable notice of Lender’s intent to enter, inspect and conduct the Tests provided for in this Paragraph. In addition, Lender shall conduct such inspections and Tests during normal business hours and use reasonable efforts to minimize disruption to any lessees.   The foregoing licenses and authorizations are intended to be a means of protection of Lender’s security interest in the Premises and not as participation in the management of the Premises.   25.       Within fifteen (15) days after any written request by any party to this Mortgage, the requested party shall certify, by a written statement duly acknowledged, the amount of principal, interest and other Indebtedness then owing on the Note, the terms of payment, maturity date and the date to which interest has been paid. Mortgagor shall further certify whether any defaults, offsets or defenses exist against the Indebtedness secured hereby. Mortgagor shall also furnish to Lender, within thirty (30) days of its request therefor, tenant estoppel letters from such tenants of the Premises as Lender may reasonably require; which Lender shall not request more than one (1) time per annum, nor more than one (1) time prior to the date of the Securitization Transaction.   26.       Each notice, consent, request, report or other communication under this Mortgage shall be given in accordance with the provisions of Section 6.18 of the Loan Agreement.   25    27.       Mortgagor has had the opportunity to fully negotiate the terms hereof and modify the draftsmanship of the Loan Documents. Therefore, the terms of the Loan Documents shall be construed and interpreted without any presumption, inference, or rule requiring construction or interpretation of any provision of the Loan Documents against the interest of the party causing the Loan Documents or any portion of it to be drafted. Mortgagor is entering into the Loan Documents freely and voluntarily without any duress, economic or otherwise.   28.       This Mortgage and all provisions hereof shall inure to the benefit of the successors and assigns of Lender and shall bind the permitted successors and assigns of Mortgagor.   29.       THE LOAN DOCUMENTS AND THE PARTIES’ RIGHTS AND OBLIGATIONS THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO ILLINOIS’ PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT (A) OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE PERFECTION, FORECLOSURE AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE PREMISES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF INDIANA, AND (B) THAT THE LAWS OF THE UNITED STATES OF AMERICA AND ANY RULES, REGULATIONS, OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO THE AFFAIRS AND TRANSACTIONS ENTERED INTO BY LENDER, OTHERWISE PREEMPT THE LAW OF THE STATE WHERE THE PREMISES IS LOCATED OR ILLINOIS LAW; IN WHICH EVENT SUCH FEDERAL LAW SHALL CONTROL.   30.       As used herein, the term “Default Rate” means a rate equal to the lesser of (i) three percent (3%) per annum above the then applicable interest rate payable under the Note or (ii) the maximum rate allowed by applicable law at the time of the occurrence of an Event of Default.   31.       AFTER CONSULTING WITH COUNSEL AND CAREFUL CONSIDERATION, Mortgagor AND LENDER (BY ITS ACCEPTANCE HEREOF) KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF THIS MORTGAGE OR ANY OTHER INSTRUMENT OR AGREEMENT BY WHICH THIS MORTGAGE IS, OR MAY HEREAFTER BE, SECURED, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF Mortgagor OR LENDER. THIS WAIVER IS A MATERIAL INDUCEMENT TO THE LENDER’S ACCEPTANCE OF THIS MORTGAGE. 26    32.       This Mortgage and the Indebtedness secured hereby is for the sole purpose of conducting or acquiring a lawful business, professional or commercial activity or for the acquisition or management of real or personal property as a commercial investment, and all proceeds of such Indebtedness shall be used for said business or commercial investment purpose. Such proceeds will not be used for the purchase of any security within the meaning of the Securities Exchange Act of 1934, as amended, or any regulation issued pursuant thereto, including without limitation, Regulations U, T and X of the Board of Governors of the Federal Reserve System. The Premises secured hereby is not used for mining, grazing, agricultural, timber or farming purposes.   33.       Unless Lender shall otherwise direct in writing, Mortgagor shall appear in and defend all actions or proceedings purporting to affect the security hereunder, or any right or power of the Lender, excluding any federal regulatory proceedings against Lender that are not instituted because of any act or omission by Mortgagor, any Interest Owner or which result from the Premises. The Lender shall have the right to appear in such actions or proceedings. Mortgagor shall save Lender harmless from all reasonable costs and expenses, including but not limited to, reasonable attorneys’ fees and costs and costs of a title search, continuation of abstract and preparation of survey incurred by reason of any action, suit, proceeding, hearing, motion or application before any court or administrative body in and to which Lender may be or become a party by reason hereof, excluding any federal regulatory proceedings against Lender that are not instituted because of any act or omission by Mortgagor, any Interest Owner or which result from the Premises. Such proceedings shall include but not be limited to condemnation, bankruptcy, probate and administration proceedings, as well as any other action, suit, proceeding, right, motion or application wherein proof of claim is by law required to be filed or in which it becomes necessary to defend or uphold the terms of this Mortgage or the Loan Documents or otherwise purporting to affect the security hereof or the rights or powers of Lender. All money paid or expended by Lender in that regard, together with interest thereon from date of such payment at the Default Rate shall be additional Indebtedness secured hereby and shall be immediately due and payable by Mortgagor without notice.   34.       Upon the occurrence of an Event of Default, unless the same has been specifically waived in writing, all Rents collected or received by Mortgagor shall be accepted and held for Lender in trust and shall not be commingled with the funds and property of Mortgagor, but shall be promptly paid over to Lender.   35.       Mortgagor shall have the right, after giving thirty (30) days’ prior written notice to Lender, to prepay (without penalty or premium) in whole or in part, principal owed under the Note together with interest thereon to the date on which payment is made, along with all sums, amounts, advances, or charges then due under any instrument or agreement by which the Note is secured. 27    36.       Upon request of Mortgagor, Lender, at Lender's option so long as this Mortgage secures indebtedness held by Lender, may make future advances to Mortgagor. Such future advances, with interest thereon, shall be secured hereby if made under the terms of this Mortgage, the Note or any other Loan Document, or if made pursuant to any other promissory note, instrument or agreement stating that sums advanced thereunder are secured hereby.   37.       Notwithstanding any other provision of this Mortgage, in no event shall this Mortgage secure more than Twenty-Seven Million Six Hundred Thousand and no/100 Dollars ($27,600,000.00); provided, however, in no event shall Mortgagee have any obligation whatsoever to advance an amount in excess of the principal amount of the Note. REMAINDER OF PAGE INTENTIONALLY BLANK (Signatures on next page) 28    IN WITNESS WHEREOF, Mortgagor has caused this Mortgage, Security Agreement, Assignment of Rents and Fixture Filing to be duly executed and delivered as of the date first hereinabove written.     IRESI VERNON HILLS COMMONS, L.L.C, a Delaware limited liability company   By: Inland Residential Operating Partnership, L.P., a Delaware limited partnership, its sole member   By: Inland Residential Properties Trust, Inc.,        a Maryland corporation, its general partner   By:        /s/ David Z. Lichterman                Name:  David Z. Lichterman Its:        Chief Accounting Officer, Treasurer         and Vice President         State of Illinois         } County of DuPage   }   I, Susan Metzler, a Notary Public in and for said County in said State, hereby certify that David Z. Lichterman, who is the Chief Accounting Officer, Treasurer and Vice President of Inland Residential Properties Trust, Inc., a Maryland corporation, being the general partner of Inland Residential Operating Partnership, L.P., a Delaware limited partnership, as the sole member of IRESI Vernon Hills Commons, L.L.C., a Delaware limited liability company, who has signed the foregoing conveyance and who is known to me, acknowledged before me on this day that, being informed of the contents of the conveyance, he/she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation as the general partner of said limited partnership as the sole member of said limited liability company.   Given under my hand this 25th day of April, 2017.   /s/ Susan Metzler      Notary Public   SEAL Susan Metzler           Printed Name   My Commission Expires:             5/5/19            29    EXHIBIT A     PARCEL 1 LOT 10 IN THE FIRST RESUBDIVISION OF VERNON HILLS TOWN CENTER, BEING A RESUBDIVISION OF PART OF THE SOUTH HALF OF SECTION 15, TOWNSHIP 43 NORTH,RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE FINAL PLAT OF SUBDIVISION RECORDED FEBRUARY 2, 2011 AS DOCUMENT NUMBER 6705452, IN LAKE COUNTY,ILLINOIS.   PARCEL 2: NON-EXCLUSIVE EASEMENT FOR THE BENEFIT OF PARCEL 1 AS CREATED BY THE DECLARATION OF EASEMENTS AND OPERATING AGREEMENT DATED APRIL 1, 2009 ANDRECORDED JUNE 22, 2009 AS DOCUMENT NUMBER 6488478 MADE AND ENTERED INTO BY VHTC, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY AND PTD PROPERTIES, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY, FOR THE PURPOSE OF (I) INGRESS, EGRESS AND PARKING BY VEHICULAR TRAFFIC, (II) THE PASSAGE AND ACCOMMODATION OF PEDESTRIANS, (III) INSTALLATION, OPERATION, MAINTENANCE, REPAIR AND REPLACEMENT OF THE COMMON UTILITY LINES AND (IV) THE INSTALLATION, REPAIR,REPLACEMENT AND MAINTENANCE OF AN IRRIGATION SYSTEM AND GRASS LANDSCAPING, AMENDED BY AMENDED AND RESTATED DECLARATION OF EASEMENTS AND OPERATING AGREEMENT DATED NOVEMBER 1, 2010 AND RECORDED FEBRUARY 2, 2011 AS DOCUMENT NUMBER 6705457 MADE AND ENTERED INTO BY VHTC, LLC, AN ILLINOIS LIMITED LIABILITY COMPANY, VHTC LOT 3 LLC, AN ILLINOIS LIMITED LIABILITY COMPANY, AND PTD PROPERTIES, LLC, AN ILLINOIS LIMITED LIABILITY     Property Address: 1255 Town Center Road, Vernon Hills, Illinois   PIN(s): 15-15-313-003
EXHIBIT 10.2       GOODWILL PURCHASE AGREEMENT between NICOLA STEPHENSON TROIKA MEDIA GROUP, INC. and TROIKA-MISSION HOLDINGS, INC. dated as of June 29, 2018           --------------------------------------------------------------------------------         TABLE OF CONTENTS     ARTICLE I DEFINITIONS 1         ARTICLE II PURCHASE AND SALE 11           Section 2.01 Purchase and Sale. 11           Section 2.02 Purchase Price. 11           Section 2.03 Transactions to be Effected at the Closing. 12           Section 2.04 Payment of Contingent Cash Consideration. 13           Section 2.05 Payment of Earn-out Consideration. 14           Section 2.06 Subsequent Issuance of TMG Shares. 17           Section 2.07 Closing. 17           Section 2.08 Withholding Tax. 17           Section 2.09 Allocation of Aggregate Purchase Price. 17         ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 17           Section 3.01 Authority and Binding Obligation. 17           Section 3.02 Brokers. 18           Section 3.03 Investment in TMG Shares. 18           Section 3.04 No Conflicts; Consents. 18           Section 3.05 Goodwill and Intellectual Property. 18           Section 3.06 Legal Proceedings; Governmental Orders. 19           Section 3.07 Full Disclosure. 19         ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO BUYER AND TMG 19           Section 4.01 Organization and Authority. 19           Section 4.02 No Conflicts; Consents. 20           Section 4.03 Capitalization. 20           Section 4.04 Financial Statements. 21               - i - --------------------------------------------------------------------------------                     Section 4.05 Undisclosed Liabilities. 21           Section 4.06 Absence of Certain Changes, Events, and Conditions. 21           Section 4.07 Material Contracts. 23           Section 4.08 Title to Assets; Real Property. 24           Section 4.09 Condition and Sufficiency of Assets. 25           Section 4.10 Intellectual Property. 25           Section 4.11 Accounts Receivable. 27           Section 4.12 Customers and Suppliers. 27           Section 4.13 Insurance. 27           Section 4.14 Legal Proceedings; Governmental Orders. 27           Section 4.15 Compliance With Laws; Permits. 28           Section 4.16 Environmental Matters. 28           Section 4.17 Employee Benefit Matters. 29           Section 4.18 Employment Matters. 30           Section 4.19 Taxes. 31           Section 4.20 Books and Records. 32           Section 4.21 Valid Issuance of Securities. 32           Section 4.22 Compliance with Securities Laws. 33           Section 4.23 Solvency. 33           Section 4.24 No Brokers. 33           Section 4.25 Full Disclosure. 33         ARTICLE V COVENANTS 33           Section 5.01 Confidentiality. 33           Section 5.02 Non-Competition; Non-Solicitation. 33           Section 5.03 Lock Up/Leak Out. 33                 - ii - --------------------------------------------------------------------------------                           Section 5.04 Public Announcements. 33           Section 5.05 Further Assurances. 34           Section 5.06 Breach of Equity Purchase Agreement. 34           Section 5.07 Closing Balance Sheets. 34           Section 5.08 Issuance of TMG Shares. 34         ARTICLE VI INDEMNIFICATION 34           Section 6.01 Survival. 34           Section 6.02 Indemnification By Seller. 35           Section 6.03 Indemnification By Buyer. 35           Section 6.04 Certain Limitations. 35           Section 6.05 Indemnification Procedures. 36           Section 6.06 Payments. 37           Section 6.07 Tax Treatment of Indemnification Payments. 37           Section 6.08 Effect of Investigation. 37           Section 6.09 Exclusive Remedy. 37         ARTICLE VII MISCELLANEOUS 38           Section 7.01 Expenses 38 .         Section 7.02 Notices. 38           Section 7.03 Interpretation. 39               - iii - --------------------------------------------------------------------------------                         Section 7.04 Headings. 39           Section 7.05 Severability. 39           Section 7.06 Entire Agreement. 39           Section 7.07 Successors and Assigns. 40           Section 7.08 No Third-party Beneficiaries. 40           Section 7.09 Amendment and Modification; Waiver. 40           Section 7.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. 40           Section 7.11 Specific Performance. 41           Section 7.12 Counterparts. 41                                       - iv - --------------------------------------------------------------------------------         GOODWILL PURCHASE AGREEMENT This Goodwill Purchase Agreement (this "Agreement"), dated as of June 29, 2018, is entered into by and among Nicola Stephenson, an individual ("Seller"), Troika Media Group, Inc., a Nevada corporation, and Troika-Mission Holdings, Inc., a New York corporation ("Buyer"). WHEREAS, Seller independently developed and is the owner of the Seller Intellectual Property (as defined below) and the personal goodwill of Seller consisting of close personal and ongoing business relationships, Trade Secrets (to the extent not already covered by the definition of Seller Intellectual Property) and knowledge used in connection with the Business (as defined below) through her personal ability, personality, reputation, skill and integrity and other information relating thereto (all of the foregoing is referred to herein collectively as the "Goodwill"); WHEREAS, Buyer is a wholly-owned subsidiary of TMG; WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Goodwill, subject to the terms and conditions set forth in this Agreement; and WHEREAS, simultaneously herewith, Seller, Buyer and James Stephenson, an individual ("James"), are entering into that certain Equity Purchase Agreement, dated as of the date hereof (the "Equity Purchase Agreement"), pursuant to which, among other things, Seller and James are selling to Buyer, and Buyer is purchasing from Seller and James, (a) all of the issued and outstanding limited liability company membership interests in MissionCulture LLC, a Delaware limited liability company ("Mission US"), and (b) all of the issued and outstanding ordinary shares (the "Mission UK Shares") in Mission-Media Holdings Limited, a private limited company incorporated under the Laws of England and Wales (registered no. 06352697) ("Mission UK"), being the entire issued share capital of Mission UK. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS The following terms have the meanings specified or referred to in this ARTICLE I: "Action" means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity. "Affiliate" of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.           - 1 - --------------------------------------------------------------------------------       "Aggregate Purchase Price" has the meaning set forth in Section 2.02. "Agreement" has the meaning set forth in the preamble. "Ancillary Documents" means the Equity Purchase Agreement, Escrow Agreement and the Bill of Sale. "Basket" has the meaning set forth in Section 6.04(a). "Bill of Sale" means the Bill of Sale to be executed and delivered to Buyer by Seller at the Closing, in the form of Exhibit A attached hereto. "Business" means the advertising business of Mission US, Mission UK, MM Inc and MM Ltd. "Business Day" means any day except Saturday, Sunday or any other day on which commercial banks located in New York, NY are authorized or required by Law to be closed for business. "Buyer" has the meaning set forth in the preamble. "Buyer Indemnitees" has the meaning set forth in Section 6.02. "Buyer's Accountants" means RBSM, LLP. "Buyer Shares" has the meaning set forth in Section 4.03(a). "Calculation Periods" means  each of the calendar years ending on December 31, 2018, 2019, 2020, 2021 and 2022 (and 2023 but only in the event that Seller has not earned $10,000,000 of Earn-out Payments in the aggregate in respect of all Calculation Periods through the calendar year ending on December 31, 2022), respectively. "Cap" has the meaning set forth in Section 6.04(a). "Cause" has the meaning set forth in Seller's employment agreement with MM Inc, TMG or one of TMG's Affiliates. "Closing" has the meaning set forth in Section 2.07. "Closing Cash Consideration" has the meaning set forth in Section 2.02(a). "Closing Date" has the meaning set forth in Section 2.07. "Contingent Cash Calculation" has the meaning set forth in Section 2.04(b). "Contingent Cash Calculation Objection Notice" has the meaning set forth in Section 2.04(b).               - 2 - --------------------------------------------------------------------------------       "Contingent Cash Calculation Statement" has the meaning set forth in Section 2.04(b). "Contingent Cash Consideration" has the meaning set forth in Section 2.04(b). "Contingent Cash Review Period" has the meaning set forth in Section 2.04(b). "Contracts" means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral. "Direct Claim" has the meaning set forth in Section 6.05(c). "Disclosure Schedules" means the Disclosure Schedules delivered by Seller simultaneously with the execution and delivery of this Agreement. "Dollars" or "$" means the lawful currency of the United States. "Earn-out Calculation" has the meaning set forth in Section 2.05(b). "Earn-out Calculation Delivery Date" has the meaning set forth in Section 2.05(b). "Earn-out Calculation Objection Notice" has the meaning set forth in Section 2.05(b). "Earn-out Calculation Statement" has the meaning set forth in Section 2.05(b). "Earn-out Consideration" has the meaning set forth in Section 2.02(d). "Earn-out Excess" has the meaning set forth in Section 2.05(h). "Earn-out Payment" has the meaning set forth in Section 2.05(a). "Earn-out Period" means the period beginning on January 1, 2019 and ending on December 31, 2022 (or December 31, 2023 but only in the event that Seller has not earned $10,000,000 of Earn-out Payments in the aggregate in respect of all Calculation Periods through the calendar year ending on December 31, 2022). "Earn-out Shortfall" means, with respect to each Calculation Period occurring during the Earn-out Period, the amount (if any) by which the EBITDA Threshold for the applicable Calculation Period exceeds the EBITDA for such Calculation Period. "Earn-out Shortfall Calculation Period" has the meaning set forth in Section 2.05(h).           - 3 - --------------------------------------------------------------------------------         "EBITDA" means, with respect to any Calculation Period, the net income before interest, income taxes, depreciation and amortization of Mission US and Mission UK (on a consolidated basis) for such Calculation Period determined in accordance with GAAP. The following shall be added back to EBITDA: 1. All legal, reporting, auditing and regulatory costs incurred in connection with TMG's status as a publicly traded company or SEC reporting company, 2. Incremental integration, back office and property costs exceeding the commitments of Mission UK and Mission US preceding the transactions contemplated by this Agreement, 3. Inter-company charges from TMG, and 4. Up to $200,000 of Transaction Expenses paid by Mission UK or Mission US in the Calculation Period ending December 31, 2018; provided, that for purposes of the Earn-out Calculation in respect of such Calculation Period only, the aggregate amount of all of the foregoing added back to EBITDA shall not exceed $200,000.  The parties understand and agree that Seller's total compensation for the period January 1, 2018 to June 30, 2018 shall not be deducted from the net income of Mission US and Mission UK (on a consolidated basis) in calculating EBITDA for the Calculation Period ending December 31, 2018. "EBITDA Threshold" means, with respect to the Calculation Period ending December 31, 2019, $3,000,000, with respect to the Calculation Period ending December 31, 2020, $3,500,000 and with respect to any Calculation Period thereafter, $4,000,000. "Employment Agreement" means that certain Employment Agreement, dated as of the date hereof, among MM Inc., TMG and Seller in the form attached hereto as Exhibit B. "Environmental Claim" means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit. "Environmental Law" means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term "Environmental Law" includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.           - 4 - --------------------------------------------------------------------------------       "Environmental Notice" means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit. "Environmental Permit" means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law. "Encumbrance" means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. "Equity Purchase Agreement" has the meaning set forth in the recitals. "Escrow Agent" means Withers Bergman LLP. "Escrow Agreement" means the Escrow Agreement to be entered into by Buyer, Seller, James and Escrow Agent at the Closing, in the form of Exhibit C attached hereto. "GAAP" means United States generally accepted accounting principles in effect from time to time. "Good Reason" has the meaning set forth in Seller's employment agreement with MM Inc, TMG or one of TMG's Affiliates. "Goodwill" has the meaning set forth in the recitals. "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 quasi-governmental 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. "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Hazardous Materials" means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls. "Indemnified Party" has the meaning set forth in Section 6.05.             - 5 - --------------------------------------------------------------------------------         "Indemnifying Party" has the meaning set forth in Section 6.05. "Independent Accountant" means an impartial internationally recognized firm of independent certified public accountants (other than Buyer's Accountants and Seller's Accountants) appointed by the mutual written agreement of Buyer and Seller. "Intellectual Property" means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) ("Patents"); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing ("Trademarks"); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing ("Copyrights"); (d) internet domain names and social media account or user names (including "handles"), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media accounts and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) mask works, and all registrations, applications for registration, and renewals thereof; (f) industrial designs, and all Patents, registrations, applications for registration, and renewals thereof; (g) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein ("Trade Secrets"); (h) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; (i) rights of publicity; and (j) all other intellectual or industrial property and proprietary rights. "James" has the meaning set forth in the recitals. "Knowledge of Buyer or TMG" or any other similar knowledge qualification, means the actual knowledge of Christopher Broderick, Michael Tenore, Robert Machinist, and Andrew Bressman, as applicable, after due inquiry. "Knowledge of Seller", "Seller's Knowledge" or any other similar knowledge qualification, means the actual knowledge of Seller, after due inquiry. "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. "Liability" means any liability, obligation or commitment of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, or otherwise.             - 6 - --------------------------------------------------------------------------------         "Losses" means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys' fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that "Losses" shall not include punitive damages, except to the extent actually awarded to a Governmental Authority or other third party. "Material Adverse Effect" means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), prospects or assets of Seller (other than events, occurrences, facts, conditions or changes occurring generally in the economies where the Business operates or occurring generally in the advertising industry), or (b) the ability of Seller to consummate the transactions contemplated hereby. "Material Breach" means Seller or James are in material breach of Sections 5.02 or Section 6.06 of this Agreement or the equivalent sections of the Equity Purchase Agreement. "Mission UK" has the meaning set forth in the recitals. "Mission UK Subsidiaries" means, collectively, MM Inc and MM Ltd. "Mission US" has the meaning set forth in the recitals. "MM Inc" means Mission Media USA, Inc., a New York corporation. "MM Ltd" means Mission-Media Limited, a private limited company incorporated in England and Wales (registered no. 04745677). "Organizational Documents" means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations or similar governing instruments required by the laws of its jurisdiction of formation or organization; (b) in the case of a Person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise); (c) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement; and (d) in the case of a Person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the laws of its jurisdiction of organization. "Permits" means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities. "Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity.             - 7 - --------------------------------------------------------------------------------         "Post-Closing Tax Period" means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date "Release" means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture). "Representative" means, with respect to any Person, any and all directors, managing members, managers, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person. "Review Period" has the meaning set forth in Section 2.05(b). "SEC" means the U.S. Securities and Exchange Commission. "Seller" has the meaning set forth in the preamble. "Seller Indemnitees" has the meaning set forth in Section 6.03. "Seller Intellectual Property" means all Intellectual Property that is owned by Seller. "Seller IP Registrations" means all Seller Intellectual Property that is subject to any issuance, registration or application by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing. "Seller's Accountants" means Barnes Roffe LLP. "Solvent" means, with respect to a particular date and Person, that on such date (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations, and commitments as they mature and become due in the normal course of business; (iii) assuming consummation of the issuance of the TMG Shares as contemplated by this Agreement, such Person is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature; (iv) such Person is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged; and (v) such Person is not a defendant in any civil action that would result in a judgment that such Person is or would become unable to satisfy. "Stock Consideration" has the meaning set forth in Section 2.02(c).           - 8 - --------------------------------------------------------------------------------       "Stock Consideration Release Date" means June 29, 2019, June 29, 2020, June 29, 2021, and June 29, 2022. "Taxes" means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties. "Tax Return" means any return, declaration, report, claim for refund, information return, or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Third Party Claim" has the meaning set forth in Section 6.05(a). "TMG" means Troika Media Group, Inc., a Nevada corporation. "TMG Audited Financial Statements" has the meaning set forth in Section 4.04. "TMG Balance Sheet" has the meaning set forth in Section 4.04. "TMG Balance Sheet Date" has the meaning set forth in Section 4.04. "TMG Disclosure Schedules" means the Disclosure Schedules delivered by Buyer and TMG simultaneously with the execution and delivery of this Agreement. "TMG Financial Statements" has the meaning set forth in Section 4.04. "TMG Interim Financial Statements" has the meaning set forth in Section 4.04. "TMG Group" means Buyer, TMG, Troika Services Inc., a New York corporation, Troika Analytics Inc., a New York corporation, Troika Design Group Inc., a California corporation, and Troika Productions LLC, a California limited liability company. "TMG Group Benefit Plan" means each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity or other equity, change in control, retention, severance, vacation, paid time off (PTO), medical, vision, dental, disability, welfare, Code Section 125 cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each "employee benefit plan" within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by any member of the TMG Group for the benefit of any current or former employee, officer, manager, retiree, independent contractor or consultant of TMG Group or any spouse or dependent of such individual, or under which any member of the TMG Group or any of their respective TMG Group ERISA Affiliates has or may have any Liability, or with respect to which any member of the TMG Group would reasonably be expected to have any Liability, contingent or otherwise.               - 9 - --------------------------------------------------------------------------------         "TMG Group ERISA Affiliate" means all employers (whether or not incorporated) that would be treated together with any member of the TMG Group or any of its Affiliates as a "single employer" within the meaning of Section 414 of the Code or Section 4001 of ERISA. "TMG Group Insurance Policies" has the meaning set forth in Section 4.13. "TMG Group Intellectual Property" means all Intellectual Property that is owned by any member of the TMG Group. "TMG Group IP Agreements" means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which any member of the TMG Group is a party, beneficiary or otherwise bound. "TMG Group IP Registration" means all TMG Group Intellectual Property that is subject to any issuance, registration or application by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing. "TMG Group Material Customers" means each customer who has paid aggregate consideration to any member of the TMG Group for goods or services rendered in an amount greater than or equal to $200,000 for either of the two (2) most recent fiscal years. "TMG Group Material Suppliers" means each supplier to whom any member of the TMG Group has paid consideration for goods or services rendered in an amount greater than or equal to $50,000 for either of the two (2) most recent fiscal years. "TMG Group Multiemployer Plan" has the meaning set forth in Section 4.17(a). "TMG Group Qualified Benefit Plan" has the meaning set forth in Section 4.17(a). "TMG Group Single Employer Plan" has the meaning set forth in Section 4.17(b). "TMG Group Systems" has the meaning set forth in Section 4.10(h). "TMG Interim Balance Sheet" has the meaning set forth in Section 4.04. "TMG Interim Balance Sheet Date." has the meaning set forth in Section 4.04. "TMG Material Adverse Effect" means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), prospects or assets of TMG, or (b) the ability of Buyer or TMG to consummate the transactions contemplated hereby.             - 10 - --------------------------------------------------------------------------------         "TMG Material Contracts" has the meaning set forth in Section 4.07(a). "TMG Permitted Encumbrances" has the meaning set forth in Section 4.08(a). "TMG Real Property" means the real property owned, leased or subleased by any member of the TMG Group, together with all buildings, structures and facilities located thereon. "TMG Shares" has the meaning set forth in Section 2.02(c). "TMG Stock" has the meaning set forth in Section 4.03(d). "Transaction Expenses" means all fees and expenses incurred by Mission UK, any Mission UK Subsidiary, Mission US, MM Inc, Seller or James at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the Ancillary Documents, and the performance and consummation of the transactions contemplated hereby and thereby, other than any and all broker's fees associated herewith or therewith. "Union" means a union, works council or labor organization. ARTICLE II PURCHASE AND SALE Section 2.01     Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Goodwill, free and clear of all Encumbrances, for the consideration specified in Section 2.02. Section 2.02     Purchase Price.  Subject to the terms and conditions contained in this Agreement, as consideration for the Goodwill, Buyer shall pay Seller an aggregate purchase price, together with the aggregate purchase price under the Equity Purchase Agreement, not to exceed $25,000,000 plus the Stock Consideration (the "Aggregate Purchase Price"), which Aggregate Purchase Price consists of the following: (a)     Cash, together with the cash payable under the Equity Purchase Agreement, in the amount of $11,000,000 (the "Closing Cash Consideration"), payable in accordance with the provisions set forth in Section 2.03; (b)     Cash, together with the cash payable under the Equity Purchase Agreement,  in an amount, if any, up to $4,000,000 (the "Contingent Cash Consideration"), payable subject to the terms and conditions set forth in Section 2.04; (c)     Up to, together with the shares issuable under the Equity Purchase Agreement, 50,000,000 (subject to equitable adjustment for stock splits, stock combinations, reclassifications, recapitalizations or other similar events) restricted shares of common stock in TMG, deliverable in accordance with the provisions set forth in Section 5.08 (such shares are referred to in this Agreement as the "TMG Shares"), and subject to the terms and conditions contained in the Escrow Agreement and Section 2.06 (the "Stock Consideration"); and           - 11 - --------------------------------------------------------------------------------         (d)     Cash, together with the cash payable under the Equity Purchase Agreement,  in an amount, if any, up to $10,000,000 (the "Earn-out Consideration"), payable subject to the terms and conditions set forth in Section 2.05.   Section 2.03     Transactions to be Effected at the Closing.   (a)      At the Closing, Buyer shall: (i)      deliver to Seller: (A)      the Closing Cash Consideration by wire transfer of immediately available funds to the bank account designated in writing by Seller at or prior to Closing; (B)      the Ancillary Documents and all other agreements, documents, instruments or certificates required to be delivered by Buyer at the Closing pursuant to this Agreement (in each case duly executed by Buyer or such Affiliate thereof that is party thereto); (C)      a copy of the legal opinion of TMG's counsel in connection with the issuance of the TMG Shares; and (D)      a copy of the authorization of the issuance of the TMG Shares. (ii)      issue instructions to the TMG's transfer agent, American Stock Transfer & Trust Company, instructing TMG's transfer agent to issue the TMG Shares in accordance with Section 5.08. (iii)      deliver to the Escrow Agent: (A)      the Escrow Agreement, duly executed by Buyer; and   (b)      At the Closing, Seller shall: (i)      deliver to Buyer: (A)      the Ancillary Documents and all other agreements (including the Employment Agreement), documents, instruments or certificates required to be delivered by Seller at the Closing pursuant to this Agreement (in each case duly executed by Seller); (B)      the Equity Purchase Agreement, duly executed by Seller; (C)      consolidated balance sheet with respect to Mission US and Mission UK as of May 31, 2018; and           - 12 - --------------------------------------------------------------------------------           (D)      current, as of Closing, cash report summarizing attached bank statements. (ii)      deliver to the Escrow Agent, the Escrow Agreement, duly executed by Seller.   Section 2.04     Payment of Contingent Cash Consideration. (a)     Subject to the terms and conditions of this Agreement, if EBITDA for the Calculation Period ending December 31, 2018 is equal to or greater than $2,500,000, then at such time as provided in Section 2.04(c), Buyer shall pay to Seller the Contingent Cash Consideration in cash by wire transfer of immediately available funds to the bank account designated in writing by Seller.  In the event that EBITDA for the Calculation Period ending December 31, 2018 is less than $2,500,000, the Contingent Cash Consideration shall be calculated as the product obtained by multiplying (A) $4,000,000, together with the cash payable under the Equity Purchase Agreement,  by (B) a fraction, the numerator of which is EBITDA for the Calculation Period ending December 31, 2018 and the denominator of which is $2,500,000.   (b)     On or before the date which is ninety (90) days after the last day of the Calculation Period ending December 31, 2018, Buyer shall prepare and deliver to Seller a written statement (the "Contingent Cash Calculation Statement") setting forth in reasonable detail its determination of EBITDA for the Calculation Period ending December 31, 2018 and Buyer's calculation of the Contingent Cash Consideration (the "Contingent Cash Calculation").  Seller shall have fifteen (15) Business Days after receipt of the Contingent Cash Calculation Statement (the "Contingent Cash Review Period") to review the Contingent Cash Calculation Statement and the Contingent Cash Calculation set forth therein.  During the Contingent Cash Review Period, Seller and her Representatives may inspect the respective books and records of Mission US and Mission UK during normal business hours at the respective offices of Mission US and Mission UK, in each case upon reasonable prior notice and solely for purposes reasonably related to the determinations of EBITDA and the amount of the resulting Contingent Cash Consideration.  Prior to the expiration of the Contingent Cash Review Period, Seller may object to the Contingent Cash Calculation set forth in the Contingent Cash Calculation Statement by delivering a written notice of objection (a "Contingent Cash Calculation Objection Notice") to Buyer.  Any Contingent Cash Calculation Objection Notice shall specify the items in the Contingent Cash Calculation disputed by Seller and shall describe in reasonable detail the basis for such objection, as well as the amount in dispute. If Seller fails to deliver a Contingent Cash Calculation Objection Notice to Buyer prior to the expiration of the Contingent Cash Review Period, then the Contingent Cash Calculation set forth in the Contingent Cash Calculation Statement shall be final and binding on the parties hereto such failure shall constitute an indefeasible waiver of Seller's ability to challenge such Contingent Cash Calculation.  If Seller timely delivers a Contingent Cash Calculation Objection Notice, Buyer and Seller shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the EBITDA and the amount of the Contingent Cash Consideration.  If Buyer and Seller are unable to reach agreement within thirty (30) days after such a Contingent Cash Calculation Objection Notice has been given, all unresolved disputed items shall be promptly referred to the Independent Accountant.  The Independent Accountant shall be directed to render a written report on the unresolved disputed items with respect to the Contingent Cash Calculation as promptly as practicable, but in no event longer than thirty (30) days after such submission to the Independent Accountant, and to resolve only those unresolved disputed items set forth in the Contingent Cash Calculation Objection Notice. If unresolved disputed items are submitted to the Independent Accountant, Buyer and Seller shall each furnish to the Independent Accountant such work papers, schedules and other documents and information relating to the unresolved disputed items as the Independent Accountant may reasonably request. The Independent Accountant shall resolve the disputed items based solely on the applicable definitions and other terms in this Agreement and the presentations by Buyer and Seller (and not by independent review).  The resolution of the dispute and the calculation of EBITDA for the Calculation Period ending December 31, 2018 by the Independent Accountant shall be final and binding on the parties hereto.  The fees and expenses of the Independent Accountant shall be borne by Seller and Buyer in proportion to the amounts by which their respective calculations of EBITDA differ from EBITDA as finally determined by the Independent Accountant.               - 13 - --------------------------------------------------------------------------------       (c)     Subject to Section 2.04(e), the Contingent Cash Consideration that Buyer is required to pay pursuant to Section 2.04(a) hereof shall be paid in full no later than ten (10) Business Days following the date upon which the determination of EBITDA for the Calculation Period ending December 31, 2018 becomes final and binding upon the parties as provided in Section 2.04(b) (including any final resolution of any dispute raised by Seller in an Contingent Cash Calculation Objection Notice).  Notwithstanding any other provision contained in this Agreement, Seller's right to receive the Contingent Cash Consideration (if any) that becomes due and payable hereunder is expressly conditioned upon the following: (i) Seller is not in Material Breach of this Agreement, (ii) neither Seller nor James is in Material Breach of the Equity Purchase Agreement (as Material Breach is defined therein) and (iii) neither Seller nor James has been terminated for Cause by MM Inc, TMG or an Affiliate thereof and neither Seller nor James has quit employment by TMG or an Affiliate thereof without Good Reason, in each case as of the date such Contingent Cash Consideration is to be paid by Buyer.   (d)     Intentionally Omitted.   (e)     Buyer shall have the right to withhold and set off against any amount otherwise due to be paid pursuant to this Section 2.04 the amount of any Losses to which any Buyer Indemnitee is entitled pursuant to Section 6.06 of this Agreement.   Section 2.05     Payment of Earn-out Consideration.   (a)     Subject to the terms and conditions of this Agreement, at such times as provided in Section 2.05(d), Buyer shall pay to Seller with respect to each Calculation Period within the Earn-out Period in which the EBITDA Threshold has been achieved an aggregate amount, if any (each, an "Earn-out Payment"), equal to fifty percent (50%) of EBITDA for the corresponding Calculation Period; provided, that (x) in no event shall Buyer be obligated to pay Seller more than $10,000,000, together with the cash payable under the Equity Purchase Agreement, in the aggregate in respect of all Calculation Periods during the Earn-out Period; and (y) in no event shall any Earn-out Payment (plus the amount, if any, payable under Section 2.05(h) in respect of the immediately preceding Earn-out Shortfall Calculation Period) exceed fifty percent (50%) of EBITDA for the corresponding Calculation Period.  For the avoidance of doubt, if the EBITDA for a particular Calculation Period does not exceed the applicable EBITDA Threshold, no Earn-out Payment shall be due for such Calculation Period, except as expressly set forth in Section 2.05(h).             - 14 - --------------------------------------------------------------------------------         (b)     On or before the date which is ninety (90) days after the last day of each Calculation Period (each such date, an "Earn-out Calculation Delivery Date"), Buyer shall prepare and deliver to Seller a written statement (in each case, an "Earn-out Calculation Statement") setting forth in reasonable detail its determination of EBITDA for the applicable Calculation Period and Buyer's calculation of the resulting Earn-out Payment, if any (in each case, an "Earn-out Calculation").  Seller shall have fifteen (15) Business Days after receipt of the Earn-out Calculation Statement for each Calculation Period (in each case, the "Review Period") to review the Earn-out Calculation Statement and the Earn-out Calculation set forth therein.  During the Review Period, Seller and her Representatives may inspect the respective books and records of Mission US and Mission UK during normal business hours at the respective offices of Mission US and Mission UK, in each case upon reasonable prior notice and solely for purposes reasonably related to the determinations of EBITDA and the resulting Earn-out Payment (if any).  Prior to the expiration of the Review Period, Seller may object to the Earn-out Calculation set forth in the Earn-out Calculation Statement for the applicable Calculation Period by delivering a written notice of objection (an "Earn-out Calculation Objection Notice") to Buyer.  Any Earn-out Calculation Objection Notice shall specify the items in the applicable Earn-out Calculation disputed by Seller and shall describe in reasonable detail the basis for such objection, as well as the amount in dispute. If Seller fails to deliver an Earn-out Calculation Objection Notice to Buyer prior to the expiration of the Review Period, then the Earn-out Calculation set forth in the Earn-out Calculation Statement shall be final and binding on the parties hereto and such failure shall constitute an indefeasible waiver of Seller's ability to challenge such Earn-out Calculation.  If Seller timely delivers an Earn-out Calculation Objection Notice, Buyer and Seller shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the EBITDA and the Earn-out Payment (if any) for the applicable Calculation Period.  If Buyer and Seller are unable to reach agreement within thirty (30) days after such an Earn-out Calculation Objection Notice has been given, all unresolved disputed items shall be promptly referred to the Independent Accountant.  The Independent Accountant shall be directed to render a written report on the unresolved disputed items with respect to the applicable Earn-out Calculation as promptly as practicable, but in no event longer than thirty (30) days after such submission to the Independent Accountant, and to resolve only those unresolved disputed items set forth in the Earn-out Calculation Objection Notice. If unresolved disputed items are submitted to the Independent Accountant, Buyer and Seller shall each furnish to the Independent Accountant such work papers, schedules and other documents and information relating to the unresolved disputed items as the Independent Accountant may reasonably request. The Independent Accountant shall resolve the disputed items based solely on the applicable definitions and other terms in this Agreement and the presentations by Buyer and Seller (and not by independent review).  The resolution of the dispute and the calculation of EBITDA that is the subject of the applicable Earn-out Calculation Objection Notice by the Independent Accountant shall be final and binding on the parties hereto.  The fees and expenses of the Independent Accountant shall be borne by Seller and Buyer in proportion to the amounts by which their respective calculations of EBITDA differ from EBITDA as finally determined by the Independent Accountant.   (c)     Except as set forth in Section 2.05(h), (i) Buyer's obligation to pay each of the Earn-out Payments to Seller in accordance with Section 2.05(a) is an independent obligation of Buyer and is not otherwise conditioned or contingent upon the satisfaction of any conditions precedent to any preceding or subsequent Earn-out Payment and (ii) the obligation to pay an Earn-out Payment to Seller shall not obligate Buyer to pay any preceding or subsequent Earn-out Payment.  Notwithstanding any other provision contained in this Agreement, Seller's right to receive any Earn-out Payment that becomes due and payable hereunder is expressly conditioned upon the following:  (i) Seller is not in Material Breach of this Agreement, (ii) neither Seller nor James is in Material Breach of the Equity Purchase Agreement (as Material Breach is defined therein) and (iii) neither Seller nor James has been terminated for Cause by MM Inc, TMG or an Affiliate thereof and neither Seller nor James has quit employment by TMG or an Affiliate thereof without Good Reason, in each case as of the date such Earn-out Payment is to be paid by Buyer.   (d)     Subject to Section 2.05(e), any Earn-out Payment that Buyer is required to pay pursuant to Section 2.05(a) hereof shall be paid in full no later than ten (10) Business Days following the date upon which the determination of EBITDA for the applicable Calculation Period becomes final and binding upon the parties as provided in Section 2.05(b) (including any final resolution of any dispute raised by Seller in an Earn-out Calculation Objection Notice).  Buyer shall pay to Seller the applicable Earn-out Payment in cash by wire transfer of immediately available funds to the bank account designated in writing by Seller.             - 15 - --------------------------------------------------------------------------------       (e)     Subsequent to the Closing, at all times during the Earn-out Period (or until Seller has earned $10,000,000 of Earn-out Payments in the aggregate in respect of all Calculation Periods during the Earn-out Period), TMG and Buyer shall operate the respective businesses of Mission US, Mission UK and MM Ltd in the ordinary course of business consistent with the respective past practices of Mission US, Mission UK and MM Ltd, and will (except with the prior written consent of the Seller):   (i)      maintain separate books and records for the Business; (ii)      generate appropriate stand-alone financial statements of the Business in order for all EBITDA to be calculated and reviewed in accordance with this Agreement; (iii)      provide reasonable access and information to Seller so that Seller can monitor, from time to time, the ongoing financial performance of the Business; and (iv)      promote and continue the operations of the Business with a view to the achievement of the maximization of EBITDA during the Earn-Out Period consistent with and subject to overall fair and reasonable enterprise wide objectives and policies.   (f)     Buyer shall have the right to withhold and set off against any amount otherwise due to be paid pursuant to this Section 2.05 the amount of any Losses to which any Buyer Indemnitee is entitled pursuant to Section 6.06 of this Agreement.   (g)     The parties hereto understand and agree that (i) the contingent rights to receive any Earn-out Payment shall not be represented by any form of certificate or other instrument, are not transferable, except by operation of Laws relating to descent and distribution, divorce and community property, and do not constitute an equity or ownership interest in Buyer, Mission US or Mission UK, (ii) Seller shall not have any rights as a security holder of Buyer, Mission US or Mission UK as a result of Seller's contingent right to receive any Earn-out Payment hereunder and (iii) no interest is payable with respect to any Earn-out Payment.   (h)     With respect to each Calculation Period (other than the Calculation Period ending December 31, 2023, if applicable), in the event that an Earn-out Shortfall exists in respect thereof (an "Earn-out Shortfall Calculation Period") and EBITDA for the immediately succeeding Calculation Period exceeds the sum of (A) the EBITDA Threshold for such succeeding Calculation Period plus (B) the amount of such Earn-out Shortfall (the amount of such excess, if any, is referred to herein as the "Earn-out Excess"), then Seller shall be entitled to receive an Earn-Out Payment in respect of such Earn-out Shortfall Calculation Period, which Earn-Out Payment shall be calculated as though the EBITDA for such Earn-out Shortfall Calculation Period was the sum of (A) the actual EBITDA for such Earn-out Shortfall Calculation Period plus (B) the Earn-out Excess of the immediately succeeding Calculation Period. The foregoing provisions of this Section 2.05(h) are subject to the provisions set forth in Section 2.05(a), including, but not limited to, clause (y) thereof.             - 16 - --------------------------------------------------------------------------------       Section 2.06     Subsequent Issuance of TMG Shares.   (a)     Subject to the terms and conditions of this Agreement, on each Stock Consideration Release Date (or if such Stock Consideration Release Date is not a Business Day, then on the next Business Day), Buyer shall cause to be released to Seller from the escrow established under the Escrow Agreement (and the parties hereto shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to release such TMG Shares to Seller), 5,000,000 (subject to equitable adjustment for stock splits, stock combinations, reclassifications, recapitalizations or other similar events) restricted TMG Shares issued as described in Section 5.08; provided that on such Stock Consideration Release Date (a) Seller is not in Material Breach of this Agreement, (b) neither Seller nor James is in Material Breach of the Equity Purchase Agreement and (c) neither Seller nor James has been terminated for Cause by MM Inc, TMG or an Affiliate thereof and neither Seller nor James has quit employment by TMG or an Affiliate thereof without Good Reason, in each case as of such Stock Consideration Release Date.  In the event that any of the foregoing conditions precedent is not satisfied on any particular Stock Consideration Release Date, then the TMG Shares corresponding thereto shall be released to TMG (and the parties hereto shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to release such TMG Shares to TMG).   (b)     Buyer shall have the right to withhold and set off against any amount otherwise due to be paid or released pursuant to this Section 2.06 the amount of any Losses to which any Buyer Indemnitee is entitled pursuant to Section 6.06 of this Agreement.   Section 2.07     Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the "Closing") shall take place simultaneously with the execution and delivery of this Agreement on the date hereof (the "Closing Date") via the exchange of this Agreement and the other Ancillary Documents by all the parties hereto and thereto.   Section 2.08     Withholding Tax.  Buyer shall be entitled to deduct and withhold from the Aggregate Purchase Price (and/or any portion thereof) all Taxes that Buyer may be required to deduct and withhold under any provision of Tax Law.  All such withheld amounts shall be treated as delivered to Seller hereunder.   Section 2.09     Allocation of Aggregate Purchase Price.  The parties shall allocate the Aggregate Purchase Price among this Agreement and the Equity Purchase Agreement in the manner specified in the Equity Purchase Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer that the statements contained in this ARTICLE III are true and correct as of the date hereof. Section 3.01     Authority and Binding Obligation.  Seller is an individual and has the full legal capacity to enter into this Agreement and the Ancillary Documents to which Seller is a party, to carry out Seller's obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  This Agreement and each Ancillary Document to which Seller is a party has been duly executed and delivered by Seller, and (assuming due authorization, execution, and delivery by the other parties hereto or thereto, as applicable) this Agreement and each such Ancillary Document constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as may be limited by the laws of bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity.               - 17 - --------------------------------------------------------------------------------       Section 3.02     Brokers. Except as set forth in Section 3.02 of the Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Seller.   Section 3.03     Investment in TMG Shares.  Seller understands that the offer and sale of the TMG Shares has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws.  Seller is acquiring the TMG Shares for Seller's own account, for Seller's own investment only and not with a view to resale or distribution thereof.  Seller acknowledges that the TMG Shares may not be sold or otherwise transferred without registration of the offer and sale thereof under the Securities Act, or an exemption therefrom, and applicable state securities laws.  Seller has such knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in TMG and making an informed decision with respect thereto, and Seller is able to bear the economic and financial risk of an investment in TMG for an indefinite period of time.   Section 3.04     No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the Ancillary Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller; (b) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which Seller is a party or by which Seller is bound or to which any of Seller's properties and assets are subject; or (c) result in the creation or imposition of any Encumbrance on any properties or assets of Seller. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.   Section 3.05     Goodwill and Intellectual Property.   (a)     Seller has good and valid title to all the Seller Intellectual Property and the Goodwill, in each case free and clear of all Encumbrances, and Seller is, and has at all times been, the sole and exclusive owner of all of the Seller Intellectual Property and the Goodwill, in each case free and clear of all Encumbrances.  Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Seller's right to own or use any Seller Intellectual Property or any of the Goodwill.   (b)      Section 3.05 of the Disclosure Schedules contains a correct, current, and complete list of all (i) Seller IP Registrations, specifying as to each, as applicable: the title, mark, or design; the record owner and inventor(s), if any; the jurisdiction by or in which it has been issued, registered, or filed; the patent, registration, or application serial number; the issue, registration, or filing date; and the current status and (ii) all unregistered Trademarks included in the Seller Intellectual Property; and (iii) all other Seller Intellectual Property used or held for use in the Business as currently conducted and as proposed to be conducted.  All required filings and fees related to the Seller IP Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Seller IP Registrations are otherwise in good standing. Seller has provided Buyer with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Seller IP Registrations. (c)     All of the Seller Intellectual Property is valid and enforceable.  Seller has taken all necessary steps to maintain and enforce the Seller Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the Seller Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements.   (d)     Neither the Seller Intellectual Property nor the Goodwill has infringed, misappropriated or otherwise violated, and neither the Seller Intellectual Property nor the Goodwill will infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person.  To the Knowledge of Seller, no Person has infringed, misappropriated or otherwise violated any Seller Intellectual Property or any Goodwill.             - 18 - --------------------------------------------------------------------------------         (e)     Except as set forth in Section 3.05(e) of the Disclosure Schedules, there are no Actions (including any opposition, cancellation, revocation, review or other proceeding) settled, pending or threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation or other violation by Seller of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability or ownership of any Seller Intellectual Property or the Goodwill; or (iii) by Seller or any other Person alleging any infringement, misappropriation or other violation by any Person of the Seller Intellectual Property.  Seller is not aware of any facts or circumstances that could reasonably be expected to give rise to any such Action. Seller is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any Seller Intellectual Property or the Goodwill.   Section 3.06     Legal Proceedings; Governmental Orders.   (a)     Except as set forth on Section 3.06 of the Disclosure Schedule, there are no Actions pending or, to Seller's Knowledge, threatened (a) against or by Seller affecting any of Seller's properties or assets (including the Goodwill or any portion thereof); or (b) against or by Seller, James, or any of their respective Affiliates that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.   (b)     There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting Seller or any of Seller's properties or assets (including the Goodwill or any portion thereof).   Section 3.07     Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO BUYER AND TMG Buyer and TMG represent and warrant to Seller that the statements contained in this ARTICLE VI are true and correct as of the date hereof. Section 4.01     Organization and Authority.   (a)     Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of New York.  Buyer has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any Ancillary Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and each Ancillary Document to which Buyer is a party has been duly executed and delivered by Buyer, and (assuming due authorization, execution, and delivery by each Seller) this Agreement and each such Ancillary Document constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as may be limited by the laws of bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity.             - 19 - --------------------------------------------------------------------------------       (b)     TMG is a corporation duly organized, validly existing and in good standing under the Laws of the State of Nevada.  TMG has full corporate power and authority to enter into this Agreement and the Ancillary Documents to which TMG is a party, to carry out its obligations thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by TMG of this Agreement and any Ancillary Document to which TMG is a party, the performance by TMG of its obligations hereunder and thereunder and the consummation by TMG of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of TMG. This Agreement and each Ancillary Document to which TMG is a party has been duly executed and delivered by TMG, and (assuming due authorization, execution, and delivery by each Seller) this Agreement and each such Ancillary Document constitutes a legal, valid and binding obligation of TMG enforceable against TMG in accordance with its terms, except as may be limited by the laws of bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity.   Section 4.02     No Conflicts; Consents. Except as set forth in Section 4.02 of the TMG Disclosure Schedules, the execution, delivery and performance by Buyer and TMG of this Agreement and the Ancillary Documents to which Buyer or TMG is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Organizational Documents of Buyer or TMG; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer or TMG; (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which any member of TMG Group is a party or by which any member of TMG Group is bound or to which any of their respective properties and assets are subject (including any TMG Material Contract) or any Permit affecting the properties, assets of business of TMG Group or (d) result in the creation or imposition of any Encumbrances other than TMG Permitted Encumbrances on any properties or assets of TMG Group. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer or TMG in connection with the execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.   Section 4.03     Capitalization.   (a)     The authorized capital stock of Buyer consists of 200 shares of common stock, par value $0.001, of which 200 shares are issued and outstanding (the "Buyer Shares"). TMG owns all of the Buyer Shares. The Buyer Shares have been duly authorized and are validly issued, fully-paid and non-assessable.   (b)     The Buyer Shares were issued in compliance with applicable Laws. The Buyer Shares were not issued in violation of the Organizational Documents of Buyer or any other agreement, arrangement, or commitment to which Buyer is a party and are not subject to or in violation of any preemptive or similar rights of any Person.   (c)     There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any Buyer Shares obligating Buyer to issue or sell any shares, or any other interest, in Buyer. Other than the Organizational Documents, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Buyer Shares.   (d)     The authorized capital stock of TMG consists of 600,000,000 shares of common stock, par value $0.001 and 15,000,000 shares of preferred stock, par value $0.20 per share as amended on April 24, 2018 (the "TMG Stock").  As of the date hereof, there were 178,169,348 shares of common stock; 720,000 shares of non-convertible Preferred Stock; 2,495,000 shares of Series B Preferred Stock (convertible into approximately 8,910,715 shares of Common Stock); 869,149 shares of Series C Preferred Stock (convertible into approximately 173,828,800 shares of Common Stock), and 626,500 shares of Series D Preferred Stock (convertible into approximately 25,060,000 shares of Common Stock) issued and outstanding. All TMG Stock has been duly authorized and are validly issued, fully-paid and non-assessable.   (e)     All TMG Stock was issued in compliance with applicable Laws. All TMG Stock was not issued in violation of the Organizational Documents of TMG or any other agreement, arrangement, or commitment to which TMG is a party and are not subject to or in violation of any preemptive or similar rights of any Person.             - 20 - --------------------------------------------------------------------------------       (f)     Except as set forth in Section 4.03(f) of the TMG Disclosure Schedules, there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any TMG Stock obligating TMG to issue or sell any shares, or any other interest, in TMG. Other than the Organizational Documents, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the TMG Stock.   Section 4.04     Financial Statements. Complete copies of TMG's audited financial statements consisting of the balance sheet of TMG as at December 31, 2015 and the related statements of income and retained earnings, members' equity and cash flow for the year then ended (the "TMG Audited Financial Statements"), and unaudited financial statements consisting of the balance sheet of TMG as at May 31, 2018 and the related statements of income and retained earnings, members' equity and cash flow for the five-month period then ended (the "TMG Interim Financial Statements" and together with the TMG Audited Financial Statements, the "TMG Financial Statements") have been provided to Seller prior to Closing. The TMG Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the TMG Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the TMG Audited Financial Statements). The TMG Financial Statements are based on the books and records of TMG, and fairly present the financial condition of TMG as of the respective dates they were prepared and the results of the operations of TMG for the periods indicated.  The business of TMG has been operated in a manner consistent with the operation of the business of Buyer. The balance sheet of TMG as of December 31, 2015 is referred to herein as the "TMG Balance Sheet" and the date thereof as the "TMG Balance Sheet Date" and the balance sheet of TMG as of May 31, 2018 is referred to herein as the "TMG Interim Balance Sheet" and the date thereof as the "TMG Interim Balance Sheet Date." TMG maintains a standard system of accounting established and administered in accordance with GAAP.  Buyer is newly formed and has not conducted any operations to date.   Section 4.05     Undisclosed Liabilities. TMG has no Liabilities, except (a) those which are adequately reflected or reserved against in the TMG Interim Balance Sheet as of the TMG Interim Balance Sheet Date, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the TMG Interim Balance Sheet Date and which are not, individually or in the aggregate, material in amount.   Section 4.06     Absence of Certain Changes, Events, and Conditions.  Except as set forth in Section 4.06 of the TMG Disclosure Schedules, since the TMG Interim Balance Sheet Date, respectively, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to TMG, any:   (a)     event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a TMG Material Adverse Effect;   (b)     amendment of the Organizational Documents of TMG;   (c)     split, combination or reclassification of any TMG Stock;   (d)     issuance, sale or other disposition of, or creation of any Encumbrance on, any TMG Stock, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any TMG Stock;   (e)     declaration or payment of any distributions on or in respect of any TMG Stock, or redemption, purchase or acquisition of any outstanding TMG Stock;             - 21 - --------------------------------------------------------------------------------     (f)     material change in any method of accounting or accounting practice of TMG, except as required by GAAP or as disclosed in the notes to the TMG Financial Statements;   (g)     material change in TMG's cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;   (h)     entry into any Contract that would constitute a TMG Material Contract, other than with any other member of TMG Group;   (i)     incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;   (j)     transfer, assignment, sale or other disposition of any of the assets shown or reflected in the TMG Interim Balance Sheet or cancellation of any debts or entitlements;   (k)     transfer or assignment of or grant of any license or sublicense under or with respect to any TMG Group Intellectual Property or TMG Group IP Agreements;   (l)     abandonment or lapse of or failure to maintain in full force and effect any TMG Group IP Registration or failure to take or maintain reasonable measures to protect the confidentiality or value of any Trade Secrets included in the TMG Group Intellectual Property;   (m)     material damage, destruction or loss (whether or not covered by insurance) to its property;   (n)     any capital investment in, or any loan to, any other Person;   (o)     acceleration, termination, material modification to or cancellation of any material Contract (including, but not limited to, any TMG Material Contract) to which TMG is a party or by which it is bound;   (p)     any material capital expenditures;   (q)     imposition of any Encumbrance upon any of TMG's properties or assets, tangible or intangible;   (r)     (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, managers, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $30,000, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, manager, independent contractor or consultant;   (s)     hiring or promoting any person as or to (as the case may be) an officer or hiring or promoting any employee below officer, except to fill a vacancy in the ordinary course of business;   (t)     adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, manager, independent contractor or consultant, (ii) TMG Group Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;               - 22 - --------------------------------------------------------------------------------         (u)     any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its members or current or former managers, officers and employees;   (v)     entry into a new line of business or abandonment or discontinuance of existing lines of business;   (w)     adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;   (x)     purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of $10,000, individually (in the case of a lease, per annum) or $50,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;   (y)     acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets, stock or other equity of, or by any other manner, any business or any Person or any division thereof;   (z)     action by TMG to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of TMG in respect of any Post-Closing Tax Period; or   (aa)     any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.   Section 4.07     Material Contracts.    (a)     Section 4.07(a) of the TMG Disclosure Schedules lists each of the following Contracts of the TMG Group (such Contracts, together with all Contracts concerning the occupancy, management or operation of any TMG Real Property (including without limitation, brokerage contracts) and all TMG Group IP Agreements, being "TMG Material Contracts"):   (i)      each Contract of any member of the TMG Group involving aggregate consideration in excess of $100,000 and which, in each case, cannot be cancelled by such member without penalty or without more than ninety (90) days' notice; (ii)      all Contracts that require any member of the TMG Group to purchase its total requirements of any product or service from a third party or that contain "take or pay" provisions; (iii)      all Contracts that provide for the indemnification by any member of the TMG Group of any Person or the assumption of any Tax, environmental or other Liability of any Person; (iv)      all Contracts that relate to the acquisition or disposition of any business, a material amount of equity or assets of any other Person or any real property (whether by merger, sale of stock or other equity interests, sale of assets or otherwise);             - 23 - --------------------------------------------------------------------------------           (v)      all broker, distributor, dealer, manufacturer's representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which any member of the TMG Group is a party; (vi)      all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which any member of the TMG Group is a party and which are not cancellable without material penalty or without more than ninety (90) days' notice; (vii)      except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of any member of the TMG Group; (viii)      all Contracts with any Governmental Authority to which any member of the TMG Group is a party; (ix)      all Contracts that limit or purport to limit the ability of any member of the TMG Group to compete in any line of business or with any Person or in any geographic area or during any period of time; (x)      any Contracts to which any member of the TMG Group is a party that provide for any joint venture, partnership or similar arrangement by any member of the TMG Group; (xi)      all Contracts between or among any member of the TMG Group, on the one hand, and any other member of the TMG Group, on the other hand; (xii)      all collective bargaining agreements or Contracts with any Union to which any member of the TMG Group is a party; and (xiii)      any other Contract that is material to any member of the TMG Group and not previously disclosed pursuant to this Section 4.07.   (b)     Each TMG Material Contract is valid and binding on each TMG Group member that is a party thereto in accordance with its terms and is in full force and effect.  Neither any TMG Group member nor, to the Knowledge of Buyer and TMG, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any TMG Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any TMG Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each TMG Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Seller.   Section 4.08     Title to Assets; Real Property.    (a)     TMG (or another member of the TMG Group) has good and valid title to, or a valid leasehold interest in, all TMG Real Property and personal property and other assets reflected in the TMG Audited Financial Statements or acquired after the TMG Interim Balance Sheet Date, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the TMG Interim Balance Sheet Date.   All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as "TMG Permitted Encumbrances"):             - 24 - --------------------------------------------------------------------------------         (i)      liens for Taxes not yet due and payable; (ii)      mechanics, carriers', workmen's, repairmen's or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the business of TMG or the other members of the TMG Group, as applicable; (iii)      easements, rights of way, zoning ordinances and other similar encumbrances affecting TMG Real Property, as applicable, which are not, individually or in the aggregate, material to the business of TMG or the other members of the TMG Group, as applicable; or (iv)      liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the business of TMG or the other members of the TMG Group, as applicable.   (b)     The use and operation of the TMG Real Property in the conduct of TMG Group's business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of TMG or another member of the TMG Group encroach on real property owned or leased by a Person other than the TMG Real Property, as applicable. There are no Actions pending or, to the Knowledge of Buyer and TMG, threatened, against or affecting the TMG Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.   Section 4.09     Condition and Sufficiency of Assets.  The furniture, fixtures, equipment, vehicles and other items of tangible personal property of TMG Group are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such furniture, fixtures, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The furniture, fixtures, equipment, vehicles and other items of tangible personal property currently owned or leased by the members of the TMG Group, together with all other properties and assets of TMG Group, are sufficient for the continued conduct of TMG Group's business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of TMG Group as currently conducted.   Section 4.10     Intellectual Property.   (a)     All required filings and fees related to the TMG Group IP Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all TMG Group IP Registrations are otherwise in good standing.                 - 25 - --------------------------------------------------------------------------------           (b)     Each TMG Group IP Agreement is valid and binding on each member of the TMG Group that is a party thereto in accordance with its terms and is in full force and effect.  Neither any member of the TMG Group nor, to the Knowledge of Buyer and TMG, any other party thereto is, or is alleged to be, in breach of or default under, or has provided or received any notice of breach of, default under, or intention to terminate (including by non-renewal), any TMG Group IP Agreement.   (c)     TMG or another member of the TMG Group is the sole and exclusive legal and beneficial, and with respect to the TMG Group IP Registrations, record, owner of all right, title and interest in and to the TMG Group Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of TMG Group's business as currently conducted or as proposed to be conducted, in each case, free and clear of Encumbrances other than TMG Permitted Encumbrances. TMG or another member of the TMG Group has entered into binding, valid and enforceable, written Contracts with each current and former employee and independent contractor of the TMG Group whereby such employee or independent contractor (i) acknowledges TMG's (or another member of the TMG Group's) exclusive ownership of all Intellectual Property invented, created or developed by such employee or independent contractor within the scope of his or her employment or engagement with TMG Group; (ii) grants to TMG or another member of the TMG Group a present, irrevocable assignment of any ownership interest such employee or independent contractor may have in or to such Intellectual Property; and (iii) irrevocably waives any right or interest, including any moral rights, regarding such Intellectual Property, to the extent permitted by applicable Law.   (d)     Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, TMG Group's right to own or use any TMG Group Intellectual Property or any Intellectual Property subject to any TMG Group IP Agreement.   (e)     All of the TMG Group Intellectual Property is valid and enforceable, and all TMG Group IP Registrations are subsisting and in full force and effect.  TMG Group has taken all necessary steps to maintain and enforce the TMG Group Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the TMG Group Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements.   (f)     The conduct of TMG Group's business as currently and formerly conducted and as proposed to be conducted, and the products, processes and services of TMG Group, have not infringed, misappropriated or otherwise violated, and will not infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person.  To the Knowledge of TMG and Buyer, no Person has infringed, misappropriated or otherwise violated any TMG Group Intellectual Property.   (g)     Except as set forth in Section 4.10(g) of the TMG Disclosure Schedules, there are no Actions (including any opposition, cancellation, revocation, review or other proceeding) settled, pending or threatened (including in the form of offers to obtain a license): (i) alleging any infringement, misappropriation or other violation by TMG Group of the Intellectual Property of any Person; (ii) challenging the validity, enforceability, registrability, patentability or ownership of any TMG Group Intellectual Property; or (iii) by TMG Group or any other Person alleging any infringement, misappropriation or other violation by any Person of the TMG Group Intellectual Property. TMG Group is not aware of any facts or circumstances that could reasonably be expected to give rise to any such Action. TMG Group is not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any TMG Group Intellectual Property.   (h)     The computer hardware, servers, networks, platforms, peripherals, data communication lines, and other information technology equipment and related systems, including any outsourced systems and processes, that are owned or used by TMG Group ("TMG Group Systems") are reasonably sufficient for the immediate and anticipated needs of the business of TMG Group. In the past eighteen (18) months, there has been no unauthorized access, use, intrusion, or breach of security, or failure, breakdown, performance reduction, or other adverse event affecting any TMG Group Systems, that has caused or could reasonably be expected to cause any: (i) substantial disruption of or interruption in or to the use of such TMG Group Systems or the conduct of TMG Group's business; (ii) material loss, destruction, damage, or harm of or to TMG Group or its operations, personnel, property, or other assets; or (iii) liability of any kind to TMG Group.  TMG Group has taken all reasonable actions, consistent with applicable industry best practices, to protect the integrity and security of the TMG Group Systems and the data and other information stored or processed thereon. TMG Group (i) maintains commercially reasonable backup and data recovery, disaster recovery, and business continuity plans, procedures, and facilities; (ii) acts in compliance therewith; and (iii) tests such plans and procedures on a regular basis, and such plans and procedures have been proven effective upon such testing.             - 26 - --------------------------------------------------------------------------------       Section 4.11     Accounts Receivable. The accounts receivable (billed and unbilled) reflected on the TMG Interim Balance Sheet and the accounts receivable (billed and unbilled) of TMG as of the date hereof (a) have arisen from bona fide transactions entered into by TMG involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of TMG not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice. The reserve for bad debts shown on the TMG Interim Balance Sheet or, with respect to accounts receivable arising after the TMG Interim Balance Sheet Date, on the accounting records of TMG have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.  With respect to all unbilled work-in-process of TMG as of the date hereof, TMG expects that valid invoices will be issued in respect thereof by TMG in its ordinary course of business without any significant discounts or write-downs.   Section 4.12     Customers and Suppliers.   (a)     TMG has not received any notice, and has no reason to believe, that any of the TMG Group Material Customers has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce its relationship with the TMG Group.   (b)     TMG has not received any notice, and has no reason to believe, that any of the TMG Group Material Suppliers has ceased, or intends to cease, to supply goods or services to TMG Group or to otherwise terminate or materially reduce its relationship with the TMG Group.   Section 4.13     Insurance. All current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers' compensation, vehicular, directors' and officers' liability, fiduciary liability and other casualty and property insurance maintained by TMG Group and relating to the assets, business, operations, employees, officers and managers of TMG Group (collectively, the "TMG Group Insurance Policies") are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. TMG Group has not received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such TMG Group Insurance Policies. All premiums due on such TMG Group Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each TMG Group Insurance Policy. The TMG Group Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of TMG Group. All such TMG Group Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. There are no claims related to the business of TMG Group pending under any such TMG Group Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. TMG Group is not in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such TMG Group Insurance Policy. The TMG Group Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to TMG Group and are sufficient for compliance with all applicable Laws and Contracts to which TMG Group is a party or by which it is bound.   Section 4.14     Legal Proceedings; Governmental Orders.   (a)     There are no Actions pending or, to Buyer or TMG's Knowledge, threatened, (i) against or by any member of TMG Group affecting any of its properties or assets or (ii) against or by Buyer, TMG or any other member of the TMG Group that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.  No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.                 - 27 - --------------------------------------------------------------------------------         (b)     Except as set forth in Section 4.14 of the TMG Disclosure Schedules, there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting Buyer or TMG or any of their respective properties or assets.   Section 4.15     Compliance With Laws; Permits.    (a)     Except as set forth in Section 4.15(a) of the TMG Disclosure Schedules, each of Buyer and TMG has complied, and is now complying, in all material respects, with all Laws applicable to it or its business, properties or assets.   (b)     All Permits required for Buyer or TMG, as applicable, to conduct its respective business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit issued to Buyer or TMG.   Section 4.16     Environmental Matters.    (a)     TMG Group is currently and has been in compliance with all Environmental Laws and has not received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.   (b)     No real property currently or formerly owned, operated or leased by TMG Group is listed on, or has been proposed for listing on, the National Priorities List (or CERCLIS) under CERCLA, or any similar state list.   (c)     There has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the business or assets of TMG Group, to the Knowledge of Buyer or TMG, any real property currently or formerly owned, operated or leased by TMG Group, and no member of TMG Group has received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of TMG Group (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by TMG Group.   (d)     TMG Group has not retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law.   (e)     TMG Group is not aware of or reasonably anticipates, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of TMG Group as currently carried out.             - 28 - --------------------------------------------------------------------------------       Section 4.17     Employee Benefit Matters.    (a)     Each TMG Group Benefit Plan (other than any multiemployer plan within the meaning of Section 3(37) of ERISA (each a "TMG Group Multiemployer Plan")) has been established, administered and maintained in accordance with its terms and in compliance in all material respects with all applicable Laws (including ERISA, the Code and any applicable local Laws). Each TMG Group Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (a "TMG Group Qualified Benefit Plan") is so qualified and received a favorable and current determination letter from the Internal Revenue Service with respect to the most recent five year filing cycle, or with respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan or volume submitter plan sponsor, to the effect that such TMG Group Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and nothing has occurred that could reasonably be expected to adversely affect the qualified status of any TMG Group Qualified Benefit Plan. Nothing has occurred with respect to any TMG Group Benefit Plan that has subjected or could reasonably be expected to subject TMG Group or, with respect to any period on or after the Closing Date, Seller or any of her Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 or 4980H of the Code.   (b)     No pension plan (other than a TMG Group Multiemployer Plan) which is subject to minimum funding requirements, including any multiple employer plan, (each, a "TMG Group Single Employer Plan") in which employees of TMG Group or any TMG Group ERISA Affiliate participate or have participated has an "accumulated funding deficiency", whether or not waived, or is subject to a lien for unpaid contributions under Section 303(k) of ERISA or Section 430(k) of the Code. No TMG Group Single Employer Plan covering employees of TMG Group which is a defined benefit plan has an "adjusted funding target attainment percentage", as defined in Section 436 of the Code, less than 80%. All benefits, contributions and premiums relating to each TMG Group Benefit Plan have been timely paid in accordance with the terms of such TMG Group Benefit Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded TMG Group Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, GAAP.   (c)     Neither any member of the TMG Group nor any TMG Group ERISA Affiliate has (i) incurred or reasonably expects to incur, either directly or indirectly, any material Liability under Title I or Title IV of ERISA or related provisions of the Code or applicable local Law relating to employee benefit plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty Corporation; (iii) withdrawn from any TMG Group Benefit Plan; (iv) engaged in any transaction which would give rise to liability under Section 4069 or Section 4212(c) of ERISA; (v) incurred taxes under Section 4971 of the Code with respect to any TMG Group Single Employer Plan; or (v) participated in a multiple employer welfare arrangements (MEWAs).   (d)     With respect to each TMG Group Benefit Plan (i) no such plan is a TMG Group Multiemployer Plan; (ii) no such plan is a "multiple employer plan" within the meaning of Section 413(c) of the Code or a "multiple employer welfare arrangement" (as defined in Section 3(40) of ERISA); (iii) no Action has been initiated by the Pension Benefit Guaranty Corporation to terminate any such plan or to appoint a trustee for any such plan; (iv) no such plan or the plan of any ERISA Affiliate maintained or contributed to within the last six (6) years is a TMG Group Single Employer Plan subject to Title IV of ERISA; and (v) no "reportable event," as defined in Section 4043 of ERISA, with respect to which the reporting requirement has not been waived, has occurred with respect to any such plan.   (e)     Each TMG Group Benefit Plan can be amended, terminated, or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to TMG Group other than ordinary administrative expenses typically incurred in a termination event. TMG Group has no commitment or obligation and have not made any representations to any employee, officer, manager, independent contractor, or consultant, whether or not legally binding, to adopt, amend, modify, or terminate any TMG Group Benefit Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.   (f)     Other than as required under Sections 601 to 608 of ERISA or other applicable Law, no TMG Group Benefit Plan provides post-termination or retiree health benefits to any individual for any reason, neither any member of TMG Group nor any TMG Group ERISA Affiliate has any Liability to provide post-termination or retiree health benefits to any individual or ever represented, promised or contracted to any individual that such individual would be provided with post-termination or retiree health benefits.             - 29 - --------------------------------------------------------------------------------           (g)     There is no pending or, to the Knowledge of Buyer or TMG, threatened Action relating to a TMG Group Benefit Plan (other than routine claims for benefits), and no TMG Group Benefit Plan has within the three (3) years prior to the date hereof been the subject of an examination or audit by a Governmental Authority or the subject of an application or filing under or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.   (h)     There has been no amendment to, announcement by TMG Group relating to, or change in employee participation or coverage under, any TMG Group Benefit Plan or collective bargaining agreement that would increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year (other than on a de minimis basis) with respect to any manager, officer, employee, independent contractor or consultant, as applicable.  TMG Group has no commitment or obligation or has made any representations to any manager, officer, employee, independent contractor, or consultant, whether or not legally binding, to adopt, amend, modify or terminate any TMG Group Benefit Plan or any collective bargaining agreement.   (i)     Each TMG Group Benefit Plan that is subject to Section 409A of the Code has been administered in compliance with its terms and the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices, rulings and proposed and final regulations) thereunder.  TMG Group has no obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest, or penalties incurred pursuant to Section 409A of the Code.   (j)     Each individual who is classified by TMG Group as an independent contractor has been properly classified for purposes of participation and benefit accrual under each TMG Group Benefit Plan.   (k)     Except as set forth in Section 4.17(k) of the TMG Disclosure Schedules, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (i) entitle any current or former manager, officer, employee, independent contractor or consultant of TMG Group to severance pay or any other payment; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation (including stock-based compensation) due to any such individual; (iii) limit or restrict the right of TMG Group to merge, amend or terminate any TMG Group Benefit Plan; (iv) increase the amount payable under or result in any other material obligation pursuant to any TMG Group Benefit Plan; (v) result in "excess parachute payments" within the meaning of Section 280G(b) of the Code; or (vi) require a "gross-up" or other payment to any "disqualified individual" within the meaning of Section 280G(c) of the Code. Seller have made available to Buyer true and complete copies of any Section 280G calculations prepared (whether or not final) with respect to any disqualified individual in connection with the transactions.   Section 4.18     Employment Matters.    (a)     Except as set forth in Section 4.18(a) of the TMG Disclosure Schedules, as of the date hereof, all compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors or consultants of TMG Group for services performed on or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of TMG Group with respect to any compensation, commissions, bonuses or fees, other than any payments to be made thereto in the ordinary course of business (e.g., payroll).   (b)     Except as set forth in Section 4.18(b) of the TMG Disclosure Schedules, each TMG Group member is not, and has never been, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a Union, and there is not, and has never been, any Union representing or purporting to represent any employee of TMG Group, and no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining.  There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting TMG Group or any of its respective employees.  TMG Group has no duty to bargain with any Union.               - 30 - --------------------------------------------------------------------------------       (c)     Except as set forth in Section 4.18(c) of the TMG Disclosure Schedules, TMG Group is and has been in compliance with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, independent contractor classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers' compensation, leaves of absence, paid sick leave and unemployment insurance. All individuals characterized and treated by TMG Group as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of TMG Group classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified.  TMG Group is in compliance with and has complied with all immigration laws, including From I-9 requirements and any applicable mandatory E-Verify obligations.  There are no Actions against TMG Group pending or, to the Knowledge of Buyer or TMG, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of TMG Group, including, without limitation, any charge, investigation or claim relating to unfair labor practices, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment related matter arising under applicable Laws.   (d)     To the Knowledge of Buyer and TMG, no employee of Buyer or TMG intends to terminate such employee's employment with Buyer or TMG, as applicable, or solicit any clients or customers in each case, (prospective or actual) of Buyer or TMG.   Section 4.19     Taxes.   (a)     Except as set forth in Section 4.19(a) of the TMG Disclosure Schedules, All Tax Returns required to be filed on or before the Closing Date by TMG have been timely filed.  Such Tax Returns are true, complete and correct in all material respects. All material Taxes due and owing by TMG (whether or not shown on any Tax Return) have been timely paid.   (b)     TMG withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, member or other party, and complied with all information reporting and backup withholding provisions of applicable Law.   (c)     No claim has been made by any taxing authority in any jurisdiction where TMG does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction.   (d)     No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of TMG.   (e)     Buyer, as a newly formed entity, has not incurred any tax liability. The amount of TMG's Liability for unpaid Taxes for all periods ending on or before December 31, 2017 does not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected on the TMG Financial Statements. The amount of TMG's Liability for unpaid Taxes for all periods following the end of the recent period covered by the TMG Financial Statements shall not, in the aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted for the passage of time in accordance with the past custom and practice of TMG (and which accruals shall not exceed comparable amounts incurred in similar periods in prior years).   (f)     All deficiencies asserted, or assessments made, against TMG as a result of any examinations by any taxing authority have been fully paid.   (g)     Except as set forth in Section 4.19(g) of the TMG Disclosure Schedules, TMG is not a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority with respect to TMG.   (h)     There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the assets of TMG.             - 31 - --------------------------------------------------------------------------------         (i)     TMG is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement.   (j)     No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into, or issued by any taxing authority with respect to TMG.   (k)     Except as set forth in Section 4.19(k) of the TMG Disclosure Schedules, TMG will not be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxable period or portion thereof ending after the Closing Date as a result of:   (i)      any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date; (ii)       an installment sale or open transaction occurring on or prior to the Closing Date; (iii)      a prepaid amount received on or before the Closing Date; (iv)      any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or (v)      any election under Section 108(i) of the Code.   (l)     TMG is a not "foreign person" as that term is used in Treasury Regulations Section 1.1445-2 and Section 1446(f)(2) of the Code.  TMG has not been a "distributing corporation" or a "controlled corporation" in connection with a distribution described in Section 355 of the Code.  TMG is not, and has not been, a party to, or a promoter of, a "reportable transaction" within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).  There is currently no limitation on the utilization of net operating losses, capital losses, built-in losses, tax credits or similar items of TMG under Sections 269, 382, 383, 384 or 1502 of the Code and the Treasury Regulations thereunder (and comparable provisions of state, local or foreign Law).   Section 4.20     Books and Records. The minute books of each of Buyer and TMG have been made maintained in accordance with sound business practices. The respective minute books of Buyer and TMG contain accurate and complete records of all meetings, and actions taken by written consent of, the members, managers, shareholders, officers and directors, as applicable, and no meeting, or action taken by written consent, of any such members, managers, shareholders, officers and directors, as applicable, has been held for which minutes have not been prepared and are not contained in such minute books.  All of such books and records are in the respective possession of Buyer or TMG.   Section 4.21     Valid Issuance of Securities. The TMG Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable.             - 32 - --------------------------------------------------------------------------------         Section 4.22     Compliance with Securities Laws. Assuming the accuracy of the representations of Seller herein, the issuance and delivery of the TMG Shares by TMG to Seller in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act of 1933, as amended, and will be exempt from the registration or qualification requirements of the New York state securities or "blue sky" laws.   Section 4.23     Solvency. TMG is and, immediately after giving effect to the transactions contemplated by this Agreement upon Closing, will be Solvent.   Section 4.24     No Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of TMG or Buyer.   Section 4.25     Full Disclosure. No representation or warranty by Buyer or TMG in this Agreement or any certificate or other document furnished or to be furnished to Seller pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. ARTICLE V COVENANTS Section 5.01     Confidentiality. From and after the Closing, Seller shall, and shall cause Seller's Affiliates to, hold (and shall use reasonable best efforts to cause their respective Representatives to hold) in confidence any and all information, whether written or oral, concerning the Goodwill, except to the extent that Seller can show that such information (a) is generally available to and known by the public through no fault of Seller or any of Seller's Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller or any of Seller's Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller or any of Affiliate of Seller (or any of their respective Representatives) is compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which Seller is advised by Seller's counsel in writing is legally required to be disclosed, provided that Seller shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.   Section 5.02     Non-Competition; Non-Solicitation.  The provisions set forth in Section 7.05 (Non-Competition; Non-Solicitation) of the Equity Purchase Agreement are hereby incorporated by reference as such provisions relate to Seller.   Section 5.03     Lock Up/Leak Out. The provisions set forth in Section 7.11 (Lock Up/Leak Out) of the Equity Purchase Agreement are hereby incorporated by reference as such provisions relate to Seller.   Section 5.04     Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other parties (which consent shall not be unreasonably withheld or delayed), and the parties hereto shall cooperate as to the timing and contents of any such announcement.             - 33 - --------------------------------------------------------------------------------       Section 5.05     Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.   Section 5.06     Breach of Equity Purchase Agreement.  Notwithstanding any other provision contained in this Agreement, Seller agrees that any breach of the Equity Purchase Agreement by Seller and/or James shall be deemed to be a breach by Seller of this Agreement.   Section 5.07     Closing Balance Sheets.  Within ninety (90) days of Closing, Seller shall deliver to Buyer an unaudited closing balance sheet (as of June 30, 2018) with respect to Mission US, prepared in accordance with GAAP, and an unaudited consolidated balance sheet (as of June 30, 2018) of Mission UK, prepared in accordance with UK GAAP.   Section 5.08     Issuance of TMG Shares. Within two (2) Business Days following the Closing, Buyer shall:   (a)     cause 5,000,000 TMG Shares to be issued to Seller and cause TMG's transfer agent to record Seller's ownership of such TMG Shares in TMG's transfer agent's book-entry system.   (b)     deliver to the Escrow Agent:   (A)     40,000,000, together with the shares issuable under the Equity Purchase Agreement, (subject to equitable adjustment for stock splits, stock combinations, reclassifications, recapitalizations or other similar events) TMG Shares, as issued by TMG to Seller (which TMG Shares shall be issued to Seller and recorded by TMG's transfer agent in TMG's transfer agent's book-entry system as held by Escrow Agent pursuant to the Escrow Agreement), to be held and administered subject to and in accordance with the terms and conditions of the Escrow Agreement (subject to Section 2.06) and, provided further, that notwithstanding any provision of this Agreement or the Escrow Agreement to the contrary, Seller shall only be allowed to vote those TMG Shares that have been released from escrow to Seller, in accordance with the Escrow Agreement, in any matter put to the shareholders of TMG.  The parties agree that until released by the Escrow Agent, the TMG Shares are considered owned by TMG for Tax purposes.   ARTICLE VI INDEMNIFICATION Section 6.01     Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is one (1) year from the Closing Date; provided, that the representations and warranties in Section 3.01, Section 3.02, Section 3.03, Section 3.04, the first sentence of Section 3.05(a), Section 4.01, Section 4.02, Section 4.21 and Section 4.24 shall survive indefinitely. All covenants and agreements of the parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.               - 34 - --------------------------------------------------------------------------------         Section 6.02     Indemnification By Seller. Subject to the other terms and conditions of this ARTICLE VI, Seller shall indemnify and defend each of Buyer and its Affiliates and their respective Representatives (collectively, the "Buyer Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:   (a)     any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or in any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement;   (b)     any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement;   (c)     any inaccuracy in or breach of any of the representations or warranties of Seller or James contained in the Equity Purchase Agreement or in any certificate or instrument delivered by or on behalf of Seller or James pursuant thereto; or (d)     any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or James pursuant to the Equity Purchase Agreement.   Section 6.03     Indemnification By Buyer. Subject to the other terms and conditions of this ARTICLE VI, TMG and Buyer shall, jointly and severally, indemnify and defend each of Seller and her Affiliates and their respective Representatives (collectively, the "Seller Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:   (a)     any inaccuracy in or breach of any of the representations or warranties of TMG or Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of TMG or Buyer pursuant to this Agreement;   (b)     any breach or non-fulfillment of any covenant, agreement or obligation to be performed by TMG or Buyer pursuant to this Agreement;   (c)     any inaccuracy in or breach of any of the representations or warranties of TMG or Buyer contained in the Equity Purchase Agreement or in any certificate or instrument delivered by or on behalf of TMG or Buyer pursuant thereto; or   (d)     any breach or non-fulfillment of any covenant, agreement or obligation to be performed by TMG or Buyer pursuant to the Equity Purchase Agreement.   Section 6.04     Certain Limitations. The indemnification provided for in Section 6.02 shall be subject to the following limitations:   (a)     Seller shall not be liable to the Buyer Indemnitees for indemnification under Section 6.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 6.02(a) and Section 9.02(a) of the Equity Purchase Agreement exceeds $550,000 (the "Basket"), in which event Seller shall be required to pay or be liable for all such Losses from the first dollar.  The aggregate amount of all Losses for which Seller shall be liable pursuant to Section 6.02(a) and Section 9.02(a) of the Equity Purchase Agreement shall not exceed $5,250,000 (the "Cap").             - 35 - --------------------------------------------------------------------------------       (b)     Notwithstanding the foregoing, the limitations set forth in Section 6.04(a) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 3.01, Section 3.02, Section 3.03, Section 3.04 and the first sentence of Section 3.05(a).   (c)     Buyer and TMG shall not be liable to the Seller Indemnitees for indemnification under Section 6.03(a) until the aggregate amount of all Losses in respect of indemnification under Section 6.03(a) and Section 9.03(a) of the Equity Purchase Agreement exceeds the Basket, in which event Buyer and TMG shall be required to pay or be liable for all such Losses from the first dollar.  The aggregate amount of all Losses for which Buyer and TMG shall be liable pursuant to Section 6.03(a) and Section 9.03(a) of the Equity Purchase Agreement shall not exceed the Cap.   (d)     Notwithstanding the foregoing, the limitations set forth in Section 6.04(c) shall not apply to Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.01, Section 4.02, Section 4.21 and Section 4.24.   (e)     For purposes of this ARTICLE VI, any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality or other similar qualification contained in or otherwise applicable to such representation or warranty.   Section 6.05     Indemnification Procedures. The party making a claim under this ARTICLE VI is referred to as the "Indemnified Party," and the party against whom such claims are asserted under this ARTICLE VI is referred to as the "Indemnifying Party."   (a)     Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a "Third Party Claim") against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of such Indemnifying Party's indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party's expense and by the Indemnifying Party's own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly or on behalf of a Person that is a supplier or customer of Seller, (y) seeks an injunction or other equitable relief against the Indemnified Party or (z) involves non-monetary relief, criminal or quasi-criminal allegations, or a matter in respect of which Buyer reasonably believes an adverse determination would have a Material Adverse Effect. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 6.05(b), such Indemnifying Party shall have the right to take such action as such Indemnifying Party deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by such Indemnified Party subject to the Indemnifying Party's right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of such Indemnifying Party's election to defend as provided in this Agreement or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 6.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 5.01) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.             - 36 - --------------------------------------------------------------------------------       (b)     Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 6.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within fifteen (15) days after such Indemnified Party's receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 6.05(a), such Indemnified Party shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).   (c)     Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a "Direct Claim") shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of such Indemnifying Party's indemnification obligations, except and only to the extent that such Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by such Indemnified Party. The Indemnifying Party shall have fifteen (15) days after such Indemnifying Party's receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and such Indemnifying Party's professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party's investigation by giving such information and assistance (including reasonable access to Seller's premises and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of such Indemnifying Party's professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 15-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.   Section 6.06     Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE VI, the Indemnifying Party shall satisfy such Indemnifying Party's obligations within ten (10) Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds.   Section 6.07     Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.   Section 6.08     Effect of Investigation. The representations, warranties and covenants of each Indemnifying Party, and the Indemnified Party's right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of any Indemnified Party (including by any Representative thereof) or by reason of the fact that any Indemnified Party or any Representative thereof knew or should have known that any such representation or warranty is, was or might be inaccurate.   Section 6.09     Exclusive Remedy.  Except as otherwise provided in this Agreement, The indemnification obligations set forth in this Article VI are the exclusive remedy for a breach or alleged breach of this Agreement.             - 37 - --------------------------------------------------------------------------------         ARTICLE VII MISCELLANEOUS   Section 7.01     Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.   Section 7.02     Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier, receipt requested (e.g., FedEx); or (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 7.02): If to Seller: Nicola Stephenson 200 Water Street, 3A Brooklyn, NY 11201 Email:  nicola@thisismission.com     with a copy to: Tannenbaum Helpern Syracuse & Hirschtritt LLP 900 Third Avenue New York, NY 10022 Facsimile:  (646) 390-6916 Email:  rieger@thsh.com Attention:  James Rieger     If to Buyer or TMG: Troika-Mission Holdings, Inc. 101 S. La Brea Avenue Los Angeles, California 90036 Email: mtenore@troikamedia.com Attention:  Michael Tenore   -and-   Troika Media Group, Inc. 101 S. La Brea Avenue Los Angeles, California 90036 Email: cbroderick@troikamedia.com Attention:  Christopher Broderick, COO               - 38 - --------------------------------------------------------------------------------             with a copy to: Withers Bergman LLP 430 Park Avenue, 10th Floor New York, NY 10022 Facsimile:  (212) 824-4270 Email:  david.guin@withersworldwide.com Attention:  David Guin   -and-   Withers Worldwide Studio Legale Withers Via Durini 18, 20122 Milano Email:  anthony.indaimo@withersworldwide.com Attention:  Anthony Indaimo   Section 7.03     Interpretation. For purposes of this Agreement, (a) the words "include," "includes" and "including" shall be deemed to be followed by the words "without limitation"; (b) the word "or" is not exclusive; and (c) the words "herein," "hereof," "hereby," "hereto" and "hereunder" refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.   Section 7.04    Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.   Section 7.05     Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.   Section 7.06     Entire Agreement. This Agreement and the Ancillary Documents constitute the sole and entire agreement between the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.           - 39 - --------------------------------------------------------------------------------       Section 7.07     Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Each party shall not assign its/her rights or obligations hereunder without the prior written consent of the other parties, which consent may be withheld, conditioned or delayed in each such other party's sole and absolute discretion. Any purported assignment in violation of the foregoing sentence shall be void and shall be of no force or effect.   Section 7.08     No Third-party Beneficiaries. Except as provided ARTICLE VI, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.   Section 7.09     Amendment and Modification; Waiver. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.   Section 7.10     Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.    (a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).   (b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEW YORK IN EACH CASE LOCATED IN THE CITY OF NEW YORK AND COUNTY OF NEW YORK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY'S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY 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 ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.   (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND/OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10(c).             - 40 - --------------------------------------------------------------------------------       Section 7.11     Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.   Section 7.12     Counterparts. This Agreement 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 Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.                             [SIGNATURE PAGE FOLLOWS]                 - 41 - --------------------------------------------------------------------------------             [SIGNATURE PAGE TO GOODWILL PURCHASE AGREEMENT] IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, effective as of the date first set forth above. SELLER:         /s/  Nicola Stephenson                                                                                 Nicola Stephenson, individually       TROIKA MEDIA GROUP, INC.       By: /s/     Christopher Broderick                                                                  Name:  Christopher Broderick   Title:     Chief Operating Officer       BUYER:   TROIKA-MISSION HOLDINGS, INC.       By: /s/       Michael Tenore                                                                             Name:       Michael Tenore   Title:          General Counsel               - 42 -
FIRST AMENDMENT TO CREDIT AGREEMENT This FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") dated as of October 26, 2006 made by and among A.T. CROSS COMPANY, a Rhode Island corporation (the "Borrower"), A.T. CROSS LIMITED, a corporation organized under the laws of England and Wales ("Cross UK"), BANK OF AMERICA N.A., as Administrative Agent ("Agent") L/C Issuer and Lender, and BANK OF AMERICA, N.A. ("London Branch") ("UK Lender"). Background The Borrower, Cross UK, the Agent and the UK Lender entered into a credit agreement (the "Original Credit Agreement") dated as of December 21, 2005. The Borrower and Cross UK have requested that the Agent and the UK Lender extend the maturity date on the Original Credit Agreement from December 20, 2007 to December 31, 2008, extend the dates for providing certain financial information and increase the amounts which may be invested in their China operations. NOW, THEREFORE, in consideration of the promises and the agreements, provisions and covenants herein contained, the Borrower, the Agent and the Lender hereby agree as follows: 1. Amendment. Subject to the terms and conditions herein contained and in reliance on the representations and warranties of the Borrower herein contained, effective upon satisfaction of the conditions precedent contained in section 3 below, the following amendments shall be incorporated into the Original Credit Agreement: (a) the term "Maturity Date" contained in section 1.01 of the Original Credit Agreement shall be amended to delete the date "December 20, 2007" and to insert the date "December 31, 2008" in lieu thereof; (b) section 6.01(c) of the Original Credit Agreement is hereby deleted in its entirety and the following is hereby inserted in lieu thereof: (c) as soon as available, but in any event at least 60 days after the end of each fiscal year of the Borrower, a consolidated operating budget which shall include, without limitation, a consolidated and consolidating forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries on a monthly basis, prepared on a basis consistent with the budget delivered by the Borrower to its Board of Directors and consistent with past practice or otherwise in form satisfactory to the Administrative Agent.   4135440v5 (c) section 7.02(i) of the Original Credit Agreement is hereby amended by deleting the text therein contained and inserting the following in lieu thereof: (i) Investments in Cross China, in addition to those permitted in (h) immediately preceding, (A) for Equipment, in an aggregate amount of up to $4,500,000 for fiscal year 2006, $2,000,000 for fiscal year 2007 and $1,500,000 for fiscal year 2008, which Investments may be made by contributing cash to enable Cross China to purchase the Equipment or by contributing the Equipment directly to Cross China, such Equipment contributed directly to Cross China to be valued at the purchase price therefor, and (B) for working capital, and not for the acquisition of Equipment, in an aggregate amount of up to $6,000,000 for fiscal year 2006, $4,000,000 for fiscal year 2007 and $0.00 for fiscal year 2008; or (d) section 7.12 "Capital Expenditures" of the Old Credit Agreement is hereby amended by deleting the text therein contained and inserting the following in lieu thereof 7.12 Capital Expenditures. Make or become legally obligated to make any Capital Expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations), except for capital expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrower and the Guarantors in excess of $7,000,000 during each fiscal year; provided that the Borrower and the Guarantor shall not make Capital Expenditures in excess of $5,500,000 in fiscal year 2006 and not in excess of $4,000,000 in fiscal year 2007 and thereafter, for any asset or assets which are or will be located outside of the United States provided, further, that so long as no Default has occurred and is continuing or would result from such expenditure, any portion of any amount set forth above, if not expended in the fiscal year for which it is permitted above, may be carried over for expenditure in the next following fiscal year. 2. Conditions Precedent. The provisions of this First Amendment shall be effective as of the date on which all of the following conditions shall be satisfied: (a) the Borrower shall have delivered to the Agent a fully executed counterpart of this first amendment; (b) the Borrower shall have paid all fees, costs and expenses owing to the Agent and its counsel on or before the date hereof; -2- 4135440v5 (c) the UK Lender and the Agent shall have indicated their consent and agreement by executing this First Amendment; and (d) the Borrower shall have delivered certified copies of the resolutions of its Board of Directors approving the execution of this First Amendment and the actions contemplated herein, in form and substance satisfactory to the Agent. 3. Miscellaneous. (a) Ratification. The terms and provisions set forth in this First Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Original Credit Agreement and except as expressly modified and superseded by this First Amendment, the terms and provisions of the Original Credit Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. The Borrower and the Agent agree that the Original Credit Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. For all matters arising prior to the effective date of this First Amendment, the Original Credit Agreement (as unmodified by this Amendment) shall control. The Borrower hereby acknowledges that, as of the date hereof, the security interests and liens granted to the Agent and the Lender under the Original Credit Agreement and the other Loan Documents are in full force and effect, are properly perfected and are enforceable in accordance with the terms of the Credit Agreement and the other Loan Documents. (b) Representations and Warranties. The Borrower hereby represents and warrants to the Agent that the representations and warranties set forth in the Loan Documents (except for the representation and warranty at Section 5.05(d) which representation and warranty is qualified by the statement "except as disclosed on the 10K public filing made with the SEC regarding fiscal year 2005 which was filed with the SEC in 2006), after giving effect to the waiver contained in this First Amendment, are true and correct in all material respects on and as of the date hereof, with the same effect as though made on and as of such date except with respect to any representations and warranties limited by their terms to a specific date. The Borrower further represents and warrants to the Agent that the execution, delivery and performance by the Borrower of this consent letter (i) are within the Borrower's power and authority; (ii) have been duly authorized by all necessary corporate and shareholder action; (iii) are not in contravention of any provision of the Borrower's certificate or articles of incorporation or bylaws or other organizational documents; (iv) do not violate any law or regulation, or any order or decree of any Governmental Authority; (v) do not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which the Borrower is a party or by which the Borrower or any of its property is bound; (vi) do not result in the creation or imposition of any Lien upon any of the property of the Borrower other than in favor of Agent; (vii) do not require the consent or approval of any Governmental Authority. All representations and warranties made in this First Amendment shall survive the execution and delivery of this First Amendment, and no investigation by the Agent shall affect the representations and warranties or the right of the Agent to rely upon them. -3- 4135440v5 (c) Release. IN ADDITION, TO INDUCE THE AGENT AND THE LENDER TO AGREE TO THE TERMS OF THIS FIRST AMENDMENT, THE BORROWER REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS FIRST AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT: (a) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, RIGHTS OF RECOUPMENT, DEFENSES OR COUNTERCLAIMS, ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND (b) RELEASE. RELEASES AND DISCHARGES THE AGENT, THE LENDER, AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL LIABILITIES, CLAIMS, CAUSES OF ACTION, IN LAW OR EQUITY, WHICH THE BORROWER OR ANY GUARANTOR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO THE DATE HEREOF IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. (d) Reference to Agreement. Each of the Loan Documents, including the Original Credit Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Original Credit Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Original Credit Agreement shall mean a reference to the Original Credit Agreement as amended hereby. (e) Expenses of the Agent. As provided in the Credit Agreement, the Borrower agrees to pay all reasonable costs and expenses incurred by the Agent in connection with the preparation, negotiation, and execution of this First Amendment, including without limitation, the reasonable costs and fees of the Agent's legal counsel. (f) Severability. Any provision of this First Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this First Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. (g) Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts and the applicable laws of the United States of America. (h) Successors and Assigns. This First Amendment is binding upon and shall inure to the benefit of the Agent, the Lender and the Borrower, and their respective successors and assigns, except the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Agent. -4- 4135440v5 (i) Counterparts. This First Amendment may be executed in one or more counterparts and on facsimile counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement. (j) Effect of Waiver. No consent or waiver, express or implied, by the Agent to or for any breach of or deviation from any covenant, condition or duty by the Borrower shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. (k) Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. (l) ENTIRE AGREEMENT. THIS FIRST AMENDMENT EMBODIES THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER THEREOF, AND SUPERSEDES ANY AND ALL PRIOR REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.                           -5- 4135440v5 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date first above written. BORROWER A.T. CROSS COMPANY By: KEVIN F. MAHONEY Name: Kevin F. Mahoney Title: V.P. Finance, CFO CROSS UK A.T. CROSS LIMITED By: KEVIN F. MAHONEY Name: Kevin F. Mahoney Title: V.P. Finance, CFO AGENT BANK OF AMERICA, N.A. By: RICHARD J. MAC DONALD Name: Richard F. MacDonald Title: Vice President -6- 4135440v5
Exhibit 10.32 Amendment N°1 to the Manufacturing and Supply Agreement effective 19 March 2014 (the “Amendment”) This Amendment is made as of July 25, 2018 (“Amendment Date”) by and between: Corcept Therapeutics Incorporated, a Delaware corporation having a principal place of business at 149 Commonwealth Drive, Menlo Park, CA 94025 (“CORCEPT”) AND PCAS SA, a French corporation, having its principal office at 23 Rue Bossuet, Z.I. la Vigne-aux-Loups, 91161 Longjumeau Cedex, France (“PCAS”) Individually a “Party” and collectively “Parties” WHEREAS, PCAS and CORCEPT entered into a supply agreement, the Manufacturing and Supply Agreement, executed by all Parties as of March 24, 2014 (the “Supply Agreement”) under which PCAS manufactures and sells Mifepristone to CORCEPT (the “Product”); WHEREAS, the initial term of the Supply Agreement is set to expire as of March 19, 2019, unless otherwise terminated in accordance with the terms therein; WHEREAS, the Parties wish to further secure the manufacture and sale of the Product and support each other in this endeavour; and WHEREAS, PCAS will invest in new equipment at its Aramon, France facility so that Corcept may qualify such facility in its Marketing Authorization (as defined in the Supply Agreement) for the Product and Corcept agrees to certain terms in consideration of this investment. NOW THEREFORE IT IS AGREED AS FOLLOWS: Article 1. Qualification of Aramon facility The Parties agree to amend Section 2 (“2. Subject”) of the Supply Agreement by replacing Section 2.2 in its entirety as follows: “2.2 The Parties shall cooperate to set up the PCAS facility in Aramon, France (the “Facility”) as an alternate manufacturing site for the Product in the following manner: 2.2.1. Corcept will qualify the Facility as an alternate manufacturing site for Mifepristone (“Qualification”) by submitting a supplement to the approved New Drug Application for Korlym® to the US Food and Drug Administration (“FDA”). 2.2.2. For the purposes of such Qualification with the FDA, PCAS will supply [***] batches of [***]kg of Product to Corcept for a priced fixed at $[***] /kg ([***] U.S. dollars per kilogramme). The Parties will agree on a reasonable schedule for deliveries to be made before December 31, 2018. corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg] -------------------------------------------------------------------------------- Exhibit 10.32 2.2.3 By no later than June 30, 2019, PCAS will install and qualify additional equipment at the Facility in order to supply batches of [***]kg of the Product from this Facility, subject to the terms set-out herein. 2.2.4 PCAS’ Drug Master File (“DMF”) for the Product includes the Facility as an authorized facility for the manufacture of the Product, such that either the VLG facility or the Facility may supply Mifepristone to Corcept during the term of this Agreement, so long as PCAS is able to meet the supply demands of Corcept. In the event that a material element (such as a notified person for a Product complaint) is missing from this Agreement for the Facility, then either Party shall promptly inform the other Party and the relevant Party shall provide the missing information 2.2.5 During the term of this Agreement, PCAS will maintain its DMF, as amended to include the Facility, with the FDA for Mifepristone current, active and up-to-date during the Term of the Agreement for the Facility as well as its VLG site.” Article 2. Exclusivity The Parties agree to amend Section 2 (“2. Subject”) of the Supply Agreement by inserting after Section 2.3 the following sections: “2.4 PCAS agrees to sell the Product exclusively to Corcept for all commercial purposes, indications and use with the sole exclusion of sales of the Product for the purpose of research, development and commercialization of drug products used exclusively in the termination of pregnancy provided that Corcept purchases at least [***] of Product during each calendar year during the Term. In the event that Corcept fails to purchase at least [***] of Product during a calendar year then PCAS shall be freed from its exclusivity restriction for such calendar year only. 2.5 Corcept agrees to purchase all its requirements for Products exclusively from PCAS between 2019 – [***], such term of which may be extended from time to time in accordance with the terms herein, provided that PCAS meets Corcept’s requirements for the Products during each calendar year. In the event that PCAS fails to meet Corcept’s requirements for the Products in a given calendar year, then Corcept may purchase the quantities that PCAS is unable to supply during such calendar year from an alternative source.” Article 3. Supply, Forecast, Orders The Parties agree to delete Section 3.5 of the Supply Agreement in its entirety. Article 4. Price/Quantities The Parties agree to amend Section 4 (“Price/Quantities”) of the Supply Agreement and replace it in its entirety with the following section: “4. Price/Quantities 4.1 The price payable by Corcept to PCAS for the Product supplied hereunder shall be the price listed in Appendix II. 4.2 In case changes to the Specifications and quality requirements requested by Corcept have an impact on manufacturing costs, a price adjustment will be agreed as set forth in Section 8.3. 4.3 The price for Product will be adjusted annually starting in 2019 based on the US Government reported Producer Price Index - "Pharmaceutical preparation mfg - pcu325412325412", with the base year being corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg] -------------------------------------------------------------------------------- Exhibit 10.32 2018 and the price adjustment will take effect once a year on January 1, and shall apply to orders made during that calendar year. 4.4 In addition to the above, the Parties agree to the specific provisions hereunder related to the investment made by PCAS at the Facility. 4.4.1 PCAS shall incur a significant investment cost to modify the Facility with the stated purpose of such Facility becoming operational and providing batch sizes targeting [***]kg as of June 30, 2019. 4.4.2 In consideration of the significant investments for the Facility modifications by PCAS, Corcept agrees to the surcharge laid out in Appendix II. 4.5. Corcept shall purchase and PCAS shall supply an amount of Product of no less than [***]kg per calendar year for calendar years 2019 and 2020. In the event that Corcept fails to purchase at least [***]kg of Product in calendar year 2019 or 2020, respectively, then Corcept agrees to the surcharge calculation as set forth out in Appendix II.“ Article 5. Term The Parties agree to delete Section 10 (“10. Term”) of the Supply Agreement and replace it in its entirety with the following section: “10. Term 10.1 This Agreement shall become effective on July 25, 2018 for an in initial period ending on December 31, 2021 and shall be automatically renewed thereafter for successive renewal terms of one (1) year each ending on December 31, for a maximum of two renewal terms. Either Party may terminate this Agreement at the end of the initial period or a renewal period upon giving twelve (12) months prior written notice.” Article 6. Termination for Cause The Parties agree to delete Section 11.2 and 11.3 of the Supply Agreement and replace them in their entirety with the following: “11.2. Either Party at its sole option may immediately terminate this Agreement upon written notice, but without prior advance notice, to the other Party in the event that (i) the other Party is declared insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary petition of bankruptcy is filed in any court of competent jurisdiction by such other Party; or (iii) this Agreement is assigned by such other Party for the benefit of creditors.“ Article 7. Appendix II The Parties agree to delete Appendix II of the Supply Agreement and replace it in its entirety with Exhibit 1 attached hereto. Article 8. Further terms In the event of any conflict between this Amendment and the Supply Agreement, this Amendment shall prevail. For the avoidance of doubt all terms and conditions laid out in the Supply Agreement shall continue to apply unless otherwise specifically amended by the present Amendment (including applicable law and jurisdiction). corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg] -------------------------------------------------------------------------------- Exhibit 10.32 In the event that a material element (such as an address, a notified person etc.) has changed or is not contemplated in this Amendment then the relevant Party shall inform the other Party promptly upon request of such element. This Amendment, together with the Supply Agreement shall constitute the entire agreement between the Parties unless further amended by a similar written agreement by the Parties. IN WITNESS WHEREOF, the parties have duly executed this amendment as of the Effective Date. For Corcept         By: /s/ G. Charles Robb         Name: G. Charles Robb         Title: CFO               For PCAS         By: /s/ Vincent Touraille         Name: Vincent Touraille         Title: CEO   corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg] -------------------------------------------------------------------------------- Exhibit 10.32 Exhibit 1 A/ BASE PRICING The Product (Mifepristone) shall have the following base price for calendar year 2019. Such base price shall vary depending upon (i) the volume ordered and (ii) the exchange rate ratio at the time a purchase order is placed in accordance with the table hereunder “Base Pricing”. BASE PRICING Volumes (kg) > 40 to 400 > 400 to 850 > 850 [***] $[***] $[***] $[***]         [***] $[***] $[***] $[***]         [***] $[***] $[***] $[***]         In the event that at the end of a relevant calendar year (December 31), the volume ordered is less or greater than the volumes forecast leading to the application of a different volume bracket, then PCAS shall emit a credit note or an invoice to adjust the amount invoiced to the volumes effectively ordered. B/ SURCHARGE For calendar year starting January 1, 2019 and ending December 31, 2019 (“CY2019”) and calendar year starting January 1, 2020 and ending December 31, 2020 (“CY2020”), Corcept shall purchase an amount of Product of no less than [***]kg per calendar year (for the avoidance of doubt this means [***]kg in the aggregate over both calendar years). In addition to the above, Corcept shall pay a surcharge of $[***] U.S. Dollars) per kilogram (the “Surcharge”) in addition to the Base Pricing (as adjusted in accordance with Section 4.3 of the Supply Agreement) during CY2019 and CY2020 applied to the first [***]kg ordered over each calendar year. For the avoidance of doubt the Surcharge shall not be applied to any quantities ordered above [***]kg over CY2019 or CY2020. In the event that Corcept purchases less than [***]kg of the Product over CY2019 or CY2020 then it shall pay to PCAS the Surcharge multiplied by the difference between the minimum volume of [***]kg and the amount of Product effectively ordered (e.g. if Corcept only orders [***]kg over CY2019, then it shall pay an amount equal to missing quantities multiplied by the Surcharge: [***]). Examples (Based on exchange rate of one US dollar per 1-1.2 euro): (a)    CY2019 (1) Forecast amount at time of purchase order = [***]kg corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg] -------------------------------------------------------------------------------- Exhibit 10.32 (2) Actual purchase amount = [***]kg (3) Pricing for the first [***]kg: (Base Price for [***]kg) + (Surcharge) = $[***]/kg (4) Price for additional [***]kg = $[***]/kg] (b)    CY2021 (1) Forecast amount at the time of purchase order = [***]kg (2) Actual purchase amount = [***]kg (3) Price for [***]kg = $[***]/kg (as adjusted in accordance with Section 4.3 of the Supply Agreement)] corceptpcasmsaamendme_image1.jpg [corceptpcasmsaamendme_image1.jpg]
Exhibit 10.1 SEPARATION AND DISTRIBUTION AGREEMENT by and between AUTOMATIC DATA PROCESSING, INC. and CDK GLOBAL HOLDINGS, LLC Dated as of September 29, 2014 -------------------------------------------------------------------------------- TABLE OF CONTENTS            Page   ARTICLE I DEFINITIONS      3    Section 1.1   Definitions      3    Section 1.2   General Interpretive Principles      14    ARTICLE II THE PRE-DISTRIBUTION TRANSACTIONS      15    Section 2.1   Restructuring, Recapitalization and Other Transactions      15    Section 2.2   Financings and Dealer Cash Dividend      15    Section 2.3   The Separation and Related Transactions      15    Section 2.4   Conditions Precedent to Consummation of the Pre-Distribution Transactions      20    ARTICLE III THE DISTRIBUTION      21    Section 3.1   Actions Prior to the Distribution      21    Section 3.2   The Distribution      22    Section 3.3   Conditions to Distribution      23    ARTICLE IV SURVIVAL AND INDEMNIFICATION; RELEASE      25    Section 4.1   Survival of Agreements      25    Section 4.2   Indemnification by Dealer      25    Section 4.3   Indemnification by ADP      26    Section 4.4   Insurance      26    Section 4.5   Procedures for Indemnification of Third Party Claims      27    Section 4.6   Procedures for Indemnification of Non-Third Party Claims      29    Section 4.7   Survival of Indemnities      29    Section 4.8   Remedies Cumulative      29    Section 4.9   Ancillary Agreements      29    Section 4.10   Mutual Release      29    ARTICLE V ANCILLARY AGREEMENTS      31    Section 5.1   Data Center Services Agreement      31    Section 5.2   Employee Matters Agreement      31    Section 5.3   Intellectual Property Transfer Agreement      31    Section 5.4   Tax Matters Agreement      32    Section 5.5   Transition Services Agreement      32    Section 5.6   Restructuring Documents      32    ARTICLE VI CERTAIN ADDITIONAL COVENANTS      32    Section 6.1   Consents for Business      32    Section 6.2   Additional Consents      32      (i) -------------------------------------------------------------------------------- Section 6.3   Further Assurances      32    Section 6.4   Future Activities      33    Section 6.5   Settlement of Certain Insurance Claims      34    Section 6.6   Transitional Use of ADP Name      34    ARTICLE VII ACCESS TO INFORMATION      35    Section 7.1   Agreement for Exchange of Information      35    Section 7.2   Ownership of Information      36    Section 7.3   Compensation for Providing Information      36    Section 7.4   Record Retention      36    Section 7.5   Limitation of Liability      37    Section 7.6   Other Agreements Providing for Exchange of Information      37    Section 7.7   Production of Witnesses; Records; Cooperation      37    Section 7.8   Confidentiality      39    Section 7.9   Privileged Information      40    ARTICLE VIII NO REPRESENTATIONS OR WARRANTIES      41    Section 8.1   NO REPRESENTATIONS OR WARRANTIES      41    ARTICLE IX TERMINATION      42    Section 9.1   Termination      42    Section 9.2   Effect of Termination      42    ARTICLE X MISCELLANEOUS      42    Section 10.1   Complete Agreement; Representations      42    Section 10.2   Costs and Expenses      43    Section 10.3   Governing Law      43    Section 10.4   Notices      43    Section 10.5   Amendment, Modification or Waiver      44    Section 10.6   No Assignment; Binding Effect; No Third Party Beneficiaries      44    Section 10.7   Counterparts      44    Section 10.8   Negotiation      45    Section 10.9   Specific Performance      45    Section 10.10   New York Forum      45    Section 10.11   WAIVER OF JURY TRIAL      46    Section 10.12   Interpretation      46    Section 10.13   Severability      46    Section 10.14   No Set-Off      46      (ii) -------------------------------------------------------------------------------- EXHIBITS    Bylaws of Dealer    Exhibit A Certificate of Incorporation of Dealer    Exhibit B Form of Data Center Services Agreement    Exhibit C Form of Employee Matters Agreement    Exhibit D Form of Intellectual Property Transfer Agreement    Exhibit E Form of Tax Matters Agreement    Exhibit F Form of Transition Services Agreements    Exhibit G SCHEDULES    ADP Assigned Agreements    Schedule 2.3(c)(i) Dealer Assigned Agreements    Schedule 2.3(c)(ii) Surviving ADP Group and Dealer Group Agreements    Schedule 2.3(d) Guarantee Fees    Schedule 2.3(f) ADP Statements in Information Statement    Schedule 4.3(d) Transaction Expenses    Schedule 10.2   (iii) -------------------------------------------------------------------------------- SEPARATION AND DISTRIBUTION AGREEMENT SEPARATION AND DISTRIBUTION AGREEMENT, dated as of September 29, 2014, by and between Automatic Data Processing, Inc., a Delaware corporation (“ADP”), and CDK Global Holdings, LLC, a Delaware limited liability company whose sole member is ADP (each, a “Party” and collectively, the “Parties”). RECITALS WHEREAS, the Board of Directors of ADP has determined that it is in the best interests of ADP to separate the Dealer Business (as defined below) and the ADP Business (as defined below) into two independent companies (the “Separation”), on the terms and subject to the conditions set forth in this Agreement (as defined below), in order to provide greater flexibility for the management, capital requirements and growth of the Dealer Business while ensuring that ADP can focus its time and resources on the development of the ADP Business; WHEREAS, to effect the Separation, Dealer (as defined below) intends to retain ownership and possession of all Dealer Assets (as defined below) and ADP intends to retain ownership and possession of all ADP Assets (as defined below); WHEREAS, to further effect the Separation, Dealer intends to remain solely liable for all Dealer Liabilities (as defined below) and ADP intends to remain solely liable for all ADP Liabilities (as defined below); WHEREAS, to further effect the Separation, and as an integral part thereof, ADP intends to cause the Restructuring (as defined below) to occur prior to the Separation; WHEREAS, it is the intention of the Parties that, following the Restructuring and the Separation but prior to the Distribution (as defined below), Dealer will be converted from a Delaware limited liability company into a Delaware corporation pursuant to Section 18-216 of the Delaware Limited Liability Company Act (the “LLC Conversion”), and will be recapitalized such that all of the shares of common stock of Dealer, par value $0.01 per share (the “Dealer Common Stock”), then outstanding will be owned by ADP; WHEREAS, following the Restructuring, the Separation and the LLC Conversion but prior to the Distribution, Dealer intends to effect the Financings (as defined below) and the Dealer Cash Dividend (as defined below); WHEREAS, following the Restructuring, the Separation, the LLC Conversion, the Financings and the Dealer Cash Dividend, ADP intends to distribute on a pro rata basis to holders of issued and outstanding shares of common stock, par value $0.10 per share, of ADP (“ADP Common Stock”), other than shares of ADP Common Stock held in the treasury of ADP, all of the issued and outstanding shares of Dealer Common Stock owned by ADP, by means of a dividend of the Dealer Common Stock to ADP’s stockholders (the “Distribution”), on the terms and subject to the conditions set forth in this Agreement;   1 -------------------------------------------------------------------------------- WHEREAS, it is the intention of the Parties that, for United States federal income tax purposes, (i) each U.S. Subsidiary Conversion (as defined below) shall qualify as a tax-free liquidation pursuant to Sections 332 and 337 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and each U.S. Legal Transfer (as defined below) shall be disregarded, (ii) the India Restructuring (as defined below) shall qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code, (iii) the Preliminary Dutch Spin-off (as defined below) shall qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code, and the Subsequent Dutch Spin-off (as defined below) shall qualify as a tax-free spin-off pursuant to Section 355 of the Code, (iv) the Canadian Restructuring (as defined below) shall qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code, (v) the LLC Conversion and the Distribution shall qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code and (vi) this Agreement shall constitute, and is hereby adopted as, a plan of liquidation under Section 332 of the Code with respect to each U.S. Subsidiary Conversion, a plan of reorganization under Section 368 of the Code with respect to the India Restructuring, a plan of reorganization under Section 368 of the Code with respect to the Preliminary Dutch Spin-Off, a plan of reorganization under Section 368 of the Code with respect to the Canadian Restructuring and a plan of reorganization under Section 368 of the Code with respect to the LLC Conversion; WHEREAS, the Board of Directors of ADP has (i) determined that the Restructuring, the Separation, the LLC Conversion, the Financings, the Dealer Cash Dividend, the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements (as defined below) are in furtherance of and consistent with its business strategy and are in the best interests of ADP and (ii) approved this Agreement and the Ancillary Agreements; WHEREAS, the Restructuring, the Separation, the LLC Conversion, the Financings, the Dealer Cash Dividend, the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements shall be consummated in the order and in the manner agreed by the Parties; and WHEREAS, it is appropriate and desirable to set forth in this Agreement the principal corporate transactions required to effect the Separation, the Financings, the Dealer Cash Dividend and the Distribution and certain other agreements that will govern certain matters relating to these transactions and the relationship of ADP and Dealer and their respective Subsidiaries (as defined below) following the Distribution.   2 -------------------------------------------------------------------------------- NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: “Action” means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority. “ADP” has the meaning assigned to such term in the Preamble hereto. “ADP Amalco” has the meaning assigned to such term in the definition of Canadian Restructuring. “ADP Assets” means all Assets of the ADP Group (including the amount of the Dealer Cash Dividend after declaration thereof), other than the Dealer Assets. “ADP Atlantic” has the meaning assigned to such term in the definition of ADP Atlantic Conversion. “ADP Atlantic Conversion” means the conversion of ADP Atlantic, Inc., a Delaware corporation (“ADP Atlantic”), to a Delaware limited liability company (“ADP Atlantic, LLC”) in a transaction intended to qualify as a tax-free liquidation pursuant to Sections 332 and 337 of the Code. “ADP Atlantic Legal Transfer” means the distribution by ADP Atlantic, LLC to ADP of all of the equity and any other assets received by ADP Atlantic, LLC in the ADP Legal Transfer or the ADP Network Services International Legal Transfer. “ADP Atlantic LLC” has the meaning assigned to such term in the definition of ADP Atlantic Conversion. “ADP Business” means all businesses and operations of the ADP Group, other than the Dealer Business. “ADP Claims” has the meaning assigned to such term in Section 4.10(a). “ADP Common Stock” has the meaning assigned to such term in the Recitals hereto. “ADP Conversion” means the conversion of ADP, Inc., a Delaware corporation (“ADP, Inc.”), to a Delaware limited liability company (“ADP, LLC”) in a transaction intended to qualify as a tax-free liquidation pursuant to Sections 332 and 337 of the Code.   3 -------------------------------------------------------------------------------- “ADP Group” means ADP and each Person that will be a direct or indirect Subsidiary of ADP immediately after the Distribution and each Person that is or becomes a member of the ADP Group after the Distribution, including any Person that is or was merged into ADP or any such direct or indirect Subsidiary, and each other Person that would have been included in the ADP Group in connection with the Restructuring but for the delayed transfers required by Section 2.3(b). “ADP, Inc.” has the meaning assigned to such term in the definition of ADP Conversion. “ADP Indemnified Parties” has the meaning assigned to such term in Section 4.2. “ADP Legal Transfer” means the distribution by ADP, LLC to ADP Atlantic, LLC of all of the equity of the first-tier Subsidiaries of ADP, LLC that conduct the Dealer Business, and any other Dealer Assets held by ADP, LLC. For the avoidance of doubt, the ADP Legal Transfer shall include the transfer by ADP, LLC to ADP Atlantic, LLC of all of the equity of ADP Dealer Services Holding Company, Inc., a Delaware corporation, and Performance Consultants Corporation, a corporation incorporated under the laws of Quebec. “ADP Liabilities” means those Liabilities of ADP, other than the Dealer Liabilities. “ADP, LLC” has the meaning assigned to such term in the definition of ADP Conversion. “ADP Nederland BV” has the meaning assigned to such term in the definition of Dutch Restructuring. “ADP Network Services International Conversion” means the conversion of ADP Network Services International Inc., a Delaware corporation (“ADP Network Services International, Inc.”), to a Delaware limited liability company (“ADP Network Services International, LLC”) in a transaction intended to qualify as a tax-free liquidation pursuant to Sections 332 and 337 of the Code. “ADP Network Services International, Inc.” has the meaning assigned to such term in the definition of ADP Network Services International Conversion. “ADP Network Services International Legal Transfer” means the distribution by ADP Network Services International, LLC to ADP Atlantic, LLC of the 19.41% equity interest in ADP Holding BV, a company organized under the Laws of the Netherlands, held by ADP Network Services International, LLC. “ADP Network Services International, LLC” has the meaning assigned to such term in the definition of ADP Network Services International Conversion.   4 -------------------------------------------------------------------------------- “ADP Parties” has the meaning assigned to such term in Section 4.10(b). “ADP Releasors” has the meaning assigned to such term in Section 4.10(a). “Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, no member of either Group shall be deemed to be an Affiliate of any member of the other Group. As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. “Agreement” means this Separation and Distribution Agreement, as the same may be modified, amended, restated or otherwise supplemented from time to time in accordance with the terms hereof. “Ancillary Agreements” means the Employee Matters Agreement, the Intellectual Property Transfer Agreement, the Data Center Services Agreement, the Transition Services Agreement, the Tax Matters Agreement, the Restructuring Documents and any other instruments, assignments, documents and agreements executed in connection with the implementation of the transactions contemplated by this Agreement. “Asset” means any right, property or asset, whether real, personal or mixed, tangible or intangible, of any kind, nature and description, whether accrued, contingent or otherwise, and wheresoever situated and whether or not carried or reflected, or required to be carried or reflected, on the books of any Person. “Balance Sheet” has the meaning assigned to such term in the definition of “Dealer Assets.” “Business” means the Dealer Business and/or the ADP Business, as the context requires. “Canadian Restructuring” means the amalgamation under the Laws of Nova Scotia, Canada, of ADP Canada Holding Co., a corporation incorporated pursuant to the laws of Nova Scotia, and ADP Canada Co./Compagnie ADP Canada, a corporation amalgamated pursuant to the Laws of Nova Scotia to form “ADP Amalco” in a transaction intended to qualify as a tax-free reorganization pursuant to Section 368(a) of the Code, followed by the transfer of the Dealer Business conducted directly or indirectly by ADP Amalco from ADP Amalco to a new Canadian company that will be transferred to a second newly formed Canadian company that will be a Subsidiary of, and treated for United States federal income tax purposes as disregarded from, Dealer in a transaction intended to qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code and as tax-free pursuant to paragraph 55(3)(b) of the Income Tax Act (Canada).   5 -------------------------------------------------------------------------------- “Code” has the meaning assigned to such term in the Recitals hereto. “Consents” means any consents, waivers, notices, reports or other filings to be made, or any registrations, licenses, permits, authorizations to be obtained from, or approvals from, or notification requirements to, any third parties, including any Governmental Authority. “Continuing ADP Guarantees” has the meaning assigned to such term in Section 2.3(f)(ii). “Data Center Services Agreement” means the Data Center Services Agreement to be entered into between ADP and Dealer, substantially in the form attached hereto as Exhibit C, with such changes as may be agreed to by the Parties. “Dealer” means, prior to the LLC Conversion, CDK Global Holdings, LLC, a Delaware limited liability company whose sole member is ADP and, immediately after the LLC Conversion, CDK Global, Inc., a Delaware corporation whose sole stockholder is ADP. “Dealer Assets” means, without duplication: (i) all of the outstanding shares of all classes of capital stock of (or other equity interests in) Dealer Subsidiaries and joint ventures owned (either of record or beneficially) by Dealer or a Dealer Subsidiary, as of the Effective Time; (ii) all of the Assets included on the unaudited pro forma combined balance sheet of Dealer, including the notes thereto, as of June 30, 2014, that is included or incorporated by reference in the Registration Statement (the “Balance Sheet”) to the extent such Assets would have been included as Assets on a consolidated balance sheet of Dealer, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Assets included on the Balance Sheet; (iii) all other Assets that are of a nature or type that would have resulted in such Assets being included as Assets on a consolidated balance sheet of Dealer, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Assets included on the Balance Sheet; (iv) the Assets expressly contributed, assigned, transferred, conveyed or delivered to any member of the Dealer Group pursuant to the Ancillary Agreements; (v) the contract rights, licenses, Trade Secrets (as defined in the definition of “Intellectual Property”), know-how, and any other rights and Intellectual Property, and any other rights, claims or properties (including any and all rights as an insured party under any ADP insurance policy), in each case of any member of the Dealer Group and as of the Effective Time; and (vi) all other Assets that are held by any member of the Dealer Group as of the Effective Time and that relate primarily to, are used primarily in or held primarily for use in, or otherwise arise primarily from the operation of the Dealer Business.   6 -------------------------------------------------------------------------------- “Dealer Business” means the business and operations conducted by the Dealer Group from time to time, whether prior to, at or after the Effective Time, including, without duplication, (i) the Dealer Services Business conducted by ADP prior to the Restructuring (including with respect to any terminated, divested or discontinued business or operations of the Dealer Group), (ii) the Dealer Services Business conducted by ADP prior to any previous internal restructurings of ADP relating to the Dealer Services Business and (iii) the business and operations conducted by the Dealer Group, as more fully described in the Information Statement. “Dealer Bylaws” means the Bylaws of Dealer substantially in the form attached hereto as Exhibit A, with such changes as may be agreed to by the Parties. “Dealer Cash Dividend” means a cash dividend of $825 million to be paid by Dealer to ADP in one or more transactions intended to be treated as part of a plan with the LLC Conversion and the Distribution and to qualify as tax-free pursuant to Section 361(b) of the Code, using the net proceeds from the Financings. “Dealer Certificate of Incorporation” means the Certificate of Incorporation of Dealer substantially in the form attached hereto as Exhibit B, with such changes as may be agreed to by the Parties. “Dealer Claims” has the meaning assigned to such term in Section 4.10(b). “Dealer Common Stock” has the meaning assigned to such term in the Recitals hereto. “Dealer Group” means Dealer and each Person that will be a direct or indirect Subsidiary of Dealer immediately prior to the Distribution (but after giving effect to the Restructuring) and each Person that is or becomes a member of the Dealer Group after the Distribution, including any Person that is or was merged into Dealer or any such direct or indirect Subsidiary, and each other Person that would have been included in the Dealer Group in connection with the Restructuring but for the delayed transfers required by Section 2.3(b). “Dealer Indemnified Parties” has the meaning assigned to such term in Section 4.3.   7 -------------------------------------------------------------------------------- “Dealer Legal Contribution” means the contribution by ADP to Dealer of all of the equity and any other Dealer Assets received by ADP in the ADP Atlantic Legal Transfer or the Dutch Restructuring. “Dealer Liabilities” means, without duplication: (i) all outstanding Liabilities included on the Balance Sheet, to the extent such Liabilities would have been included on a consolidated balance sheet of Dealer, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Liabilities included on the Balance Sheet; (ii) all other Liabilities that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a consolidated balance sheet of Dealer, and the notes thereto, as of the Effective Time (were such balance sheet and notes to be prepared) on a basis consistent with the determination of Liabilities included on the Balance Sheet; (iii) all Liabilities to the extent relating to, arising out of or resulting from any terminated, divested or discontinued business or operations of the Dealer Business; (iv) all Liabilities expressly assumed by any member of the Dealer Group pursuant to this Agreement or the Ancillary Agreements; and (v) all Liabilities to the extent relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Effective Time, in each case to the extent such Liabilities relate to, arise out of or result from (w) any Dealer Asset, (x) the Dealer Business, (y) any service or function used by the Dealer Group at shared locations or (z) any service or function performed by any member of the ADP Group for (but not exclusively for) the Dealer Business. “Dealer Parties” has the meaning assigned to such term in Section 4.10(a). “Dealer Releasors” has the meaning assigned to such term in Section 4.10(b). “Dealer Services Business” means all of the ADP Dealer Services’ business and operations, as more fully described in ADP’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014. “Delayed Transfer Asset and/or Liability” has the meaning assigned to such term in Section 2.3(b). “Dispute Escalation Notice” has the meaning assigned to such term in Section 10.8.   8 -------------------------------------------------------------------------------- “Distribution” has the meaning assigned to such term in the Recitals hereto. “Distribution Agent” means Wells Fargo Bank, N.A. “Distribution Agent Agreement” has the meaning assigned to such term in Section 3.1(b). “Distribution Date” means the date on which the Distribution shall be effected, such date to be determined by, or under the authority of, the Board of Directors of ADP in its sole and absolute discretion. “Dutch Restructuring” means (i) the transfer of the Dealer Business conducted by the Subsidiaries of ADP Nederland BV, a company organized under the Laws of the Netherlands (“ADP Nederland BV”), from ADP Nederland BV to a company newly formed under the Laws of the Netherlands (“Nederland 2”) that will be transferred to ADP Holding BV, a company formed under the Laws of the Netherlands, in a transaction intended to qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code (the “Preliminary Dutch Spin-off”), followed by (ii) the transfer by ADP Network Services International, LLC of all of its equity in ADP Holding BV to ADP Atlantic, LLC and the transfer by ADP Atlantic, LLC of such interest to ADP in transactions intended to be disregarded for United States federal income tax purposes, followed by (iii) the distribution by ADP Holding BV of Nederland 2 to ADP in a transaction intended to qualify as a tax-free spin-off pursuant to Section 355 of the Code (the “Subsequent Dutch Spin-off”). “Effective Time” means the time at which the Distribution occurs on the Distribution Date. “Employee Matters Agreement” means the Employee Matters Agreement to be entered into between ADP and Dealer, substantially in the form attached hereto as Exhibit D, with such changes as may be agreed to by the Parties. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder. “FIFO Basis” means, with respect to the payment of Unrelated Claims pursuant to the same ADP insurance policy, the payment in full of each successful claim (regardless of whether ADP or Dealer is the claimant) in the order in which such successful claim is approved by the insurance carrier, until the limit of the applicable ADP insurance policy is met. “Finally Determined” has the meaning assigned to such term in Section 7.9(c). “Financings” means (i) that certain term loan facility, in the amount not to exceed $250 million (the “Term Loan Facility”), and a revolving credit facility, in the amount not to exceed $300 million (the “Revolving Credit Facility”), in each case to be entered into   9 -------------------------------------------------------------------------------- prior to the Distribution and in connection with the Separation, by and among Dealer, an administrative agent, certain arrangers, and each of the financial institutions from time to time party thereto, and (ii) $750 million of additional new indebtedness, which may include bank debt, long-term notes or a combination thereof, which may be entered into prior to the Distribution by and among Dealer and certain administrative agents, arrangers, underwriters or financial institutions, each as may be necessary. “Governmental Authority” means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the NASDAQ. “Group” means the ADP Group and/or the Dealer Group, as the context requires. “Indemnified Party” has the meaning assigned to such term in Section 4.3. “Indemnifying Party” means Dealer, for any indemnification obligation arising under Section 4.2, and ADP, for any indemnification obligation arising under Section 4.3. “India Restructuring” means the transfer of the Dealer Business conducted by ADP Private Limited, an Indian company, to a newly formed Indian company (“New IndiaCo”), the shares of which will have been transferred to ADP Nederland BV (in part directly and in part to a Subsidiary of ADP Nederland BV that is treated for United States federal income tax purposes as disregarded from ADP Nederland BV) in a transaction intended to qualify as a tax-free spin-off pursuant to Sections 368(a)(1)(D) and 355 of the Code. “Information” means all information of either the ADP Group or the Dealer Group, as the context requires, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including non-public financial information, studies, reports, records, books, accountants’ work papers, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other Software (as defined in the definition of “Intellectual Property”), marketing plans, customer data, communications by or to attorneys, memos and other materials prepared by attorneys and accountants or under their direction (including attorney work product), and other technical, financial, legal, employee or business information or data. “Information Statement” means the information statement and any related documentation distributed to holders of ADP Common Stock in connection with the Distribution, including any amendments or supplements thereto.   10 -------------------------------------------------------------------------------- “Intellectual Property” means all intellectual property and other similar proprietary rights in any jurisdiction, whether owned or held for use under license, whether registered or unregistered, including any and all such rights in and to: (i) trademarks, trade dress, service marks, certification marks, logos, and trade names, and the goodwill associated with the foregoing (collectively, “Trademarks”); (ii) patents and patent applications, and any and all divisions, continuations, continuations-in-part, reissues, continuing patent applications, reexaminations, and extensions thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention, certificates of registration, design registrations or patents and like rights (collectively, “Patents”); inventions, invention disclosures, discoveries and improvements, whether or not patentable; (iii) copyrights, writings and other works of authorship (“Copyrights”); (iv) trade secrets (including, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory Law and common law), Information, business, technical and know-how information, business processes, non-public information, proprietary information and confidential information and rights to limit the use or disclosure thereof by any Person (collectively, “Trade Secrets”); (v) software, including data files, source code, object code, application programming interfaces, databases and other software-related specifications and documentation (collectively, “Software”); (vi) domain names and uniform resource locators; (vii) moral rights; (viii) privacy and publicity rights; (ix) any and all technical information, Software, specifications, drawings, records, documentation, works of authorship or other creative works, ideas, knowledge, invention disclosures or other data, not including works subject to Copyright, Patent or Trademark protection; (x) advertising and promotional materials, whether or not copyrightable; and (xi) claims, causes of action and defenses relating to the enforcement of any of the foregoing; in each case, including any registrations of, applications to register, and renewals and extensions of, any of the foregoing with or by any Governmental Authority in any jurisdiction. “Intellectual Property Transfer Agreement” means the Intellectual Property Transfer Agreement to be entered into between ADP and Dealer, substantially in the form attached hereto as Exhibit E, with such changes as may be agreed to by the Parties. “Inter-Group Indebtedness” means any intercompany receivables, payables, accounts, advances, loans, guarantees, commitments and indebtedness for borrowed funds between a member of the ADP Group and a member of the Dealer Group; provided, that “Inter-Group Indebtedness” shall not include any contingent Liabilities and accounts payable arising pursuant to the Ancillary Agreements, any agreements with respect to continuing transactions between a member of the ADP Group and a member of the Dealer Group and any other agreements entered into in the ordinary course of business. “Law” means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.   11 -------------------------------------------------------------------------------- “Liabilities” means all debts, liabilities, obligations, responsibilities, response actions, Losses, damages (whether compensatory, punitive, consequential, treble or other), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, on- or off-balance sheet, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any Law, or other pronouncements of Governmental Authorities constituting an Action, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or a Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursements and expense of counsel, expert and consulting fees, fees of third party administrators, and costs related thereto or to the investigation or defense thereof. “LLC Conversion” has the meaning assigned to such term in the Recitals hereto. “Loss” means any claim, demand, complaint, damage, loss, obligation, liability, cost or expense arising out of, relating to or in connection with any Action, including reasonable attorney’s, accountant’s, consultant’s and expert’s fees and expenses. “Mixed Account” has the meaning assigned to such term in Section 2.3(g)(ii). “Mixed Contract” has the meaning assigned to such term in Section 2.3(g)(i). “NASDAQ” means the NASDAQ Global Select Market. “Nederland 2” has the meaning assigned to such term in the definition of Dutch Restructuring. “New IndiaCo” has the meaning assigned to such term in the definition of India Restructuring. “Parties” has the meaning assigned to such term in the Preamble hereto. “Person” means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority. “Pre-Distribution Policies” has the meaning assigned to such term in Section 6.5(a).   12 -------------------------------------------------------------------------------- “Pre-Distribution Transactions” means, collectively, the Restructuring, the Separation, the LLC Conversion, the Recapitalization and the Dealer Cash Dividend. “Preliminary Dutch Spin-Off” has the meaning assigned to such term in the definition of Dutch Restructuring. “Preliminary U.S. Restructuring” means the ADP Conversion, followed by the ADP Network Services International Conversion, then followed by the ADP Atlantic Conversion. “Privileged Information” has the meaning assigned to such term in Section 7.9(a). “Recapitalization” has the meaning assigned to such term in Section 2.1(c). “Record Date” means the date to be determined by the Board of Directors of ADP in its sole and absolute discretion as the record date for determining stockholders of ADP entitled to receive shares of Dealer Common Stock pursuant to the Distribution. “Registration Statement” means the Registration Statement on Form 10 of Dealer relating to the registration under the Exchange Act of the Dealer Common Stock, including any amendments or supplements thereto. “Related Claims” means a claim or claims against an ADP insurance policy made by each of ADP and/or its insured parties, on the one hand, or Dealer and/or its insured parties, on the other hand, filed in connection with Losses suffered by each of ADP and Dealer arising out of the same underlying transaction, transactions, event or events. “Restructuring” means, collectively, the U.S. Subsidiary Conversions, the U.S. Legal Transfers, the Preliminary U.S. Restructuring, the India Restructuring, the Preliminary Dutch Spin-off, the Subsequent Dutch Spin-off, the Canadian Restructuring, the LLC Conversion and such other restructuring-related transactions agreed by the Parties in connection herewith. “Restructuring Documents” means, collectively, the contracts, agreements, arrangements, certificates, instruments, Consents and other documents to be entered into, approved, authorized, confirmed and/or ratified to implement or effect the Restructuring in the manner contemplated by this Agreement or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement or the Restructuring, in each case in such form or forms and with such changes as may be agreed to by the Parties. “SEC” means the United States Securities and Exchange Commission. “Separation” has the meaning assigned to such term in the Recitals hereto.   13 -------------------------------------------------------------------------------- “Shared Person” has the meaning assigned to such term in Section 2.3(h). “Subsequent Dutch Spin-Off” has the meaning assigned to such term in the definition of Dutch Restructuring. “Subsidiary” means, with respect to any Person, any other Person of which such first Person (either alone or through or together with any other Subsidiary of such first Person) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such other Person. “Tax Matters Agreement” means the Tax Matters Agreement to be entered into between ADP and Dealer, substantially in the form attached hereto as Exhibit F, with such changes as may be agreed to by the Parties. “Third Party Claim” has the meaning assigned to such term in Section 4.5(a). “Transaction Expenses” has the meaning assigned to such term in Section 10.2. “Transition Services Agreement” means the Transition Services Agreement to be entered into between ADP and Dealer, substantially in the form attached hereto as Exhibit G, with such changes as may be agreed to by the Parties. “Unrelated Claims” means a claim or claims against an ADP insurance policy made by each of ADP and/or its insured parties, on the one hand, or Dealer and/or its insured parties, on the other hand, filed in connection with Losses suffered by each of ADP and Dealer arising out of unrelated and separate transactions or events. “U.S. Legal Transfers” means each of the ADP Legal Transfer, the ADP Network Services International Legal Transfer, the ADP Atlantic Legal Transfer and the Dealer Legal Contribution. “U.S. Subsidiary Conversions” means each of the ADP Conversion, the ADP Network Services International Conversion and the ADP Atlantic Conversion. Section 1.2 General Interpretive Principles. (a) Words in the singular shall include the plural and vice versa, and words of one gender shall include the other gender, in each case, as the context requires, (b) the words “hereof,” “herein,” “hereunder,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph, Exhibit and Schedule are references to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified, (c) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified and (d) any reference to any federal, state, local or non-U.S. statute or Law shall be deemed to also refer to all rules and regulations promulgated thereunder, in each case as amended from time to time, unless the context otherwise requires.   14 -------------------------------------------------------------------------------- ARTICLE II THE PRE-DISTRIBUTION TRANSACTIONS Section 2.1 Restructuring, Recapitalization and Other Transactions. On or prior to the Distribution Date (but prior to the Dealer Cash Dividend and the Distribution), and subject to satisfaction or waiver of the conditions set forth in Section 2.4: (a) the Parties shall effect the Restructuring; (b) following the Restructuring, the Parties shall effect the LLC Conversion; and (c) following the LLC Conversion, the Dealer Common Stock shall be recapitalized (the “Recapitalization”) such that the number of shares of Dealer Common Stock issued and outstanding and owned by ADP immediately prior to the Effective Time shall be in an amount calculated on the basis of the following: one (1) share of Dealer Common Stock with respect to every three (3) shares of ADP Common Stock issued and outstanding immediately prior to the Distribution (excluding shares held in the treasury of ADP); and such Dealer Common Stock owned by ADP will constitute all of the issued and outstanding capital stock of Dealer. Section 2.2 Financings and Dealer Cash Dividend. On or prior to the Distribution Date (but prior to the Distribution), and subject to the consummation of the transactions contemplated by Section 2.1 and the satisfaction or waiver of the conditions set forth in Section 2.4, Dealer shall effect the Financings and the Dealer Cash Dividend. Section 2.3 The Separation and Related Transactions. (a) (i) The Parties acknowledge that the Separation, subject to the terms and conditions hereof and of the Ancillary Agreements, will result in (A) Dealer directly or indirectly operating the Dealer Group and the Dealer Business, owning all of the Dealer Assets and being liable for all of the Dealer Liabilities and (B) ADP directly or indirectly operating the ADP Group and the ADP Business, owning all of the ADP Assets and being liable for all of the ADP Liabilities. (ii) Pursuant to the Separation, Dealer, or one or more members of the Dealer Group, shall remain and be the sole owner, and shall have exclusive right, title and interest in and to, all Dealer Assets. Concurrently therewith, Dealer shall remain solely liable for and shall faithfully perform, fulfill and discharge fully in due course all of the Dealer Liabilities in accordance with their respective terms, in each case except as otherwise provided in any Ancillary Agreement. Pursuant to the Separation, ADP, or one or more members of the ADP Group, shall remain the sole   15 -------------------------------------------------------------------------------- owner, and shall have exclusive right, title and interest in and to, all ADP Assets. Concurrently therewith, ADP shall remain and be solely liable for and shall faithfully perform, fulfill and discharge fully in due course all of the ADP Liabilities in accordance with their respective terms. From and after the Effective Time, Dealer or one or more members of the Dealer Group shall be solely responsible for all Dealer Liabilities and ADP or one or more members of the ADP Group shall be solely responsible for all ADP Liabilities, regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to, on or subsequent to the Distribution Date, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by ADP’s or Dealer’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the ADP Group or the Dealer Group, as the case may be) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the ADP Group or the Dealer Group or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates, as the case may be. Notwithstanding anything herein to the contrary, this Section 2.3(a)(ii) shall not apply to any Assets or Liabilities contributed, assigned, transferred, conveyed, licensed, delivered and/or assumed under any Ancillary Agreement, which shall be governed by the terms thereof. (iii) Subject to any Ancillary Agreement and to the extent that prior to the Effective Time, (A) any member of the ADP Group owns or is in possession of any Dealer Asset or any member of the Dealer Group owns or is in possession of any ADP Asset or (B) any member of the ADP Group is liable to any third party for any Dealer Liability or any member of the Dealer Group is liable to any third party for any ADP Liability, ADP and Dealer shall, and shall cause the respective members of their Groups to, cooperate and use their respective commercially reasonable efforts to obtain the necessary Consents to, and shall, contribute, assign, transfer, convey and/or deliver any ADP Asset or Dealer Asset, as the case may be, and/or assume any ADP Liability or Dealer Liability, as the case may be, such that, on or prior to the Effective Time, Dealer or a member of the Dealer Group owns and is in possession of the Dealer Assets and is solely liable for the Dealer Liabilities and ADP or a member of the ADP Group owns and is in possession of the ADP Assets and is solely liable for the ADP Liabilities. (b) Delayed Transfer of Assets and/or Liabilities. To the extent that any contribution, assignment, transfer, conveyance, delivery or assumption required pursuant to Section 2.3 shall not have been consummated as of the Effective Time, whether by its terms or by operation of Law (any such Asset and/or Liability, a “Delayed Transfer Asset and/or Liability”) and subject to any Ancillary Agreement: (i) ADP and Dealer thereafter shall, and shall cause the members of their respective Groups to, use commercially reasonable efforts and cooperate to effect such contribution, assignment, transfer, conveyance, delivery or assumption as promptly following the Effective Time as shall be practicable; (ii) ADP shall thereafter, with respect to any such Dealer Asset, use commercially reasonable efforts, with the costs of ADP related thereto to be promptly reimbursed by Dealer, hold, or cause a member of the ADP Group to   16 -------------------------------------------------------------------------------- hold, such Dealer Asset in trust for the use and benefit of Dealer and, with respect to any such Dealer Liability, retain such Dealer Liability for the account of Dealer; and (iii) Dealer shall thereafter, with respect to any such ADP Asset, use commercially reasonable efforts, with the costs of Dealer related thereto to be promptly reimbursed by ADP, hold, or cause a member of the Dealer Group to hold, such ADP Asset in trust for the use and benefit of ADP and, with respect to any such ADP Liability, to retain such ADP Liability for the account of ADP; in each case in order to place each Party, insofar as is reasonably possible, in the same position as would have existed had such Delayed Transfer Asset and/or Liability been contributed, assigned, transferred, conveyed, delivered or assumed as contemplated hereby (it being understood that neither ADP (with respect to any Dealer Asset or Dealer Liability) nor Dealer (with respect to any ADP Asset or ADP Liability) shall be required to take any action pursuant to this clause that would, or could reasonably be expected to, result in any financial obligation to it or any restriction on its business or operations, except as may be required in any Ancillary Agreement). To the extent that Dealer is provided the use or benefit of any Dealer Asset or has any Dealer Liability held for its account pursuant to this Section 2.3(b), Dealer or another member of the Dealer Group shall perform, for the benefit of ADP and any third Person, the obligations of ADP thereunder or in connection therewith, or as may be directed by ADP and if Dealer or another member of the Dealer Group shall fail to perform to the extent required herein, Dealer shall hold ADP harmless and indemnify ADP therefor. To the extent that ADP or another member of the ADP Group is provided the use or benefit of any ADP Asset or has any ADP Liability held for its account pursuant to this Section 2.3(b), ADP or another member of the ADP Group shall perform, for the benefit of Dealer and any third Person, the obligations of Dealer thereunder or in connection therewith, or as may be directed by Dealer and if ADP or another member of the ADP Group shall fail to perform to the extent required herein, ADP shall hold Dealer harmless and indemnify Dealer therefor. Each Party shall, and/or shall cause members of its Group to, as and when any such Delayed Transfer Asset and/or Liability becomes contributable, assignable, transferable, conveyable, deliverable or assumable by such Party, effect such contribution, assignment, transfer, conveyance, delivery or assumption, as applicable, as promptly as practicable thereafter. Each of ADP and Dealer shall, and shall cause the members of its respective Group to, (A) treat for all income tax purposes (x) the Delayed Transfer Assets as assets owned by the Person entitled to such Delayed Transfer Assets as of the Effective Time and (y) the Delayed Transfer Liabilities as liabilities of, or owed by, the Person intended to be subject to such Delayed Transfer Liabilities as of the Effective Time and (B) neither report nor take any income tax position (on a tax return or otherwise) inconsistent with such treatment (unless required by a change in applicable Law or a good faith resolution of a tax contest relating to income taxes). (c) Assignment of Certain Agreements. Subject to the Ancillary Agreements and to Section 2.3(g) hereof, (i) ADP shall assign to Dealer all of its right, title and interest under the agreements comprising Dealer Assets, as set forth on Schedule 2.3(c)(i) attached hereto, and (ii) Dealer shall assign to ADP all of its right, title and interest under the agreements comprising ADP Assets, as set forth on Schedule 2.3(c)(ii) attached hereto, and each Party shall execute and deliver any and all instruments of substitution and such other instruments or agreements as shall be necessary in connection with the discharge of the other Party from its respective obligations with respect to such agreements.   17 -------------------------------------------------------------------------------- (d) Termination of Certain Agreements. All contracts, licenses, agreements, commitments or other arrangements, formal or informal, between any member of the ADP Group, on the one hand, (i) and any member of the Dealer Group, on the other hand, or (ii) guarantying any obligation of any member of the Dealer Group, on the other hand, in each case in existence on or prior to the Distribution Date, shall be automatically settled, cancelled, assigned, assumed or terminated by the Parties at the Effective Time, except (A) for (x) such agreements specifically set forth on Schedule 2.3(d) attached hereto, (y) this Agreement and (z) each Ancillary Agreement (including each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the Parties or any of the members of their respective Groups), (B) for any contracts, licenses, agreements, commitments or other arrangements to which any Person is a party in addition to either Party or any member of either Group, or (C) as otherwise agreed to in good faith by the Parties in writing on or after the date hereof. From and after the Distribution Date, no member of either Group shall have any rights or obligations under any such settled, cancelled, assigned, assumed or terminated contract, license, agreement, commitment or arrangement with any member of the other Group. (e) Settlement of Inter-Group Indebtedness. Except with respect to the agreements specifically set forth on Schedule 2.3(d), the Parties shall use their commercially reasonable efforts to settle all amounts payable in connection with any Inter-Group Indebtedness on or prior to the Distribution Date. (f) Guaranteed Obligations. (i) ADP and Dealer shall cooperate, and shall cause their respective Groups to cooperate, to terminate, or to cause a member of the ADP Group to be substituted in all respects for any member of the Dealer Group in respect of, all obligations of such member of the Dealer Group under any ADP Liability for which such member of the Dealer Group may be liable, as guarantor, original tenant, primary obligor or otherwise. If such termination or substitution is not effected by the Distribution Date, (A) ADP shall indemnify and hold harmless the relevant Dealer Indemnified Party for any Liability arising from or relating thereto and (B) without the prior written consent of Dealer, from and after the Distribution Date, ADP shall not, and shall not permit any member of the ADP Group to, amend, renew or extend the term of, increase its obligations under, or transfer to a third Person, any loan, lease, contract or other obligation for which any member of the Dealer Group is or may be liable, unless all obligations of the Dealer Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to Dealer. (ii) ADP and Dealer shall cooperate, and shall cause their respective Groups to cooperate, to terminate, or to cause a member of the Dealer Group to be substituted in all respects for any member of the ADP Group in respect of, all obligations of such member of the ADP Group under any Dealer Liability for which   18 -------------------------------------------------------------------------------- such member of the ADP Group may be liable, as guarantor, original tenant, primary obligor or otherwise, other than those guarantees listed on Schedule 2.3(d) (the “Continuing ADP Guarantees”). If such termination or substitution is not effected by the Distribution Date, (A) Dealer shall indemnify and hold harmless the relevant ADP Indemnified Party for any Liability arising from or relating thereto (including with respect to any Continuing ADP Guarantees), (B) without the prior written consent of ADP, from and after the Distribution Date, Dealer shall not, and shall not permit any member of the Dealer Group to, amend, renew or extend the term of, increase its obligations under, or transfer to a third Person, any loan, lease, contract or other obligation for which any member of the ADP Group is or may be liable (including any Continuing ADP Guarantee or any loan, lease, contract or other obligation underlying any Continuing ADP Guarantee), unless all obligations of the ADP Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to ADP and (C) with respect to each Continuing ADP Guarantee, for the period commencing on the Distribution Date through the date that such Continuing ADP Guarantee has terminated, the member of the Dealer Group that is a party to the underlying loan, lease, contract or other obligation relating to such Continuing ADP Guarantee shall pay a guarantee fee to ADP in the amounts specified on Schedule 2.3(f). (g) Mixed Contracts; Mixed Accounts. (i) Subject to the Ancillary Agreements, and unless the Parties agree otherwise, any agreement to which any member of the ADP Group or the Dealer Group is a party prior to the Effective Time that inures to the benefit or burden of both of the ADP Business and the Dealer Business (a “Mixed Contract”) shall be assigned in part to Dealer or one of its Subsidiaries, and/or to ADP or one of its Subsidiaries, as the case may be, if so assignable, prior to or as of the Effective Time, such that each Party or its respective Subsidiaries shall be entitled to the rights and benefits thereof and shall assume the related portion of any obligations thereunder and any Liabilities inuring to their respective Businesses; provided, however, that in no event shall either Party be required to assign any Mixed Contract in its entirety. If any Mixed Contract cannot be so partially assigned, ADP and Dealer shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause: (A) the Assets associated with that portion of each Mixed Contract that relates to the Dealer Business to be enjoyed by Dealer or a Dealer Subsidiary; (B) the Liabilities associated with that portion of each Mixed Contract that relates to the Dealer Business to be borne by Dealer or a Dealer Subsidiary; (C) the Assets associated with that portion of each Mixed Contract that relates to the ADP Business to be enjoyed by ADP or an ADP Subsidiary; and (D) the Liabilities associated with that portion of each Mixed Contract that relates to the ADP Business to be borne by ADP or an ADP Subsidiary; provided, however, that the arrangements described in clauses (A), (B), (C) and (D) shall terminate on the earlier to occur of (1) the termination of the applicable Mixed Contract and (2) the first anniversary of the Distribution Date. (ii) Except as may otherwise be agreed by the Parties, neither Party shall seek to assign any accounts receivable or accounts payable relating to both the ADP Business and the Dealer Business (“Mixed Accounts”). ADP and Dealer   19 -------------------------------------------------------------------------------- shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause: (A) the Assets associated with that portion of each Mixed Account that relates to the ADP Business to be enjoyed solely by ADP or an ADP Subsidiary; (B) the Liabilities associated with that portion of each Mixed Account that relates to the ADP Business to be borne solely by ADP or an ADP Subsidiary; (C) the Assets associated with that portion of each Mixed Account that relates to the Dealer Business to be enjoyed solely by Dealer or a Dealer Subsidiary; and (D) the Liabilities associated with that portion of each Mixed Account that relates to the Dealer Business to be borne solely by Dealer or a Dealer Subsidiary; provided, however, that the arrangements described in clauses (A), (B), (C) and (D) shall terminate no later than the first anniversary of the Distribution Date. (iii) Nothing in this Section 2.3(g) shall require any member of either Group to make any payment, incur any obligation or grant any concession to any third party in order to effect any transaction contemplated by this Section 2.3(g). (h) Shared Personnel. Immediately prior to the Distribution Date, except for Leslie A. Brun, (i) each Person who is an officer or director of any member of the Dealer Group and an officer or director of any member of the ADP Group (a “Shared Person”) and who is to continue as an officer or director of any member of the Dealer Group after the Distribution Date shall resign, effective at or prior to the Effective Time, from each of such Person’s positions with each member of the ADP Group and (ii) each such Shared Person who is to continue as an officer or director of any member of the ADP Group after the Distribution Date shall resign, effective at or prior to the Effective Time, from each of such Person’s positions with each member of the Dealer Group. Section 2.4 Conditions Precedent to Consummation of the Pre-Distribution Transactions. The obligations of the Parties to consummate each of the Pre-Distribution Transactions is subject to the prior or simultaneous satisfaction, or waiver by ADP in its sole and absolute discretion, of each of the following conditions: (a) final approval of each of the Pre-Distribution Transactions shall have been given by the Board of Directors of ADP in its sole and absolute discretion; and (b) each of the conditions precedent to the consummation of the Distribution set forth in Section 3.3 hereof (other than Section 3.3(j)) shall have been satisfied or waived by ADP in its sole and absolute discretion. Each of the foregoing conditions is for the benefit of ADP and ADP may, in its sole and absolute discretion, determine whether to waive any such condition. Any determination made by ADP prior to any of the Pre-Distribution Transactions concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 2.4 shall be conclusive and binding on the Parties.   20 -------------------------------------------------------------------------------- ARTICLE III THE DISTRIBUTION Section 3.1 Actions Prior to the Distribution. Subject to the satisfaction or waiver of the conditions set forth in Section 3.3, the actions set forth in this Section 3.1 shall be taken prior to the Distribution Date. (a) The Board of Directors of ADP shall establish the Distribution Date and any appropriate procedures in connection with the Distribution. ADP and Dealer shall use commercially reasonable efforts to (i) cooperate with each other with respect to the preparation of the Registration Statement and the Information Statement, (ii) cause the Registration Statement to become effective under the Exchange Act and to keep the Registration Statement effective until the Effective Time, and (iii) mail, promptly after effectiveness of the Registration Statement and on or promptly after the Record Date, and in any event prior to the Distribution Date, to the holders of ADP Common Stock as of the Record Date, the Information Statement or a notice of the internet availability thereof. (b) ADP shall enter into a distribution agent agreement with the Distribution Agent (the “Distribution Agent Agreement”) providing for, among other things, (i) the payment of the Distribution to the holders of ADP Common Stock in accordance with this Article III and the Distribution Agent Agreement, and (ii) the designation of Dealer as a third party beneficiary thereunder. (c) ADP and Dealer shall deliver to the Distribution Agent (i) book-entry transfer authorizations for all of the outstanding shares of Dealer Common Stock to be distributed in connection with the payment of the Distribution and (ii) all information required to complete the Distribution on the basis set forth herein and under the Distribution Agent Agreement. Following the Distribution Date, upon the request of the Distribution Agent, Dealer shall provide to the Distribution Agent all book-entry transfer authorizations of Dealer Common Stock that the Distribution Agent shall require in order to further effect the Distribution. (d) Each of ADP and Dealer shall execute and deliver to the other Party, or cause the appropriate members of its Group to execute and deliver to the other Party, each of the Ancillary Agreements and any other document necessary to effect the transactions contemplated by this Agreement. (e) ADP will establish the Record Date and give the NASDAQ the required notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act and Rule 5250(e)(6) of the NASDAQ Continued Listing Guide. (f) Each Party shall cooperate with the other Party to accomplish the Distribution and shall take any and all actions necessary or desirable to effect the Distribution.   21 -------------------------------------------------------------------------------- (g) The Parties will take all actions and make all filings as ADP, in consultation with Dealer but ultimately in its sole and absolute discretion, determines are necessary or appropriate, to cause the transfer or issuance of all material Consents in order for ADP and Dealer to operate their respective Businesses independently of each other in the manner contemplated hereunder and under the Ancillary Agreements. Dealer will prepare, file and use commercially reasonable efforts to make effective an application for listing of the Dealer Common Stock on the NASDAQ, subject to official notice of issuance. (h) ADP shall, in its sole discretion, determine (i) whether to proceed with all or part of the Distribution, (ii) the Distribution Date, (iii) the timing and conditions to the Distribution and (iv) the terms thereof. ADP may, at any time and from time to time prior to the Effective Time, change the terms of the Distribution, including by delaying or accelerating the timing of the Distribution. ADP shall use good faith efforts to provide notice to Dealer of any such change. ADP may select, for itself and for Dealer, outside financial advisors, outside counsel, agents and the financial printer employed in connection with the transactions hereunder in its sole and absolute discretion. (i) ADP and Dealer shall take all actions necessary so that the Dealer Certificate of Incorporation and the Dealer Bylaws shall be in effect at or prior to the Effective Time. (j) ADP and Dealer shall take all such actions as ADP, in consultation with Dealer but ultimately in its sole and absolute discretion, determines are necessary or appropriate under applicable federal or state securities or blue sky laws of the United States (and any comparable Laws under any foreign jurisdiction) in connection with the Distribution. Section 3.2 The Distribution. Subject to the satisfaction or waiver of the conditions set forth in Section 3.3, the actions set forth in this Section 3.2 shall be taken on the Distribution Date. (a) ADP shall effect the Distribution by causing all of the issued and outstanding shares of Dealer Common Stock beneficially owned by ADP to be distributed to record holders of shares of ADP Common Stock as of the Record Date, other than with respect to shares of ADP Common Stock held in the treasury of ADP, by means of a pro rata dividend of such Dealer Common Stock to such record holders of shares of ADP Common Stock, on the terms and subject to the conditions set forth in this Agreement. (b) Each record holder of ADP Common Stock on the Record Date (or such holder’s designated transferee or transferees), other than in respect of shares of ADP Common Stock held in the treasury of ADP, will be entitled to receive in the Distribution, one (1) share of Dealer Common Stock with respect to every three (3) shares of ADP Common Stock held by such record holder on the Record Date. ADP shall direct the Distribution Agent to distribute on the Distribution Date or as soon as reasonably practicable thereafter the appropriate number of shares of Dealer Common Stock to each such record holder or designated transferee(s) of such holder of record.   22 -------------------------------------------------------------------------------- (c) ADP shall direct the Distribution Agent to determine, as soon as is practicable after the Distribution Date, the number of fractional shares, if any, of Dealer Common Stock allocable to each holder of record of ADP Common Stock entitled to receive Dealer Common Stock in the Distribution and to promptly thereafter aggregate all such fractional shares and sell the whole shares obtained thereby, in open market transactions or otherwise at the then-prevailing trading prices, and to cause to be distributed to each such holder, in lieu of any fractional share, such holder’s ratable share of the proceeds of such sale, after making appropriate deductions of the amounts required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale. (d) Any Dealer Common Stock or cash in lieu of fractional shares with respect to Dealer Common Stock that remains unclaimed by any holder of record 180 days after the Distribution Date shall be delivered to Dealer at its request. Dealer shall hold such Dealer Common Stock and/or cash for the account of such holder of record and any such holder of record shall look only to Dealer for such Dealer Common Stock and/or cash, if any, in lieu of fractional share interests, subject in each case to applicable escheat or other abandoned property Laws. Section 3.3 Conditions to Distribution. The obligation of ADP to consummate the Distribution is subject to the prior or simultaneous satisfaction, or waiver by ADP, in its sole and absolute discretion, of each of the following conditions: (a) final approval of the Distribution shall have been given by the Board of Directors of ADP, and the Board of Directors of ADP shall have declared the dividend of Dealer Common Stock, each such action in its sole and absolute discretion; (b) the Registration Statement shall have been filed with, and declared effective by, the SEC, and there shall be no stop-order in effect with respect thereto and the Information Statement or a notice of the internet availability thereof shall have been mailed to ADP stockholders; (c) the actions and filings necessary or appropriate under applicable federal and state securities Laws of the United States (and any comparable Laws under any foreign jurisdictions) in connection with the Distribution (including, if applicable, any actions and filings relating to the Registration Statement) and any other necessary and applicable Consents from any Governmental Authority shall have been taken, obtained and, where applicable, have become effective or been accepted, each as the case may be; (d) the Dealer Common Stock to be delivered in the Distribution shall have been approved for listing on the NASDAQ, subject to official notice of issuance;   23 -------------------------------------------------------------------------------- (e) no order, injunction or decree issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of the Pre-Distribution Transactions or the Distribution or any of the other transactions contemplated by this Agreement or any Ancillary Agreement shall have been threatened or be in effect; (f) ADP shall have received a tax opinion from Paul, Weiss, Rifkind, Wharton & Garrison LLP, in form and substance satisfactory to ADP, to the effect that the LLC Conversion and the Distribution will qualify as a tax-free spin-off under Sections 368(a)(1)(D) and 355 of the Code; (g) ADP shall have established the Record Date and shall have given the NASDAQ not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act and Rule 5250(e)(6) of the NASDAQ Continued Listing Guide; (h) the Distribution will not violate or result in a breach of Law or any material agreement; (i) all material Consents required in connection with the transactions contemplated hereby (that are not referred to in Section 3.3(c)) shall have been received and be in full force and effect; (j) each of the Pre-Distribution Transactions shall have been consummated in accordance with this Agreement; (k) the Ancillary Agreements shall have been duly executed and delivered and such agreements shall be in full force and effect and the parties thereto shall have performed or complied with all of their respective covenants, obligations and agreements contained herein and therein and as required to be performed or complied with prior to the Effective Time; and (l) the Board of Directors of ADP shall have not determined that any event or development shall have occurred or exists, or might occur or exist, that makes it inadvisable to effect the Distribution. Each of the foregoing conditions is for the sole benefit of ADP and ADP may, in its sole and absolute discretion, determine whether to waive any such condition. Any determination made by ADP, in its sole and absolute discretion, prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.3 shall be conclusive and binding on the Parties. Each Party will use good faith efforts to keep the other Party apprised of its efforts with respect to, and the status of, each of the foregoing conditions.   24 -------------------------------------------------------------------------------- ARTICLE IV SURVIVAL AND INDEMNIFICATION; RELEASE Section 4.1 Survival of Agreements. All covenants and agreements of the Parties contained in this Agreement shall survive the Pre-Distribution Transactions and the Distribution. Section 4.2 Indemnification by Dealer. Dealer shall indemnify, defend, release and hold harmless ADP, each member of the ADP Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ADP Indemnified Parties”), from and against any and all Losses or Liabilities of the ADP Indemnified Parties relating to, arising out of or resulting from any of the following items regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud, misrepresentation or otherwise (without duplication): (a) the failure of Dealer or any other member of the Dealer Group or any other Person to pay, perform or otherwise promptly discharge any Dealer Liability or any contract, agreement or arrangement included in the Dealer Assets in accordance with their respective terms, whether arising prior to, on or after the Distribution Date; (b) any Dealer Liability, any Dealer Asset or the Dealer Business, whether arising prior to, on or after the Distribution Date; (c) any breach by Dealer or any member of the Dealer Group of this Agreement; (d) except to the extent set forth in Section 4.3(d), any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, contained in the Registration Statement or the Information Statement or in any registration statement filed by Dealer (or related prospectus) in connection with the Distribution, or in any materials or information provided to investors by, or with the approval of, Dealer in connection with the marketing of the Distribution; (e) the failure by Dealer to substitute a member of the Dealer Group for any member of the ADP Group as guarantor or primary obligor for any Dealer Agreement or Dealer Liability according to the terms and conditions of Section 2.3(f)(ii); and (f) the failure by Dealer to perform in connection with any Delayed Transfer Asset and/or Liability held by ADP for Dealer’s benefit or account pursuant to Section 2.3(b).   25 -------------------------------------------------------------------------------- Section 4.3 Indemnification by ADP. ADP shall indemnify, defend, release and hold harmless Dealer, each member of the Dealer Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Dealer Indemnified Parties,” and, together with ADP Indemnified Parties, the “Indemnified Parties”), from and against any and all Losses or Liabilities of the Dealer Indemnified Parties relating to, arising out of or resulting from any of the following items regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud, misrepresentation or otherwise (without duplication): (a) the failure of ADP or any other member of the ADP Group or any other Person to pay, perform or otherwise promptly discharge any ADP Liability or any contract, agreement or arrangement included in the ADP Assets in accordance with their respective terms, whether arising prior to, on or after the Distribution Date; (b) any ADP Liability, ADP Asset or the ADP Business, whether arising prior to, on or after the Distribution Date; (c) any breach by ADP or any member of the ADP Group of this Agreement; (d) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with respect to the information contained in the Registration Statement or the Information Statement that is set forth on Schedule 4.3(d); (e) the failure by ADP to substitute a member of the ADP Group for any member of the Dealer Group as guarantor or primary obligor for any ADP agreement or ADP Liability according to the terms and conditions of Section 2.3(f)(i); and (f) the failure by ADP to perform in connection with any Delayed Transfer Asset and/or Liability held by Dealer for ADP’s benefit or account pursuant to Section 2.3(b). Section 4.4 Insurance. (a) Each of ADP and Dealer shall use its respective commercially reasonable efforts to collect any proceeds under its respective available and applicable third party insurance policies to which it or any of its Subsidiaries is entitled prior to seeking indemnification under this Agreement, where allowed; provided, however, that any such actions by an Indemnified Party will not relieve the Indemnifying Party of any of its obligations under this Agreement, including the Indemnifying Party’s obligation to pay directly or reimburse the Indemnified Party for costs and expenses actually incurred by the Indemnified Party.   26 -------------------------------------------------------------------------------- (b) The amount of any Loss subject to indemnification pursuant to this Agreement will be reduced by any amounts actually recovered (including insurance proceeds or other amounts actually recovered under insurance policies, net of any out-of-pocket costs or expenses incurred in the collection thereof), whether retroactively or prospectively, by the Indemnified Party from any third Person with respect to such Loss. If any Indemnified Party recovers an amount from a third Person in respect of any Loss for which indemnification is provided in this Agreement after the full amount of such indemnifiable Loss has been paid by an Indemnifying Party or after an Indemnifying Party has made a payment of such indemnifiable Loss and the amount received from the third Person exceeds the remaining unpaid balance of such indemnifiable Loss, then the Indemnified Party will promptly remit to the Indemnifying Party the excess (if any) of (i) the sum of the amount previously paid by such Indemnifying Party in respect of such indemnifiable Loss plus the amount received by such Indemnified Party from such third Person in respect of such indemnifiable Loss (after deducting any costs and expenses that have not yet been paid or reimbursed by the Indemnifying Party), minus (ii) the full amount of such indemnifiable Loss. An insurer or other third Person who would otherwise be obligated to pay any Loss shall not be relieved of the responsibility with respect thereto by virtue of the indemnification provisions hereof or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being understood and agreed that no insurer or any third Person shall be entitled to a “windfall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof. Section 4.5 Procedures for Indemnification of Third Party Claims. (a) If an Indemnified Party shall receive notice or otherwise learn of the assertion by any Person who is not a member of the ADP Group or the Dealer Group of any claim, or of the commencement by any such Person of any Action, with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnified Party pursuant to Section 4.2 or Section 4.3, or any other Section of this Agreement or any Ancillary Agreement (other than the Tax Matters Agreement) (collectively, a “Third Party Claim”), such Indemnified Party shall give such Indemnifying Party prompt written notice thereof and, in any event, within ten (10) days after such Indemnified Party received notice of such Third Party Claim. Any such notice shall describe the Third Party Claim in reasonable detail, including, if known, the amount of the Liability for which indemnification may be available. Notwithstanding the foregoing, the failure of any Indemnified Party or other Person to give notice as provided in this Section 4.5(a) shall not relieve the related Indemnifying Party of its obligations under this Article IV, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice. (b) An Indemnifying Party may elect (but is not required) to assume the defense of and defend, at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party Claim. Within thirty (30) days after the receipt of notice from an Indemnified Party in accordance with Section 4.5(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party   27 -------------------------------------------------------------------------------- shall notify the Indemnified Party of its election whether the Indemnifying Party will assume control of the defense of such Third Party Claim, which election shall specify any reservations or exceptions. If, in such notice, the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense solely of such Indemnified Party. (c) If, in such notice, an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnified Party of its election as provided in Section 4.5(b), such Indemnified Party may defend such Third Party Claim at the cost and expense of the Indemnifying Party (subject to the terms and conditions of this Agreement). (d) The Indemnifying Party shall not have the right to compromise or settle a Third Party Claim the defense of which it shall have assumed pursuant to Section 4.5(b) except with the consent of the Indemnified Party (such consent not to be unreasonably withheld, delayed or conditioned). Any such settlement or compromise made or caused to be made of a Third Party Claim in accordance with this Article IV shall be binding on the Indemnified Party in the same manner as if a final judgment or decree had been entered by a court of competent jurisdiction in the amount of such settlement or compromise. For the avoidance of doubt, the Indemnified Party’s failure to consent to any such settlement or compromise shall be deemed unreasonable if such settlement or compromise (1) provides for an unconditional release of the Indemnified Party from Liability with respect to such Third Party Claim and (2) does not require the Indemnified Party to make any payment that is not fully indemnified under this Agreement or to be subject to any non-monetary remedy. If the Indemnified Party unreasonably withholds a consent required by this Section 4.5(d) to the terms of a compromise or settlement of a Third Party Claim proposed to the Indemnified Party by the Indemnifying Party, the Indemnifying Party’s obligation to indemnify the Indemnified Party for such Third Party Claim (if applicable) shall not exceed the total amount that had been proposed in such compromise or settlement offer plus the amount of all expenses incurred by the Indemnified Party with respect to such Third Party Claim through the date on which such consent was requested. (e) In the event of payment by or on behalf of any Indemnifying Party to any Indemnified Party in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim. (f) The provisions of Section 4.2 through Section 4.6 shall not apply to matters that are governed by the Tax Matters Agreement.   28 -------------------------------------------------------------------------------- Section 4.6 Procedures for Indemnification of Non-Third Party Claims. Any claim with respect to a Liability that does not result from a Third Party Claim shall be asserted by written notice given by the Indemnified Party to the Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond in writing within such 30-day period, such Indemnifying Party shall be deemed to have agreed to accept responsibility to make payment. If such Indemnifying Party (a) does not respond within such 30-day period or (b) rejects such claim in whole or in part and does not deliver a Dispute Escalation Notice pursuant to Section 10.8 within such 30-day period, then, in either case, such Indemnified Party shall be free to pursue such remedies as may be available to such Party as contemplated by this Agreement. Section 4.7 Survival of Indemnities. The rights and obligations of each of ADP and Dealer and their respective Indemnified Parties under this Article IV shall survive the sale or other transfer by any Party of any of its Assets or Businesses or the assignment by it of any Liabilities. Section 4.8 Remedies Cumulative. The remedies provided in this Article IV shall be cumulative and shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party; provided, that the procedures set forth in this Article IV shall be the exclusive procedures governing any indemnity action brought under this Agreement. Section 4.9 Ancillary Agreements. Notwithstanding anything in this Agreement to the contrary, to the extent any Ancillary Agreement contains any indemnification obligation relating to any ADP Liability, ADP Asset, Dealer Liability or Dealer Asset contributed, assumed, retained, transferred, delivered or conveyed pursuant to such Ancillary Agreement, the indemnification obligations contained herein shall not apply to such ADP Liability, ADP Asset, Dealer Liability or Dealer Asset and instead the indemnification obligations set forth in such Ancillary Agreement shall govern with regard to such ADP Asset, ADP Liability, Dealer Asset or Dealer Liability. Section 4.10 Mutual Release. (a) Except as provided in Section 4.10(c), effective as of the Effective Time, ADP does hereby, on behalf of itself and each other member of the ADP Group, their respective Affiliates (other than any member of the Dealer Group), successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders (other than any member of the Dealer Group), directors, officers, agents or employees of any member of the ADP Group (in each case, in their respective capacities as such) (the “ADP Releasors”), unconditionally and irrevocably release and discharge each of Dealer, the other members of the Dealer Group, their respective Affiliates (other than any member of the ADP Group), successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the Dealer Group (in each case, in their respective capacities as such), and their respective heirs, executors, trustees, administrators, successors and assigns (the “Dealer Parties”), from any and all Liabilities   29 -------------------------------------------------------------------------------- existing or arising in connection with the implementation of the Separation (the “ADP Claims”); and the ADP Releasors hereby, unconditionally and irrevocably agree not to initiate proceedings with respect to, or institute, assert or threaten to assert, any ADP Claim. (b) Except as provided in Section 4.10(c), effective as of the Effective Time, Dealer does hereby, on behalf of itself and each other member of the Dealer Group, their respective Affiliates (other than any member of the ADP Group), successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders (other than any member of the ADP Group), directors, officers, agents or employees of any member of the Dealer Group (in each case, in their respective capacities as such) (the “Dealer Releasors”), unconditionally and irrevocably release and discharge each of ADP, the other members of the ADP Group, their respective Affiliates (other than any member of the Dealer Group), successors and assigns, and all Persons who at any time prior to the Effective Time have been stockholders (other than any member of the Dealer Group), directors, officers, agents or employees of any member of the ADP Group (in each case, in their respective capacities as such), and their respective heirs, executors, trustees, administrators, successors and assigns (the “ADP Parties”), from any and all Liabilities existing or arising in connection with the implementation of the Separation (the “Dealer Claims”); and the Dealer Releasors hereby unequivocally, unconditionally and irrevocably agree not to initiate proceedings with respect to, or institute, assert or threaten to assert, any Dealer Claim. (c) Nothing contained in Section 4.10(a) or 4.10(b) shall impair any right of any Person to enforce this Agreement or any Ancillary Agreement, nor shall anything contained in this Agreement or any Ancillary Agreement be interpreted as terminating as of the Effective Time any rights under this Agreement or any Ancillary Agreement. For purposes of clarification, nothing contained in Section 4.10(a) or 4.10(b) shall release any Person from: (i) any Liability provided in or resulting from this Agreement or any of the Ancillary Agreements (including for greater certainty, any Liability resulting or flowing from any breaches of such agreements that arose prior to the Effective Time); (ii) with respect to ADP, any ADP Liability and, with respect to Dealer, any Dealer Liability; (iii) any Liability that the Parties may have under Article IV with respect to Third Party Claims; (iv) any Liability for unpaid Inter-Group Indebtedness; or (v) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.10.   30 -------------------------------------------------------------------------------- In addition, nothing contained in this Section 4.10 shall release ADP from honoring its existing obligations to indemnify any director, officer or employee of Dealer who was a director, officer or employee of ADP or any other member of the ADP Group on or prior to the Effective Time, to the extent that such director, officer or employee becomes a named defendant in any litigation involving ADP or any other member of the ADP Group and was entitled to such indemnification pursuant to the then existing obligations of a member of the ADP Group. (d) ADP shall not make, and shall not permit any other member of the ADP Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Dealer or any other member of the Dealer Group or any other Person released pursuant to Section 4.10(a), with respect to any Liabilities released pursuant to Section 4.10(a). Dealer shall not make, and shall not permit any other member of the Dealer Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against ADP or any other member of the ADP Group or any other Person released pursuant to Section 4.10(b), with respect to any Liabilities released pursuant to Section 4.10(b). ARTICLE V ANCILLARY AGREEMENTS Section 5.1 Data Center Services Agreement. All matters relating to or arising out of ADP’s data center shall be governed by the Data Center Services Agreement, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the Data Center Services Agreement and this Agreement or any other Ancillary Agreement, the Data Center Services Agreement shall govern to the extent of the inconsistency. Section 5.2 Employee Matters Agreement. All matters relating to or arising out of any employee benefit, compensation or welfare arrangement in respect of any present and former employee of the ADP Group or the Dealer Group shall be governed by the Employee Matters Agreement, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the Employee Matters Agreement and this Agreement or any other Ancillary Agreement, the Employee Matters Agreement shall govern to the extent of the inconsistency. Section 5.3 Intellectual Property Transfer Agreement. All matters relating to the ownership and right to use Intellectual Property, including the “ADP” name, shall be governed exclusively by the Intellectual Property Transfer Agreement, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the Intellectual Property Transfer Agreement and this Agreement or any other Ancillary Agreement, the Intellectual Property Transfer Agreement shall govern to the extent of the inconsistency.   31 -------------------------------------------------------------------------------- Section 5.4 Tax Matters Agreement. All matters relating to taxes shall be governed exclusively by the Tax Matters Agreement, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the Tax Matters Agreement and this Agreement or any other Ancillary Agreement, the Tax Matters Agreement shall govern to the extent of the inconsistency. Section 5.5 Transition Services Agreement. All matters relating to the provision of support and other services by the ADP Group to the Dealer Group after the Effective Time, covered by the Transition Services Agreement, shall be governed exclusively by the Transition Services Agreement, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the Transition Services Agreement and this Agreement or any other Ancillary Agreement, the Transition Services Agreement shall govern to the extent of the inconsistency. Section 5.6 Restructuring Documents. All matters relating to the Restructuring shall be governed exclusively by the applicable Restructuring Documents, except as may be expressly stated herein or therein. In the event of any inconsistency with respect to such matters between the applicable Restructuring Documents and this Agreement or any other Ancillary Agreement, the applicable Restructuring Document shall govern to the extent of the inconsistency. ARTICLE VI CERTAIN ADDITIONAL COVENANTS Section 6.1 Consents for Business. After the Effective Time, each Party shall cause the appropriate members of its respective Group to prepare and file with the appropriate Governmental Authorities applications for the transfer or issuance, as each of the Parties determines is necessary or advisable, to its Group of all material Consents required for the members of its Group to operate its Business. The members of the Dealer Group and the members of the ADP Group shall cooperate and use all reasonable efforts to secure the transfer or issuance of such Consents. Section 6.2 Additional Consents. In addition to the actions described in Section 6.1, the members of the ADP Group and the members of the Dealer Group shall cooperate to make all other filings and to give notice to and obtain any Consent required or advisable to consummate the transactions that are contemplated to occur from and after the Effective Time by this Agreement and the Ancillary Agreements. Section 6.3 Further Assurances. (a) Each of the Parties shall use its commercially reasonable efforts, on and after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.   32 -------------------------------------------------------------------------------- (b) Without limiting the foregoing, on and after the Distribution Date, each Party shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party, cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and make all filings with, and to obtain all Consents, under any permit, license, agreement, indenture or other instrument, and take all such other actions as either Party may request to be taken by any other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and, to the extent necessary, (i) the transfer of any Dealer Asset from any member of the ADP Group to any member of the Dealer Group and the assignment and assumption of any Dealer Liability by any member of the Dealer Group and (ii) the transfer of any ADP Asset from any member of the Dealer Group to any member of the ADP Group and the assignment and assumption of any ADP Liability by any member of the ADP Group, and the other transactions contemplated hereby and thereby; provided that neither Party shall be obligated to make any payment, incur any obligation or grant any concession, other than the payment of ordinary and customary fees to Governmental Authorities. (c) ADP and Dealer, in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each properly ratify or cause to be taken any actions that are reasonably necessary or desirable to be taken by ADP and Dealer, or any of their respective Subsidiaries, as the case may be, to effectuate the transactions contemplated by this Agreement and any Ancillary Agreement. (d) Each of the Parties shall, and shall cause each of the members of their respective Groups, at the request of the other, to use its commercially reasonable efforts to obtain, or cause to be obtained, any Consent, substitution or amendment required to novate (including with respect to any federal government contract) or assign all obligations under agreements, leases, licenses and other obligations or Liabilities of any nature whatsoever that constitute Dealer Liabilities or ADP Liabilities, as the case may be, or to obtain in writing the unconditional release of all parties to such arrangements other than any member of either the Dealer Group or the ADP Group, as the case may be, so that, in any such case, such Group will be solely responsible for all such Liabilities. (e) In the event that at any time and from time to time after the Effective Time any member of the ADP Group shall receive or otherwise possess any Dealer Asset, ADP shall or shall cause such member of the ADP Group to promptly transfer such Dealer Asset to Dealer or its Affiliate or designee. (f) In the event that at any time and from time to time after the Effective Time any member of the Dealer Group shall receive or otherwise possess any ADP Asset, Dealer shall or shall cause such member of the Dealer Group to promptly transfer such ADP Asset to ADP or its Affiliate or designee. Section 6.4 Future Activities. Following the Effective Time and except as set forth in any Ancillary Agreement, no member of either Group shall have any duty   33 -------------------------------------------------------------------------------- to refrain from (a) engaging in the same or similar activities or lines of business as any member of the other Group, (b) conducting its business with any potential or actual supplier or customer of any member of the other Group or (c) engaging in, or refraining from, any other activities whatsoever relating to any of the potential or actual suppliers or customers of any member of the Group. Section 6.5 Settlement of Certain Insurance Claims. (a) Notwithstanding the provisions of Section 2.3(a), the Parties acknowledge and agree that, following the Distribution Date, Dealer may make claims arising out of occurrences or events relating to the Dealer Business that occurred prior to the Distribution Date against applicable insurance policies of ADP covering periods prior to the Distribution Date (the “Pre-Distribution Policies”), in accordance with the terms and subject to the conditions of such Pre-Distribution Policies. ADP shall not be responsible to negotiate, investigate, defend, settle or otherwise handle such claims on behalf of Dealer. Notwithstanding the foregoing, each Party agrees to keep the other Party apprised of the status of any such claims and to cooperate and assist the other Party in a commercially reasonable manner in connection with the communications and discussions with the applicable insurance providers under the Pre-Distribution Policies. ADP shall instruct the applicable insurance carrier to negotiate with and accept proof of Loss directly from Dealer with respect to such claims, and to pay such claims directly to Dealer. ADP and Dealer each agree to provide necessary releases to resolve claim settlements. (b) To the extent that the limits of any Pre-Distribution Policies preclude payment in full of Unrelated Claims filed by ADP and Dealer, the insurance proceeds available under such policies shall be paid to ADP and/or Dealer on a FIFO Basis. (c) In the event that, after the Distribution Date, ADP and Dealer file Related Claims under any Pre-Distribution Policies, each of Dealer and ADP shall receive a pro rata amount of the available insurance proceeds, based on the relationship the Loss incurred by each such Party bears to the total Loss to both such Parties from the occurrence or event underlying the Related Claims. Section 6.6 Transitional Use of ADP Name. ADP agrees that the Dealer Group shall have a royalty-free, non-exclusive, non-transferable right to use the trademark “ADP” and the “ADP” logo only in the following manner: (a) to the extent reasonably required during a transitional period not to exceed one (1) year following the Distribution Date; provided Dealer is diligently transitioning off of such use during such time; (b) solely to the extent that any tangible materials acquired by the Dealer Group hereunder contain the “ADP” trademark or “ADP” logo at the time such tangible materials are acquired by the Dealer Group hereunder, for a transitional period not to exceed six (6) months following the Distribution Date; and (c) solely with respect to software releases acquired by the Dealer Group hereunder and installed at sites of clients as of the Distribution Date, for a transitional period ending on the date that a new release of such software has been installed at such client site by the Dealer Group but in any   34 -------------------------------------------------------------------------------- event not later than one (1) year following the Distribution Date; provided that the Dealer Group shall not be liable for a breach of this clause (c) with respect to software used by a client if such client has not permitted the Dealer Group to install a new release in accordance with this clause (c), provided that the Dealer Group shall have used its reasonable commercial efforts to comply with this clause (c) and the Dealer Group is in compliance with this clause (c) within two (2) years following the Distribution Date. ADP agrees further that the Dealer Group shall have a perpetual, royalty-free, non-exclusive, non-transferable right to use the trademark “ADP” solely with respect to software that contains such trademark at the time such software is acquired by the Dealer Group hereunder, provided that such software is used solely by, and is not made available to persons other than, the Dealer Group. Any uses of the “ADP” trademark or the “ADP” logo during the periods referred to above shall be subject to ADP’s right to approve the manner, style and placement of the “ADP” trademark or “ADP” logo on or in connection with any materials, goods or services, except to the extent that any tangible materials acquired by the Dealer Group hereunder already contain the “ADP” trademark or “ADP” logo. All uses of the “ADP” trademark and “ADP” logo by the Dealer Group shall inure to the exclusive benefit of ADP, and the Dealer Group shall acquire no ownership rights of any kind or nature in and to the “ADP” trademark or the “ADP” logo by virtue of this transitional right to use such trademark or logo. ARTICLE VII ACCESS TO INFORMATION Section 7.1 Agreement for Exchange of Information. (a) Each of ADP and Dealer, on behalf of its respective Group, agrees to provide, or cause to be provided, to the other Party and its auditors, at any time after the Distribution Date, as soon as reasonably practicable after written request therefor from such other Party, any Information in the possession or under the control of such respective Group (including access to such Group’s accountants, personnel and facilities) that the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities Laws) by a Governmental Authority having jurisdiction over the requesting Party (including pursuant to Section 7.1(d)), (ii) for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation or other similar requirements, or (iii) to comply with its obligations under this Agreement or any Ancillary Agreement (other than with respect to matters governed by the Tax Matters Agreement, which shall remain subject solely to the terms and conditions set forth therein); provided, however, that in the event that any Party reasonably determines that any such provision of Information could be commercially detrimental to such Party or any member of its Group, violate any Law or agreement to which such Party or member of its Group is a party, or waive any attorney-client privilege applicable to such Party or member of its Group, the Parties shall take reasonable measures to permit the compliance with the obligations pursuant to this Section 7.1(a) in a manner that avoids any such harm or consequence. ADP and Dealer intend that any transfer of Information that would otherwise be within the attorney-client privilege shall not operate as a waiver of any potentially applicable privilege.   35 -------------------------------------------------------------------------------- (b) Following the Distribution Date, each Party shall make its employees available during normal business hours and on reasonable prior notice to provide an explanation of any Information provided hereunder. (c) Until the end of the first full ADP fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each Party shall use its commercially reasonable efforts, consistent with past practice, to enable the other Party to meet its timetable for dissemination of its financial statements and enable such other Party’s auditors to timely complete their annual audit and quarterly financial statements. (d) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of the other Party to make the certifications required of them by Rule 13a-14 under the Exchange Act, within thirty (30) days following the end of any fiscal quarter during which Dealer is a Subsidiary of ADP, each Party shall cause its officers or employees to provide the other Party with the certification statements of such officers and employees with respect to such quarter or portion thereof, in substantially the same form and manner as such officers or employees provided such certification statements prior to the Distribution Date, or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the Separation, Distribution and any other transactions related thereto. Section 7.2 Ownership of Information. Any Information owned by one Group that is provided to a requesting Party pursuant to Section 7.1 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein or in any Ancillary Agreement, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information. Section 7.3 Compensation for Providing Information. The Party requesting such Information agrees to reimburse the other Party for the reasonable out-of-pocket costs, if any, of creating, gathering and copying such Information or for providing explanations of Information provided, to the extent that such costs are incurred for the benefit of the requesting Party by or on behalf of such other Party’s Group. Except as may be specifically provided elsewhere in this Agreement or in any other Ancillary Agreement, such costs shall be computed in accordance with the providing Party’s reasonable standard methodology and procedures. Section 7.4 Record Retention. Except as otherwise required or agreed in writing, or as otherwise provided in the Tax Matters Agreement, each Party shall use its good faith efforts to retain, in accordance with such Party’s record retention practices as in effect from time to time, all significant Information in such Party’s possession or   36 -------------------------------------------------------------------------------- under its control relating to the Business, Assets or Liabilities of the other Party, and, for a period of two (2) years following the Distribution Date, prior to destroying or disposing of any such Information, (a) the Party proposing to dispose of or destroy any such Information shall use its good faith efforts to provide reasonable prior written notice to the other Party, specifying the Information proposed to be destroyed or disposed of and (b) if, prior to the scheduled date for such destruction or disposal, the other Party requests in writing that any of the Information proposed to be destroyed or disposed of be delivered to such other Party, the Party proposing to dispose of or destroy such Information shall promptly arrange for the delivery of the requested Information to a location specified by, and at the expense of, the requesting Party; provided, however, that in the event that any Party reasonably determines that any such provision of Information could be commercially detrimental to such Party or any member of its Group, violate any Law or agreement to which such Party or member of its Group is a party, or waive any attorney-client privilege applicable to such Party or member of its Group, the Parties shall take reasonable measures to permit the compliance with the obligations pursuant to this Section 7.4 in a manner that avoids any such harm or consequence. ADP and Dealer intend that any transfer of Information that would otherwise be within the attorney-client privilege shall not operate as a waiver of any potentially applicable privilege. Section 7.5 Limitation of Liability. Notwithstanding Article IV, no Party shall have any Liability to the other Party in the event that any Information exchanged or provided pursuant to this Agreement (and not otherwise constituting part of this Agreement, its Exhibits or Schedules), or otherwise in connection with the Separation and the other transactions contemplated hereby, is found to be inaccurate, whether such Information is exchanged or provided prior to or after the Effective Time. No Party shall have any Liability to the other Party if any Information is disposed of or destroyed after using good faith efforts to comply with its obligations under Section 7.4 with respect to the retention of such Information. Section 7.6 Other Agreements Providing for Exchange of Information. The rights and obligations granted under this Article VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement. The provisions of Section 7.1 through Section 7.7 shall not apply to matters governed by the Tax Matters Agreement. Section 7.7 Production of Witnesses; Records; Cooperation. (a) Except in the case of an Action by one Party against another Party (which shall be governed by such discovery rules as may be applicable thereto), each Party shall use its commercially reasonable efforts to make available to the other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel   37 -------------------------------------------------------------------------------- and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting Party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all reasonable out-of-pocket costs and expenses in connection therewith. (b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the Indemnified Party shall use its commercially reasonable efforts to make available to the Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, and shall otherwise cooperate in such defense, settlement or compromise. (c) Without limiting the foregoing, the Parties shall cooperate and consult, and shall cause each member of its respective Group to cooperate and consult, to the extent reasonably necessary with respect to any Actions and any Related Claims with respect thereto. (d) Without limiting any provision of this Section 7.7, each of the Parties agrees to cooperate, and to cause each member of its respective Group to cooperate, at the other Party’s sole cost and expense, with the other Party and each member of its respective Group in the defense of any claim that the Business of the other Party or its Group members infringes upon or misappropriates third Person Intellectual Property and shall not acknowledge or concede, or permit any member of its respective Group to acknowledge or concede (i) that the Business of the other Party or its Group members infringes upon such third Person Intellectual Property (ii) or that such third Person Intellectual Property is valid or enforceable, in a manner that would hamper or undermine the defense of such infringement or misappropriation claim. (e) In connection with any matter contemplated by this Section 7.7, the Parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of any Group. (f) With respect to any Third Party Claim that implicates both Parties in any material respect due to the allocation of Liabilities, responsibilities for management of defense and related indemnities pursuant to this Agreement or any of the Ancillary Agreements, the Parties agree to use commercially reasonable efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for all Parties any privilege with respect thereto). The Party that is not responsible for managing the defense of any such Third Party Claim shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may, if necessary or helpful, retain   38 -------------------------------------------------------------------------------- counsel to assist in the defense of such claims. Each of ADP and Dealer agrees that at all times from and after the Effective Time, if an Action is commenced by a third party naming two (2) or more Parties (or any member of such Parties’ respective Groups) as defendants and with respect to which one or more named Parties (or any member of such Party’s respective Group) is a nominal defendant and/or such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party or Parties shall use commercially reasonable efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable. Section 7.8 Confidentiality. (a) General. Each Party acknowledges (i) that such Party has in its possession and, in connection with this Agreement and the Ancillary Agreements such Party will receive, Information of the other Party that is not available to the general public, and (ii) that such Information may constitute, contain or include material non-public Information of the other Party. Subject to Section 7.8(c), as of the Distribution Date, ADP, on behalf of itself and each of its Affiliates, and Dealer, on behalf of itself and each of its Affiliates, agrees to hold, and to cause its and their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that such Party applies to its own confidential and proprietary Information pursuant to its applicable policies and procedures in effect as of the Distribution Date, all Information (including Information received and/or obtained pursuant to Section 7.1) concerning the other Party (or its Business) and such other Party’s Affiliates (or their respective Business) that is either in its possession (including Information in its possession prior to the Distribution Date) or furnished by the other Party or the other Party’s Affiliates or their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement and the Ancillary Agreements, and will not use such Information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such Information: (i) is or becomes available to the general public, other than as a result of a disclosure by such Party or its Affiliates or any of their respective directors, officers, employees, agents, third party contractors, vendors, accountants, counsel and other advisors and representatives in breach of this Agreement; (ii) was available to such Party or its Affiliates or becomes available to such Party or its Affiliates, on a non-confidential basis from a source other than the other Party hereto, provided, that, the source of such Information was not bound by a confidentiality obligation with respect to such Information, or otherwise prohibited from transmitting the Information to such Party or its Affiliates by a contractual, legal or fiduciary obligation; or (iii) is independently generated by such Party without use of or reference to any proprietary or confidential Information of the other Party. (b) No Disclosure, Compliance with Law, Return or Destruction. Following the Effective Time, each Party agrees not to release or disclose, or permit to be released or disclosed, any Information with respect to the other Party to any other Person, except its directors, officers, employees, agents, third party contractors,   39 -------------------------------------------------------------------------------- vendors, accountants, counsel, lenders, investors and other advisors and representatives who need to know such Information in connection with this Agreement or the Ancillary Agreements or for valid business reasons relating thereto, and except in compliance with Section 7.8(c). Each Party shall advise its directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders, investors and other advisors and representatives who have been provided with such Information of such Party’s confidentiality obligations hereunder and that such Information may constitute, contain or include material non-public Information of the other Party. Following the Effective Time, each Party shall, and shall cause, its directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders, investors and other advisors and representatives who have been provided with such Information to, use such Information only in accordance with (i) the terms of this Agreement or the Ancillary Agreements and (ii) applicable Law (including federal and state securities Laws). Following the Effective Time, each Party shall promptly, after receiving a written request of the other Party, return to the other Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon), as directed by the other Party; provided, however, that in no event shall either Party be required to destroy any hardware that includes Information if such Information is only accessible to highly skilled computer experts and cannot otherwise be deleted or destroyed without undue cost or effort (provided that such Information will remain subject to the confidentiality protection provisions herein). (c) Protective Arrangements. Notwithstanding anything herein to the contrary, in the event that, following the Effective Time, either Party or any of its directors, officers, employees, agents, third party contractors, vendors, accountants, counsel, lenders, investors or other advisors or representatives either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable Law or the rules or regulations of a Governmental Authority or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of the other Party that is subject to the confidentiality provisions hereof, such Party shall, if possible, notify the other Party prior to disclosing or providing such Information and shall cooperate at the expense of the other Party in seeking any reasonable protective arrangements requested by such other Party. In the event that a protective arrangement is not obtained, the Person that received such request (i) may thereafter disclose or provide such Information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority, without liability therefor and (ii) shall exercise its commercially reasonable efforts to have confidential treatment accorded any such Information so furnished. Section 7.9 Privileged Information. In furtherance of the rights and obligations of the Parties set forth in this Article VII: (a) Each of Dealer (on behalf of itself and the other members of the Dealer Group) and ADP (on behalf of itself and the other members of the ADP Group) acknowledges that: (i) each member of the Dealer Group and the ADP Group has or may obtain Information that is or may be protected from disclosure pursuant to the   40 -------------------------------------------------------------------------------- attorney-client privilege, the work product doctrine, the common interest and joint defense doctrines or other applicable privileges (“Privileged Information”); (ii) actual, threatened or future Actions have been or may be asserted by or against, or otherwise affect, some or all members of the Dealer Group or the ADP Group; (iii) members of the Dealer Group and the ADP Group have or may in the future have a common legal interest in such Actions, in the Privileged Information and in the preservation of the protected status of the Privileged Information; and (iv) each of Dealer and ADP (on behalf of itself and the other members of its Group) intends that the transactions contemplated by this Agreement and the Ancillary Agreements and any transfer of Privileged Information in connection herewith or therewith shall not operate as a waiver of any applicable privilege or protection afforded Privileged Information. (b) Each of Dealer and ADP agrees, on behalf of itself and each member of the Group of which it is a member, not to intentionally disclose or otherwise intentionally waive any privilege or protection attaching to any Privileged Information relating to a member of the other Group, without consulting with the other. ARTICLE VIII NO REPRESENTATIONS OR WARRANTIES Section 8.1 NO REPRESENTATIONS OR WARRANTIES. EACH PARTY, ON BEHALF OF ITSELF AND ALL MEMBERS OF ITS GROUP, UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER ANCILLARY AGREEMENT, (A) NO MEMBER OF THE ADP GROUP, THE DEALER GROUP OR ANY OTHER PERSON IS, IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR IN ANY OTHER AGREEMENT OR DOCUMENT, MAKING ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, TO ANY PARTY OR ANY MEMBER OF ANY GROUP IN ANY WAY WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THE BUSINESS, ASSETS, CONDITION OR PROSPECTS (FINANCIAL OR OTHERWISE) OF, OR ANY OTHER MATTER INVOLVING, ANY ADP ASSETS, ANY ADP LIABILITIES, THE ADP BUSINESS, ANY DEALER ASSETS, ANY DEALER LIABILITIES OR THE DEALER BUSINESS, (B) EACH PARTY AND EACH MEMBER OF EACH GROUP SHALL TAKE ALL OF THE ASSETS, THE BUSINESS AND LIABILITIES TRANSFERRED TO OR ASSUMED BY IT PURSUANT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT ON AN “AS IS, WHERE IS” BASIS, AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR OTHERWISE ARE HEREBY EXPRESSLY DISCLAIMED, AND (C) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY APPLICABLE ANCILLARY AGREEMENT, NONE OF ADP, DEALER OR ANY MEMBERS OF THE ADP GROUP OR DEALER GROUP OR ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO ANY OF THE   41 -------------------------------------------------------------------------------- PRE-DISTRIBUTION TRANSACTIONS OR THE DISTRIBUTION OR THE ENTERING INTO OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, EACH PARTY AND EACH MEMBER OF EACH GROUP SHALL BEAR THE ECONOMIC AND LEGAL RISK THAT ANY CONVEYANCES OF ASSETS SHALL PROVE TO BE INSUFFICIENT OR THAT THE TITLE OF ANY MEMBER OF ANY GROUP TO ANY ASSETS SHALL BE OTHER THAN GOOD AND MARKETABLE AND FREE FROM ENCUMBRANCES. ARTICLE IX TERMINATION Section 9.1 Termination. This Agreement may be terminated by ADP in its sole discretion at any time prior to the consummation of the Distribution. Section 9.2 Effect of Termination. In the event of any termination of this Agreement prior to consummation of the Distribution, neither Party (nor any of its directors or officers) shall have any Liability or further obligation to the other Party. ARTICLE X MISCELLANEOUS Section 10.1 Complete Agreement; Representations. (a) This Agreement, together with the Exhibits and Schedules hereto and the other Ancillary Agreements, constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. (b) ADP represents on behalf of itself and each other member of the ADP Group and Dealer represents on behalf of itself and each other member of the Dealer Group as follows: (i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform each of this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated by such agreements; and (ii) this Agreement has been duly executed and delivered by such Person (if such Person is a Party) and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other Party), and each of the Ancillary Agreements to which it is or will be a party is or will be duly executed and delivered by it and will   42 -------------------------------------------------------------------------------- constitute a valid and binding agreement of it enforceable in accordance with the terms thereof (assuming the due execution and delivery thereof by the other party or parties to such Ancillary Agreements), except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to creditors’ rights generally and by general equitable principles. Section 10.2 Costs and Expenses. Except as expressly provided in this Agreement or any Ancillary Agreement, and except with respect to the Transaction Expenses (defined below) set forth on Schedule 10.2 to be borne by Dealer, the ADP Group shall bear all costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby (the “Transaction Expenses”) to the extent such costs and expenses are incurred on or prior to the Distribution Date. Except as expressly provided in this Agreement, any Ancillary Agreement or Schedule 10.2, each Party shall bear its respective Transaction Expenses to the extent incurred after the Distribution Date. Section 10.3 Governing Law. This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof. Section 10.4 Notices. All notices, requests, claims, demands and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers: If to ADP or any member of the ADP Group, to: Automatic Data Processing, Inc. One ADP Boulevard Roseland, New Jersey 07068 Attn: General Counsel Fax: (973) 974-3399 If to Dealer or any member of the Dealer Group, to: CDK Global Holdings, LLC 1950 Hassell Road Suite 1000 Hoffman Estates, IL 60169-6308 Attn: General Counsel Fax: (847) 781-9873 All such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described   43 -------------------------------------------------------------------------------- above to the address as provided in this section, be deemed given upon receipt. Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party. Section 10.5 Amendment, Modification or Waiver. (a) Prior to the Effective Time, this Agreement may be amended, modified, waived, supplemented or superseded, in whole or in part, by ADP in its sole discretion by execution of a written amendment delivered to Dealer. Subsequent to the Effective Time, this Agreement may be amended, modified, supplemented or superseded only by an instrument signed by duly authorized signatories of both Parties. (b) Following the Effective Time, any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative. Section 10.6 No Assignment; Binding Effect; No Third Party Beneficiaries. (a) Neither this Agreement nor any right, interest or obligation hereunder may be assigned by either Party hereto without the prior written consent of the other Party hereto and any attempt to do so will be void, except that following the Effective Time each Party hereto may assign any or all of its rights, interests and obligations hereunder to an Affiliate; provided that any such Affiliate agrees in writing to be bound by all of the terms, conditions and provisions contained herein; provided, further, that any such assignment shall not relieve the assigning party of its obligations or liabilities hereunder. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and permitted assigns. (b) Except for the provisions of Article IV relating to indemnification, the terms and provisions of this Agreement are intended solely for the benefit of each Party hereto and their respective Affiliates, successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person. Section 10.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.   44 -------------------------------------------------------------------------------- Section 10.8 Negotiation. In the event that any dispute arises between the Parties that cannot be resolved, either Party shall have the right to refer the dispute for resolution to the chief financial officers of the Parties by delivering to the other Party a written notice of such referral (a “Dispute Escalation Notice”). Following receipt of a Dispute Escalation Notice, the chief financial officers of the Parties shall negotiate in good faith to resolve such dispute. In the event that the chief financial officers of the Parties are unable to resolve such dispute within fifteen (15) business days after receipt of the Dispute Escalation Notice, either Party shall have the right to refer the dispute to the chief executive officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief executive officers of the Parties are unable to resolve such dispute within thirty (30) business days after the date of the Dispute Escalation Notice, either Party shall have the right to commence litigation in accordance with Section 10.10. The Parties agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent Action. Section 10.9 Specific Performance. From and after the Distribution, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Parties agree that the Party or Parties to this Agreement or such Ancillary Agreement who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its or their rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that, from and after the Distribution, the remedies at law for any breach or threatened breach of this Agreement or any Ancillary Agreement, including monetary damages, are inadequate compensation for any loss, that any defense in any action for specific performance that a remedy at law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived. Section 10.10 New York Forum. Subject to the prior exhaustion of the procedures set forth in Section 10.8, each of the Parties agrees that, notwithstanding anything herein, all Actions arising out of or in connection with this Agreement or any Ancillary Agreement (except to the extent any such Ancillary Agreement provides otherwise), or for recognition and enforcement of any judgment arising out of or in connection with the foregoing agreements, shall be tried and determined exclusively in the state or federal courts in the State of New York, County of New York, and each of the Parties hereby irrevocably submits with regard to any such Action for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Parties hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such Action: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) any claim that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such Action, (ii) venue is not proper in any of the aforesaid   45 -------------------------------------------------------------------------------- courts and (iii) this Agreement or any such Ancillary Agreement, or the subject matter hereof or thereof, may not be enforced in or by any of the aforesaid courts. Each of the Parties agrees that mailing of process or other papers in connection with any such Action in the manner provided in Section 10.4 or any other manner as may be permitted by Law shall be valid and sufficient service thereof. Section 10.11 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS HEREIN. Section 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 interpretation of this Agreement. Section 10.13 Severability. If any provision or any portion of any provision of this Agreement shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement shall not be affected thereby. If the application of any provision or any portion of any provision of this Agreement to any Person or circumstance shall be held invalid or unenforceable, the application of such provision or portion of such provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby. Section 10.14 No Set-Off. Each Party’s obligation to pay fees or make any other required payments under this Agreement shall not be subject to any right of offset, set-off, deduction or counterclaim, however arising, including, without limitation, pursuant to any claims under any of the Ancillary Agreements. [Remainder of page intentionally left blank]   46 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.   AUTOMATIC DATA PROCESSING, INC. By:   /s/ Michael A. Bonarti   Name:   Michael A. Bonarti   Title:   Vice President CDK Global Holdings, LLC By:   /s/ Jan Siegmund   Name:   Jan Siegmund   Title:   Vice President and Controller                                                                   [Signature Page – Separation and Distribution Agreement] -------------------------------------------------------------------------------- Schedule 2.3(c)(i) ADP Assigned Agreements All contracts with third parties entered into prior to the date of the foregoing Separation Agreement that were executed by a member of the ADP Group, but which relate solely to the Dealer Business, shall be deemed assigned by such ADP Group member to the Dealer Group, notwithstanding that such contracts are not identified on this Schedule. -------------------------------------------------------------------------------- Schedule 2.3(c)(ii) Dealer Assigned Agreements All contracts with third parties entered into prior to the date of the foregoing Separation Agreement that were executed by an entity that is now (or pursuant to the Separation and Distribution, will become) a member of the Dealer Group, but which relate solely to the ADP Business, shall be deemed to be assigned by such entity to the ADP Group, notwithstanding that such contracts are not identified on this Schedule. -------------------------------------------------------------------------------- Schedule 2.3(d) Surviving ADP Group and Dealer Group Agreements Leases     1. Guaranty given by Automatic Data Processing, Inc., commencing as of September 13, 2002 and expiring on September 30, 2017,1 with respect to the real property lease between Digital Motorwork L.P. and TPG-Park 22 LLC (successor in interest to Walton Stacy Investors III, L.P.) for 8601 Ranch Road 2222, Austin, TX.     2. Indemnity Agreement made by Automatic Data Processing, Inc., commencing as of September 1, 2013 and expiring on August 31, 2018, with respect to the real property lease between ADP Canada Co. (successor in interest to ADP Dealer Services, Ltd. and Amexon Property Management Inc. (successor in interest to 1200/1210/1220 Sheppard Avenue East Limited).     3. Guaranty given by Automatic Data Processing, Inc., commencing as of December 3, 2010 and expiring on March 31, 2015, with respect to the real property lease between ADP Dealer Services Deutschland GmbH. and IAK Dritte Immobilienfonds Koln GmbH & Co. Projekte Ludwigshafen/ Wulfrath KG for 1 ADP Strasse 42489 Wulfrath, Germany.     4. Standard Industrial Lease dated as of May 15, 2012 and expiring on October 31, 2017, between TA/Western, LLC (as predecessor-in-interest to Teachers Insurance and Annuity Association of America, For the Benefit of The Real Estate Account, as landlord, and ADP, Inc. relating to the leasing of premises located at 13926 Equitable Road, Cerritos, California 90703.     5. Lease Agreement dated as of September 17, 2013 and expiring on March 31, 2019, between 500 Woodward LLC, as landlord, and ADP, Inc., as amended by that certain First Amendment to Lease Agreement dated as of February 24, 2014 relating to the leasing of premises located at 500 Woodward Avenue, Detroit, MI.     6. Agreement of Lease dated August 29, 2013 and expiring on October 14, 2016, between 2000 Ponce De Leon Square, Inc., as landlord, and ADP, Inc., as tenant, relating to the leasing of premises located at 2000 Ponce De Leon Boulevard, Suite 103, Coral Gables, Florida, 33134.     1  Expiration dates reflect the expiration of the current lease terms. -------------------------------------------------------------------------------- Schedule 2.3(d) (Cont’d)     7. Office Lease dated as of July 30, 1997 and expiring on June 30, 2015, between 2550 Gray Falls, Inc. (predecessor-in-interest to LandPark Commercial, LLC), as landlord, and Traver Technologies, Inc. (predecessor-in-interest to ADP, Inc., as tenant, as amended by that certain Landlord Consent to Assignment and Assumption and Amendment to Lease dated November 30, 2000, as amended by that certain Second Amendment to Lease dated December 23, 2004, as amended by that certain Third Amendment to Lease dated June 28, 2005, as amended by that certain Fourth Amendment to Lease dated November 19, 2010, as amended by that certain Amendment No. 5 to Lease dated August 4, 2011, and as amended by that certain Amendment No. 6 to Lease dated July 10, 2012, relating to that certain premises located at 2550 Gray Falls, Suite 400, Houston, TX 77077.     8. Lease dated October 31, 2003 and expiring on February 28, 2015, between Highlands Group of Madison, LLC, as landlord, and ADP, Inc., as tenant, as amended by that certain Letter Agreement dated November 5, 2008, and that certain Lease Extension Notice and Agreement dated September 28, 2011, relating to the leasing of premises located at 2985 Triverton Pike Drive, Fitchburg, Wisconsin 53711.     9. Lease dated as of October 25, 2007 and expiring on November 30, 2016, by and between Paino Associates, LLC, as landlord, and ADP, Inc., as tenant, as amended by that certain First Amendment and Modification of Lease dated as of August 6, 2010, and as amended by that certain Second Amendment and Modification of Lease dated as of September 12, 2013, relating to that certain premises located at 23 Midstate Drive., Auburn, MA 01501.     10. Standard Office Lease Agreement dated as of July 10, 1996 and expiring February 29, 2016, by and between Mid-Cities Partners, Ltd. (predecessor-in-interest to MLMT 2005-LC1 Freeway Offices, LLC), as landlord, and ADP, Inc., as tenant, as amended by that certain First Amendment to Lease Agreement dated as of March 1, 2000, as amended by that certain Second Amendment to Lease Agreement dated as of April 1, 2004, as amended by that certain Third Amendment to Lease Agreement dated as of May 19, 2005, as amended by that certain Fourth Amendment to Lease dated November 10, 2011, and as amended by that certain Fifth Amendment to Lease dated as of October 29, 2012, relating to that certain premises located at 4001 Airport Freeway, Suite 300 & 400 Bedford, TX 76061.     11. Limited Delegation of Financial Obligations given by Automatic Data Processing, Inc. covering the period commencing as of July 1, 1997 and expiring on September 30, 2014, with respect to those certain Agreements for Guarantee of Deductible Reimbursement & Premium Payments (numbered respectively 2145, 2781, 3475, 3960, 6810, 7149, 0504), by and between Liberty Mutual Insurance Company, its parents, subsidiaries and affiliates, on the one hand, and Automatic Data Processing, Inc., on the other hand. -------------------------------------------------------------------------------- Schedule 2.3(f) Guaranty Fees   Agreement Description    Monthly fee*   I. Leases    1.    Guaranty given by Automatic Data Processing, Inc., commencing as of September 13, 2002 and expiring on September 30, 2017, with respect to the real property lease between Digital Motorwork L.P. and TPG-Park 22 LLC (successor in interest to Walton Stacy Investors III, L.P.) for 8601 Ranch Road 2222, Austin, TX.    $ 1,279.74    2.    Indemnity Agreement made by Automatic Data Processing, Inc., commencing as of September 1, 2013 and expiring on August 31, 2018, with respect to the real property lease between ADP Canada Co. (successor in interest to ADP Dealer Services, Ltd. And Amexon Property Management Inc. (successor in interest to 1200/1210/1220 Sheppard Avenue East Limited).    $ 223.30    3.    Guaranty given by Automatic Data Processing, Inc., commencing as of December 3, 2010 and expiring on March 31, 2015, with respect to the real property lease between ADP Dealer Services Deutschland GmbH. and IAK Dritte Immobilienfonds Koln GmbH & Co. Projekte Ludwigshafen/ Wulfrath KG for 1 ADP Strasse 42489 Wulfrath, Germany.    $ 397.25    4.    Standard Industrial Lease dated as of May 15, 2012 and expiring on October 31, 2017, between TA/Western, LLC (as predecessor-in-interest to Teachers Insurance and Annuity Association of America, For the Benefit of The Real Estate Account, as landlord, and ADP, Inc. relating to the leasing of premises located at 13926 Equitable Road, Cerritos, California 90703.    $ 90.49        *  Fees to be invoiced on a quarterly basis, with payment due within 30 days of invoice, and payable so long as the guaranty remains in effect. -------------------------------------------------------------------------------- Schedule 2.3(f) (Cont’d)   Agreement Description    Monthly fee*   5.    Lease Agreement dated as of September 17, 2013 and expiring on March 31, 2019, between 500 Woodward LLC, as landlord, and ADP, Inc., as amended by that certain First Amendment to Lease Agreement dated as of February 24, 2014 relating to the leasing of premises located at 500 Woodward Avenue, Detroit, MI.    $ 559.65    6.    Agreement of Lease dated August 29, 2013 and expiring on October 14, 2016, between 2000 Ponce De Leon Square, Inc., as landlord, and ADP, Inc., as tenant, relating to the leasing of premises located at 2000 Ponce De Leon Boulevard, Suite 103, Coral Gables, Florida, 33134.    $ 70.26    7.    Office Lease dated as of July 30, 1997 and expiring on June 30, 2015, between 2550 Gray Falls, Inc. (predecessor-in-interest to LandPark Commercial, LLC), as landlord, and Traver Technologies, Inc. (predecessor-in-interest to ADP, Inc., as tenant, as amended by that certain Landlord Consent to Assignment and Assumption and Amendment to Lease dated November 30, 2000, as amended by that certain Second Amendment to Lease dated December 23, 2004, as amended by that certain Third Amendment to Lease dated June 28, 2005, as amended by that certain Fourth Amendment to Lease dated November 19, 2010, as amended by that certain Amendment No. 5 to Lease dated August 4, 2011, and as amended by that certain Amendment No. 6 to Lease dated July 10, 2012, relating to that certain premises located at 2550 Gray Falls, Suite 400, Houston, TX 77077.    $ 45.50    8.    Lease dated October 31, 2003 and expiring on February 28, 2015, between Highlands Group of Madison, LLC, as landlord, and ADP, Inc., as tenant, as amended by that certain Letter Agreement dated November 5, 2008, and that certain Lease Extension Notice and Agreement dated September 28, 2011, relating to the leasing of premises located at 2985 Triverton Pike Drive, Fitchburg, Wisconsin 53711.    $ 25.64        *  Fees to be invoiced on a quarterly basis, with payment due within 30 days of invoice, and payable so long as the guaranty remains in effect. -------------------------------------------------------------------------------- Schedule 2.3(f) (Cont’d)   Agreement Description    Monthly fee*   9.    Lease dated as of October 25, 2007 and expiring on November 30, 2016, by and between Paino Associates, LLC, as landlord, and ADP, Inc., as tenant, as amended by that certain First Amendment and Modification of Lease dated as of August 6, 2010, and as amended by that certain Second Amendment and Modification of Lease dated as of September 12, 2013, relating to that certain premises located at 23 Midstate Drive., Auburn, MA 01501.    $ 20.27    10.    Standard Office Lease Agreement dated as of July 10, 1996 and expiring February 29, 2016, by and between Mid-Cities Partners, Ltd. (predecessor-in-interest to MLMT 2005-LC1 Freeway Offices, LLC), as landlord, and ADP, Inc., as tenant, as amended by that certain First Amendment to Lease Agreement dated as of March 1, 2000, as amended by that certain Second Amendment to Lease Agreement dated as of April 1, 2004, as amended by that certain Third Amendment to Lease Agreement dated as of May 19, 2005, as amended by that certain Fourth Amendment to Lease dated November 10, 2011, and as amended by that certain Fifth Amendment to Lease dated as of October 29, 2012, relating to that certain premises located at 4001 Airport Freeway, Suite 300 & 400 Bedford, TX 76061.    $ 357.99    11.    Limited Delegation of Financial Obligations given by Automatic Data Processing, Inc. covering the period commencing as of July 1, 1997 and expiring on September 30, 2014, with respect to those certain Agreements for Guarantee of Deductible Reimbursement & Premium Payments (numbered respectively 2145, 2781, 3475, 3960, 6810, 7149, 0504), by and between Liberty Mutual Insurance Company, its parents, subsidiaries and affiliates, on the one hand, and Automatic Data Processing, Inc., on the other hand.    $ 3,125.00        *  Fees to be invoiced on a quarterly basis, with payment due within 30 days of invoice, and payable so long as the guaranty remains in effect. -------------------------------------------------------------------------------- Schedule 4.3(d) ADP Statements in Information Statement   1. Letter to ADP stockholders from Carlos A. Rodriguez.   2. The information set forth under the first through the thirteenth, the penultimate sentence of the fourteenth, the seventeenth and the twenty-first questions and answers under “Summary—Questions and Answers About the Distribution.”   3. The information set forth under the first through the ninth and the thirteenth line items under “Summary—Distribution.”   4. The information set forth under the following headings: “Distribution—General” “Distribution—Reasons for the Distribution” “Distribution—The Number of Shares You Will Receive” “Distribution—When and How You Will Receive the Dividend” “Distribution—Material U.S. Federal Income Tax Consequences of the Distribution”   5. The information set forth under the heading “Executive Compensation—Compensation Discussion and Analysis.” -------------------------------------------------------------------------------- Schedule 10.2 Transaction Expenses Dealer shall be responsible for (i) all financing, commitment or other fees payable in connection with the Term Loan Facility and the Revolving Credit Facility, each entered into in connection with the Dealer Cash Dividend and (ii) any legal and administrative expenses incurred in connection therewith.
REAL ESTATE PURCHASE AGREEMENT PAUL M. KRAUS and CAROL A. KRAUS, husband and wife (“Purchaser”) hereby offer and agree to purchase from THE ANDERSONS FARM DEVELOPMENT CO., LLC, an Ohio limited liability company, of 480 W. Dussel Drive, Maumee, Ohio 43537 (“Seller”), the real estate commonly addressed as 1833 South Holland-Sylvania Road, Maumee, Ohio 43537 and legally described on the attached Exhibit A (the “Premises”), subject to the following terms and conditions. The Premises includes all buildings, improvements, fixtures, licenses, easements, privileges and appurtenances belonging to the Premises. The Premises specifically includes the rights of access provided to and from the Premises under the Driveway Access Easement attached hereto as Exhibit B (the “Driveway Easement”). NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: 1. Agreement to Sell. Seller at closing (as hereinafter defined) shall sell, transfer and convey to Purchaser, and Purchaser shall purchase, all of Seller’s right, title and interest in the Premises. 2. Purchase Price and Payment. The purchase price for the Premises is $630,000.00 (the “Purchase Price”), which shall be payable as follows: A. $373,167.90.00 credited at closing by Seller to Purchaser against the Purchase Price (the “Life Estate Credit”); and B. The balance of the Purchase Price, minus the Life Estate Credit, by certified check, or bank check or wire transfer at closing. C. The amount of the Life Estate Credit is set through June 30, 2006, and if closing occurs after June 30, 2006 the Life Estate Credit must be recalculated for the lives of both Purchasers in accordance with U.S. Treasury Regulation Section 25.2512-S by multiplying the Purchase Price by the applicable factors derived from IRS Publication 1457 using the applicable Internal Revenue Code Section 7520 rate of interest applicable as of the closing. 3. Conditions Precedent to Purchaser’s Obligations. Purchaser’s obligations under this Agreement are subject to the satisfaction of the following conditions: A. Title to the Premises shall be marketable in accordance with the title standards of the Ohio State Bar Association. B. Within fifteen (15) days of acceptance hereof, Seller shall furnish Purchaser, and Purchaser shall approve, a commitment for an owner’s policy of title insurance issued by Port Lawrence Title and Trust Company in the amount of the purchase price, showing good and marketable fee simple title to the Premises in Seller, free and clear of all liens or encumbrances, except those to be paid at closing, and subject to existing easements, agreements, reservations and restrictions, of record, including, without limitation, a Declaration of Covenants, Easements, Restrictions and Assessment Lien for The Andersons Farm Development Co. attached hereto as Exhibit C (the “Restrictions”); government ordinances and zoning regulations; and real estate taxes and assessments, both general and special, which are a lien but are no yet due and payable. Seller shall pay the cost of a guaranteed certificate of title only. Purchaser shall pay all additional title expense. If, based on the foregoing, Purchaser objects to the title to the Premises within seven (7) days of its receipt thereof, Seller shall have ten (10) days to remove such title defect from date of written notice or obtain title protection through such defect; or thereafter, Seller or Purchaser may terminate this Agreement. Absent Seller’s actual receipt of written notice of a title defect within the seven (7) day period, the terms and conditions of this Paragraph 3B shall be deemed waived and satisfied. C. Prior to closing, Purchaser shall approve the terms and conditions of the Lake License Agreement attached hereto as Exhibit D. 4. Title. A. Seller shall furnish Purchaser with a general warranty deed conveying the Premises to Purchaser, or Purchaser’s assignee, in recordable form at closing, subject to the Driveway Easement, the Restrictions and all other existing easements, agreements, reservations and restrictions, of record; governmental ordinances and zoning regulations; and real estate taxes and assessments, both general and special, which are a lien but not yet due and payable. Seller shall execute and deliver at closing the Lake License Agreement and the Water Facilities License Agreement. Seller shall record, if necessary, the Driveway Easement and the Restrictions prior to recording of the Deed. B. Purchaser acknowledges Seller may convey the Premises to Purchaser prior to Seller recording necessary utility easements burdening the Premises and for the benefit of other lots in the Seller’s subdivision. In consideration thereof, Purchaser agrees to execute and deliver to Seller any utility easements burdening the Premises reasonably required by Seller for the use and development of the Premises and all other parcels or lots with the Seller’s subdivision, provided such future easements do not unreasonably interfere with the use and enjoyment of the Premises. This obligation shall survive closing and delivery of the deed for the Premises. 5. Prorations and Charges. All real estate taxes and assessments affecting the Premises are paid by Purchaser according to the Lease (hereinafter defined). There shall be no tax proration between the parties for real estate tax and assessments at closing. Seller has no obligation to pay any unpaid real estate taxes and assessments specifically attributable to the Premises. 6. Risk of Casualty Loss. Until closing, Purchaser shall bear the sole risk of loss due to fire or other casualty at the Premises. If the Premises shall be damaged or destroyed by fire or other cause between the date this Offer is accepted and the date the transaction closes, Purchaser shall be entitled to all insurance proceeds and Purchaser and Seller shall proceed with the transaction. 7. Miscellaneous. A. This offer (sometimes referred to as Agreement) is subject to acceptance by the Purchaser and when accepted by Purchaser it shall constitute a contract binding Purchaser and Seller, their respective heirs, executors, administrators, successors and assigns, for the purchase and sale of the Premises upon the terms and conditions herein set forth. B. This transaction shall close on or before June 30, 2006; which date shall be known as the “closing date or closing” for the purposes of this Offer. C. If this Agreement is at any time cancelled or terminated through the failure of any conditions herein, this Agreement shall become null and void with no further liability on the part of either party. D. This offer shall expire on midnight of the tenth (10th) business day following the day this offer is delivered to Seller, unless accepted by Seller and delivered to Purchaser by that time. E. Purchaser has constructed, maintained, repaired and replaced all buildings, structures and improvements now located on the Premises pursuant to a long-term lease agreement dated January 2, 1979 (the “Lease”). Seller has no knowledge of the condition of the Premises. Purchaser acknowledges Seller is unable, for lack of information, to provide Purchaser any residential real estate seller disclosure form required by Ohio law. No representations or warranties have been made by Seller with respect to the condition of the Premises, the boundary lines or acreage of the Premises. Purchaser is purchasing the Premises in its present “AS IS” condition and “WHERE IS.” F. This Agreement contains the entire agreement between the parties and there are no agreements, representations or warranties, oral or written, which are not set forth herein. This Agreement may not be amended or modified except by a writing signed by both parties. Upon delivery and acceptance of the deed conveying the Premises to Purchaser, as provided in Paragraph 4 hereof, the Lease shall automatically and immediately terminate. G. Any written notices required hereunder may be personally delivered, telecopied, express mailed or mailed by certified mail, return receipt requested, to each party’s address listed above, and shall be effective on actual receipt. H. This Agreement shall not be assigned or transferred by Purchaser without Seller’s prior written consent. I. Purchaser warrants to Seller that Purchaser has had no dealings with any real estate broker, salesman, agent or finder, so as to entitle such party to a commission or fee in connection with the transaction contemplated by this Agreement. If for any reason such a commission or fee is due or claimed to be due as a result of Purchaser’s dealings, Purchaser shall pay such commission or fee, and Purchaser shall indemnify and hold Seller harmless from any and all claims, causes of action, liability, expense, damage or attorney’s fees related thereto. This indemnification and hold harmless agreement shall survive the closing and delivery of the deed. 1 PURCHASER:       Paul M. Kraus       Carol A. Kraus Date:      ACCEPTANCE The undersigned, Seller, hereby accepts the foregoing offer and agrees to sell the Premises and to otherwise comply with the Agreement. SELLER: THE ANDERSONS FARM DEVELOPMENT CO., LLC, an Ohio limited liability company       By:   THE ANDERSONS, INC.,     an Ohio corporation, its sole member           By:      Title:      Date:      2 EXHIBIT A LEGAL DESCRIPTION Lot 2 All That Part Of The Northwest 1/4 Of Section 23, Town 2, United States Reserve, City Of Toledo, Lucas County, Ohio, Bounded And Described As Follows: Commencing At A Metal Disk Found In Concrete At The Northwest Corner Of Said Section 23; Thence South 00º14’11” West A Distance Of 465.00 Feet Along The West Line Of Said Section 23 To A Point; Thence South 89º51’45” East A Distance Of 119.05 Feet Parallel To And 465.00 Feet South Of As Measured Perpendicular To The North Line Of Said Section 23 To A Point On The Centerline Of Holland Sylvania Road ; Thence Southwest A Distance Of 342.80 Feet Along A Curve To The Right Southwest Having A Radius Of 636.62 Feet And A Central Angle Of 30º51’07” And A Chord Of North 10º12’35” West 338.67 Feet To The Point Of Beginning; Thence South 54º22’36” East A Distance Of 120.15 Passing Through A Capped 5/8” Rod Set On The Southeasterly Right Of Way Line Of Holland Sylvania Road To A Point (Found 3/4” Pipe 0.45 Feet North And 0.54 Feet East); Thence South 89º34’54” East A Distance Of 234.54 Feet To A Capped 5/8” Rod Set; Thence North 71º14’29” East A Distance Of 130.06 Feet To A Capped 5/8” Rod Set; Thence North 17º57’25” East A Distance Of 152.49 Feet To A Capped 5/8” Rod Set; Thence North 62º57’25” East A Distance Of 78.60 Feet To A Point On The Meander Line Of A Lake; Thence South 54º04’38” East A Distance Of 135.76 Feet Along Said Meander Line To A Point; Thence South 74º38’38” East A Distance Of 81.28 Feet Continuing Along Said Meander Line To A Point; Thence South 16º09’33” West A Distance Of 311.54 Feet To A Capped 5/8” Rod Set; Thence North 62º35’52” West A Distance Of 364.26 Feet To A Mag Nail Set; Thence North 89º34’54” West A Distance Of 256.18 Feet To A Mag Nail Set; Thence North 54º22’36” West A Distance Of 121.64 Feet To A Point On The Centerline Of Holland Sylvania Road; Thence Northeast A Distance Of 10.14 Feet Along A Curve To The Left Having A Radius Of 636.62 Feet And A Central Angle Of 00º54’45” And A Chord Of North 26º05’31” East 10.14 Feet To The Point Of Beginning, Containing 2.051 Acres More Or Less Of Which 304.017 Square Feet More Or Less Lies Within The Right Of Way Of Holland Sylvania Road. Subject To All Highways, Easements And Restrictions. The Land Herein Described Is Part Of Land Owned By Anderson Elevator Company, Lucas County Tax Parcel #26-26771. Bearing Control Is Based On Previous Survey By G.M. Barton. This Description Was Prepared On March 3, 2006 From A Survey Of The Premises. 3
Exhibit 10.1(d)   NORTHWESTERN CORPORATION   Incentive Compensation and Severance Plan and Summary Plan Description   It is of utmost importance to NorthWestern Corporation and its affiliates (collectively, “NorthWestern”) to motivate and to retain employees who support its continued, successful operation of and who will lead NorthWestern through a successful Chapter 11 reorganization (the “Chapter 11 Case”).  Accordingly, NorthWestern has adopted this Incentive Compensation and Severance Plan (the “Plan”) to determine both –   •                  the incentive compensation that participating employees will receive pursuant to Section 3 of the Plan for calendar years 2003 and 2004 (“Incentive Payments”); and   •                  the severance benefits that participating employees will receive pursuant to Section 4 of the Plan in the event their employment with the Company terminates for any reason.   Throughout this Plan, the term “Company” is used when NorthWestern is acting, through its employees and Directors, in its corporate interest as employer, as Plan sponsor, or as settlor with respect to the Plan and any successor-in-interest to NorthWestern in such capacity.  The Plan uses the term “Plan Administrator” whenever the Company is acting in the limited capacity of making determinations, decisions, and interpretations associated with administering the Plan.   This Plan modifies and supersedes any and all prior incentive compensation and severance policies, plans and programs with respect to the Company’s employees.  To the extent any of such incentive compensation and severance policies, plans and programs conflict or differ in any way with this Plan, the provisions of this Plan governs except with respect to the severance provisions of the UPA.  The Plan is an “employee welfare benefit plan” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is not intended to be a “pension plan” as defined in Section 3(2)(A) of ERISA, and shall be administered so as not to be an ERISA pension plan.   1.                                       Plan Eligibility   You will be eligible to collect incentive compensation and severance benefits pursuant to Sections 3 and 4 of the Plan only if (i) the Company makes the discretionary decision in writing to include you in the Plan, and (ii) if required by the Company, you enroll in the Plan through execution of an agreement (the “Enrollment Agreement”) substantially in the form attached and made a part of this Plan.   --------------------------------------------------------------------------------   2.                                      Ineligibility for Plan Benefits   (a)                               Incentive Compensation.  You will become ineligible to receive incentive compensation pursuant to Section 3 of the Plan immediately upon terminating your employment with the Company for any reason.  This means that to qualify to collect Incentive Payments, you must remain an employee of the Company through the respective performance dates provided in the Plan.   (b)                               Severance Benefits.  You will be ineligible to receive severance benefits pursuant to Section 4 of the Plan if at the time your employment terminates, you are either ineligible pursuant to subsection (c) of this Section or classified by the Company as being in one or more of the following ineligible categories:   i.                  Foreign Employees, i.e., persons who are not on a U.S. payroll of the Company. ii.               Leased Employees, i.e., persons who are the Company’s leased employees, within the meaning of Internal Revenue Code Section 414(n). iii.            Persons Waiving Participation, i.e., persons to whom the Company did not extend the opportunity of participating in this Plan. iv.           Persons on Indefinite Unpaid Leaves of Absence, i.e., persons who are absent from work on indefinite unpaid leaves of absence expected to exceed thirty days, except leaves during which regular pay continues or to the extent eligibility is required by applicable law. v.              Employees with Individual Agreements, i.e., persons who have a right to collect severance benefits pursuant to a separate written agreement entered into with the Company after the date on which NorthWestern adopts this Plan, unless such an agreement provides expressly to the contrary. vi.           Employees who Resign, etc., i.e., persons whose employment terminates voluntarily, or due to Cause, retirement, death, or disability. vii.        Persons Discharged for Cause, i.e., persons whose employment is terminated for Cause, as determined by the Plan Administrator in its sole discretion based on the following types of misconduct: 1.                                                               willful failure to comply with written policies or lawful directives on material business matters;   2.                                                               willful statements or conduct adversely affecting the Company or causing (or being reasonably likely to cause) injury to the reputation, business or business relationships of the Company; or   3.                                                              illegal conduct, gross misconduct or, dishonesty, in each case which is willful and results (or is reasonably likely to result) in material damage to the Company.   viii.     Changed Decisions, i.e., persons for whom NorthWestern cancels a pending termination of employment at any time before employment actually terminates.   (c)                                Successor Employment, and Comparable Employment.  You will not be entitled to severance benefits under this Plan, if the Plan Administrator determines that a Successor Employer has offered you an Equivalent or Better Position to commence promptly   --------------------------------------------------------------------------------   following your termination of employment with NorthWestern, whether you accept the position or not.  A “Successor Employer” is: i.                  any entity that assumes operations or functions formerly carried out by the Company (such as the buyer of a facility or any entity to which a Company operation or function has been outsourced); ii.               any affiliate of the Company; or iii.            any entity making the job offer at the request of the Company (such as a joint venture of which the Company or an affiliate is a member). “Equivalent or Better Position” means employment that does not involve either a material reduction in compensation or benefits, a material reduction in responsibilities, duties or support, or relocation to a primary place of employment of greater than fifty (50) miles from the current primary place of employment.   3.                                      Eligible Employees Incentive Payments   In general, Incentive Payments will be approximately 60% of normal, total targeted cumulative incentives for all participants for each of Plan Years 2003 and 2004.   (a)                               Officers   An Incentive Payment will be provided to each Officer equal to a fixed multiple of the Officer’s targeted, annual incentive.  The following amounts are payable upon the Company’s determination that the associated performance-based milestones have been achieved while the Officer is an active employee of the Company:   i.                  One-third of the total amount listed in the Plan with respect to the Officer shall be paid as soon as practicable following the entry of any order by the Court approving a disclosure statement.   ii.               The second one-third of the total amount listed in the Plan with respect to the Officer shall be paid as soon as practicable following the effective date of the Debtor’s confirmed reorganization plan.   iii.            The final one-third of the total amount listed in the Plan with respect to the Officer shall be paid as of January 31, 2005.   If an Officer voluntarily resigns from employment with the Company before the effective date of the Company’s reorganization plan, the Officer will both forfeit any future right to collect benefits pursuant to the Plan, and will promptly return to the Company the full amount of any benefits previously paid to the Officer pursuant to the Plan.   (b)                               Group 1 Employees   An Incentive Payment will be provided to each employee eligible for Group 1 Incentive Payments as described in the Plan.  Incentive Payments will vest on June 1, 2004 and will be paid on or after September 30, 2004 with respect to 2003 incentives.  Incentive Payments with respect to 2004 incentives will vest on January 1, 2005 and will be paid not later than January 31, 2005.   --------------------------------------------------------------------------------   (c)                                Group 2 Employees – All Other Employees   An Incentive Payment will be provided for all employees (other than Officers and Group 1 Employees), for calendar years 2003 and 2004, and will be funded at 40% of the cumulative, targeted annual incentive level for all such participants for each year.  Individual Incentive Payments will be based on individual performance and will be made not later than June 30, 2004 with respect to 2003 incentives and not later than January 31, 2005 with respect to 2004 incentives.(1)   4.                                      Severance Benefits   If the Company terminates the employment of an eligible employee without Cause (as defined in Section 2) directly in connection with NorthWestern’s post-petition corporate restructuring process, the Company, upon a properly executed release of claims, shall –   •                  make a lump sum cash severance payment to the employee in an amount determined pursuant to the guidelines set forth in the remainder of this Section; and   •                  provide the employee with healthcare and similar Company-provided group insurance, at no cost to the employee, for the number of months that serves as the multiple for calculating the employee’s cash severance payment.   Unless otherwise set forth in the release of claims, any cash payment due under this Section will be made within seven (7) business days from the date of an employee’s termination of employment.   (a)                               Officers   If an employee is an officer and qualifies for severance benefits under this Section, the Company will provide the employee with severance benefits.  The Company, without the mutual, written consent of the qualified officer, may not reduce the right to and amount of such severance benefits.   (b)                               Group 1 Employees   If an employee qualifies for severance benefits under this Section, the Company will provide the employee with severance benefits determined under the Plan.  The Company, without the mutual, written consent of the qualified employee, may not reduce the right to and amount of such severance benefits.   -------------------------------------------------------------------------------- (1) The right to these Incentive Payments shall be in addition to any pre-petition contractual rights that a Group 2 Employee may have to collect cash-based payments (which the Company shall pay in the ordinary course of business during the post-petition corporate restructuring process).   --------------------------------------------------------------------------------   (c)                                Group 2 (All other employee)   If an employee qualifies for severance benefits under this Section due to a termination of employment without Cause, the Company will provide such employees with severance benefits equal to the greater of –   i.                  1-week of salary for every full year of service with the Company, with a minimum of 4 weeks and a maximum of 26 weeks, or   ii.               if applicable, the severance benefits that such employee would be entitled to receive pursuant to the terms of UPA.(2)   5.                                      Reemployment   If you are re-employed by NorthWestern or a Successor Employer while severance benefits are still payable under the Plan, all such benefits will cease, except as otherwise specified by NorthWestern or the Successor Employer, as the case may be.  If you receive severance benefits after your eligibility ceases under the Plan due to reemployment, you must promptly repay any such severance benefits.   6.                                      Taxes   Taxes will be withheld from benefits under the Plan to the extent required by law.   7.                                      Relation to Other Plans   Any prior incentive compensation, severance, or similar plan of the Company that might apply to you is hereby modified as to you while you are eligible for Plan benefits.  Severance benefits under this Plan will not be counted as “compensation” for purposes of determining benefits under any other benefit plan, pension plan, or similar arrangement.  All such plans or similar arrangements, to the extent inconsistent with this Plan, are hereby so amended except the severance provisions of the UPA.   8.                                      Amendment or Termination   Acting through its Board of Directors, NorthWestern Corporation or any successor-in-interest to NorthWestern Corporation has the right, in its nonfiduciary settlor capacity, to amend the Plan or to terminate it at any time, prospectively, for any reason, without notice, including to discontinue or eliminate benefits; provided, however, any vested right to Incentive Payments under this Plan may not be eliminated.  No person has any right to Incentive Payments under this Plan until those Incentive Payments vest in accordance with the terms of the Plan.  Unless expressly provided otherwise herein, the Company may amend the Plan to provide greater or lesser benefits to particular employees by sending affected employees a letter or other notice setting forth the applicable benefit modification.   9.                                      Claims Procedures   (a)                               Claims Normally Not Required   Normally, you do not need to present a formal claim to receive benefits payable under this Plan.   -------------------------------------------------------------------------------- (2) The severance benefits portion of the Unit Purchase Agreement between Touch America Holdings, Inc., Montana Power Company and NorthWestern dated September 29, 2000 as amended (“UPA”) applies until it expires on February 15, 2004, at which time those employees covered by the UPA will be eligible for severance benefits only under the Plan.   --------------------------------------------------------------------------------   (b)                               Disputes   If any person (Claimant) believes that benefits are being denied improperly, that the Plan is not being operated properly, that fiduciaries of the Plan have breached their duties, or that the Claimant’s legal rights are being violated with respect to the Plan, the Claimant must file a formal claim with the Plan Administrator.  This requirement applies to all claims that any Claimant has with respect to the Plan, including claims against fiduciaries and former fiduciaries, except to the extent the Plan Administrator determines, in its sole discretion, that it does not have the power to grant all relief reasonably being sought by the Claimant.   (c)                                Time for Filing Claims   A formal claim must be filed within 90 days after the date the Claimant first knew or should have known of the facts on which the claim is based, unless the Plan Administrator in writing consents otherwise.   (d)                               Procedures   The Plan Administrator has adopted the procedures for considering claims, which it may amend from time to time, as it sees fit.  These procedures shall comply with all applicable legal requirements.  The right to receive benefits under this Plan is contingent on a Claimant using the prescribed claims procedures to resolve any claim.  Therefore, if a Claimant (or his or her successor or assign) seeks to resolve any claim by any means other than the prescribed claims provisions, he or she must repay all benefits received under this Plan and shall not be entitled to any further Plan benefits.   10.                               Plan Administration   (a)                               Discretion   The Plan Administrator is responsible for the general administration and management of the Plan and shall have all powers and duties necessary to fulfill its responsibilities, including, but not limited to, the discretion to interpret and apply the Plan and to determine all questions relating to eligibility for benefits.  The Plan shall be interpreted in accordance with its terms and their intended meanings.  However, the Plan Administrator and all Plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion they deem to be appropriate in their sole discretion, and to make any findings of fact needed in the administration of the Plan.  The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.   (b)                               Finality of Determinations   All actions taken and all determinations made in good faith by the Plan Administrator or by Plan fiduciaries will be final and binding on all persons claiming any interest in or under the Plan.  To the extent the Plan Administrator or any Plan fiduciary has been granted discretionary authority under the Plan, the Plan Administrator’s or Plan fiduciary’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter.   (c)                                Drafting Errors   If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent,   --------------------------------------------------------------------------------   or as determined by the Plan Administrator in its sole discretion, the provision shall be considered ambiguous and shall be interpreted by the Plan Administrator and all Plan fiduciaries in a fashion consistent with its intent, as determined in the sole discretion of the Plan Administrator.  The Plan Administrator shall amend the Plan retroactively to cure any such ambiguity.   (d)                               Fiduciary Disclosure Authority   No Plan fiduciary shall have the authority to answer questions about any pending or final business decision of the Company or any affiliate that has not been officially announced, to make disclosures about such matters, or even to discuss them, and no person shall rely on any unauthorized, unofficial disclosure.  Thus, before a decision is officially announced, no fiduciary is authorized to tell any person, for example, that he or she will or will not be terminated or that the Company will or will not offer severance benefits in the future.  Nothing in this subsection shall preclude any fiduciary from fully participating in the consideration, making, or official announcement of any business decision.   (e)                                Scope   This Section may not be invoked by any person to require the Plan to be interpreted in a manner inconsistent with its interpretation by the Plan Administrator or other Plan fiduciaries.   11.                               Costs and Indemnification   All costs of administering the Plan and providing Plan benefits will be paid by the Company, with one exception: Any expenses (other than arbitrator fees) incurred in resolving disputes with multiple Claimants concerning their entitlement to the same benefit may be charged against the benefit, which will be reduced accordingly, to the extent permitted by law.  To the extent permitted by applicable law and in addition to any other indemnities or insurance provided by the Company, the Company shall indemnify and hold harmless its (and its affiliates’) current and former officers, Directors, and employees against all expenses, liabilities, and claims (including legal fees incurred to defend against such liabilities and claims) arising out of their discharge in good faith of their administrative and fiduciary responsibilities with respect to the Plan.  Expenses and liabilities arising out of willful misconduct will not be covered under this indemnity.   12.                               Limitation on Employee Rights   This Plan shall not give any employee the right to be retained in the service of the Company or interfere with or restrict the right of the Company to discharge or retire the employee.   13.                               Governing Law   This Plan is a welfare plan subject to ERISA, and it shall be interpreted, administered, and enforced in accordance with that law.  To the extent that state law is applicable, the statutes and common law of the State of South Dakota (excluding any that mandate the use of another jurisdiction’s laws) shall apply.   14.                               Miscellaneous   Where the context so indicates, the singular will include the plural and vice versa.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.  Unless the context clearly indicates to the   --------------------------------------------------------------------------------   contrary, a reference to a statute or document shall be construed as referring to any subsequently enacted, adopted, or executed counterpart.   15.                               Statement of ERISA Rights   The following information required by ERISA is furnished by the Plan Administrator.   (a)                               General Plan Information   Name of Plan:   NorthWestern Corporation Incentive Compensation and Severance Plan Plan Administrator’s Name:   NorthWestern Corporation  Address and Phone Number:   125 South Dakota Avenue Sioux Falls, South Dakota 57104 Telephone: 605-978-2835 Employer Identification Number assigned by IRS:   46-0172280 Plan Number of the Plan:   <ASSIGN PLAN NUMBER> Type of Plan:   Incentive Compensation and Severance Pay Plan Type of Administration:   Employer Administration Name and Address of Registered Agent for Service of Legal Process   Plan Administrator Source of Contribution to the Plan:   General assets of NorthWestern Corporation Funding Medium:   General assets of NorthWestern Corporation Plan Fiscal Year Ends On:   December 31st   (b)                               Plan Modification, Amendment, And Termination   The Plan Administrator has the right to amend or terminate the Plan at any time in accordance with Section 8 above, with or without notice.  The consent of any employee is not required to terminate, modify, amend, or change the plan.   (c)                                Your Rights under ERISA   As a participant in the plan, you are entitled to certain rights and protections under ERISA.  Your rights include the following:   1.                                       Right to Examine Plan Documents:   You have the right to examine all plan documents, including the annual reports and plan descriptions filed with the U.S. Department of Labor.  The Plan Administrator will tell you where the plan documents are available for examination.  There will be no charge for examining plan documents.   --------------------------------------------------------------------------------   2.                                       Right to Obtain Copies of Plan Documents:   You have the right to obtain copies of all plan documents.  You should make your request in writing to the Plan Administrator.  There may be a reasonable charge for the copies.   3.                                       Right to Written Explanation of Denial:   If your claim for benefits under the plan is denied in whole or in part, you must be given a written explanation of the reason for denial.   4.                                       Right to Review:   You have the right to request a review and reconsideration of any denial of your claim for plan benefits.   5.                                       Other ERISA Rights:   You can protect your rights under ERISA.  For example, ERISA gives you the right to file suit in a state or federal court if your claim for benefits under the plan is denied or ignored.  You can also file suit in a federal court if you request plan documents and do not receive them within 30 days.  In such a case, the court will require the Plan Administrator to give you the plan documents you requested.  In some cases, the court could also require the Plan Administrator to pay you up to $110 a day until you receive the requested materials.   ERISA gives you rights and protections.  ERISA also imposes special obligations on the people (called “fiduciaries”) who operate this employee benefit plan.  The fiduciaries have a duty to protect the plan’s money and the interests of plan participants.  The named fiduciary is NorthWestern Corporation.  ERISA prohibits anyone from discriminating against you in any way to prevent you from receiving a plan benefit or from exercising your rights under ERISA.   If you believe that the fiduciaries have misused the plan’s money, or that you have been discriminated against for asserting your rights, you can ask for help from the U.S. Department of Labor.  You can also file suit in a federal court.  If you file a suit, the court will decide who must pay the court costs and legal fees.  If your suit is successful, the court may require the fiduciary to pay those costs and fees.   If you have any questions about your plan, you should contact the Plan Administrator.   If you have any questions about this statement of your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.   --------------------------------------------------------------------------------   Adopted and Approved     NORTHWESTERN CORPORATION           By:           Signature Date     Title:         Chairman and Chief Executive Officer     --------------------------------------------------------------------------------
Exhibit 10.40   FOURTH LOAN MODIFICATION AGREEMENT   This Fourth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of August 1, 2002, by and between SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton Executive Park, Suite 200, 222l Washington Street, Newton, Massachusetts 02462, doing business under the name “Silicon Valley East” (“Bank”) and MERCATOR SOFTWARE, INC., a Delaware corporation with its principal place of business at 45 Danbury Road, Wilton, Connecticut 06897(“Borrower”).   1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of June 22, 2001, evidenced by, among other documents, a certain Accounts Receivable Financing Agreement dated as of June 22, 2001, as amended by a certain Accounts Receivable Financing Modification Agreement dated as of September 18, 2001, as further amended by a certain Second Loan Modification Agreement dated as of November 28, 2001, as further amended by a certain Third Loan Modification Agreement dated June 28, 2002 (the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement. Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be referred to as the “Obligations”.   2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement and in a certain Intellectual Property Security Agreement dated June 22, 200l (the “IP Security Agreement”) (together with any other collateral security granted to Bank, the “Security Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.   3. DESCRIPTION OF CHANGE IN TERMS.   Modification to Loan Agreement. The Loan Agreement shall be amended by deleting Section 6.3(L) in its entirety and inserting in lieu thereof the following:   “(L) Maintain at all times an Adjusted Quick Ratio of at least 1.1 to 1.0, which Adjusted Quick Ratio will be tested by Bank on a monthly basis.”   4. FEES. Borrower shall pay to Bank a modification fee equal to Two Thousand Five Hundred Dollars ($2,500.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. The Borrower shall also reimburse Bank for all reasonable legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.   5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.   6. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.   7. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts under the Obligations.   8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement and the disclosure referenced on Exhibit A, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Banks agreement to modify the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future -------------------------------------------------------------------------------- modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.   9. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.   [signature page follows] 2 --------------------------------------------------------------------------------   This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above.   MERCATOR SOFTWARE, INC.   By /s/ Kenneth J. Hall Title EVP, CFO and Treasurer   SILICON VALLEY BANK   By /s/ David Reich Title SVP 3 --------------------------------------------------------------------------------   Exhibit A   Compliance Certificates previously furnished and furnished herewith to Silicon Valley Bank dated as follows:   June 30, 2001 September 18, 2001 September 30, 2002 December 31, 2001 March 31, 2002 June 30, 2002 September 20, 2002
QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.1 SIXTH AMENDMENT         This SIXTH AMENDMENT (this "Amendment"), dated as of April 9, 2003, is entered into by and among Huntsman International LLC (f/k/a Huntsman ICI Chemicals LLC), a Delaware limited liability company (the "Borrower"), Huntsman International Holdings LLC (f/k/a Huntsman ICI Holdings LLC), a Delaware limited liability company ("Holdings"), the undersigned financial institutions, including Deutsche Bank Trust Company Americas (formerly named Bankers Trust Company), in their capacities as lenders hereunder (collectively, the "Lenders," and each individually, a "Lender"), Deutsche Bank Trust Company Americas (formerly named Bankers Trust Company), as Lead Arranger, Administrative Agent ("Administrative Agent") for the Lenders and Sole Book Manager, Goldman Sachs Credit Partners L.P., as Syndication Agent and Co-Arranger and The Chase Manhattan Bank and UBS Warburg LLC (as successor to Warburg Dillon Read), as Co-Arrangers and as Co-Documentation Agents (collectively, the "Agents" and each individually, an "Agent"). Terms used herein and not otherwise defined herein shall have the same meanings as specified in the Credit Agreement (as defined below). RECITALS:         A. The Borrower, Holdings, the Lenders, the Agents and the Administrative Agent have heretofore entered into that certain Credit Agreement dated as of June 30, 1999, as amended by that certain First Amendment dated as of December 21, 2000, that certain Second Amendment dated as of March 5, 2001, that certain Third Amendment dated as of November 30, 2001, that certain Fourth Amendment dated as of March 15, 2002 and that certain Fifth Amendment dated as of February 7, 2003 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement").         B. The Borrower and Holdings wish, and the Lenders signatory hereto and the Agents and Administrative Agent are willing, to amend the Credit Agreement subject to the terms and conditions of this Agreement.         C. This Agreement constitutes a Loan Document and these Recitals shall be construed as part of this Agreement.         NOW, THEREFORE, in consideration of the recitals herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. Amendment of Credit Agreement.         The Credit Agreement is hereby amended as of the Sixth Amendment Effective Date as follows:         (a) Section 1.1 of the Credit Agreement is hereby amended by adding the following definitions in their proper alphabetical order:         "Sixth Amendment" means that certain Sixth Amendment to this Agreement dated as of April 9, 2003.         "Sixth Amendment Effective Date" has the meaning set forth in Section 2 of the Sixth Amendment.         (b) Section 4.5(e)(ii) of the Credit Agreement is hereby amended by adding the following new sentence immediately at the end of such section:         "Notwithstanding anything else in this Section 4.5(e)(ii) to the contrary, any prepayment of principal required to be made by the Borrower pursuant to Section 4.4(m)(ii) during the period beginning on the Sixth Amendment Effective Date and ending on May 15, 2003 in an amount not exceeding $200 million, shall be applied, first, in an amount equal to 17% of the Net Offering Proceeds thereof, to reduce pro rata the outstanding balance of the Domestic Revolving Loans and -------------------------------------------------------------------------------- Multicurrency Revolving Loans (in each case without any permanent reduction in the applicable Commitment), second shall be applied, subject to Section 4.5(c), to the Scheduled Term A Dollar Repayments, the Dollar Equivalent amount of the Scheduled Term A Euro Repayments, the Scheduled Term B Repayments and the Scheduled Term C Repayments due within the 16 month period following the date of such prepayment in direct order of maturity and thereafter, subject to Section 4.5(c), shall be applied in proportional amounts equal to the Term A Dollar Percentage, the Term A Euro Percentage, Term B Percentage and Term C Percentage (in each case, after giving effect to the prepayments made to the Scheduled Term A Dollar Repayments, the Scheduled Term A Euro Repayments, Scheduled Term B Repayments and Scheduled Term C Repayments due within such 16 month period as specified above), as the case may be, of such remaining prepayment, if any, and within each Term Loan, shall be applied to reduce the remaining Scheduled Term A Repayments, Scheduled Term B Repayments and Scheduled Term C Repayments on a pro rata basis (based upon the then remaining principal amount of such Scheduled Term A Dollar Repayments, Scheduled Term A Euro Repayments, Scheduled Term B Repayments and Scheduled Term C Repayments, respectively)."         (c) Section 8.2(o) of the Credit Agreement is hereby amended by (i) adding the parenthetical "(including intraday cash management lines relating thereto)" immediately following the word "Indebtedness" where such word first appears in such Section; and (ii) adding the parenthetical "(other than intraday cash management lines relating thereto)" immediately following the word "Indebtedness" in each other place where such word appears in such Section.         SECTION 2.    Conditions to Effectiveness of the Amendment. The provisions of this Amendment shall become effective upon the date of the satisfaction of all of the conditions set forth in this Section 2 (the "Sixth Amendment Effective Date"):          2.1  Proper Execution and Delivery of Amendment. Borrower, Holdings, the Administrative Agent and the Required Lenders shall have duly executed and delivered to Administrative Agent this Amendment.          2.2  Delivery of Credit Party Documents. On or before the date hereof, Borrower shall deliver or cause to be delivered to Administrative Agent the following with respect to each of Borrower and Holdings, each, unless otherwise noted, dated the Sixth Amendment Effective Date:         (a) Certified copies of its Certificate of Formation, together with a good standing certificate from the Secretary of State of the jurisdiction of its incorporation and each other state in which it is qualified as a foreign corporation to do business and where failure to be so qualified would have a Material Adverse Effect and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such states, each dated a recent date prior to the Sixth Amendment Effective Date or, in the event that any such document has been previously delivered by the Borrower to the Administrative Agent, a certificate executed by a Responsible Officer of the Borrower indicating that no change has occurred with respect to such document;         (b) Copies of its operating agreement or limited liability company agreement, certified by its corporate secretary or an assistant secretary or a certificate of the lack of any change thereto since the Initial Borrowing Date or, in the event that any such document has been previously delivered by the Borrower to the Administrative Agent, a certificate executed by a Responsible Officer of the Borrower indicating that no change has occurred with respect to such document;         (c) Resolutions of its members, manager or board of managers (i) approving and authorizing the execution, delivery and performance of this Amendment, and (ii) approving and authorizing the execution, delivery and performance of the other Loan Documents to which it is a party and all transactions related thereto, in each case certified as of the Sixth Amendment Effective Date by its 2 -------------------------------------------------------------------------------- corporate secretary or an assistant secretary as being in full force and effect without modification or amendments;         (d) Signature and incumbency certificates of its officers executing this Amendment; and         (e) Such other instruments and documents in respect of such matters as Administrative Agent shall reasonably request.          2.3  Representations and Warranties; Default; Officer's Certificate. After giving effect to this Amendment, the representations and warranties set forth in Article VI of the Agreement shall be true and correct, except to the extent such representations and warranties are expressly made as of a specified date in which event such representations and warranties shall be true and correct as of such specified date, and no Event of Default or Unmatured Event of Default shall have occurred or be continuing and Administrative Agent shall have received a certificate executed by a Responsible Officer on behalf of Borrower, dated the Sixth Amendment Effective Date stating that, after giving effect to this Amendment, the representations and warranties set forth in Article VI of the Agreement are true and correct as of the date of the certificate, except to the extent such representations and warranties are expressly made as of a specified date in which event such representations and warranties shall be true and correct as of such specified date, that no Event of Default or Unmatured Event of Default has occurred and is continuing, and that the conditions of this Section 2 hereof have been fully satisfied or waived.          2.4  Fees. Borrower shall have paid to Administrative Agent and the Lenders all costs, fees and expenses (including, without limitation, reasonable legal fees and expenses) payable to Administrative Agent and the Lenders to the extent then due, including, without limitation, pursuant to Section 4 of this Amendment.          2.5  Corporate Proceedings. All corporate and legal proceedings and all instruments and agreements in connection with the execution and delivery of this Amendment shall be satisfactory in form and substance to Administrative Agent and the Required Lenders and Administrative Agent and all Lenders shall have received all information and copies of all documents and papers, including records of corporate proceedings, governmental approvals, good standing certificates and bring-down telegrams or certificates, if any, which Administrative Agent or such Lender reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or Governmental Authorities.         Each Lender and the Administrative Agent hereby agrees that by its execution and delivery of its signature page hereto, such Person approves of and consents to each of the matters set forth in Section 2 which must be approved by, or which must be satisfactory to, the Required Lenders or such Person, as the case may be; provided that, in the case of any agreement or document which must be approved by, or which must be satisfactory to, the Required Lenders, Administrative Agent or Borrower shall have delivered a copy of such agreement or document to such Person if so requested on or prior to the Sixth Amendment Effective Date.         SECTION 3. References to and Effect on the Credit Agreement.    On and after the date hereof each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import, and each reference to the Credit Agreement, as the case may be, in the Loan Documents and all other documents (the "Ancillary Documents") delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement as amended hereby.         Except as specifically amended above, the Credit Agreement, and the other Loan Documents and all other Ancillary Documents shall remain in full force and effect and are hereby ratified and confirmed. 3 --------------------------------------------------------------------------------         The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders or Administrative Agent under the Credit Agreement, the Loan Documents or the Ancillary Documents.         SECTION 4. Fees, Costs and Expenses.    (a) Borrower agrees to pay a fee to the Administrative Agent on or prior to the Sixth Amendment Effective Date on behalf of each Lender which has executed and delivered this Amendment on or prior to 5:00 p.m. E.S.T. on April 9, 2003 equal to .05% times the sum of the Domestic Revolving Commitment, Multicurrency Revolving Commitment and outstanding Term Loans of such Lender as in effect under the Credit Agreement on the Sixth Amendment Effective Date, such fee to be due and payable on the Sixth Amendment Effective Date; and (b) Borrower also agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the negotiation, preparation, printing, typing, reproduction, execution and delivery of this Amendment and all other documents furnished pursuant hereto or in connection herewith, including without limitation, the reasonable fees and out-of-pocket expenses of Winston & Strawn, special counsel to Administrative Agent and any local counsel retained by Administrative Agent relative thereto or the reasonable allocated costs of staff counsel as well as the fees and out-of-pocket expenses of counsel, independent public accountants and other outside experts retained by Administrative Agent in connection with the administration of this Amendment. SECTION 5. Miscellaneous.          5.1  Execution in Counterparts. This Amendment may be executed in one or more counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same document with the same force and effect as if the signatures of all of the parties were on a single counterpart, and it shall not be necessary in making proof of this Amendment to produce more than one (1) such counterpart. Delivery of an executed signature page to this Amendment by telecopy shall be deemed to constitute delivery of an originally executed signature page hereto.          5.2  Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.          5.3  Headings. Headings used in this Amendment are for convenience of reference only and shall not affect the construction of this Amendment.          5.4  Integration. This Amendment, the other agreements and documents executed and delivered pursuant to this Amendment and the Credit Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof.          5.5  Binding Effect. This Amendment shall be binding upon and inure to the benefit of and be enforceable by the Borrower, the Administrative Agent and the Lenders and their respective successors and assigns. Except as expressly set forth to the contrary herein, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the Borrower, the Administrative Agent and the Lenders and their respective successors and permitted assigns. [signature page follows] 4 --------------------------------------------------------------------------------         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the day and year first above written. 5 -------------------------------------------------------------------------------- QuickLinks Exhibit 10.1 SIXTH AMENDMENT
Exhibit 10.3 EXECUTION COPY SECURITY AGREEMENT THIS SECURITY AGREEMENT (this “Security Agreement”), is entered into as of February 11, 2011, among Impax Laboratories, Inc., a Delaware corporation (the “Borrower”), each of the Domestic Subsidiaries of the Borrower from time to time party hereto (individually a “Guarantor” and collectively the “Guarantors”; the Guarantors, together with the Borrower, individually an “Obligor” and collectively the “Obligors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Administrative Agent under the Credit Agreement referred to below (in such capacity, the “Administrative Agent”) for the several banks and other financial institutions as may from time to time become parties to such Credit Agreement (individually a “Lender” and collectively the “Lenders”). RECITALS WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Guarantors, the Lenders party thereto and the Administrative Agent, the Lenders have agreed to make Loans and to issue and/or acquire participation interests in Letters of Credit upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement and the obligations of the Lenders to make their respective Loans and to issue and/or acquire participation interests in Letters of Credit under the Credit Agreement that the Obligors shall have executed and delivered this Security Agreement to the Administrative Agent for the ratable benefit of the Lenders and the other Secured Parties. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. (a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code from time to time in effect in the State of New York (the “UCC”) are used herein as so defined: Accession, Account, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Good, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Product, Fixture, General Intangible, Good, Instrument, Inventory, Investment Property, Letter-of-Credit Right, Manufactured Home, Payment Intangible, Proceeds, Securities Account, Securities Intermediary, Software, Supporting Obligation and Tangible Chattel Paper.     --------------------------------------------------------------------------------   (b) In addition, the following term shall have the following meaning: “Excluded Property” means (i) Equity Interests of any Foreign Subsidiary owned directly by any Credit Party in excess of sixty-five percent (65%) of such Equity Interests and one hundred percent (100%) of the Equity Interests of any Foreign Subsidiary not owned directly by any Obligor to the extent the inclusion of such Equity Interests would cause any amount to be includable in the taxable income of any Obligor under Section 951 of the Internal Revenue Code, (ii) all real property interests, (iii) any property to the extent that such grant of a security interest is prohibited by any Requirements of Law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such Requirement of Law, except to the extent that such Requirement of Law providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law (including, without limitation, Sections 9-406, 9- 407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity); provided, that for purposes of the foregoing, it is understood and agreed that, to the extent reasonably requested by the Administrative Agent, the applicable Obligor will use its commercially reasonable efforts to obtain a consent if permissible by the applicable Requirement of Law, (iv) any lease, license or other agreement to the extent the grant of a security interest therein would result in an invalidation thereof or constitute a breach or violation of such agreement (other than any non-assignment of payment intangibles provisions that is unenforceable under the UCC) or to the extent that such security interests would result in adverse tax or accounting consequences, as reasonably determined by the Borrower; provided, that for purposes of the foregoing, it is understood and agreed that, to the extent reasonably requested by the Administrative Agent, the applicable Obligor will use its reasonable efforts to obtain any necessary consents to permit the grant of a security interest hereunder if permissible by the applicable lease, license or other agreement, (v) any property subject to a Permitted Lien (other than Liens in favor of the Administrative Agent) to the extent that the grant of a Lien to the Administrative Agent hereunder on such asset (A) would result in a breach or violation of, or constitute a default under, the agreement or instrument governing such Permitted Lien, (B) would result in the loss of use of such asset, (C) would permit the holder of such Permitted Lien to terminate such Obligor’s use of such asset or (D) would otherwise result in a loss of rights of such Obligor in such asset, provided however that the Collateral shall include and such security interest shall attach immediately at such time as the condition causing such breach, violation, loss of use, termination or loss of rights shall be remedied and to the extent severable, shall attach immediately to any portion of such asset that does not result in any of the consequences specified in (A), (B), (C) or (D) above, (vi) Accounts, Instruments, Chattel Paper or other obligation or property of any kind due from, owed by, or belonging to, a Sanctioned Person or Sanctioned Entity, or (vii) any lease in which the lessee is a Sanctioned Person or Sanctioned Entity shall be Collateral.   2 --------------------------------------------------------------------------------   2. Grant of Security Interest in the Collateral. (a) To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Credit Party Obligations, each Obligor hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”): (i) all Accounts; (ii) all cash and Cash Equivalents; (iii) all Chattel Paper (including Electronic Chattel Paper); (iv) all Commercial Tort Claims as set forth on Schedule 3.16(d) to the Credit Agreement (as updated from time to time in accordance with the Credit Agreement); (v) all Copyright Licenses; (vi) all Copyrights; (vii) all Deposit Accounts; (viii) all Documents; (ix) all Equipment; (x) all Fixtures; (xi) all General Intangibles; (xii) all Goods; (xiii) all Instruments; (xiv) all Inventory; (xv) all Investment Property; (xvi) all Letter-of-Credit Rights; (xvii) all Material Contracts and all such other agreements, contracts, leases, licenses, tax sharing agreements or hedging arrangements now or hereafter entered into by an Obligor, as such agreements may be amended or otherwise modified from time to time (collectively, the “Assigned Agreements”), including without limitation, (A) all rights of an Obligor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (B) all rights of an Obligor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (C) claims of an Obligor for damages arising out of or for breach of or default under the Assigned Agreements and (D) the right of an Obligor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder;   3 --------------------------------------------------------------------------------   (xviii) all Patent Licenses; (xix) all Patents; (xx) all Payment Intangibles; (xxi) all Securities Accounts; (xxii) all Software; (xxiii) all Supporting Obligations; (xxiv) all Trademark Licenses; (xxv) all Trademarks; (xxvi) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks, and related data processing software (owned by such Obligor or in which it has an interest) that at any time evidence or contain information relating to any Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; (xxvii) all other personal property of any kind or type whatsoever owned by such Obligor; and (xxviii) to the extent not otherwise included, all Accessions, Proceeds and products of any and all of the foregoing. Notwithstanding the foregoing, the Collateral shall not include the Excluded Property. (b) The Obligors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest created hereby in the Collateral (i) constitutes continuing collateral security for all of the Credit Party Obligations, whether now existing or hereafter arising and (ii) is not to be construed as a present assignment of any Intellectual Property. (c) The term “Collateral” shall include any Bank Products and any rights of the Obligors thereunder only for purposes of this Section 2.   4 --------------------------------------------------------------------------------   3. Provisions Relating to Accounts, Contracts and Agreements. (a) Anything herein to the contrary notwithstanding, each of the Obligors shall remain liable under each of its Accounts, contracts and agreements to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account or the terms of such contract or agreement. Neither the Administrative Agent nor any Secured Party shall have any obligation or liability under any Account (or any agreement giving rise thereto), contract or agreement by reason of or arising out of this Security Agreement or the receipt by the Administrative Agent or any Secured Party of any payment relating to such Account, contract or agreement pursuant hereto, nor shall the Administrative Agent or any Secured Party be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Account (or any agreement giving rise thereto), contract or agreement, 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 under any Account (or any agreement giving rise thereto), contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) The Administrative Agent hereby authorizes the Obligors to collect the Accounts; provided, that the Administrative Agent may curtail or terminate such authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuation of an Event of Default, any payments of Accounts, when collected by the Obligors (i) shall be forthwith (and in any event within two (2) Business Days) deposited by the Obligors in a collateral account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in Section 12 hereof, and (ii) until so turned over, shall be held by the Obligors in trust for the Administrative Agent and the Secured Parties, segregated from other funds of the Obligors. (c) At any time and from time to time, the Administrative Agent shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Obligors shall use commercially reasonable efforts to furnish all such assistance and information as the Administrative Agent may reasonably require in connection with such test verifications. Upon the Administrative Agent’s reasonable request and at the expense of the Obligors, the Obligors shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. The Administrative Agent in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Accounts.   5 --------------------------------------------------------------------------------   4. Representations and Warranties. Each Obligor hereby represents and warrants to the Administrative Agent, for the benefit of the Secured Parties, that so long as any of the Credit Party Obligations (other than contingent indemnity obligations that survive termination of the Credit Documents pursuant to the stated terms thereof) remain outstanding or any Credit Document is in effect, and until all of the Commitments shall have been terminated: (a) Chief Executive Office; Books & Records; Legal Name; State of Formation. No Obligor has in the four (4) months preceding the Closing Date changed its name, been party to a merger, consolidation or other change in structure or used any tradename not disclosed on Schedule 4(a) attached hereto (as updated from time to time). (b) Location of Tangible Collateral. As of the Closing Date, the location of all tangible Collateral owned by each Obligor is as shown on Schedule 3.16(f)(i) to the Credit Agreement. (c) Ownership. Each Obligor is the legal and beneficial owner of its Collateral and, subject to Section 2(e), has the right to pledge, sell, assign or transfer the same. (d) Security Interest/Priority. This Security Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral of such Obligor and, when properly perfected by filing, obtaining possession, the granting of control to the Administrative Agent or otherwise, shall constitute a valid first priority, perfected security interest in such Collateral, to the extent such security interest can be perfected by (i) filing, obtaining possession, the granting of control or otherwise under the UCC, (ii) by filing an appropriate notice with the United States Patent and Trademark Office or the United States Copyright Office, or (iii) such other action as may be required pursuant to any applicable jurisdictions’ certificate of title statute, free and clear of all Liens except for Permitted Liens. (e) Consents. Except for (i) the filing or recording of UCC financing statements, (ii) the filing of appropriate notices with the United States Patent and Trademark Office, the United States Copyright Office and the Canadian Intellectual Property Office, (iii) obtaining control to perfect the Liens created by this Security Agreement, (iv) compliance with the Federal Assignment of Claims Act or comparable state law, and/or (v) the filing, registration or other action required pursuant to any applicable certificate of title statute, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any stockholder, member or creditor of such Obligor is required (A) for the grant by such Obligor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Security Agreement by such Obligor or (B) for the perfection of such security interest or the exercise by the Administrative Agent of the rights and remedies provided for in this Security Agreement.   6 --------------------------------------------------------------------------------   (f) Types of Collateral. None of the Collateral consists of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes or standing timber (as such term is used in the UCC). (g) Accounts. With respect to the Accounts of the Obligors: (i) the goods sold and/or services furnished giving rise to each Account are not subject to any security interest or Lien except the first priority, perfected security interest granted to the Administrative Agent herein and except for Permitted Liens; (ii) each Account and the papers and documents of the applicable Obligor relating thereto are genuine and in all material respects what they purport to be; (iii) each Account arises out of a bona fide transaction for goods sold and delivered (or in the process of being delivered) by an Obligor or for services actually rendered by an Obligor, which transaction was conducted in the ordinary course of the Obligor’s business and was completed in accordance with the terms of any documents pertaining thereto; (iv) no Account of an Obligor is evidenced by any Instrument or Chattel Paper unless such Instrument or Chattel Paper has been theretofore endorsed over and delivered to, or submitted to the control of, the Administrative Agent; (v) the amount of each Account as shown on the applicable Obligor’s books and records, and on all invoices and statements which may be delivered to the Administrative Agent with respect thereto, is due and payable to the applicable Obligor and is not in any way contingent; (vi) to each of the Obligor’s knowledge, the account debtor with respect to each Account has the capacity to contract; (vii) no surety bond was required or given in connection with any Account of an Obligor or the contracts or purchase orders out of which they arose; (viii) no Account is evidenced by a judgment, there are no set-offs, counterclaims or disputes existing or asserted with respect to any material Account, and no Obligor has made any agreement with any account debtor for any deduction from any Account except for deductions made in the ordinary course of its business; (ix) there are no facts, events or occurrences which in any material respect impair the validity or enforcement of any Account or tend to materially reduce the amount payable thereunder as shown on the applicable Obligor’s books and records; and (x) the right to receive payment under each Account is assignable except where the account debtor with respect to such Account is a Governmental Authority, to the extent assignment of any such right to payment is prohibited or limited by applicable law, regulations, administrative guidelines or contract. (h) Inventory. No Inventory of an Obligor is held by a third party (other than an Obligor) pursuant to consignment, sale or return, sale on approval or similar arrangement. (i) Intellectual Property. (i) Each of the Obligors and its Subsidiaries owns, or has the legal right to use, all Intellectual Property, tradenames, technology, know-how and processes necessary for each of them to conduct its business as currently conducted.   7 --------------------------------------------------------------------------------   (ii) Except as disclosed in Schedule 3.16(a) to the Credit Agreement, (A) each Obligor has the right to use its owned Intellectual Property in perpetuity and without payment of royalties, (B) all registrations with and applications to Governmental Authorities in respect of such Intellectual Property are valid and in full force and effect and are not subject to the payment of any taxes or maintenance fees or the taking of any interest therein, held by any of the Obligors to maintain their validity or effectiveness, and (C) there are no restrictions on the direct or indirect transfer of any Contractual Obligation, or any interest therein, held by any of the Obligors in respect of such Intellectual Property which has not been waived or satisfied, except where the failure to waive or satisfy could not reasonably be expected to have a Material Adverse Effect. (iii) None of the Obligors is in default (or with the giving of notice or lapse of time or both, would be in default) under any license to use its Intellectual Property; no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor do the Obligors or any of their Subsidiaries know of any such claim; and, to the knowledge of the Obligors or any of their Subsidiaries, the use of such Intellectual Property by any of the Obligors or any of its Subsidiaries does not infringe on the rights of any Person. (iv) The Obligors have recorded or deposited with and paid to the United States Copyright Office, the Register of Copyrights, the Copyrights Royalty Tribunal or other Governmental Authority, all notices, statements of account, royalty fees and other documents and instruments required under the terms and conditions of any Contractual Obligation of the Obligors and/or under Title 17 of the United States Code and the rules and regulations issued thereunder (collectively, the “Copyright Act”), and are not liable to any Person for copyright infringement under the Copyright Act or any other law, rule, regulation, contract or license as a result of their business operations. (v) All material Intellectual Property of each Obligor is valid, subsisting, unexpired, enforceable and has not been abandoned, and each Obligor is legally entitled to use each of its tradenames. (vi) Except as set forth in Schedule 3.16(a) to the Credit Agreement, none of the material Intellectual Property of the Obligors is the subject of any licensing or franchise agreement. (vii) No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of any Intellectual Property of the Obligors. (viii) No action or proceeding is pending seeking to limit, cancel or question the validity of any Intellectual Property of the Obligors, or which, if adversely determined, would have a Material Adverse Effect except as otherwise disclosed in the Credit Agreement.   8 --------------------------------------------------------------------------------   (ix) All applications pertaining to the material Intellectual Property of each Obligor have been duly and properly filed, and all registrations or letters pertaining to such Intellectual Property have been duly and properly filed and issued, and all of such Intellectual Property is valid and enforceable. (x) No Obligor has made any assignment or entered into any agreement in conflict with the security interest of the Administrative Agent in the Intellectual Property of each Obligor hereunder. (j) Documents, Instruments and Chattel Paper. All Documents, Instruments and Chattel Paper describing, evidencing or constituting Collateral are, to the Obligors’ knowledge, complete, valid, and genuine. (k) Equipment. With respect to each Obligor’s Equipment: (i) such Obligor has good and marketable title thereto and (ii) all such Equipment is in normal operating condition and repair, ordinary wear and tear alone excepted (subject to casualty events), and is suitable for the uses to which it is customarily put in the conduct of such Obligor’s business. (l) Restrictions on Security Interest. None of the Obligors is party to any material lease that contains legally enforceable restrictions on the granting of a security interest therein other than those which have been waived or satisfied. Notwithstanding anything to the contrary contained herein, no representation or warranty is provided with respect to the Liens purported to be created with respect to any Equity Interests of a Foreign Subsidiary as it pertains to the laws and regulations of jurisdictions outside of the United States of America. 5. Covenants. Each Obligor covenants that, so long as any of the Credit Party Obligations (other than contingent indemnity obligations that survive termination of the Credit Documents pursuant to the stated terms thereof) remain outstanding or any Credit Document is in effect, and until all of the Commitments shall have been terminated, such Obligor shall: (a) Perfection of Security Interest by Filing, Etc. Execute and deliver to the Administrative Agent and/or file such agreements, assignments or instruments (including affidavits, notices, reaffirmations, amendments and restatements of existing documents, and any document as may be necessary if the law of any jurisdiction other than New York becomes or is applicable to the Collateral or any portion thereof, in each case, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary or appropriate (i) to assure to the Administrative Agent its security interests hereunder are perfected, including (A) such financing statements (including continuation statements) or   9 --------------------------------------------------------------------------------   amendments thereof or supplements thereto or other instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC and any other personal property security legislation in the appropriate state(s) or province(s), (B) with regard to Copyrights, a Notice of Grant of Security Interest in Copyrights for filing with the United States Copyright Office and the Canadian Intellectual Property Office, as applicable in the form of Exhibit A attached hereto, (C) with regard to Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office and the Canadian Intellectual Property Office, as applicable in the form of Exhibit B attached hereto and (D) with regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office and the Canadian Intellectual Property Office, as applicable in the form of Exhibit C attached hereto, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder. Each Obligor hereby authorizes the Administrative Agent to prepare and file such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as the Administrative Agent may from time to time deem necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, including, without limitation, any financing statement that describes the Collateral as “all personal property” or “all assets” of such Obligor or that describes the Collateral in some other manner as the Administrative Agent deems necessary or advisable. Each Obligor agrees to mark its books and records to reflect the security interest of the Administrative Agent in the Collateral. (b) Perfection of Security Interest by Possession. If (i) any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Document, Instrument, Tangible Chattel Paper or Supporting Obligation or (ii) any Collateral shall be stored or shipped subject to a Document or (iii) any Collateral shall consist of Investment Property in the form of certificated securities, promptly notify the Administrative Agent of the existence of such Collateral and deliver such Instrument, Chattel Paper, Supporting Obligation, Document or Investment Property to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Security Agreement. (c) Perfection of Security Interest Through Control. If any Collateral shall consist of Deposit Accounts, Electronic Chattel Paper, Letter-of-Credit Rights, Securities Accounts or uncertificated Investment Property, execute and deliver (and, with respect to any Collateral consisting of a Securities Account or uncertificated Investment Property, cause the Securities Intermediary or the issuer, as applicable, with respect to such Investment Property to execute and deliver) to the Administrative Agent all control agreements, assignments, instruments or other documents as reasonably requested by the Administrative Agent for the purposes of obtaining and maintaining control of such Collateral. (d) Other Liens. Defend its interests in the Collateral against the claims and demands of all other parties claiming an interest therein and keep the Collateral free from all Liens, except for Permitted Liens. Neither the Administrative Agent nor any Secured Party authorizes any Obligor to, and no Obligor shall, sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral or any interest therein, except as permitted under the Credit Agreement.   10 --------------------------------------------------------------------------------   (e) Preservation of Collateral. Keep the Collateral in good order, condition and repair in all material respects, ordinary wear and tear excepted; not use the Collateral in violation of the provisions of this Security Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable Requirement of Law; not permit any Collateral to be or become a fixture to real property or an accession to other personal property unless the Administrative Agent has a valid, perfected and first priority security interest for the benefit of the Secured Parties in such real or personal property; and not, without the prior written consent of the Administrative Agent, alter or remove any identifying symbol or number on its Equipment. (f) [Reserved.] (g) [Reserved.] (h) Collateral Held by Warehouseman, Bailee, etc. If any Collateral with a value in excess of $1,000,000 is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Obligor, (i) notify the Administrative Agent of such possession, (ii) upon the request of the Administrative Agent, notify such Person of the Administrative Agent’s security interest for the benefit of the Secured Parties in such Collateral, (iii) upon the request of the Administrative Agent, instruct such Person to hold all such Collateral for the Administrative Agent’s account subject to the Administrative Agent’s instructions and (iv) upon the request of the Administrative Agent, obtain an acknowledgment from such Person that it is holding such Collateral for the benefit of the Administrative Agent. (i) Treatment of Accounts. (i) Not grant or extend the time for payment of any Account, or compromise or settle any Account for less than the full amount thereof, or release any person or property, in whole or in part, from payment thereof, or allow any credit or discount thereon, other than as normal and customary in the ordinary course of an Obligor’s business and (ii) maintain at its principal place of business a record of Accounts consistent with customary business practices. (j) Covenants Relating to Inventory. (i) Maintain, keep and preserve its Inventory in good salable condition at its own cost and expense. (ii) [Reserved.] (iii) If any of the Inventory is at any time evidenced by a document of title, promptly notify the Administrative Agent thereof and, upon the request of the Administrative Agent, deliver such document of title to the Administrative Agent.   11 --------------------------------------------------------------------------------   (k) Covenants Relating to Copyrights. (i) Employ the Copyright for each material Work with such notice of copyright as may be required by law to secure copyright protection. (ii) Not do any act or knowingly omit to do any act whereby any Copyright may become invalidated unless such Obligor determines that such Copyright is no longer useful or necessary in its business and (A) not do any act, or knowingly omit to do any act, whereby any material Copyright may become injected into the public domain; (B) notify the Administrative Agent immediately if it knows, or has reason to know, that any material Copyright could reasonably be expected to become injected into the public domain or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in any court or tribunal in the United States, Canada or any other country) regarding an Obligor’s ownership of any such Copyright or its validity; (C) take all necessary steps as it shall deem appropriate under the circumstances to maintain and pursue each material application (and to obtain the relevant registration) and to maintain each registration of each material Copyright owned by an Obligor including, without limitation, filing of applications for renewal where necessary; and (D) promptly notify the Administrative Agent of any material infringement of any material Copyright of an Obligor of which it becomes aware and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Copyright, including, where appropriate, the bringing of suit for infringement, seeking injunctive relief and seeking to recover any and all damages for such infringement. (iii) Not make any assignment or agreement in conflict with the security interest in the Copyrights of each Obligor hereunder. (l) Covenants Relating to Patents and Trademarks. (i) (A) Continue to use each material Trademark in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (B) maintain as in the past the quality of products and services offered under such Trademark, (C) employ such Trademark with the appropriate notice of registration and (D) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material Trademark may become invalidated unless such Obligor determines that such Trademark is no longer useful or necessary in its business.   12 --------------------------------------------------------------------------------   (ii) Not do any act, or omit to do any act, whereby any material Patent may become abandoned or dedicated unless such Obligor determines that such Patent is no longer useful or necessary in its business. (iii) Promptly notify the Administrative Agent if it knows, or has reason to know, that any application or registration relating to any material Patent or material Trademark may become abandoned or dedicated, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the Canadian Intellectual Property Office or any court or tribunal in any country) regarding an Obligor’s ownership of any such Patent or Trademark or its right to register the same or to keep, maintain and use the same. (iv) Take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each material application, to obtain the relevant registration and to maintain each registration of the material Patents and material Trademarks, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability. (v) Promptly notify the Administrative Agent after it learns that any material Patent or material Trademark included in the Collateral is infringed, misappropriated or diluted by a third party and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark in a material manner. (vi) Not make any assignment or agreement in conflict with the security interest in the Patents or Trademarks of any Obligor hereunder. (m) [Reserved]. (n) Intellectual Property Generally. Upon request of the Administrative Agent, execute and deliver any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in the Intellectual Property and the general intangibles relating thereto including, without limitation, the goodwill of the Obligors and their Subsidiaries relating thereto or represented thereby (or such other Intellectual Property or the general intangibles relating thereto or represented thereby as the Administrative Agent may reasonably request). (o) Commercial Tort Claims; Notice of Litigation. Promptly (i) forward to the Administrative Agent written notification of any and all Commercial Tort Claims of the Obligors in excess of $1,000,000, including, but not limited to, any and all actions, suits, and proceedings before any court or Governmental Authority by or affecting such Obligor or any of its Subsidiaries and (ii) execute and deliver such statements, documents and notices and do and cause to be done all such things as may be reasonably required by the Administrative Agent, or required by law, including all things which may from time to time be necessary under the UCC to fully create, preserve, perfect and protect the priority of the Administrative Agent’s security interest in any Commercial Tort Claims.   13 --------------------------------------------------------------------------------   (p) Status of Collateral as Personal Property. At all times maintain the Collateral as personal property and not affix any of the Collateral to any real property in a manner which would change its nature from personal property to real property or a Fixture, unless the Administrative Agent has a first priority, perfected Lien on such real property or Fixture. (q) Regulatory Approvals. Promptly, and at its expense, execute and deliver, or cause to be executed and delivered, all applications, certificates, instruments, registration statements, and all other documents and papers the Administrative Agent may reasonably request and as may be required by law to acquire the consent, approval, registration, qualification or authorization of any Governmental Authority deemed necessary or appropriate for the effective exercise of any of the rights under this Security Agreement (each a “Governmental Approval”). Without limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing, each Obligor shall take any action which the Administrative Agent may reasonably request in order to transfer and assign to the Administrative Agent, or to such one or more third parties as the Administrative Agent may designate, or to a combination of the foregoing, each Governmental Approval of such Obligor. To enforce the provisions of this subsection, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent is empowered to request the appointment of a receiver from any court of competent jurisdiction. Such receiver shall be instructed to seek from the Governmental Authority an involuntary transfer of control of each such Governmental Approval for the purpose of seeking a bona fide purchaser to whom control will ultimately be transferred. Each Obligor hereby agrees to authorize such an involuntary transfer of control upon the request of the receiver so appointed, and, if such Obligor shall refuse to authorize the transfer, its approval may be required by the court. Upon the occurrence and continuance of an Event of Default, such Obligor shall further use its reasonable best efforts to assist in obtaining Governmental Approvals, if required, for any action or transaction contemplated by this Security Agreement, including, without limitation, the preparation, execution and filing with the Governmental Authority of such Obligor’s portion of any necessary or appropriate application for the approval of the transfer or assignment of any portion of the assets (including any Governmental Approval) of such Obligor. Because each Obligor agrees that the Administrative Agent’s remedy at law for failure of such Obligor to comply with the provisions of this subsection would be inadequate and that such failure would not be adequately compensable in damages, such Obligor agrees that the covenants contained in this subsection may be specifically enforced, and such Obligor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.   14 --------------------------------------------------------------------------------   (r) Insurance. All proceeds derived from insurance on the Collateral shall be subject to the security interest of the Administrative Agent hereunder. (s) Covenants Relating to the Assigned Agreements. (i) [Reserved]. (ii) Unless the applicable Obligor believes it is necessary in the prudent conduct of its business, no Obligor shall (A) cancel or terminate any Assigned Agreement of such Obligor or consent to or accept any cancellation or termination thereof; (B) amend or otherwise modify any Assigned Agreement of such Obligor or give any consent, waiver or approval thereunder; (C) waive any default under or breach of any Assigned Agreement of such Obligor; or (D) take any other action in connection with any Assigned Agreement of such Obligor which would impair the value of the interest or rights of such Obligor thereunder or which would impair the interests or rights of the Administrative Agent. (t) Material Contracts. Upon the request of the Administrative Agent, with respect to any Material Contract, each Obligor will (i) execute and deliver (or cause to be executed and delivered) to the Administrative Agent a collateral assignment of such Material Contract and a consent to such collateral assignment, in each case in a form acceptable to the Administrative Agent, (ii) use commercially reasonable efforts to cause the other parties to such Material Contract to execute such consent and (iii) do any act or execute any additional documents required by the Administrative Agent to ensure to the Administrative Agent the effectiveness and first priority of its security interest in such Material Contract. 6. License of Intellectual Property. The Obligors hereby assign, transfer and convey to the Administrative Agent, effective upon the occurrence and during the continuance of any Event of Default, the nonexclusive right and license to use all Intellectual Property owned or used by any Obligor that relate to the Collateral and any other collateral granted by the Obligors as security for the Credit Party Obligations, together with any goodwill associated therewith, all to the extent necessary to enable the Administrative Agent to use, possess and realize on the Collateral and to enable any successor or assign to enjoy the benefits of the Collateral. This right and license shall inure to the benefit of all successors, assigns and transferees of the Administrative Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is granted free of charge, without requirement that any monetary payment whatsoever be made to the Obligors. 7. Special Provisions Regarding Inventory. Notwithstanding anything to the contrary contained in this Security Agreement, each Obligor may, unless and until an Event of Default occurs and is continuing and the Administrative Agent instructs such Obligor otherwise, without further consent or approval of the Administrative Agent, use, consume, sell, lease and exchange its Inventory in the ordinary course of its business as presently conducted, whereupon, in the case of such a sale or exchange, the security interest created hereby in the Inventory so sold or exchanged (but not in any Proceeds arising from such sale or exchange) shall cease immediately without any further action on the part of the Administrative Agent.   15 --------------------------------------------------------------------------------   8. Performance of Obligations; Advances by Administrative Agent. On failure of any Obligor to perform any of the covenants and agreements contained herein, the Administrative Agent may, at its sole option and in its sole discretion, perform or cause to be performed the same and in so doing may expend such sums as the Administrative Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Administrative Agent may make for the protection of the security interest hereof or may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Credit Party Obligations and shall bear interest from the date said amounts are expended at the Default Rate. No such performance of any covenant or agreement by the Administrative Agent on behalf of any Obligor, and no such advance or expenditure therefor, shall relieve the Obligors of any default under the terms of this Security Agreement or the other Credit Documents. The Administrative Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by an Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP. 9. Events of Default. The occurrence of an event which under the Credit Agreement would constitute an Event of Default shall be an event of default hereunder (an “Event of Default”). 10. Remedies. (a) General Remedies. Upon the occurrence of an Event of Default and during continuation thereof, the Administrative Agent and the Secured Parties shall have, in addition to the rights and remedies provided herein, in the Credit Documents or by law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Administrative Agent may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Obligors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Obligors to assemble and make available to the Administrative Agent at the expense of the Obligors any Collateral at any   16 --------------------------------------------------------------------------------   place and time designated by the Administrative Agent which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting the sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest extent permitted by law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale, by one or more contracts, in one or more parcels, for cash, upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Neither the Administrative Agent’s compliance with any applicable state or federal law in the conduct of such sale, nor its disclaimer of any warranties relating to the Collateral, shall be considered to adversely affect the commercial reasonableness of such sale. To the extent the rights of notice cannot be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Borrower in accordance with the notice provisions of Section 9.2 of the Credit Agreement at least ten (10) days before the time of sale or other event giving rise to the requirement of such notice. The Administrative Agent and the Secured Parties shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by law, any Secured Party may be a purchaser at any such public sale. To the extent permitted by applicable law, each of the Obligors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable law, the Administrative Agent and the Secured Parties may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by law, be made at the time and place to which the sale was postponed, or the Administrative Agent and the Secured Parties may further postpone such sale by announcement made at such time and place. (b) Remedies Relating to Accounts. Upon the occurrence of an Event of Default and during the continuation thereof, whether or not the Administrative Agent has exercised any or all of its rights and remedies hereunder, the Administrative Agent shall have the right to enforce any Obligor’s rights against any account debtors and obligors on such Obligor’s Accounts. Each Obligor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Administrative Agent in accordance with the provisions of this Section shall be solely for the Administrative Agent’s own convenience and that such Obligor shall not have any right, title or interest in such Proceeds or in any such other amounts except as expressly provided herein. After the occurrence and during the continuance of an Event of Default, to the extent required by the Administrative Agent, each Obligor agrees to execute any document or instrument, and to take any action, necessary under applicable law (including the Federal Assignment of Claims Act) in order for the Administrative Agent to exercise its rights and remedies (or be able to exercise its rights and remedies at some future date) with respect to any Accounts of such Obligor where the account debtor is a Governmental Authority. The Administrative Agent and the Secured Parties shall have no liability or responsibility to any Obligor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any   17 --------------------------------------------------------------------------------   remittance. Each Obligor hereby agrees to indemnify the Administrative Agent and the Secured Parties and their respective officers, directors, employees, partners, members, counsel, agents, representatives, advisors and affiliates from and against all liabilities, damages, losses, actions, claims, judgments, costs, expenses, charges and reasonable attorneys’ fees suffered or incurred by the Administrative Agent or the Secured Parties (each, an “Indemnified Party”) because of the maintenance of the foregoing arrangements except, with respect to any Indemnified Party, as relating to or arising out of the gross negligence or willful misconduct of such Indemnified Party or its officers, employees or agents. In the case of any investigation, litigation or other proceeding, the foregoing indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by an Obligor, its directors, shareholders or creditors or an Indemnified Party or any other Person or any other Indemnified Party is otherwise a party thereto. (c) Access. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall have the right to enter and remain upon the various premises of the Obligors without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Obligors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral. If the Administrative Agent exercises its right to take possession of the Collateral, each Obligor shall also at its expense perform any and all other steps reasonably requested by the Administrative Agent to preserve and protect the security interest hereby granted in the Collateral, such as placing and maintaining signs indicating the security interest of the Administrative Agent, appointing overseers for the Collateral and maintaining inventory records. (d) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the Secured Parties to exercise any right, remedy or option under this Security Agreement, any other Credit Document or as provided by law, or any delay by the Administrative Agent or the Secured Parties in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the Secured Parties shall only be granted as provided herein. To the extent permitted by law, neither the Administrative Agent, the Secured Parties, nor any party acting as attorney for the Administrative Agent or the Secured Parties, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Administrative Agent and the Secured Parties under this Security Agreement shall be cumulative and not exclusive of any other right or remedy which the Administrative Agent or the Secured Parties may have.   18 --------------------------------------------------------------------------------   (e) Retention of Collateral. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent may, after providing the notices required by Sections 9-620 and 9-621 of the UCC (or any successor sections of the UCC) or otherwise complying with the notice requirements of applicable law of the relevant jurisdiction, accept or retain all or any portion of the Collateral in satisfaction of the Credit Party Obligations. Unless and until the Administrative Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to have retained any Collateral in satisfaction of any Credit Party Obligations for any reason. (f) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the Secured Parties are legally entitled, the Obligors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and the reasonable fees of any attorneys employed by the Administrative Agent to collect such deficiency. Any surplus remaining after the full payment and satisfaction of the Credit Party Obligations shall be returned to the Obligors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto. (g) Other Security. To the extent that any of the Credit Party Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real and other personal property and securities owned by an Obligor), or by a guarantee, endorsement or property of any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence and during the continuation of any Event of Default, and the Administrative Agent shall have the right, in its sole discretion, to determine which rights, security, Liens, security interests or remedies the Administrative Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or any of the Administrative Agent’s and the Secured Parties’ rights or the Credit Party Obligations under this Security Agreement or under any other of the Credit Documents. 11. Rights of the Administrative Agent. (a) Power of Attorney. Each Obligor hereby designates and appoints the Administrative Agent, on behalf of the Secured Parties, and each of its designees or agents, as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuation of an Event of Default: (i) to demand, collect, settle, compromise, adjust and give discharges and releases concerning the Collateral of such Obligor, all as the Administrative Agent may reasonably determine in respect of such Collateral;   19 --------------------------------------------------------------------------------   (ii) to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof; (iii) to defend, settle, adjust or compromise any action, suit or proceeding brought with respect to the Collateral and, in connection therewith, give such discharge or release as the Administrative Agent may deem reasonably appropriate; (iv) to receive, open and dispose of mail addressed to an Obligor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Obligor, or securing or relating to such Collateral, on behalf of and in the name of such Obligor; (v) to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes; (vi) to adjust and settle claims under any insurance policy relating to the Collateral; (vii) to execute and deliver and/or file all assignments, conveyances, statements, financing statements, continuation financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may determine necessary in order to perfect and maintain the security interests and Liens granted in this Security Agreement and in order to fully consummate all of the transactions contemplated herein; (viii) to institute any foreclosure proceedings that the Administrative Agent may deem appropriate; (ix) to execute any document or instrument, and to take any action, necessary under applicable law (including the Federal Assignment of Claims Act) in order for the Administrative Agent to exercise its rights and remedies (or to be able to exercise its rights and remedies at some future date) with respect to any Account of an Obligor where the account debtor is a Governmental Authority; and (x) to do and perform all such other acts and things as the Administrative Agent may reasonably deem to be necessary, proper or convenient in connection with the Collateral.   20 --------------------------------------------------------------------------------   This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Credit Party Obligations (other than contingent indemnity obligations that survive termination of the Credit Documents pursuant to the stated terms thereof) remain outstanding or any Credit Document is in effect, and until all of the Commitments shall have been terminated. The Administrative Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Administrative Agent in this Security Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Administrative Agent solely to perfect, protect, preserve and realize upon its security interest in the Collateral. (b) Assignment by the Administrative Agent. Subject to the terms and conditions of the Credit Agreement, the Administrative Agent may from time to time assign the Credit Party Obligations or any portion thereof and/or the Collateral or any portion thereof to a successor Administrative Agent, and the assignee shall be entitled to all of the rights and remedies of the Administrative Agent under this Security Agreement in relation thereto. (c) The Administrative Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Obligors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Obligors. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 10 hereof, the Administrative Agent shall have no obligation to clean-up, repair or otherwise prepare the Collateral for sale. 12. [Reserved]. 13. [Reserved].   21 --------------------------------------------------------------------------------   14. Continuing Agreement. (a) This Security Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as any of the Credit Party Obligations (other than contingent indemnity obligations that survive termination of the Credit Documents pursuant to the stated terms thereof) remain outstanding or any Credit Document is in effect, and until all of the Commitments shall have been terminated. Upon such payment and termination, this Security Agreement shall be automatically terminated and the Administrative Agent and the Secured Parties shall, upon the request and at the expense of the Obligors, forthwith release all of the Liens and security interests granted hereunder and shall execute and/or deliver all UCC termination statements and/or other documents reasonably requested by the Obligors evidencing such termination. Notwithstanding the foregoing all releases and indemnities provided hereunder shall survive termination of this Security Agreement. (b) This Security Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Credit Party Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Secured Party as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event that payment of all or any part of the Credit Party Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by the Administrative Agent or any Secured Party in defending and enforcing such reinstatement shall be deemed to be included as a part of the Credit Party Obligations. 15. Amendments; Waivers; Modifications. This Security Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 9.1 of the Credit Agreement. 16. Successors in Interest. This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Obligor, its successors and assigns and shall inure, together with the rights and remedies of the Administrative Agent and the Secured Parties hereunder, to the benefit of the Administrative Agent and the Secured Parties and their successors and permitted assigns; provided, however, that none of the Obligors may assign its rights or delegate its duties hereunder except as permitted by the Credit Agreement. To the fullest extent permitted by law, each Obligor hereby releases the Administrative Agent and each Secured Party, each of their respective officers, employees and agents and each of their respective successors and assigns, from any liability for any act or omission relating to this Security Agreement or the Collateral, except for any liability arising from the gross negligence or willful misconduct of the Administrative Agent or such Secured Party or their respective officers, employees and agents, in each case as determined by a court of competent jurisdiction pursuant to a final non-appealable judgment. 17. Notices. All notices required or permitted to be given under this Security Agreement shall be in conformance with Section 9.2 of the Credit Agreement.   22 --------------------------------------------------------------------------------   18. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Security Agreement to produce or account for more than one such counterpart. Delivery of executed counterparts of the Security Agreement by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original shall be delivered upon the request of the Administrative Agent. 19. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning, construction or interpretation of any provision of this Security Agreement. 20. Governing Law; Submission to Jurisdiction and Service of Process; Waiver of Jury Trial; Venue. THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The terms of Sections 9.13 and 9.16 of the Credit Agreement are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms. 21. Severability. If any provision of this Security Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 22. Entirety. This Security Agreement and the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to this Security Agreement, the other Credit Documents or the transactions contemplated herein and therein. 23. Survival. All representations and warranties of the Obligors hereunder shall survive the execution and delivery of this Security Agreement and the other Credit Documents, the delivery of the Notes and the making of the Loans and the issuance of the Letters of Credit under the Credit Agreement. 24. Joint and Several Obligations of Obligors. (a) Each of the Obligors is accepting joint and several liability hereunder in consideration of the financial accommodations to be provided by the Lenders under the Credit Agreement, for the mutual benefit, directly and indirectly, of each of the Obligors and in consideration of the undertakings of each of the Obligors to accept joint and several liability for the obligations of each of them.   23 --------------------------------------------------------------------------------   (b) Each of the Obligors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Obligors with respect to the payment and performance of all of the Credit Party Obligations, it being the intention of the parties hereto that all the Credit Party Obligations shall be the joint and several obligations of each of the Obligors without preferences or distinction among them. (c) Notwithstanding any provision to the contrary contained herein, in any other of the Credit Documents, to the extent the obligations of an Obligor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Obligor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code). 25. Rights of Required Lenders. All rights of the Administrative Agent hereunder, if not exercised by the Administrative Agent, may be exercised by the Required Lenders. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   24 --------------------------------------------------------------------------------   Each of the parties hereto has caused a counterpart of this Security Agreement to be duly executed and delivered as of the date first above written.                   BORROWER:   IMPAX LABORATORIES, INC., a Delaware corporation                           By:   /s/ Arthur A. Koch, Jr.                           Name:   Arthur A. Koch, Jr.             Title:   CFO         --------------------------------------------------------------------------------   Accepted and agreed to as of the date first above written.                       WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent                           By:   /s/ Samuel Thompson                           Name:   Samuel Thompson             Title:   Vice President/Relationship Manager         --------------------------------------------------------------------------------   Schedule 4(a) to Credit Agreement Tradenames in use: Impax Pharma Global Pharma Impax Pharmaceuticals Global Pharmaceuticals     --------------------------------------------------------------------------------   EXHIBIT A [FORM OF] NOTICE OF GRANT OF SECURITY INTEREST IN COPYRIGHTS [United States Copyright Office][Canadian Intellectual Property Office] Ladies and Gentlemen: Please be advised that (a) pursuant to the Security Agreement dated as of February 11, 2011 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Security Agreement”), by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) for the secured parties referenced therein (the “Secured Parties”), the undersigned Obligor has granted a continuing security interest in and continuing lien upon [the copyrights, copyright licenses and copyright applications] shown on Schedule 1 attached hereto (the “Copyrights”) to the Administrative Agent for the ratable benefit of the Secured Parties and (b) the undersigned hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the Copyrights. The Obligors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in the Copyrights (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any Copyright. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]     --------------------------------------------------------------------------------                         Very truly yours, [OBLIGOR]                           By:                                   Name:                 Title:                           Acknowledged and Accepted: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent               By:                           Name:             Title:                           --------------------------------------------------------------------------------   Schedule 1     --------------------------------------------------------------------------------   EXHIBIT B [FORM OF] NOTICE OF GRANT OF SECURITY INTEREST IN PATENTS [United States Patent and Trademark Office][Canadian Intellectual Property Office] Ladies and Gentlemen: Please be advised that (a) pursuant to the Security Agreement dated as of February 11, 2011 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Security Agreement”), by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) for the secured parties referenced therein (the “Secured Parties”), the undersigned Obligor has granted a continuing security interest in and continuing lien upon [the patents, patent licenses and patent applications] shown on Schedule 1 attached hereto (the “Patents”) to the Administrative Agent for the ratable benefit of the Secured Parties and (b) the undersigned hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the Patents. The Obligors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in the Patents (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any Patent. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]     --------------------------------------------------------------------------------                         Very truly yours, [OBLIGOR]                           By:                                   Name:                 Title:                           Acknowledged and Accepted: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent               By:                           Name:             Title:                           --------------------------------------------------------------------------------   Schedule 1     --------------------------------------------------------------------------------   EXHIBIT C [FORM OF] NOTICE OF GRANT OF SECURITY INTEREST IN TRADEMARKS [United States Patent and Trademark Office][Canadian Intellectual Property Office] Ladies and Gentlemen: Please be advised that (a) pursuant to the Security Agreement dated as of February 11, 2011 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Security Agreement”), by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) for the secured parties referenced therein (the “Secured Parties”), the undersigned Obligor has granted a continuing security interest in and continuing lien upon [the trademarks, trademark licenses and trademark applications] shown on Schedule 1 attached hereto (the “Trademarks”) to the Administrative Agent for the ratable benefit of the Secured Parties and (b) the undersigned hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the Trademarks. The Obligors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in the Trademarks (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any Trademark. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]     --------------------------------------------------------------------------------                         Very truly yours, [OBLIGOR]                           By:                                   Name:                 Title:                           Acknowledged and Accepted: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent               By:                           Name:             Title:                           --------------------------------------------------------------------------------   Schedule 1     --------------------------------------------------------------------------------   [INDUSTRIAL DESIGN] NOTICE OF GRANT OF SECURITY INTEREST IN INDUSTRIAL DESIGNS Canadian Intellectual Property Office Ladies and Gentlemen: Please be advised that pursuant to the Security Agreement dated as of February 11, 2011 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Security Agreement”), by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) for the secured parties referenced therein (the “Secured Parties”), the undersigned Obligor has granted a continuing security interest in and continuing lien upon the industrial designs shown on Schedule 1 attached hereto (the “Industrial Designs”) to the Administrative Agent for the ratable benefit of the Secured Parties. The Obligors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in the Industrial Designs (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any Industrial Design. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]     --------------------------------------------------------------------------------                         Very truly yours, [OBLIGOR]                           By:                                   Name:                 Title:                           Acknowledged and Accepted: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent               By:                           Name:             Title:                           --------------------------------------------------------------------------------   Schedule 1
Exhibit 10.1   LIMITED LIABILITY COMPANY INTEREST IN THE COMPANY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION. WITHOUT SUCH REGISTRATION, SUCH MEMBERSHIP INTERESTS MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE SECURITIES OR BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION. IN ADDITION, ANY TRANSFER OF MEMBERSHIP INTERESTS REQUIRES THE PRIOR WRITTEN CONSENT OF THE COMPANY AND IS SUBJECT TO OTHER RESTRICTIONS PURSUANT TO THIS AGREEMENT.   LIMITED LIABILITY COMPANY AGREEMENT   OF   LARCLAY GP, LLC   (a Texas limited liability company)   --------------------------------------------------------------------------------   Table of Contents       Page No.         ARTICLE 1     DEFINITIONS         1.1 Certain Definitions 1 1.2 Construction 7         ARTICLE 2     ORGANIZATIONAL AND OTHER MATTERS         2.1 Formation 7 2.2 Name 7 2.3 Limited Liability 7 2.4 Registered Office; Registered Agent; Other Offices 8 2.5 Principal Place of Business 8 2.6 Term 8 2.7 Foreign Qualification 8 2.8 Fiscal Year 8 2.9 No State-Law Partnership 8         ARTICLE 3     PURPOSE AND POWERS         3.1 Purpose of the Company 8 3.2 Powers of the Company 9         ARTICLE 4     MEMBERS; REPRESENTATIONS         4.1 Member Information 9 4.2 Representations, Warranties and Covenants 9         ARTICLE 5     MANAGEMENT OF THE COMPANY         5.1 Management 10 5.2 Board of Managers 10 5.3 Matters Requiring Approval of the Members 11 5.4 Certain Agreements and Covenants of the Members 12         ARTICLE 6     OFFICERS         6.1 Powers 13 6.2 Election and Term 13 6.3 Compensation 13 6.4 Removal 13 6.5 Resignation 13   i --------------------------------------------------------------------------------     ARTICLE 7     BOOKS AND RECORDS         7.1 Books, Records and Tax Information 13 7.2 Tax Elections 14 7.3 Tax Matters Member 14         ARTICLE 8     CAPITAL CONTRIBUTIONS         8.1 Capital Contributions of Members 14 8.2 Further Contributions 14 8.3 Return of Capital 14 8.4 Capital Accounts. 14         ARTICLE 9     ALLOCATIONS         9.1 Allocations of Profits and Losses 15 9.2 Regulatory Allocations 16 9.3 Curative Allocations 17 9.4 Income Tax Allocations 17 9.5 Other Allocation Rules 18         ARTICLE 10     DISTRIBUTIONS         10.1 Distributions 18         ARTICLE 11     MEETINGS OF MEMBERS         11.1 Meetings 19 11.2 Place of Meetings 19 11.3 Notice of Meetings 19 11.4 Record Date 19 11.5 Quorum 19 11.6 Manner of Acting 19 11.7 Action by Members Without a Meeting; Telephone Conference 19 11.8 Waiver of Notice 20 11.9 Conduct of Meetings 20         ARTICLE 12     INDEMNIFICATION           ARTICLE 13     RESTRICTIONS ON TRANSFERS OF MEMBERSHIP INTERESTS         13.1 Restrictions on Transfer 21 13.2 Right of First Refusal on Transfer of Membership Interests. 22 13.3 Rights of Transferees 23         ARTICLE 14     DISSOLUTION AND LIQUIDATION         14.1 Dissolution 23 14.2 Effect of Dissolution 23   ii --------------------------------------------------------------------------------   14.3 Liquidation Upon Dissolution 24 14.4 Winding Up and Certificate of Cancellation 24 14.5 Non-Solicitation of Employees 24         ARTICLE 15     GENERAL PROVISIONS         15.1 Confidentiality 24 15.2 Offset 25 15.3 Notices 25 15.4 Entire Agreement 25 15.5 Effect of Waiver or Consent 25 15.6 Amendment or Modification. 26 15.7 Binding Effect 26 15.8 Governing Law; Severability 26 15.9 Further Assurances 26 15.10 Waiver of Certain Rights 26 15.11 Successors and Assigns 26 15.12 Counterparts 26       Exhibit A: Schedule of Members and Membership Interests     iii --------------------------------------------------------------------------------   LIMITED LIABILITY COMPANY AGREEMENT OF LARCLAY GP, LLC   This Limited Liability Company Agreement (this “Agreement”) of Larclay GP, LLC, a Texas limited liability company (the “Company”), is entered into on April 21, 2006 by the members named on Exhibit A hereto (collectively, the “Members”).   Recitals:   The Members desire to form the Company for the purposes set forth herein.   Accordingly, the Members hereby agree as follows:   ARTICLE 1 DEFINITIONS   1.1                               Certain Definitions. As used in this Agreement, the following terms have the following meanings:   “Adjusted Capital Account” means the Capital Account maintained for each Member, (a) increased by any amounts that such Member is obligated to restore or is treated as obligated to restore under Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5)), and (b) decreased by any amounts described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) with respect to such Member.   “Affiliate” means, when used with reference to a specified Person, (a) any Person directly or indirectly owning, controlling or holding power to vote 25% or more of the outstanding voting securities of the specified Person, (b) any Person 25% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by the specified Person, (c) any Person directly or indirectly controlling, controlled by or under common control with the specified Person, (d) if the specified Person is a corporation, any officer or director of the specified Person or of any corporation directly or indirectly controlling that specified Person, (e) if the specified Person is a partnership, any general partner or if the general partner is a partnership, the general partners of that partnership, and (f) if the specified Person is an individual, such individual’s spouse and natural and adoptive lineal descendants and trusts for the benefit of any such Persons. For purposes of this definition, the ability through share ownership or contractual arrangement to elect or cause the election of a majority of the board of directors of a corporation shall constitute “control.”   “Agreement” means this Limited Liability Company Agreement, as amended or restated from time to time.   “Board of Managers” has the meaning set forth in Section 5.1 of this Agreement.   “Book Value” means, with respect to any property of the Company, such property’s adjusted basis for federal income tax purposes, except as follows:   1 --------------------------------------------------------------------------------   (a)                                  The initial Book Value of any property contributed by a Member to the Company shall be the Fair Market Value of such property as of the date of such contribution;   (b)                                 The Book Values of all properties shall be adjusted to equal their respective Fair Market Values in connection with (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution to the Company or in exchange for the performance of services to or for the benefit of the Company, (ii) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company, or (iii) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g)(1) (other than pursuant to Section 708(b)(1)(B) of the Code); provided that adjustments pursuant to clauses (i) and (ii) above shall be made only if the Board of Managers reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;   (c)                                  The Book Value of property distributed to a Member shall be the Fair Market Value of such property as of the date of such distribution;   (d)                                 The Book Value of all property shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such property pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and clause (f) of the definition of Profits and Losses; and   (e)                                  If the Book Value of property has been determined or adjusted pursuant to clauses  (b) or (d) hereof, such Book Value shall thereafter be adjusted by the Depreciation taken into account with respect to such property for purposes of computing Profits and Losses and other items allocated pursuant to Article 9.   “Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in Texas are authorized by law to be closed.   “Capital Account” has the meaning set forth in Section 8.4 of this Agreement.   “Capital Contribution” has the meaning set forth in Section 8.1 of this Agreement.   “Certificate” has the meaning set forth in Section 2.1 of this Agreement.   “Change of Control of Lariat” means, in a single transaction or a series of related transactions, (i) a merger, consolidation, recapitalization, reorganization, business combination or similar transaction involving Lariat in which the owners of the outstanding capital stock or equity securities of Lariat immediately prior to such transaction do not own capital stock or equity securities of Lariat representing a majority of the outstanding voting power (based on the right directly or indirectly, through a parent company or otherwise, to elect directors generally) of Lariat or the surviving or consolidating entity immediately following such transaction, or (ii) the sale, lease, exchange, transfer or other disposition, directly or indirectly, of all or substantially all of the assets of Lariat.   2 --------------------------------------------------------------------------------   “Code” means the Internal Revenue Code of 1986, as amended.   “Confidential Information” has the meaning set forth in Section 15.1 of this Agreement.   “Curative Allocations” means the allocations pursuant to Section 9.3 of this Agreement.   “CWEI” means Clayton Williams Energy, Inc., a Delaware corporation, and any successor entity.   “CWEI Manager” has the meaning set forth in Section 5.2 of the Agreement.   “Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to property for such Fiscal Year or other period, except that (A) with respect to any property the Book Value of which differs from its adjusted tax basis for federal income tax purposes and which difference is being eliminated by use of the “remedial method” pursuant to Treasury Regulation Section 1.704-3(d), Depreciation for such taxable year shall be the amount of book basis recovered for such Fiscal Year or other period under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2), and (B) with respect to any other property the Book Value of which differs from its adjusted tax basis at the beginning of such Fiscal Year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Book Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year or other period bears to such beginning adjusted tax basis; provided that if the adjusted tax basis of any property at the beginning of such Fiscal Year or other period is zero, Depreciation with respect to such property shall be determined with reference to such beginning value using any reasonable method selected by the Tax Matters Member.   “Distributable Property” means the excess of cash and property on hand over the amount that the Board of Managers determines is required to be retained as a reasonable reserve to meet any liabilities or proposed expenditures of the Company which are accrued or reasonably foreseeable or that is reasonably necessary to be retained.   “Drilling Rigs” means the drilling rigs and related equipment, including, without limitation, transportation equipment, acquired by the Partnership as contemplated in the Partnership Agreement.   “Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section 1.752-2(a).   “Fair Market Value” of any property means the fair market value of such property as determined (i) by an appraiser of recognized standing selected by the Board of Managers, or (ii) at the election of the Board of Managers, good faith by the Board of Managers, which determination shall be conclusive for all purposes and shall be made within 15 days of any event that requires a determination of Fair Market Value.   “Financing Obligation” means the aggregate amount of obligations incurred by the Partnership under the Loan Facility.   3 --------------------------------------------------------------------------------   “Fiscal Year” has the meaning set forth in Section 2.8 of this Agreement.   “GAAP Capital Account” has the meaning set forth in Section 8.5 of this Agreement.   “Lariat” means Lariat Services, Inc., a Texas corporation, and any successor entity.   “Lariat Manager” has the meaning set forth in Section 5.2 of the Agreement   “Letter Agreement” means the letter agreement dated October 20, 2005, as amended, by and between CWEI and Lariat.   “Limited Liability Company Law” means the Texas Limited Liability Company Law (Chapter 101, and to the extent applicable to limited liability companies, the provisions of Title 1 of the Texas Business Organizations Code), as amended from time to time.   “Loan Documents” has the meaning given to such term in the Loan Facility.   “Loan Facility” means that certain Term Loan and Security Agreement, to be entered into on or about April 21, 2006, between the Partnership and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., a corporation organized and existing under the laws of the State of Delaware, as agent for the Lenders defined therein, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.   “Manager” has the meaning set forth in Section 5.1 of this Agreement.   “Master Drilling Agreement” means the Drilling Contract for Multiple Rigs to be entered into on or about April 21, 2006 by and between the Partnership and CWEI, as amended from time to time.   “Member Nonrecourse Debt” has the meaning assigned to the term “partner nonrecourse debt” in Treasury Regulation Section 1.704-2(b)(4).   “Member Nonrecourse Debt Minimum Gain” has the meaning assigned to the term “partner nonrecourse debt minimum gain” set forth in Treasury Regulation Section 1.704-2(i)(2).   “Member Nonrecourse Deduction” has the meaning assigned to the term “partner nonrecourse deduction” in Treasury Regulation Section 1.704-2(i)(1).   “Members” has the meaning set forth in the preamble of this Agreement.   “Membership Interest” means the interests of a Member in the Company as determined under this Agreement and the Limited Liability Company Law. The Membership Interest of each Member as of the date of this Agreement, expressed as a percentage based on the Membership Interest held by such Member as a percentage of the total Membership Interests held by all Members, is set forth on Exhibit A, as such Exhibit A may be amended from time to time as necessary to reflect additional Capital Contributions or upon the admittance of additional Members.   4 --------------------------------------------------------------------------------   “Minimum Gain” has the meaning assigned to that term in Treasury Regulation Section 1.704-2(d).   “Nonrecourse Deduction” has the meaning assigned to that term in Treasury Regulation Section 1.704-2(b)(1).   “Nonrecourse Liability” has the meaning assigned to that term in Treasury Regulation Section 1.752-1(a)(2).   “Notice” has the meaning set forth in Section 13.2 of this Agreement.   “Operating Agreement” means the Operating Agreement to be entered into on or about April 21, 2006 by and between the Partnership and Lariat, providing, among other things, for Lariat to act as the sole operator of the Drilling Rigs, as amended, restated, modified, renewed, extended or replaced from time to time.   “Ownership Percentage” means, with respect to a Member, the percentage ownership of the Company of such Member equal to a percentage obtained by dividing (i) the Membership Interests held by such Member by (ii) the total Membership Interests held by all Members.   “Partner” means a partner in the Partnership.   “Partnership” means Larclay, L.P., a Texas limited partnership.   “Partnership Agreement” means the Agreement of Limited Partnership of the Partnership dated April 21, 2006, as amended from time to time.   “Partnership Property” means the Drilling Rigs and all other property of any character, tangible or intangible, real, personal or mixed, now or hereafter owned, held or acquired by the Partnership.   “Partnership Interests” means partnership interests in the Partnership.   “Permitted Transfer” means any of the following Transfers:  (i) a Transfer by a Member (A) to any Affiliate of such Member or (B) to an entity owned by or organized for the benefit of the shareholders, officers, directors, employees, Affiliates or beneficiaries of such Member, as applicable; and (ii) a Member pledge by a Member of Membership Interests owned or held by such Member to secure payment of bona fide indebtedness owing by such Member; provided, that such Member retains the power to vote the Membership Interests so pledged until such time as the pledgee shall have realized on the pledge; and, provided further, that the provisions of Section 13.2 shall be applicable to the transfer of such Membership Interests upon exercise of such pledge and after such exercise.   “Permitted Transferee” means a transferee of Membership Interests in a Permitted Transfer.   “Person” means any individual, partnership, corporation, limited liability company, trust or other entity.   5 --------------------------------------------------------------------------------   “Principal Office” has the meaning set forth in Section 2.5 of this Agreement.   “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such an action, suit, or proceeding, and any inquiry or investigation that could lead to such an action, suit, or proceeding.   “Profits” or “Losses” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such taxable year or other period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments (without duplication):   (a)                                  Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses pursuant to this definition of “Profits” and “Losses” shall be added to such taxable income or loss;   (b)                                 Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this definition of “Profits” and “Losses” shall be subtracted from such taxable income or loss;   (c)                                  In the event the Book Value of any asset is adjusted pursuant to clause (b) or clause (c) of the definition of Book Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Book Value of the asset) or an item of loss (if the adjustment decreases the Book Value of the asset) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses;   (d)                                 Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Book Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Book Value;   (e)                                  In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such taxable year;   (f)                                    To the extent an adjustment to the adjusted tax basis of any asset pursuant to Code Section 734(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Account balances as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or an item of loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and   (g)                                 Any items that are allocated pursuant to the Regulatory Allocations or the Curative Allocations shall not be taken into account in computing Profits and Losses.   6 --------------------------------------------------------------------------------   “Regulatory Allocations” means the allocations pursuant to Section 9.2 of this Agreement.   “Securities Act” means the Securities Act of 1933, as amended.   “Selling Member” has the meaning set forth in Section 13.2 of this Agreement.   “Tax Matters Member” has the meaning assigned to the term “tax matters partner” in Section 6231(a)(7) of the Code.   “Transfer” means any sale, transfer, assignment, exchange, pledge, encumbrance, hypothecation, gift or other disposition of a Membership Interest in whole or in part, or any rights or benefits to which a holder of a Membership Interest may be entitled as provided in this Agreement or the Limited Liability Company Law, including, without limitation, the right to receive distributions in cash or in kind.   “Treasury Regulations” means the Income Tax Regulations promulgated under the Code, as they may be amended from time to time.   “Unreturned Capital Contribution Balance” of a Member at any time means the excess, if any, of (i) the cumulative amount of Capital Contributions made by such Member to the Company as of such time over (ii) the cumulative amount of distributions made by the Company to such Member pursuant to Section 10.1(a) as of such time.   1.2                               Construction. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine and neuter. All references to Articles and Sections refer to articles and sections of this Agreement, and all references to exhibits are to Exhibits attached to this Agreement, each of which is made a part of this Agreement for all purposes.   ARTICLE 2 ORGANIZATIONAL AND OTHER MATTERS   2.1                               Formation. The Members have formed the Company pursuant to and in accordance with the provisions of the Limited Liability Company Law. The Members have filed, on behalf of the Company, a Certificate of Formation (the “Certificate”) conforming to the Limited Liability Company Law in the office of the Secretary of State of the State of Texas.   2.2                               Name. The name of the Company is “Larclay GP, LLC” and the business of the Company shall be conducted under that name, or under any other name adopted by the Board of Managers in accordance with the Limited Liability Company Law.   2.3                               Limited Liability. Except as otherwise provided by the Limited Liability Company Law, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and a   7 --------------------------------------------------------------------------------   Member shall not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a Member.   2.4                               Registered Office; Registered Agent; Other Offices. The registered office of the Company required by the Limited Liability Company Law to be maintained in the State of Texas shall be the office named in the Certificate or such other office as the Board of Managers may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Texas shall be the initial registered agent designated in the Certificate or such other Person or Persons as the Board of Managers may designate from time to time in the manner provided by law.   2.5                               Principal Place of Business. The principal place of business of the Company shall be the place designated by the Board of Managers (the “Principal Office”). The Principal Office initially shall be located at 701 South Taylor, Suite 426, Amarillo, Texas 79101. The location of the Principal Office may be changed by the Board of Managers.   2.6                               Term. The period of duration for the Company shall be perpetual, unless the Company is earlier dissolved in accordance with either the provisions of this Agreement or the Limited Liability Company Law.   2.7                               Foreign Qualification. Prior to the Company’s conducting business in any jurisdiction other than Texas, the Board of Managers shall cause the Company to comply, to the extent procedures are available and those matters are reasonably within the control of the Board of Managers, with all requirements necessary to qualify the Company as a foreign limited liability company in that jurisdiction. At the request of the Board of Managers, each Member shall execute, acknowledge, swear to and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business.   2.8                               Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall end on December 31 of each calendar year unless, for United States federal income tax purposes, another fiscal year is required. The Company shall have the same fiscal year for United States federal income tax purposes and for accounting purposes.   2.9                               No State-Law Partnership. The Company shall not be a partnership (including without limitation a limited partnership) or a joint venture, and no Member shall be a partner or joint venturer of any other Member, for any reason other than for United States federal income and state tax purposes, and no provision of this Agreement shall be construed otherwise.   ARTICLE 3 PURPOSE AND POWERS   3.1                               Purpose of the Company. The purpose of the Company is to act as the sole general partner of the Partnership and to carry on any lawful business or activity in furtherance of such purpose as permitted by the Limited Liability Company Law.   8 --------------------------------------------------------------------------------   3.2                               Powers of the Company. The Company shall have the power to do any and all acts reasonably necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose and business described herein and for the protection and benefit of the Company and the Partnership.   ARTICLE 4 MEMBERS; REPRESENTATIONS   4.1                               Member Information. The identity of the Members and the number of Membership Interests held by each Member are reflected on Exhibit A attached hereto, which shall be amended as necessary to reflect any changes in such information. The term “Members” shall not include any Person who has ceased to be a member of the Company.   4.2                               Representations, Warranties and Covenants. Each Member represents, warrants, covenants and agrees that the following statements are true and correct as of the date hereof and shall be true and correct at all times that such Member is a Member:   (a)                                  such Member is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary;   (b)                                 such Member has full power and authority to execute and deliver this Agreement and each other agreement to be entered into by such Member pursuant to this Agreement and to perform its obligations hereunder and thereunder, and all actions by the board of directors and stockholders of such Member necessary for the due authorization, execution, delivery and performance by such Member of this Agreement and such other agreements have been duly taken and have not been revoked, rescinded or modified;   (c)                                  such Member has duly executed and delivered this Agreement and each other agreement to be entered into by such Member pursuant to this Agreement, and this Agreement constitutes and each such other agreement shall constitute the legal, valid and binding obligation of such Member enforceable against such Member in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity; and   (d)                                 the execution, delivery and performance of this Agreement and each other agreement to be entered into by such Member pursuant to this Agreement by such Member does not and will not (i) conflict with, or result in a breach, default or violation of (A) the organizational documents of such Member, (B) any contract or agreement to which such Member is a party or is otherwise subject or (C) any law, order, judgment, decree, writ, injunction or arbitral award to which such Member is subject; or (ii) require any consent, approval or authorization from, filing or registration with, or notice to, any governmental authority or other person, unless such requirement has already been satisfied.   9 --------------------------------------------------------------------------------   ARTICLE 5 MANAGEMENT OF THE COMPANY   5.1                               Management. The business and affairs of the Company shall be managed by or under the direction of a board of managers (the “Board” or “Board of Managers,” and each such manager, a “Manager”), and, subject to the limitations set forth in this Section 5.3, the Board of Managers shall have full, exclusive and complete authority and discretion in the management and control of the administration, affairs and operations of the Company.   5.2                               Board of Managers.   (a)                                  Board Representation. Each Member shall vote at any regular or special meeting of Members or in any written consent executed in lieu of such a meeting of Members and shall take all other actions necessary to elect a Board of Managers comprising four Managers as designated as follows:   (i)                                     two Managers designated by CWEI (the “CWEI Managers”), for so long as CWEI is a Member, who initially shall be Michael L. Pollard and John F. Kennedy; and   (ii)                                  two Managers designated by Lariat (the “Lariat Managers”), for so long as Lariat is a Member, who initially shall be Michael W. Burnett and Henry McElroy.   (b)                                 In order to effectuate the provisions of this Article 5 when any action or vote is required to be taken by a Member pursuant to this Agreement, such Member shall use commercially reasonable efforts to call, or cause the appropriate officers and managers of the Company to call, a special or annual meeting of Members of the Company, as the case may be, or execute or cause to be executed a written consent in writing in lieu of any such meetings. Any action by the Company, as the General Partner of the Partnership, causing a Required Advance to be made by the Partners relating to (i) a repair or maintenance obligation of the Partnership involving an amount greater than $50,000, or (ii) any capital expenditure of the Partnership, shall require the prior approval of the Board.   (c)                                  Vacancies; Removal. In the event of any vacancy in the Board of Managers, each Member agrees to vote and to otherwise use all commercially reasonable efforts to fill such vacancy so that the Board of Managers will include managers designated as provided in Section 5.2(a). Each Member agrees to vote all membership interests or other voting interests owned or controlled by such Member for the removal of a Manager whenever (but only whenever) there shall be presented to the Board of Managers the written direction that such Manager be removed, signed by CWEI, in the case of a CWEI Manager, or signed by Lariat, in the case of a Lariat Manager.   (d)                                 Meetings; Quorum. Unless waived in writing by each Member, the Company shall hold quarterly meetings of the Board of Managers in March, June, September, and December of each calendar year, commencing in June 2006. The presence of all members of the Board of Managers at a meeting shall be required to constitute a quorum for the transaction   10 --------------------------------------------------------------------------------   of business. The vote or consent of a majority of the Managers shall be the act of the Board of Managers.   (e)                                  Special Meetings. A special meeting of the Board of Managers may be called at any time at the request of two Managers.   (f)                                    Notice. Written notice stating the time, date and place of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than twenty-four (24) hours prior to the date of the meeting, either personally, by facsimile, by U.S. mail or by electronic mail to each Manager.   (g)                                 Action Without a Meeting; Telephone Conference. Any action required or permitted to be taken at a meeting of the Board of Manager may be taken without a meeting if a written consent or consents stating the action to be taken is signed by all of the Managers. Each such consent shall be included in the minutes of the Board of Managers or filed with the Company records. The Board of Managers may hold and participate in a meeting by means of conference telephone or similar communications equipment by means of which all Managers participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Manager participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.   (h)                                 Committees. The Board of Managers may establish one or more committees of the Board of Managers and may delegate by resolution to such committees the authority of the Board of Managers; provided that the delegation of authority to a committee shall not relieve the Board of Managers of any responsibility imposed by the Limited Liability Company Law.   (i)                                     Indemnification Agreements. The Company shall enter into an indemnification agreement in a form approved by the Board of Managers with each Manager who is elected or appointed to the Board of Managers from time to time.   5.3                               Matters Requiring Approval of the Members. Notwithstanding any other provision of this Agreement, including, without limitation, Section 5.1, the Members shall possess the full and exclusive decision making authority and discretion to manage and direct the Company with respect to the following actions and such actions may only be taken by the Company upon the approval of both Members (each, a “Member Decision”):   (a)                                  causing or permitting the sale, lease, assignment, transfer, exchange, or other disposition of all or substantially all of the assets of the Company or the Partnership, or consummating any merger, consolidation, recapitalization, reorganization, business combination or similar transaction involving the Company or Partnership;   (b)                                 causing or permitting any dissolution, liquidation, or winding up of the Company or the Partnership; provided, that the Members shall not vote to dissolve the Partnership at any time prior to payment of 50% of the Financing Obligation by the Partnership;   11 --------------------------------------------------------------------------------   (c)                                  causing or permitting the sale, lease, exchange, assignment, transfer or disposition by the Partnership of any Drilling Rig (other than pursuant to the Loan Documents);   (d)                                 directing, designing and implementing a plan of dissolution (“Plan of Dissolution”) in connection with a liquidation, dissolution or winding up of the affairs of the Company or the Partnership, as applicable, that contains provisions relating to the distribution of property to the Members and Partners, respectively, or otherwise determining the amounts of any in-kind distribution of Partnership Property by the Partnership to the Partners;   (e)                                  causing or permitting the Company or the Partnership to incur, create, assume, become or be liable in any manner with respect to, or permit to exist any indebtedness for borrowed money (including, without limitation, capitalized leases) or for the deferred purchase price for the acquisition of property, that could give rise to liability of either Member or recourse against any Member (other than pursuant to the Loan Documents);   (f)                                    amending, modifying, renewing, extending, or waiving compliance with any provision of, this Agreement, the Partnership Agreement, any of the Loan Documents, or the Master Drilling Agreement; and   (g)                                 receiving any loan or credit from the Agent or the Lenders (as such terms are defined in the Loan Facility) in excess of the amounts set forth in the Loan Facility.   5.4                               Certain Agreements and Covenants of the Members. Each Member agrees to vote and take any and all actions necessary with respect to approval of Member Decisions to effectuate the agreements of the Members set forth in this Section 5.4.   (a)                                  The Members shall cause the Company to dissolve the Partnership in accordance with the dissolution provisions and procedures set forth in the Partnership Agreement:   (i)                                     at the election of any Member any time following payment of 50% of the Financing Obligation; or   (ii)                                  at the election of CWEI at any time following a Change of Control of Lariat.   (b)                                 Upon the dissolution of the Partnership, the Members will cause the Company, in its capacity as general partner of the Partnership, to liquidate and distribute the Partnership Property in kind to the Partners to the fullest extent practicable. The Members agree to negotiate in good faith in designing and implementing a Plan of Dissolution such that the in-kind distribution of Partnership Property results in each Partner receiving, as nearly as practicable, Partnership Property having equivalent value.   (c)                                  Pursuant to the terms of the Operating Agreement and the Master Drilling Agreement, CWEI shall have the preferential right to contract for and utilize the Drilling Rigs in the course of CWEI’s Oil and Gas Business (the “Drilling Program”) on properties owned by CWEI, properties operated by CWEI and properties on which CWEI has an opportunity to commit and deploy a Drilling Rig in exchange for an interest in a well or lease. If at any time   12 --------------------------------------------------------------------------------   CWEI declines to utilize a Drilling Rig in its Drilling Program (an “Idle Drilling Rig”), the Members will cause the Company, on behalf of the Partnership, to either (i) retain the Idle Drilling Rig for use in contract drilling operations for third parties, (ii) offer the Idle Drilling Rig for sale to Lariat at a price agreed upon by the Members, or (iii) offer the Idle Drilling Rig for sale to an unaffiliated third party.   ARTICLE 6 OFFICERS   6.1                               Powers. Subject to the authority of the Board of Managers, the day-to-day management and control of the Company, and its business and affairs, shall be conducted or exercised by, or under the direction and authority of, the officers of the Company. The Company may have such officers who hold such offices, including but not limited to those set forth in this Section 6.1, as may be determined from time to time by the Board of Managers.   6.2                               Election and Term. At the last meeting of each calendar year, the Board of Managers shall elect a President and a Secretary, and such other officers as the Board of Managers may determine, who may include a Chairman of the Board of Managers, one or more vice presidents, a treasurer, a controller and one or more assistant treasurers and assistant secretaries. The Board of Managers may elect officers at such additional times as it deems advisable. Each officer shall serve a one year term unless re-elected at the last annual meeting of the Board of Managers of the year following his election, or until his earlier resignation or removal.   6.3                               Compensation. Except for any fees, salaries, or compensation expressly set forth in this Agreement or in an employment agreement approved by the Board of Managers, no fees, salaries or compensation shall be paid to the officers without the affirmative consent of the Board of Managers or in accordance with compensation or reimbursement policies adopted by the Board of Managers.   6.4                               Removal. The Board of Managers may remove any officer at any time, with or without cause, but no such removal shall affect the contract rights, if any, of the individual so removed.   6.5                               Resignation. An officer may resign at any time by delivering written notice to the Company. A resignation is effective without acceptance when the notice is delivered to the Company, unless the notice specifies a later effective date.   ARTICLE 7 BOOKS AND RECORDS   7.1                               Books, Records and Tax Information. The Company shall keep and maintain proper and complete books and records of accounts, taxes, financial information and all matters pertaining to the Company. The Company shall cause to be prepared and filed all necessary federal, state and local income tax returns for the Company, including making the elections described herein and shall cause an Internal Revenue Service Schedule K-1 or any successor   13 --------------------------------------------------------------------------------   form to be prepared and delivered in a timely manner to the Members. Each Member shall furnish to the Officers all pertinent information in its possession relating to Operations that is necessary to enable the Company’s tax returns to be prepared and filed.   7.2                               Tax Elections. The Company shall make the following elections on the appropriate tax returns:   (a)                                  to adopt the calendar year as the Company’s Fiscal Year;   (b)                                 to adopt an appropriate federal income tax method of accounting and to keep the Company’s books and records on such income tax method; and   (c)                                  any other election the Board of Managers may deem appropriate and in the best interests of the Company.   7.3                               Tax Matters Member. Pursuant to Code Section 6231(a)(7), the Tax Matters Member of the Company shall be CWEI. The Tax Matters Member may be changed only upon the approval of the Members and in accordance with the Code and the applicable Treasury Regulations.   ARTICLE 8 CAPITAL CONTRIBUTIONS   8.1                               Capital Contributions of Members. On the Effective Date, each Member shall contribute to the Company, in cash, the amounts set forth opposite such Member’s name under the heading “Capital Contribution” on Exhibit A hereto (a “Capital Contribution”).   8.2                               Further Contributions. No Member shall be obligated to make any additional capital contributions to the Company. The Members may, by unanimous written consent, agree to make additional Capital Contributions to the Company; provided, that in no event shall additional capital contributions be permitted if following such additional Capital Contribution either Member owns greater than 50% of the outstanding Membership Interests.   8.3                               Return of Capital. No interest shall accrue on Capital Contributions and no Member shall have the right to withdraw or be repaid any capital from the Company.   8.4                               Capital Accounts.   (a)                                  Solely for federal and state income tax purposes, a separate capital account (a “Capital Account”) will be maintained for each Member. Each Member’s Capital Account will be increased by:  (i) the amount of money contributed by such Member to the Company; (ii) the Fair Market Value of property contributed by such Member to the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code); and (iii) allocations to such Member of Profits and other items of income or gain pursuant to the Regulatory Allocations or the Curative Allocations. Each Member’s Capital Account will be decreased by:  (A) the amount of money distributed to such Member by the Company; (B) the Fair Market Value of property distributed to such Member by the Company (net of liabilities secured by such distributed property that such   14 --------------------------------------------------------------------------------   Member is considered to assume or take subject to under Section 752 of the Code); and (iv) allocations to the account of such Member of Net Losses and other items of loss or deduction pursuant to the Regulatory Allocations or the Curative Allocations.   (b)                                 In the event of a Transfer of Membership Interests, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent it relates to the transferred Membership Interests in accordance with Section 1.704-l(b)(2)(iv) of the Treasury Regulations.   (c)                                  The manner in which Capital Accounts are to be maintained pursuant to this Section 8.4 is intended to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder. If in the opinion of the Company’s legal counsel the manner in which Capital Accounts are to be maintained pursuant to the preceding provisions of this Section 8.4 should be modified in order to comply with Section 704(b) of the Code and the Treasury Regulations thereunder, then notwithstanding anything to the contrary contained in the preceding provisions of this Section 8.4, the method in which Capital Accounts are maintained shall be so modified; provided, however, that any change in the manner of maintaining Capital Accounts shall not materially alter the economic agreement and relative economic benefits between or among the Members.   (d)                                 Except as otherwise required in the Limited Liability Company Law, no Member shall have any liability to restore all or any portion of a deficit balance in such Member’s Capital Account.   8.5                               GAAP Capital Accounts. In addition to the Capital Account established and maintained solely for federal and state income tax purposes pursuant to Section 8.4, the Company shall establish and maintain a capital account for each Member, pursuant to generally accepted accounting principles (a “GAAP Capital Account”). Profits and Losses for each Fiscal Year or other period shall be allocated among the GAAP Capital Accounts in accordance with generally accepted accounting principles   ARTICLE 9 ALLOCATIONS   9.1                               Allocations of Profits and Losses. Subject to Section 9.2, Profits and Losses for each Fiscal Year or other period shall be allocated among the Members, solely for federal and state income tax purposes, in the following order and priority:   (a)                                  Profits shall be allocated as follows:   (i)                                     First, to the Members in proportion to the deficit balances  (if any) in their Capital Accounts, in an amount necessary to eliminate any deficits in the Members’ Capital Accounts and restore such Capital Accounts balances to zero;   (ii)                                  Next, to the Members, to the greatest extent possible, an amount required to cause the positive Capital Account balances of each of the Members to be in the same proportion as the Members’ respective Ownership Percentages; and   15 --------------------------------------------------------------------------------   (iii)                               Thereafter, to the Members pro rata in proportion to their respective Ownership Percentages.   (b)                                 Losses shall be allocated as follows:   (i)                                     First, to the Members, to the greatest extent possible, an amount required to cause the positive Capital Account balances of each of the Members to be in the same proportion as are the Members’ respective Ownership Percentages;   (ii)                                  Next, to the Members in proportion to the respective Capital Account balances of the Members until the Capital Account balance of each Member shall have been reduced to zero (0); and   (iii)                               Thereafter, to the Members pro rata in proportion to their respective Ownership Percentages.   9.2                               Regulatory Allocations. Solely for federal and state income tax purposes, the following allocations shall be made in the following order:   (a)                                  Nonrecourse Deductions shall be allocated to the Members in accordance with their respective Ownership Percentages.   (b)                                 Member Nonrecourse Deductions attributable to Member Nonrecourse Debt shall be allocated to the Members bearing the Economic Risk of Loss for such Member Nonrecourse Debt as determined under Treasury Regulation Section 1.704-2(b)(4). If more than one Member bears the Economic Risk of Loss for such Member Nonrecourse Debt, the Member Nonrecourse Deductions attributable to such Member Nonrecourse Debt shall be allocated among the Members according to the ratio in which they bear the Economic Risk of Loss. This Section 9.2(b) is intended to comply with the provisions of Treasury Regulation Section 1.704-2(i) and shall be interpreted consistently therewith.   (c)                                  Notwithstanding any other provision hereof to the contrary, if there is a net decrease in Minimum Gain for a taxable year (or if there was a net decrease in Minimum Gain for a prior taxable year and the Company did not have sufficient amounts of income and gain during prior years to allocate among the Members under this Section 9.2(c)), items of income and gain shall be allocated to each Member in an amount equal to such Member’s share of the net decrease in such Minimum Gain (as determined pursuant to Treasury Regulation Section 1.704-2(g)(2)). This Section 9.2(c) is intended to constitute a minimum gain chargeback under Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.   (d)                                 Notwithstanding any provision hereof to the contrary except Section 9.2(c) (dealing with Minimum Gain), if there is a net decrease in Member Nonrecourse Debt Minimum Gain for a taxable year (or if there was a net decrease in Member Nonrecourse Debt Minimum Gain for a prior taxable year and the Company did not have sufficient amounts of income and gain during prior years to allocate among the Members under this Section 9.2(d), items of income and gain shall be allocated to each Member in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain (as determined pursuant to Treasury Regulation Section 1.704-2(i)(4)). This Section 9.2(d) is intended to constitute a   16 --------------------------------------------------------------------------------   partner nonrecourse debt minimum gain chargeback under Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.   (e)                                  Notwithstanding any provision hereof to the contrary except Section 9.2(c) and Section 9.2(d) (dealing with Minimum Gain and Member Nonrecourse Debt Minimum Gain), a Member who unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) shall be allocated items of income and gain (consisting of a pro rata portion of each item of income, including gross income, and gain for the taxable year) in an amount and manner sufficient to eliminate any deficit balance in such Member’s Adjusted Capital Account as quickly as possible. This Section 9.2(e) is intended to constitute a qualified income offset under Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.   (f)                                    In the event that any Member has a negative Adjusted Capital Account at the end of any taxable year, such Member shall be allocated items of Company income and gain in the amount of such deficit as quickly as possible; provided, that an allocation pursuant to this Section 9.2(f) shall be made only if and to the extent that such Member would have a negative Adjusted Capital Account after all other allocations provided for in this Article 9 have been tentatively made as if Section 9.2(e) and this Section 9.2(f) were not in this Agreement.   (g)                                 To the extent an adjustment to the adjusted tax basis of any Company properties pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as the result of a distribution to any Member in complete liquidation of such Member’s Membership Interests, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be allocated to the Members in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) if such Section applies, or to the Member to whom such distribution was made if Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.   9.3                               Curative Allocations. The Regulatory Allocations are intended to comply with certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may affect the results which would be inconsistent with the manner in which the Members intend to divide Company distributions. Accordingly, the Board of Managers is authorized to divide other allocations of Profits, Losses, and other items among the Members, to the extent that they exist, so that the net amount of the Regulatory Allocations and the Curative Allocations to each Member is zero. The Board of Managers will have discretion to accomplish this result in any reasonable manner that is consistent with Code Section 704 and the related Treasury Regulations.   9.4                               Income Tax Allocations. All items of income, gain, loss and deduction for Federal income tax purposes shall be allocated in the same manner as the corresponding item of Profits and Losses is allocated, except as otherwise provided in this Section 9.4.   (a)                                  In accordance with Code Section 704(c) and the applicable Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property   17 --------------------------------------------------------------------------------   contributed to the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Book Value. In the event the Book Value of any property is adjusted pursuant to clause (b) or (d) of the definition of Book Value, subsequent allocations of income, gain, loss, and deduction with respect to such property shall take account of any variation between the adjusted basis of such property for federal income tax purposes and its Book Value in the same manner as under Code Section 704(c) and the applicable Regulations thereunder.   (b)                                 Any (i) recapture of depreciation, depletion, intangible drilling costs or any other item of deduction shall be allocated, in accordance with Treasury Regulations Sections 1.1245-1(e) and 1.1254-5, to the Members who received the benefit of such deductions (taking into account the effect of remedial allocations), and (ii) recapture of credits shall be allocated to the Members in accordance with applicable law.   (c)                                  Allocations pursuant to this Section 9.4 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement.   9.5                               Other Allocation Rules.   (a)                                  All items of income, gain, loss, deduction and credit allocable to an interest in the Company that may have been transferred shall be allocated between the transferor and the transferee based on the portion of the calendar year during which each was recognized as the owner of such interest, without regard to the results of Company operations during any particular portion of that calendar year and without regard to whether cash distributions were made to the transferor or the transferee during that calendar year; provided, however, that this allocation must be made in accordance with a method permissible under Code Section 706 and the regulations thereunder.   (b)                                 The Members’ proportionate shares of the “excess nonrecourse liabilities” of the Company, within the meaning of Treasury Regulation Section 1.752-3(a)(3), shall be determined in accordance with their Percentage Interests.   ARTICLE 10 DISTRIBUTIONS   10.1                        Distributions. Subject to Section 14.3, all Distributable Property of the Company and any or all other property of the Company shall be distributed at such time or times (if any) as the Board of Managers determines in its sole discretion to the Members in the following order and priority:   (a)                                  First, to the Members to the extent of and in proportion to the Unreturned Capital Contribution Balance of each Member until the Unreturned Capital Contribution Balance of each Member has been reduced to zero; and   18 --------------------------------------------------------------------------------   (b)                                 Thereafter, to the Members pro rata in proportion to the respective Ownership Percentage.   ARTICLE 11 MEETINGS OF MEMBERS   11.1                        Meetings. Annual meetings of Members may, but need not, be held. Any annual meeting of Members shall be held at such time and on such date as the Board of Managers may designate for the purpose of election of the Board of Managers and transacting such other business as may properly come before the meeting. Special meetings of the Members, for any purpose or purposes may be called by the Board of Managers, or any Member.   11.2                        Place of Meetings. The Board of Managers may designate any place, either within or outside the State of Delaware, as the place of meeting for any meeting of the Members. If no designation is made, the place of meeting shall be the principal executive office of the Company.   11.3                        Notice of Meetings. Written notice stating the time, date and place of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than three (3) days prior to the date of the meeting, either personally or by mail, by or at the direction of the Board of Managers or Member calling the meeting, to each Member entitled to vote at such meeting.   11.4                        Record Date. For the purpose of determining Members entitled to notice of or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any distribution, or in order to make a determination of Members for any other purpose, the date on which notice of the meeting is mailed or the date on which the resolution declaring such distribution is adopted, as the case may be, shall be the record date for such determination of Members.   11.5                        Quorum. The presence of all Members represented in person or by proxy shall constitute a quorum at any meeting of Members. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.   11.6                        Manner of Acting. The unanimous vote of the Members holding Membership Interests shall be the act of the Members, unless otherwise permitted or required by the Limited Liability Company Law, by the Certificate, or by this Agreement.   11.7                        Action by Members Without a Meeting; Telephone Conference   (a)                                  Any action required or permitted to be taken at a meeting of Members may be taken without a meeting if a written consent or consents stating the action to be taken is signed by all of the Members. Each such consent shall be included in the minutes of the Members or filed with the Company records.   (b)                                 Members may hold and participate in a meeting by means of conference telephone or similar communications equipment by means of which all Persons participating in   19 --------------------------------------------------------------------------------   the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.   11.8                        Waiver of Notice. When any notice is required to be given to any Member, a waiver thereof in writing signed by the Person entitled to such notice, whether before, or after the time of the meeting.   11.9                        Conduct of Meetings. All meetings of the Members shall be presided over by the chairman of the meeting, who shall be a Manager or Officer designated by the Board of Managers. The chairman of any meeting of Members shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him in order.   ARTICLE 12 INDEMNIFICATION   The Company shall indemnify any person who was, is, or is threatened to be made a party to a Proceeding by reason of the fact that he or she (a) is or was a Member, Manager or officer of the Company or (b) while a Member, Manager or officer of the Company, is or was serving at the request of the Company as a Manager, director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, to the fullest extent permitted under the Limited Liability Company Law, as amended from time to time. Such right shall be a contract right and as such shall run to the benefit of any Member or Manager of the Company or any officer who is elected and accepts the position of an officer of the Company or elects to continue to serve as an officer of the Company while this Article 12 is in effect. Any amendment, modification or repeal of this Article 12 shall be prospective only and shall not limit the rights of any such Member, Manager or officer of the Company or the obligations of the Company with respect to any claim arising from or related to the services of such Member, Manager or officer in any of the foregoing capacities prior to any such amendment, modification or repeal of this Article 12. Such right shall include the right to be paid in advance or reimbursed by the Company for expenses incurred in investigating or defending any such proceeding in advance of its final disposition to the maximum extent permitted under the Limited Liability Company Law, as amended from time to time. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Company within 60 days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim, and if successful in whole or in part, the claimant shall also be entitled to be paid the expenses of prosecuting such claim. It shall be a defense to any such action that such indemnification or advancement of costs of defense is not permitted under the Limited Liability Company Law, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including its officers, independent legal counsel, or   20 --------------------------------------------------------------------------------   Members) to have made its determination prior to the commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances nor an actual determination by the Company (including its officers, independent legal counsel, or Members) that such indemnification or advancement is not permissible shall be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any person having a right of indemnification under the foregoing provisions, such right shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. The rights conferred above shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, resolution of the Members, agreement, or otherwise.   ARTICLE 13 RESTRICTIONS ON TRANSFERS OF MEMBERSHIP INTERESTS   13.1                        Restrictions on Transfer  A Member may Transfer its Membership Interest, in whole or in part, only if:   (a)                                  except to the extent such opinion is waived in whole or in part by the Board of Managers, in its sole discretion, the Company obtains an opinion of counsel of the Company or an opinion of counsel for such transferor satisfactory to the Board of Managers to the effect that (i) the Transfer may be made without registration under the Securities Act; (ii) such Transfer complies with applicable state securities and blue sky laws; (iii) such Transfer will not subject the Company to registration as an “investment company” or election as a “business development company” under the Investment Company Act, or subject the Board of Managers or the Company to registration as an “investment adviser” under the Investment Advisers Act of 1940, as amended; and (iv) such Transfer will not cause the dissolution of the Company or lead to the classification of the Company as an association taxable as a corporation for federal income tax purposes;   (b)                                 the transferee furnishes to the Company a written confirmation, in form and substance satisfactory to the Board of Managers and the Company’s counsel, executed by the transferee making each of the representations and agreements of a Member contained in this Agreement and agreeing to be bound by the terms and provisions hereof;   (c)                                  after giving effect to such Transfer, less than 50% of the aggregate interests in Company profits and capital will have been sold or exchanged (within the meaning of Code Section 708) within the preceding 12-month period and the Transfer will not otherwise cause a termination of the Company for tax purposes;   (d)                                 except in the case of a transfer by a Member to a Permitted Transferee, in which case no consent shall be required (provided that the Transfer meets the other requirements of this Section 13.1 and that admission of the transferee as an additional or substituted Member remains at the sole discretion of the Board of Managers), the Board of Managers gives its written consent to such Transfer, (the Board of Managers may consent to the Transfer without consenting to the admission of the transferee as an additional or substituted Member);   (e)                                  the Selling Member (defined below) has complied with the provisions of Section 13.2;   (f)                                    the transferee has paid all costs and expenses incurred by the Company in connection with such Transfer; and   21 --------------------------------------------------------------------------------   (g)                                 the Board of Managers has not determined, in its sole discretion, that such Transfer will either cause the Company to be characterized as a “publicly traded partnership” or will materially increase the risk that the Company will be so characterized. For purposes of this paragraph the phrase “publicly traded partnership” shall have the meanings set forth in Section 7704(b) and 469(k) of the Code. In particular and without limiting the foregoing, no Transfer shall be permitted, given effect or otherwise recognized, and such Transfer (or purported Transfer) shall be void ab initio, if at the time of such Transfer interests in the Company are traded on an “established securities market” (within the meaning of Treasury Regulation Section 1.7704-1(b)) or are “readily tradeable on a secondary market or the equivalent thereof” (within the meaning of Treasury Regulation Section 1.7704-1(c)).   If and when all the foregoing conditions to Transfer are satisfied and the Board of Managers consents to the admission of the transferee as a Member, which consent may be withheld in the sole discretion of the Board of Managers, the transferee shall become an additional or substituted Member as to the Interest or part thereof so transferred. In accordance with the Limited Liability Company Law, such transferee, if admitted to the Company, will have the rights and powers and will be subject to the restrictions and liabilities of a Member under this Agreement and under the Membership Law. For purposes of this Agreement the transferee shall be treated as (i) having made previous Capital Contributions to the Company equal to the previous Capital Contributions by the Selling Member that correspond to the Interest or part thereof Transferred and (ii) having an Unreturned Capital Contribution Balance equal to the Unreturned Capital Contribution Balance of the Selling Member that correspond to the Interest or part thereof Transferred. Regardless of whether such substitution actually occurs, however, the Selling Member whose Interest or part thereof is Transferred, voluntarily or involuntarily, shall be and remain obligated for the performance and payment of any and all obligations incurred, if any, by such Selling Member prior to the date of such Transfer. All costs incurred in connection with any proposed Transfer, including without limitation fees and disbursements for counsel to the Company or the Board of Managers, shall be borne by the Member proposing such Transfer.   13.2                        Right of First Refusal on Transfer of Membership Interests.   (a)                                  Whenever and as often as any Member or Permitted Transferee desires to Transfer any Membership Interests pursuant to a bona fide written offer to purchase such Membership Interests, such Member (the “Selling Member”) shall give written notice (the “Notice”) to the other Member (the “Offeree”) to such effect, enclosing a copy of such offer and specifying the Membership Interests that the Selling Member desires to transfer, the name of the person or persons to whom the Selling Member desires to make such sale and the consideration for the Membership Interests that has been offered in connection with such offer. Upon receipt of the Notice, the Offeree initially shall have the first right and option to purchase the Membership Interests proposed to be transferred for cash at the purchase price specified in the Notice, exercisable for 20 business days after receipt of the Notice. Failure of the Offeree to respond to such Notice within such 20-day period shall be deemed to constitute a notification to the Selling Member of the Offeree’s decision not to exercise the first right and option to purchase such Membership Interests under this Section 13.2. In the event such consideration includes   22 --------------------------------------------------------------------------------   non-cash consideration, the dollar value of such non-cash consideration shall be its fair market value, as determined by the Board of Managers.   (b)                                 The Offeree may exercise its right and option to purchase such Membership Interests by giving written notice of exercise to the Selling Member within such 10-day period, specifying the date (not later than five business days after the date of such notice) upon which payment of the purchase price for the Membership Interests shall be made. The Selling Member shall deliver to the Offeree’s principal office, on or before the payment date specified in such notice, document(s) effectuating the transfer of the Membership Interests being purchased by the Offeree, against payment of the purchase price therefor by the Offeree in immediately available funds.   (c)                                  If all the Membership Interests proposed to be transferred are not purchased by the Offeree in accordance with this paragraph, the Selling Member shall not be required to sell any of the Membership Interests proposed to be transferred to the Offeree, and during the 30-day period commencing on the expiration of the rights and options provided for in this paragraph, may sell all (but not less than all) of such Membership Interests to the transferee named in the Notice for consideration equal to or greater than the consideration specified in the Notice.   (d)                                 No Transfer of any Membership Interests otherwise permitted by this Section 13.2 (including Permitted Transfers) shall be made unless simultaneously with such transfer of Membership Interests to a transferee, the Selling Member transfers to such transferee an equal number of Partnership Interests owned by such Selling Member.   (e)                                  The provisions of this Section 13.2 shall not apply to any Permitted Transfer by a Member or Permitted Transferee.   13.3                        Rights of Transferees. Unless and until any assignee, transferee, legal representative or successor in interest of a Member becomes a substituted Member in accordance with Section 13.1, its status and rights shall be limited to the rights of an assignee of a limited liability interest under Section 101.109 of the Limited Liability Company Law.   ARTICLE 14 DISSOLUTION AND LIQUIDATION   14.1                        Dissolution. The Company shall be dissolved upon the vote of the Members in accordance with Section 5.3 or upon the occurrence of any dissolution event specified in the Limited Liability Company Law.   14.2                        Effect of Dissolution. Upon dissolution, the Company shall cease carrying on its business but shall not terminate until the winding up of the affairs of the Company is completed, the assets of the Company shall have been distributed as provided below and a certificate of cancellation of the Company under the Limited Liability Company Law has been filed with the Secretary of State of the State of Delaware.   23 --------------------------------------------------------------------------------   14.3                        Liquidation Upon Dissolution. Upon the dissolution of the Company, sole and plenary authority to effectuate the liquidation of the assets of the Company shall be vested in the Board of Managers, who shall have full power and authority to sell, assign and encumber any and all of the Company’s assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner. The proceeds of liquidation of the assets of the Company distributable upon a dissolution and winding up of the Company shall be applied in the following order of priority:   (i)                                     first, to the creditors of the Company, including creditors who are Members, in the order of priority provided by law, in satisfaction of all liabilities and obligations of the Company (of any nature whatsoever, including, without limitation, fixed or contingent, matured or unmatured, legal or equitable, secured or unsecured), whether by payment or the making of reasonable provision for payment thereof; and   (ii)                                  thereafter, to the Members in accordance with Article 10.   14.4                        Winding Up and Certificate of Cancellation. The winding up of the Company shall be completed when all of its debts, liabilities, and obligations have been paid and discharged or reasonably adequate provision therefor has been made, and all of the remaining property and assets of the Company have been distributed to the Members. Upon the completion of the winding up of the Company, a certificate of cancellation of the Company shall be filed with the Secretary of State of the State of Delaware.   14.5                        Non-Solicitation of Employees. Each Member agrees that if the Partnership makes a distribution of Drilling Rigs to the Partners upon a dissolution of the Partnership and winding up of the Company, the drilling crew then associated with each Drilling Rig shall thereafter be employed by the Member to whom the Drilling Rig was so distributed. Additionally, each Member agrees that it will not solicit the employees of the other Member upon any such dissolution of the Partnership.   ARTICLE 15 GENERAL PROVISIONS   15.1                        Confidentiality. For purposes of this Agreement, “Confidential Information” means all information of or pertaining to a Member (the “Disclosing Member”), the Partnership or the Company (together, the “Larclay Entities”) acquired or obtained by the other Member (the “Receiving Member”) while the Receiving Member owns or holds an ownership interest in any Larclay Entity, other than (i) information that is now in, or hereafter enters, the public domain through no action of the Receiving Member in violation of the terms of this Agreement, (ii) information that the Receiving Member can demonstrate was not acquired or obtained by the Receiving Member directly or indirectly from the Disclosing Member or any Larclay Entity or (iii) information disclosed to the Receiving Member by the Disclosing Member or any Larclay Entity to others on an unrestricted, non-confidential basis. The Receiving Member shall use Confidential Information solely in connection with the business of the Larclay Entities and not for any other purpose or in any other manner. The Disclosing Member should disclose   24 --------------------------------------------------------------------------------   Confidential Information only to those of its directors, officers, employees, attorneys, agents, representatives and advisors (collectively, the “Representatives”) who have a need to have access to such Confidential Information for the purposes of assisting and advising the Receiving Member in connection with the ownership and holding of interests in the Larclay Entities and in performing its obligations and exercising its rights and privileges as contemplated in this Agreement. The Disclosing Member shall inform its Representatives of the confidential nature of the Confidential Information and of the terms of this Section 15.1 and, in any event, the Receiving Member shall be responsible for any use or disclosure of Confidential Information by any of its Representatives. Notwithstanding the foregoing, the Receiving Member may disclose Confidential Information to the extent (but only to the extent) disclosure is required by applicable law, including, without limitation, federal or state securities laws. Each Member acknowledges that the release of Confidential Information may be damaging to the Disclosing Member or to the Larclay Entities or persons with which they do business and that a breach of the provisions of this Section 15.1 may cause irreparable injury to the Disclosing Member or the Larclay Entities for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Parties agree that the provisions of this Section 15.1 may be enforced by specific performance.   15.2                        Offset. Any amounts owed by a Member to the Company may be deducted from any payments or distributions required to be made by the Company hereunder.   15.3                        Notices. All notices, requests or consents required or permitted to be given under this Agreement must be in writing and shall be considered as properly given if mailed by first class United States mail, postage paid, and registered or certified with return receipt requested, or if delivered to the recipient in person, by courier or by facsimile transmission. Notices, requests and consents shall be sent to a Member at the address shown on its Signature Page for Members. A Member may change its address by giving written notice to the General Member. Any notice, request or consent to the Company shall be sent to the Company at its principal place of business, to the attention of the Chief Executive Officer.   15.4                        Entire Agreement. This Agreement constitutes the entire agreement of the Members relating to the Company and supersedes all prior contracts or agreements with respect to the Company or between the Members, whether oral or written, including without limitation, the Letter Agreement.   15.5                        Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Member in the performance by that Member of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by that Member of the same or any other obligations of that Member with respect to the Company. Failure on the part of a Member to complain of any act of any Member or to declare any Member in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Member of its rights with respect to that default until the applicable statute of limitations period has run.   25 --------------------------------------------------------------------------------   15.6                        Amendment or Modification.   (a)                                  Except as otherwise provided in this Section 15.6, any amendment to this Agreement must be proposed by the Members and approved in writing by the Members to be effective.   (b)                                 The Company may amend this Agreement without the consent of any Member (i) to remove or correct any inconsistency, ambiguity or error contained herein, provided that such amendment does not materially and adversely affect the Members or (ii) to reflect any Transfer of Membership Interests pursuant to Article 13.   15.7                        Binding Effect. Subject to the restrictions on Transfers set forth in this Agreement, this Agreement is binding on and inures to the benefit of the Members and their respective successors and assigns.   15.8                        Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any provision of this Agreement or its application to any Person or circumstance is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to other Persons or circumstances is not affected and that provision shall be enforced to the fullest extent permitted by law.   15.9                        Further Assurances. In connection with this Agreement and the transactions contemplated by it, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.   15.10                 Waiver of Certain Rights. Each Member irrevocably waives any right it may have to maintain any action for partition of the property of the Company.   15.11                 Successors and Assigns. Except as otherwise specifically provided herein, this Agreement shall be binding upon and inure to the benefit of the Members and their respective successors and permitted assigns.   15.12                 Counterparts. This Agreement may be executed in any number of counterparts (including by facsimile transmission) with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.   [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]   26 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the date first written above.     MEMBERS:       CLAYTON WILLIAMS ENERGY, INC.           By: /s/ Mel G. Riggs     Mel G. Riggs     Senior Vice President and Chief Financial     Officer               LARIAT SERVICES, INC.             By:   /s/ N. Malone Mitchell   Name: N. Malone Mitchell   Title: President   --------------------------------------------------------------------------------   Exhibit A   Schedule of Members:   Name   Capital Contribution   Membership Interests               Clayton Williams Energy, Inc.   $ 5,000   50 %             Lariat Services, Inc.   $ 5,000   50 %   --------------------------------------------------------------------------------
Exhibit 10.1   LETTER AMENDMENT               November 22, 2004 To the Lenders parties to the     Credit Agreement referred to below   Gentlemen:   We refer to the Credit Agreement dated as of December 16, 2002, as amended by Amendment No. 1 dated as of March 3, 2003, Amendment No. 2 dated as of December 15, 2003 and Amendment No. 3 dated as of March 10, 2004 (the “Credit Agreement”) among the undersigned, you and Wells Fargo Bank, National Association, as your Agent. Unless otherwise defined herein, the terms defined in the Credit Agreement shall be used herein as therein defined.   It is hereby agreed by you and us that the Termination Date of the Credit Agreement should be amended to extend the term of the Credit Agreement to March 14, 2005.   You have indicated your willingness to so agree. Accordingly, it is hereby agreed by you and us that the Credit Agreement is, effective as of the date first above written, hereby amended by amending the definition of “Termination Date” by substituting for the date “December 13, 2004”, the date of “March 14, 2005”.   On and after the effective date of this letter amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended by this letter amendment. The Credit Agreement, as amended by this letter amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.   If you agree to the terms and provisions hereof, please evidence such agreement by executing and returning at least two counterparts of this letter amendment to Shearman & Sterling LLP, 525 Market Street, San Francisco, CA 94105, Attention of Eldyne Perrou; Telephone: (415) 616 1125; Facsimile: (415) 616 1325. This letter amendment shall become effective as of the date first above written when and if counterparts of this letter amendment shall have been executed by us and all of the Lenders. This letter amendment is subject to the provisions of Section 8.01 of the Credit Agreement.   This letter amendment may be executed in any number of counterparts and by any combination of the parties hereto in separate counterparts, each of which counterparts shall be an original and all of which taken together shall constitute one and the same letter amendment. -------------------------------------------------------------------------------- Very truly yours, GREATER BAY BANCORP By   /s/ James Westfall --------------------------------------------------------------------------------     Title: Executive Vice President and Chief Financial Officer By   /s/ Kamran Husain --------------------------------------------------------------------------------     Title: Senior Vice President   Agreed as of the date first above written:   WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and Lender By   /s/ Robert McFadden --------------------------------------------------------------------------------     Title: Senior Relationship Manager U.S. BANK NATIONAL ASSOCIATION, as Lender By   /s/ Jon Beggs --------------------------------------------------------------------------------     Title: HARRIS TRUST AND SAVINGS BANK, as Lender By   /s/ T. E. Broccolo --------------------------------------------------------------------------------     Title: Managing Director BANK OF AMERICA, N.A., as Lender By   /s/ Mary Riggins --------------------------------------------------------------------------------     Title: Senior Vice President M&I MARSHALL & ILSLEY BANK, as Lender By   /s/ Kurts Strelnieks --------------------------------------------------------------------------------     Title:
Exhibit 10.6 (6/22/05) MINERAL LEASE NO. ML 50773 GRANT: SCH: 1920.00 UTAH STATE MINERAL LEASE FORM GEOTHERMAL STEAM THIS MINING LEASE AND AGREEMENT (the “Lease”) is entered into and is effective as of APRIL 1, 2007, by and between the STATE OF UTAH, acting by and through the SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION, 675 East 500 South, Suite 500, Salt Lake City, Utah 84102 (“Lessor”), and INTERMOUNTAIN RENEWABLE POWER, LLC 5152 NORTH EDGEWOOD DRIVE SUITE 375 PROVO, UT 84604 having a business address as shown above (“Lessee”). WITNESSETH: That the State of Utah, as Lessor, in consideration of the rentals, royalties, and other financial consideration paid or required to be paid by Lessee, and the covenants of Lessee set forth below, does hereby GRANT AND LEASE to Lessee the exclusive right and privilege to explore for, drill for, mine, remove, transport, convey, cross-haul, commingle, and sell the leased substances covered by this lease and located within the boundaries of the following-described tract of land (the “Leased Premises”) located in BEAVER County, State of Utah: T30S, R12W, SLB&M. SEC. 13:     LOTS 3(35.70), 4(35.74), W 1/2SE 1/4, SW 1/4 SEC. 14:     S 1/2 SEC. 26:     NW 1/4, S 1/ 2 SEC. 28:     E 1/2NE 1/4, NE 1/4NW 1/4 SEC. 29:     S 1/2SW 1/4, NW  1/4SW 1/4 SEC. 30:     LOTS 1(40.22), 2(40.20), 3(40.16), 4(40.14), N 1/2NE 1/4, SW  1/4NE 1/4, E 1/2NW 1/4, N 1/ 2SE 1/4 SEC. 32:     E 1/2, NW 1/4 Containing 2272.16 acres, more or less. Together with the right and privilege to make use of the surface and subsurface of the Leased Premises for uses reasonably incident to the mining of leased substances by Lessee on the Leased Premises or on other lands under the control of Lessee or mined in connection with operations on the Leased Premises, including, but not limited to, conveying, storing, loading, hauling and otherwise transporting leased substances; excavating; removing, stockpiling, depositing and redepositing of surface materials; developing and utilizing mine portals and adjacent areas for access, staging and other purposes incident to mining; and the subsidence, mitigation, restoration and reclamation of the surface. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 2   This Mining Lease and Agreement is subject to, and Lessee hereby agrees to and accepts, the following covenants, terms, and conditions:   1. LEASED SUBSTANCES.     1.1 Geothermal Steam, as Classified and defined in Utah Administrative Code R850-27-100 (collectively “leased substances”). This mineral lease grants Lessee the right, subject to the terms and conditions set forth herein, to extract the leased substances. In the event that minerals or materials other than the leased substances are discovered during lease operations, Lessee shall promptly notify the Lessor and shall not further disturb or remove the other minerals or materials without Lessor’s written permission. Upon notifying Lessor of such discovery the Lessee shall have preference in making application to the Lessor for a lease or permit covering the unleased minerals or materials that are discovered.     1.2 Ore From Adjacent Lands; Transport Fee, Process Fee. Lessee may use mine workings, portals and ore processing facilities located on the Subject Property to transport or process ore extracted from non-state lands adjacent to or nearby the Subject Property. As a condition of Lessor’s consent to such use of the Subject Property, Lessee shall pay Lessor a fee per ton of ore attributable to non-state lands that is removed from portals located on the Subject Property and transported offsite or processed on site. Lessee shall also pay Lessor a fee per ton of any other ore that is mined from non-state lands and is transported to the Subject Property for processing at a facility located upon the Subject Property. Said transport or process fee per ton shall be paid at One-half the leased substances royalty rate as contained in Paragraph 6 of this lease. Lessee shall maintain separate stockpiles of ore removed from the Subject Property and ores attributable to non-state lands, and shall not commingle such ores. For purposes of this paragraph, weight of ores shall be the “dry weight,” determined by taking moisture content measurements, and deducting the average moisture from the ore weight, measure at the point of receipt at the mill or other processing facility. For all ore subject to the transport or process fee that is transported for milling or processing during a particular month, Lessee shall pay transport or process fees to Lessor on or before the end of the next succeeding month. Transport or process fees shall be accounted for separately on the monthly royalty settlement sheet required to be submitted by Lessee pursuant to paragraph 6.4, Royalty Payment.     1.3 No Warranty of Title. Lessor claims title to the mineral estate covered by this Lease. Lessor does not warrant title nor represent that no one will dispute the title asserted by Lessor. It is expressly agreed that Lessor shall not be liable to Lessee for any alleged deficiency in title to the mineral estate, nor shall Lessee become entitled to any refund for any rentals, bonuses, or royalties paid under this Lease in the event of title failure.   2. RESERVATIONS TO LESSOR. Subject to the exclusive rights and privileges granted to Lessee under this Lease, and further provided that Lessor shall refrain from taking actions with respect to the Leased Premises that may unreasonably interfere with Lessee’s operations, Lessor hereby excepts and reserves from the operation of this Lease the following rights and privileges (to the extent that Lessor has the right to grant such rights and privileges):     2.1 Rights-of-Way and Easements. Lessor reserves the right, following consultation with the Lessee, to establish rights-of-way and easements upon, through or over the Leased Premises, under terms and conditions that will not unreasonably interfere with operations under this Lease, for roads, pipelines, electric transmission lines, transportation and utility corridors, mineral access, and any other purpose deemed reasonably necessary by Lessor. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 3     2.2 Other Mineral Leases. Lessor reserves the right to enter into mineral leases and agreements with third parties covering minerals other than the leased substances, under terms and conditions that will not unreasonably interfere with operations under this Lease in accordance with Lessor’s regulations, if any, governing multiple mineral development.     2.3 Use and Disposal of Surface. To the extent that Lessor owns the surface estate of the Leased Premises and subject to the rights granted to the Lessee pursuant to this Lease, Lessor reserves the right to use, lease, sell, or otherwise dispose of the surface estate or any part thereof, provided that any such actions will not unreasonably interfere with operations under this Lease. Lessor shall notify Lessee of any such sale, lease, or other disposition of the surface estate.     2.4 Rights Not Expressly Granted. Lessor further reserves all rights and privileges of every kind and nature, except as specifically granted in this Lease, provided that any actions under such reservations will not unreasonably interfere with operations under this Lease.   3. TERM OF LEASE; MINIMUM ROYALTIES; READJUSTMENT.     3.1 Primary Term. This Lease is granted for a “primary term” of ten (10) years from the date hereinabove first written.     3.2 Extension Beyond Primary Term By Production. Subject to Lessee’s compliance with the other provisions of this Lease, this Lease shall remain in effect beyond the primary term so long as leased substances are being produced in paying quantities, as defined herein, from the Leased Premises, or from lands constituting a mining unit as approved by Lessor in its reasonable discretion. For purposes of this lease, production of leased substances in paying quantities shall mean the mining and sale of the leased substances during the lease-year in an amount sufficient to cover all operating expenses accruing to the lessee pursuant to the leasehold for that lease year, including the payment of all taxes and the payment of rentals and royalties accruing to the Lessor.     3.3 Extension Beyond Primary Term By Diligent Development, Financial Investment and Minimum Royalty. In the absence of actual production in paying quantities as set forth in paragraph 3.2, Extension Beyond Primary Term, this Lease shall remain in effect beyond the primary term only if the Lessee is engaged in diligent operations, exploration or development activity, as well as making a substantial financial investment, which in Lessor’s sole discretion is calculated to advance development or production of leased substances from the Leased Premises or lands constituting a mining unit as approved by the Director which includes the Leased Premises, and Lessee pays the annual minimum royalty set forth in Paragraph 3.4, Minimum Royalty, in advance, on or before the anniversary date of the date first written hereinabove.     3.4 Minimum Royalty. Commencing with the n/a year of this lease Lessee shall pay Lessor an annual minimum royalty, in advance, on or before the Effective Date and each anniversary thereof. The advance annual minimum royalty shall be in the amount of $ n/a. Lessee may credit each lease-year’s minimum royalty payment against actual production royalties accruing during that lease year, but such credit shall not carry over beyond the lease year in which the advance royalty was paid. Minimum royalties may not be credited against the annual rentals or bonus bids. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 4     3.5 Expiration; Cessation of Production. This Lease may not be extended pursuant to paragraph 3.3, Diligent Operations, beyond the end of the twentieth year after the Effective Date except by the actual production of leased substances in commercial quantities from the Leased Premises or from lands constituting an approved mining unit which includes the Leased Premises, or except by suspension of the Lease pursuant to Article 17.3, unless otherwise specifically approved in writing by the Director of the Trust Lands Administration in the interest of the trust beneficiaries. After expiration of the primary term, this Lease will expire of its own terms, without the necessity of any notice or action by Lessor, if: (a) Lessee fails to produce leased substances in accordance with Article 3.2; (b) Lessee ceases to engage in exploration, development, or operations or fails to pay annual advance minimum royalties in accordance with Article 3.4; or, (c) the Director fails to make a written determination that it is in the interest of the trust beneficiaries to extend this lease.     3.6 Readjustment. At the end of the primary term and at the end of each period of ten (10) years thereafter (“Readjustment Period”), Lessor may exercise its option to readjust the terms and conditions of this Lease (including, without limitation: rental rates, minimum royalties, royalty rates, valuation methods, and provisions concerning reclamation). Notice of intent to exercise the right to readjust is timely given by Lessor if mailed prior to the end of the Readjustment Period to the last address set forth for Lessee in Lessor’s files. Lessor shall have up to one year after exercising its option to readjust to review and communicate in writing the final readjusted terms of the lease. If within thirty (30) days after submission of the readjusted lease terms to the Lessee, the Lessee determines that any or all of the proposed readjusted terms and conditions are unreasonable, then Lessee shall so notify Lessor in writing and the parties, acting reasonably, shall attempt to resolve the objectionable term or condition. If the parties are unable, acting reasonably, to resolve the matter and agree upon the readjusted terms and conditions as submitted by Lessor at the end of the Readjustment Period, Lessee shall forfeit any right to the continued extension of this lease, and the lease shall automatically terminate, provided that nothing herein shall be deemed to preclude Lessee from appealing any readjustment by Lessor pursuant to applicable law.   4. BONUS BID. Lessee agrees to pay Lessor an initial bonus bid in the sum of n/a dollars as partial consideration for Lessor’s issuance of this Lease, payable in cash prior to execution of this lease. The initial bonus bid may not be credited against annual rentals, annual minimum royalties or production royalties accruing pursuant to this lease.   5. RENTALS/MINIMUM RENTALS. Lessee agrees to pay Lessor an annual rental of $1.00 for each acre and fractional part thereof within the Leased Premises; provided however, the minimum annual rental required by this lease shall be $500.00 irrespective of acreage. Lessee shall promptly pay annual rentals each year in advance on or before the anniversary date of the Effective Date. The rental payment for a mineral lease year may be credited against production royalties only as they accrue for that lease year. The Lessee may not credit rentals paid for one lease year against production royalties accruing to another lease year. Rental payments may not be credited against minimum royalties or bonus bids accruing to any lease year. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 5   6. ROYALTIES.     6.1 Production Royalties. Lessee shall pay Lessor a production royalty on the basis of 10% of the Gross Value, f.o.b. the mine, of the leased substances sold under an arm’s length transaction, bona fide contract of sale or $ n/a per short ton, whichever amount is greater. For purposes of this lease the Gross Value of the leased substances shall mean the actual compensation received by the Lessee, or any affiliated entity, on the basis of U.S. Dollars, including all payments, bonuses and allowances, received plus the value of all services, payments in kind and all other compensation whether monetary or non-monetary, received by the Lessee from the buyer or from other parties for the sale or disposal of the leased substances.     6.2 Non-Arms Length Transactions. In the event that Lessee uses, sells or otherwise disposes of leased substances without a non-arm’s-length contract or bill of sale, Lessee shall promptly notify Lessor of such use, sale or disposal. The Director may then determine and assign the Gross Value to the leased substances for royalty purposes after taking into account spot market prices, the value of similar or like leased substances reported by other trust lands lessees, the value of like mineral commodities as reported by the United States Geological Survey, and other pertinent economic data regarding the fair market value of the leased substances, f.o.b. the mine.     6.3 No Deductions. It is expressly understood and agreed that none of Lessee’s mining, production or processing costs, including but not limited to costs for materials, labor, overhead, distribution, transportation f.o.b. mine, loading, crushing, processing, or general and administrative activities, may be deducted in computing Lessor’s royalty. All such costs shall be entirely borne by Lessee and are anticipated by the rate of royalty set forth in this Lease.     6.4 Royalty Payment. For all leased substances that are sold or transported from the leased lands during a particular month, Lessee shall pay royalties to Lessor on or before the end of the next succeeding month. Royalty payments shall be accompanied by a verified statement, in a form approved by Lessor, stating the amount of leased substances sold or transported, the gross proceeds accruing to Lessee, and any other information reasonably required by Lessor to verify production and disposition of the leased substances or leased substances products. Delinquent royalties may be subject to late fees and penalties in accordance with Lessor’s Rules.     6.5 Suspension, Waiver or Reduction of Rents or Royalties. Lessor, to the extent not prohibited by applicable law, is authorized to waive, suspend, or reduce the rental or minimum royalty, or reduce the royalty applicable with respect to the entire Lease, whenever in Lessor’s sole judgment it is necessary to do so in order to promote development, or whenever in the Lessor’s sole judgment the Lease cannot be successfully operated under the terms provided herein and continued operations are in the trust land beneficiaries best interest.   7. RECORDKEEPING; INSPECTION; AUDITS.     7.1 Registered Agent; Records. Lessee shall maintain a registered agent within the State of Utah to whom any and all notices may be sent by Lessor and upon whom process may be served. Lessee shall also maintain an office within the State of Utah containing originals or copies of all maps, engineering data, permitting materials, books, records or contracts (whether such documents are in paper or electronic form) generated by Lessee that pertain in any way to leased substances production, output and valuation; mine operations; assays; processing returns; leased substances sales and dispositions; and calculation -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 6     of royalties from the Leased Premises. Lessee shall maintain such documents for at least seven years after the date of the leased substances production to which the documents pertain.     7.2 Inspection. Lessor’s employees and authorized agents at Lessor’s sole risk and expense shall have the right to enter the Leased Premises to check scales as to their accuracy, and to go on any part of the Leased Premises to examine, inspect, survey and take measurements for the purposes of verifying production amounts and proper lease operations. Upon reasonable notice to Lessee, Lessor’s employees and authorized agents shall further have the right to audit, examine and copy (at Lessor’s expense) all documents described in paragraph 7.1, Registered Agent; Records, whether such documents are located at the mine site or elsewhere. Lessee shall furnish all conveniences necessary for said inspection, survey, or examination; provided, however, that such inspections shall be conducted in a manner that is in conformance with all applicable mine safety regulations and does not unreasonably interfere with Lessee’s operations.     7.3 Geologic Information. In the event Lessee conducts core-drilling operations or other geologic evaluation of the Leased Premises, Lessor may inspect core samples, evaluations thereof, and proprietary geologic information concerning the Leased Premises. Upon request by Lessor, Lessee shall timely provide Lessor with a true and correct copy of all such evaluations, geological reports, drilling logs, assays and interpretive maps of the leased substances within the leased lands.     7.4 Confidentiality. Any and all documents and geologic data obtained by Lessor through the exercise of its rights as set forth in paragraphs 7.2, Inspection., and 7.3, Geologic Information., may be declared confidential information by Lessee, in which event Lessor and its authorized agents shall maintain such documents and geologic data as protected records under the Utah Governmental Records Access Management Act or other applicable privacy statute, and shall not disclose the same to any third party without the written consent of Lessee, or as required under the order of a court of competent jurisdiction requiring such disclosure, provided that Lessor’s obligations of confidentiality to Lessee shall cease upon termination of this Lease.   8. USE OF SURFACE ESTATE.     8.1 Lessor-Owned Surface. If Lessor owns the surface estate of all or some portion of the Leased Premises, at the time of the execution of this Lease, by issuance of this Lease the Lessee has been granted the right to make use of such lands to the extent reasonably necessary and expedient for the economic operation of the leasehold. Lessee’s right to surface use of Lessor-owned surface estate shall include the right to subside the surface. Such surface uses shall be exercised subject to the rights reserved to Lessor as provided in paragraph 2, RESERVATIONS TO LESSOR, and without unreasonable interference with the rights of any prior or subsequent lessee of Lessor.     8.2 Split-Estate Lands. If Lessor does not own the surface estate of any portion of the Leased Premises, Lessee’s access to and use of the surface of such lands shall be determined by applicable law governing mineral development on split-estate lands, including without limitation applicable statutes governing access by mineral owners to split estate lands, and reclamation and bonding requirements. Lessee shall indemnify, defend and hold Lessor harmless for all claims, causes of action, damages, costs and expenses (including attorney’s fees and costs) arising out of or related to damage caused by Lessee’s operations to surface lands or improvements owned by third parties. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 7   9. APPLICABLE LAWS AND REGULATIONS; HAZARDOUS SUBSTANCES     9.1 Trust Lands Statute and Regulations. This Lease is issued pursuant to, and is subject to, the provisions of Title 53C, Utah Code Annotated, 1953, as amended. Further, Lessee and this lease are subject to and shall comply with all current and future rules and regulations adopted by the School and Institutional Trust Lands Administration and its successor agencies.     9.2 Other Applicable Laws and Regulations. Lessee shall comply with all applicable federal, state and local statutes, regulations, and ordinances, including without limitation the Utah Mined Land Reclamation Act, applicable statutes and regulations relating to mine safety and health, and applicable statutes, regulations and ordinances relating to public health, pollution control, management of hazardous substances and environmental protection.     9.3 Hazardous Substances. Lessee [or other occupant pursuant to any agreement authorizing mining] shall not keep on or about the premises any hazardous substances, as defined under 42 U.S.C. § 9601(14) or any other Federal environmental law, any regulated substance contained in or released from any underground storage tank, as defined by the Resource Conservation and Recovery Act, 42 U.S.C. § 6991, et seq, or any substances defined and regulated as “hazardous” by applicable State law, (hereinafter, for the purposes of this Lease, collectively referred to as “Hazardous Substances”) unless such substances are reasonably necessary in Lessee’s mining operations, and the use of such substances or tanks is noted and approved in the Lessee’s mining plan, and unless Lessee fully complies with all Federal, State and local laws, regulations, statutes, and ordinances, now in existence or as subsequently enacted or amended, governing Hazardous Substances. Lessee shall immediately notify Lessor, the surface management agency, and any other Federal, State and local agency with jurisdiction over the Leased Premises, of contamination thereon, of (i) all reportable spills or releases of any Hazardous Substance affecting the Leased Premises, (ii) all failures to comply with any applicable Federal, state or local law, regulation or ordinance governing Hazardous Substances, as now enacted or as subsequently enacted or amended, (iii) all inspections of the Leased Premises by, or any correspondence, order, citations, or notifications from any regulatory entity concerning Hazardous Substances affecting the Leased Premises, (iv) all regulatory orders or fines or all response or interim cleanup actions taken by or proposed to be taken by any government entity or private Party concerning the Leased Premises.     9.4 Hazardous Substances Indemnity. Lessee [or other occupant pursuant to any agreement authorizing mining] shall indemnify, defend, and hold harmless Lessor, employees, officers, and agents with respect to any and all damages, costs, liabilities, fees (including reasonable attorneys’ fees and costs), penalties (civil and criminal), and cleanup costs arising out of or in any way related to Lessee’s use, disposal, transportation, generation, sale or location upon or affecting the Leased Premises of Hazardous Substances, as defined in paragraph 9.3 of this Lease. This indemnity shall extend to the actions of Lessee’s employees, agents assigns, sublessees, contractors, subcontractors, licensees and invitees. Lessee shall further indemnify, defend and hold harmless Lessor from any and all damages, costs, liabilities, fees (including reasonable attorneys’ fees and costs), penalties (civil and criminal), and cleanup costs arising out of or in any way related to any breach of the provisions of this Lease concerning Hazardous Substances. This indemnity is in addition to, and in no way limits, the general indemnity contained in paragraph 16.1 of this Lease.     9.5 Waste Certification. The Lessee shall provide upon abandonment, transfer of operation, assignment of rights, sealing-off of a mined area, and prior to lease relinquishment, certification to the Lessor that, based upon a complete search of all the -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 8     operator’s records for the Lease, and upon its knowledge of past operations, there have been no reportable quantities of hazardous substances as defined in 40 Code of Federal Regulations §302.4, or used oil as defined in Utah Administrative Code R315-15, discharged (as defined at 33 U.S.C. §1321 (a)(2)), deposited or released within the Leased Premises, either on the surface or underground, and that all remedial actions necessary have been taken to protect human health and the environment with respect to such substances. Lessee shall additionally provide to Lessor a complete list of all hazardous substances, hazardous materials, and their respective Chemical Abstracts Service Registry Numbers, used or stored on, or delivered to, the Leased Premises. Such disclosure will be in addition to any other disclosure required by law or agreement.   10. BONDING.     10.1 Lease Bond May Be Required. At the time this Lease is executed, Lessor may require Lessee to execute and file with the Lessor a good and sufficient bond or other financial guarantee acceptable to Lessor in order to: (a) guarantee Lessee’s performance of all covenants and obligations under this Lease, including Lessee’s obligation to pay royalties; and (b) ensure compensation for damage, if any, to the surface estate and any surface improvements.     10.2 Reclamation Bonding. The bond required by and filed with the Utah Division of Oil, Gas and Mining (“UDOGM”) in connection with the issuance of a mine permit which includes the Leased Premises may be accepted by the Director to satisfy Lessor’s bonding requirements with respect to Lessee’s reclamation obligations under this Lease; provided, however, upon notice to Lessee, the Lessor may, in its reasonable discretion, determine that the bond filed with UDOGM is insufficient to protect Lessor’s interests. In such an event the Director shall enter written findings as to the basis for calculation of the perceived insufficiency and enter an order establishing the amount of additional bonding required. Lessee shall file any required additional bond with Lessor within thirty (30) days after demand by Lessor. Lessor may increase or decrease the amount of any additional bond from time to time in accordance with the same procedure.   11. WATER RIGHTS.     11.1 Water Rights in Name of Lessor. If Lessee files to appropriate water for use in association with this lease or operations upon the Leased Premises, the filing for such water right shall be made by Lessee in the name of Lessor at no cost to Lessor, and such water right shall become an appurtenance to the Leased Premises, subject to Lessee’s right to use such water right at no cost during the term of this Lease.     11.2 Option to Purchase. If Lessee purchases or acquires an existing water right for use in association with this lease or operations upon the Leased Premises, Lessor shall have the option to acquire that portion of such water right as was used on the Leased Premises upon expiration or termination of this Lease. The option price for such water right shall be the fair market value of the water right as of the date of expiration or termination of this Lease. Upon expiration or termination of this Lease, Lessee shall notify Lessor in writing of all water rights purchased or acquired by Lessee for leased substances mining operations on the Leased Premises and its estimate of the fair market value of such water right. Lessor shall then have forty-five (45) days to exercise its option to acquire the water by payment to Lessee of the estimated fair market value. If Lessor disagrees with Lessee’s estimate of fair market value, Lessor shall notify Lessee of its disagreement within the 45 day option exercise period. The fair market value of the water right shall then be appraised by a single appraiser -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 9     mutually acceptable to both parties, which appraisal shall be final and not subject to review or appeal. If the parties cannot agree upon the choice of an appraiser, the fair market value of the water right shall be determined by a court of competent jurisdiction. Conveyance of any water right pursuant to this paragraph shall be by quit claim deed.   12. ASSIGNMENT OR SUBLEASE; OVERRIDING ROYALTIES.     12.1 Consent Required. Lessee shall not assign or sublease this Lease in whole or in part, or otherwise assign or convey any rights or privileges granted by this Lease, including, without limitation, creation of overriding royalties or production payments, without the prior written consent of Lessor, which shall not be unreasonably withheld. Lessee agrees that Lessor, in determining whether to consent to any proposed assignment, may reasonably consider the proposed assignee’s financial capacity, ability to market and process leased substances, and may refuse to consent to such assignment if, in the Lessor’s reasonable opinion, the proposed assignee lacks the necessary financial or technical capacity to mine, market and/or process leased substances in a manner comparable to Lessee. Any assignment, sublease or other conveyance made without prior written consent of Lessor shall have no legal effect unless and until approved in writing by Lessor. Exercise of any right with respect to the Leased Premises in violation of this provision shall constitute a default under this Lease.     12.2 Binding Effect. All of the terms and provisions of this Lease shall be binding upon and shall inure to the benefit of their respective successors, assigns, and sublessees.     12.3 Limitation on Overriding Royalties. Lessor reserves the right to disapprove the creation of an overriding royalty or production payment that would, in Lessor’s reasonable discretion, constitute an unreasonable economic burden upon operation of the Lease. In exercising its discretion to disapprove the creation of an overriding royalty, Lessor shall consult with Lessee and any third parties involved and shall prepare findings to evidence the basis of its decision. Any transfer in interest which would create a cumulative overriding royalty burden in excess of 20% shall not be approved.   13. OPERATIONS.     13.1 Permitting. Before Lessee commences exploration, drilling, or mining operations on the Leased Premises, it shall have obtained such permits and posted such bonds as may be required under applicable provisions of the Utah Mined Land Reclamation Act and associated regulations. Lessee shall maintain any required permits in place for the duration of mining operations and reclamation. Upon request, Lessee shall provide Lessor with a copy of all regulatory filings relating to permitting matters.     13.2 Plan of Operations. Prior to the commencement of any exploration, drilling, or mining operations on the Leased Premises, Lessee shall obtain Lessor’s approval of a plan of operations for the Leased Premises. Lessor may modify the proposed plan of operations as is needed to insure that there is no waste of economically recoverable mineral reserves contained on the Leased Premises. In this context “waste” shall mean the inefficient utilization of, or the excessive or improper loss of an otherwise economically recoverable mineral resource. Lessor shall notify Lessee in writing of its approval or modifications of the plan of operations. The plan of operations submitted by Lessee shall be deemed approved by Lessor if Lessor has not otherwise notified Lessee within sixty (60) days of filing. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 10     13.3 Plan of Operations - Modification. In the event that material changes are required to the plan of operations during the course of mining, Lessee shall submit a modification of the plan of operations to the Lessor. Routine adjustments to the plan of operations based upon geologic circumstances encountered during day-to-day mining operations do not require the submission of a modification. If the proposed changes require emergency action by Lessor, then the Lessee shall so notify the Lessor at the time of submission of the modification and the parties shall use their best efforts to meet the Lessee’s time schedule regarding implementation of the changes. Non-emergency modifications will be reviewed promptly by Lessor to insure that there is no waste of economically recoverable mineral reserves pursuant to the plan of operations, as modified, and Lessor shall notify lessee in writing of its approval or modification of the proposed modification. Modifications shall be deemed approved by Lessor if Lessor has not otherwise notified Lessee within thirty (30) days of filing.     13.4 Mine Maps. Lessee shall maintain at the mine office clear, accurate, and detailed maps of all actual and planned operations. Such maps shall be certified by an engineer or geologist who is professionally licensed by the State of Utah or by a state having a reciprocal licensing agreement with the State of Utah. Lessee shall provide copies of such maps to Lessor upon request.     13.5 Good Mining Practices. Lessee shall conduct exploration and mining operations on the Leased Premises in accordance with standard industry operating practices, and shall avoid waste of economically recoverable leased substances. Lessee shall comply with all regulations and directives of the Mine Safety and Health Administration or successor agencies for the health and safety of employees and workers. Leased substances shall be mined from this Lease by underground methods only.     13.6 Mining Units. Lessor may approve the inclusion of the Leased Premises in a mining unit with federal, private or other non-state lands upon terms and conditions that it deems necessary to protect the interests of the Lessor, including without limitation segregation of production, accounting for commingled leased substances production, and minimum production requirements or minimum royalties for the Leased Premises.   14. EQUIPMENT; RESTORATION.     14.1 Equipment. Upon termination of this Lease, Lessee shall remove, and shall have the right to remove, all improvements, equipment, stockpiles, and dumps from the Leased Premises within six (6) months; provided, however, that Lessor may, at Lessor’s sole risk and expense, and subject to Lessee’s compliance with requirements imposed by UDOGM and MSHA, require Lessee to retain in place underground timbering supports, shaft linings, rails, and other installations reasonably necessary for future mining of the Leased Premises. All improvements and equipment remaining on the Leased Premises after six (6) months may be deemed forfeited to Lessor upon written notice of such forfeiture to Lessee. Lessee may abandon underground improvements, equipment of any type, stockpiles and dumps in place if such abandonment is in compliance with applicable law, and further provided that Lessee provides Lessor with financial or other assurances sufficient in Lessor’s reasonable discretion to protect Lessor from future environmental liability with respect to such abandonment or any associated hazardous waste spills or releases. Lessee shall identify and locate on the mine map the location of all equipment abandoned on the Lease Premises. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 11     14.2 Restoration and Reclamation. Upon termination of this Lease, Lessee shall reclaim the Leased Premises in accordance with the requirements of applicable law, including mine permits and reclamation plans on file with UDOGM. Lessee shall further abate any hazardous condition on or associated with the Leased Premises. Lessee and representatives of all governmental agencies having jurisdiction shall have the right to re-enter the Leased Premises for reclamation purposes for a reasonable period after termination of the Lease.   15. MULTIPLE MINERAL DEVELOPMENT. The Utah School and Institutional Trust Lands Administration may designate any lands under its authority as a Multiple Mineral Development Area (MMD). In designated MMDs the Lessor may require in addition to the terms and conditions of this lease such stipulations or restrictions as may be necessary in the determination of the Director to integrate and coordinate the operations of lessees having an interest in the lands in order to conserve natural resource and optimize revenues to the trust-land beneficiaries.   16. DEFAULT     16.1 Notice of Default; Termination. Upon Lessee’s violation of or failure to comply with any of the terms, conditions or covenants set forth in this Lease, Lessor shall notify Lessee of such default by registered or certified mail, return receipt requested, at the last address for Lessee set forth in Lessor’s files. Lessee shall then have thirty (30) days, or such longer period as may be granted in writing by Lessor, to either cure the default or request a hearing pursuant to the Lessor’s administrative adjudication rules. In the event Lessee fails to cure the default or request a hearing within the specified time period, Lessor may cancel this Lease without further notice to or appeal by Lessee.     16.2 Effect of Termination. The termination of this Lease for any reason, whether through expiration, cancellation or relinquishment, shall not limit the rights of the Lessor to recover any royalties and/or damages for which Lessee may be liable, to recover on any bond on file, or to seek injunctive relief to enjoin continuing violations of the Lease terms. No remedy or election under this Lease shall be deemed exclusive, but shall, wherever possible, be cumulative with all other remedies available under this Lease, at law, or in equity. Lessee shall surrender the Leased Premises upon termination; however, the obligations of Lessee with respect to reclamation, indemnification and other continuing covenants imposed by this Lease shall survive the termination. All fees, rentals and monies of any type previously paid by the Lessee to the Lessor are forfeited to the trust.   17. MISCELLANEOUS PROVISIONS.     17.1 Indemnity. Except as limited by paragraph 7.2, Inspection, Lessee shall indemnify and hold Lessor harmless for, from and against each and every claim, demand, liability, loss, cost, damage and expense, including, without limitation, attorneys’ fees and court costs, arising in any way out of Lessee’s occupation and use of the Leased Premises, including without limitation claims for death, personal injury, property damage, and unpaid wages and benefits. Lessee further agrees to indemnify and hold Lessor harmless for, from and against all claims, demands, liabilities, damages and penalties arising out of any failure of Lessee to comply with any of Lessee’s obligations under this Lease, including without limitation reasonable attorneys’ fees and court costs. Lessee may be required to obtain insurance in a type and in an amount acceptable to Lessor, naming the Trust Lands Administration, its employees, its Board of trustees and the State of Utah as co-insured parties under the policy. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 12     17.2 Interest. Interest shall accrue and be payable on all obligations arising under this Lease at such current rate as may from time to time be enacted by the Director and recorded in the Director’s Minutes of the School and Institutional Trust Lands Administration. Interest shall accrue and be payable, without necessity of demand, from the date each such obligation shall arise.     17.3 Suspension. In the event that Lessor in its reasonable discretion determines that suspension is necessary in the interests of conservation of the leased substances; that prevailing market conditions for the leased substances render continued operation of the subject property uneconomic, or if Lessee has been prevented from performing any of its obligations or responsibilities under this Lease or from conducting mining operations by labor strikes, fires, floods, explosions, riots, acts of terrorism, any unusual mining casualties or conditions, Acts of God, government restrictions or orders, severe weather conditions, or other extraordinary events beyond its control, then the time for performance of this Lease by Lessee shall be suspended during the continuance of such conditions or acts which prevent performance, excepting any payments due and owing to Lessor.     17.4 Consent to Suit; Jurisdiction. This Lease shall be governed by the laws of the State of Utah. Lessor and Lessee agree that all disputes arising out of this Lease shall be litigated only in the Third Judicial District Court for Salt Lake County, Utah, and Lessee consents to the jurisdiction of such court. Lessee shall not bring any action against Lessor without exhaustion of available administrative remedies and compliance with applicable requirements of the Utah Governmental Immunity Act.     17.5 No Waiver. No waiver of the breach of any provision of this Lease shall be construed as a waiver of any preceding or succeeding breach of the same or any other provision of this Lease, nor shall the acceptance of rentals or royalties by Lessor during any period of time in which Lessee is in default be deemed to be a waiver of such default.     17.6 Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.     17.7 Entire Lease. This Lease, together with any attached stipulations, sets forth the entire agreement between Lessor and Lessee with respect to the subject matter of this Lease. No subsequent alteration or amendment to this Lease shall be binding upon Lessor and Lessee unless in writing and signed by each of them. -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 13   IN WITNESS WHEREOF, the parties have executed this Lease as of the date hereinabove first written.         THE STATE OF UTAH, acting by and through the SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION (“LESSOR”) APPROVED AS TO FORM:                   MARK L. SHURTLEFF     KEVIN S. CARTER, DIRECTOR     ATTORNEY GENERAL         By:    LOGO [g95931g30p06.jpg]     By:    LOGO [g95931g36i83.jpg]         THOMAS B. FADDIES         ASSISTANT DIRECTOR/MINERALS School & Institutional Trust Lands Administration - LESSOR         Form Approved: 6-27-08             LESSEE:       By:    LOGO [g95931g56q79.jpg]       Its:    LOGO [g95931g37a26.jpg] -------------------------------------------------------------------------------- Generic Mineral Lease Form 6/22/05 Page No. 14   STATE OF UTAH    )       :    COUNTY OF SALT LAKE    )    On the 11th day of April, 2007, personally appeared before me THOMAS B. FADDIES who duly sworn did say that he is Assistant Director of the School & Institutional Trust Lands Administration of the State of Utah and the signer of the above instrument, who duly acknowledged that he executed the same. Given under my hand and seal this 11th day of April, 2007.   LOGO [g95931g01n97.jpg] NOTARY PUBLIC, residing at:   My Commission Expires:    5/25/2010    LOGO [g95931g55r16.jpg] STATE OF    )       :    COUNTY OF    )    On the 9th day of April, 2007, personally appeared before me Steven R. Brown, signer of the above instrument, who duly acknowledged to me that he executed the same. Given under my hand and seal this 9th day of April, 2007.   LOGO [g95931g16h27.jpg] NOTARY PUBLIC, residing at:   My Commission Expires:    09-07-2010    LOGO [g95931g40z83.jpg] STATE OF UTAH    )       :    COUNTY OF UTAH    )    On the      day of             , 20    , personally appeared before me                          , who being duly sworn did say that he is an officer of                      and that said instrument was signed in behalf of said corporation by resolution of its Board of Directors, and said                      acknowledged to me that said corporation executed the same. Given under my hand and seal this      day of             , 20    .     NOTARY PUBLIC, residing at: My Commission Expires:
EXHIBIT 10.1     PURCHASE AGREEMENT dated as of May 30, 2017 between SANTANDER CONSUMER USA INC., as Seller and SANTANDER DRIVE AUTO RECEIVABLES LLC, as Purchaser     -------------------------------------------------------------------------------- TABLE OF CONTENTS                  Page   ARTICLE I    DEFINITIONS AND USAGE      1   SECTION 1.1    Definitions      1   SECTION 1.2    Other Interpretive Provisions      1   ARTICLE II    PURCHASE      2   SECTION 2.1    Agreement to Sell and Contribute on the Closing Date      2   SECTION 2.2    Consideration and Payment      2   ARTICLE III    REPRESENTATIONS, WARRANTIES AND COVENANTS      2   SECTION 3.1    Representations and Warranties of Santander Consumer      2   SECTION 3.2    Representations and Warranties of Santander Consumer Regarding the Purchased Assets      3   SECTION 3.3    Representations and Warranties of Santander Consumer as to each Receivable      4   SECTION 3.4    Repurchase upon Breach      5   SECTION 3.5    Protection of Title      5   SECTION 3.6    Other Liens or Interests      6   ARTICLE IV    MISCELLANEOUS      7   SECTION 4.1    Transfers Intended as Sale; Security Interest      7   SECTION 4.2    Notices, Etc      8   SECTION 4.3    Choice of Law      8   SECTION 4.4    Headings      8   SECTION 4.5    Counterparts      8   SECTION 4.6    Amendment      8   SECTION 4.7    Waivers      10   SECTION 4.8    Entire Agreement      10   SECTION 4.9    Severability of Provisions      10   SECTION 4.10    Binding Effect      10   SECTION 4.11    Acknowledgment and Agreement      10   SECTION 4.12    Cumulative Remedies      10   SECTION 4.13    Nonpetition Covenant      10   SECTION 4.14    Submission to Jurisdiction; Waiver of Jury Trial      11   SECTION 4.15    Third-Party Beneficiaries      11     -i- -------------------------------------------------------------------------------- EXHIBIT A    Form of Assignment SCHEDULE I    Perfection Representations, Warranties and Covenants SCHEDULE II    Representations and Warranties with Respect to the Receivables      ii    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- THIS PURCHASE AGREEMENT is made and entered into as of May 30, 2017 (as amended, supplemented or otherwise modified and in effect from time to time, this “Agreement”) by SANTANDER CONSUMER USA INC., an Illinois corporation (“Santander Consumer”), and SANTANDER DRIVE AUTO RECEIVABLES LLC, a Delaware limited liability company (the “Purchaser”). WITNESSETH: WHEREAS, the Purchaser desires to purchase from Santander Consumer a portfolio of motor vehicle receivables, including motor vehicle retail installment sales contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks and vans; and WHEREAS, Santander Consumer is willing to sell such portfolio of motor vehicle receivables and related property to the Purchaser on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND USAGE SECTION 1.1 Definitions. Except as otherwise defined herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in Appendix A to the Sale and Servicing Agreement dated as of the date hereof (as from time to time amended, supplemented or otherwise modified and in effect, the “Sale and Servicing Agreement”) among Santander Drive Auto Receivables Trust 2017-2, Santander Consumer, as Servicer, the Purchaser, as Seller, and Wells Fargo Bank, National Association, as Indenture Trustee, which also contains rules as to usage that are applicable herein. SECTION 1.2 Other Interpretive Provisions. For purposes of this Agreement, unless the context otherwise requires: (a) accounting terms not otherwise defined in this Agreement, and accounting terms partly defined in this Agreement to the extent not defined, shall have the respective meanings given to them under GAAP (provided, that, to the extent that the definitions in this Agreement and GAAP conflict, the definitions in this Agreement shall control); (b) terms defined in Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise defined in this Agreement are used as defined in that Article; (c) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) references to any Article, Section, Schedule, Appendix or Exhibit are references to Articles, Sections, Schedules, Appendices and Exhibits in or to this Agreement and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (e) the term “including” and all variations thereof means “including without limitation”; (f) except as otherwise expressly provided herein, references to any law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (g) references to any Person include that Person’s successors and assigns; and (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.         Purchase Agreement (2017-2) -------------------------------------------------------------------------------- ARTICLE II PURCHASE SECTION 2.1 Agreement to Sell and Contribute on the Closing Date. On the terms and subject to the conditions set forth in this Agreement, Santander Consumer does hereby irrevocably sell, transfer, assign, contribute and otherwise convey to the Purchaser without recourse (subject to the obligations herein) on the Closing Date all of Santander Consumer’s right, title and interest in, to and under the Receivables, the Collections after the Cut-Off Date, the Receivable Files and the Related Security relating thereto, whether now owned or hereafter acquired, as evidenced by an Assignment substantially in the form of Exhibit A delivered on the Closing Date (collectively, the “Purchased Assets”). The sale, transfer, assignment, contribution and conveyance made hereunder does not constitute and is not intended to result in an assumption by the Purchaser of any obligation of Santander Consumer or the Originator to the Obligors, the Dealers or any other Person in connection with the Receivables or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto. SECTION 2.2 Consideration and Payment. The purchase price for the sale of the Purchased Assets sold to the Purchaser on the Closing Date shall equal the estimated fair market value of the Purchased Assets. Such purchase price shall be paid in cash to Santander Consumer in an amount agreed to between Santander Consumer and the Purchaser, and, to the extent not paid in cash by the Purchaser, shall be paid by a capital contribution by Santander Consumer of an undivided interest in such Purchased Assets that increases its equity interest in the Purchaser in an amount equal to the excess of the estimated fair market value of the Purchased Assets over the amount of cash paid by the Purchaser to Santander Consumer. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.1 Representations and Warranties of Santander Consumer. Santander Consumer makes the following representations and warranties as of the Closing Date, on which the Purchaser will be deemed to have relied in acquiring the Purchased Assets. The representations and warranties will survive the conveyance of the Purchased Assets to the Purchaser pursuant to this Agreement, the conveyance of the Purchased Assets to the Issuer pursuant to the Sale and Servicing Agreement and the Grant thereof by the Issuer to the Indenture Trustee pursuant to the Indenture: (a) Existence and Power. Santander Consumer is a corporation validly existing and in good standing under the laws of its state of organization and has, in all material respects, full power and authority to own its assets and operate its business as presently owned or operated, and to execute, to deliver and to perform its obligations under the Transaction Documents to which it is a party. Santander Consumer has obtained all necessary licenses and approvals in each jurisdiction where the failure to do so would materially and adversely affect the ability of Santander Consumer to perform its obligations under the Transaction Documents or affect the enforceability or collectability of the Receivables or any other part of the Purchased Assets.      -2-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- (b) Authorization and No Contravention. The execution, delivery and performance by Santander Consumer of the Transaction Documents to which it is a party have been duly authorized by all necessary corporate action on the part of Santander Consumer and do not contravene or constitute a default under (i) any applicable law, rule or regulation, (ii) its organizational documents or (iii) any material indenture or material agreement to which Santander Consumer is a party or by which its properties are bound (other than violations of such laws, rules, regulations, organizational documents, indentures or agreements which do not affect the legality, validity or enforceability of any of such agreements and which, individually or in the aggregate, would not materially and adversely affect the transactions contemplated by, or Santander Consumer’s ability to perform its obligations under, the Transaction Documents). (c) No Consent Required. No approval or authorization by, or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by Santander Consumer of any Transaction Document other than (i) UCC filings, (ii) approvals and authorizations that have previously been obtained and filings that have previously been made and (iii) approvals, authorizations or filings which, if not obtained or made, would not have a material adverse effect on the enforceability or collectability of the Receivables or any other part of the Purchased Assets or would not materially and adversely affect the ability of Santander Consumer to perform its obligations under the Transaction Documents. (d) Binding Effect. Each Transaction Document to which Santander Consumer is a party constitutes the legal, valid and binding obligation of Santander Consumer enforceable against Santander Consumer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting the enforcement of creditors’ rights generally and, if applicable, the rights of creditors of corporations from time to time in effect or by general principles of equity. (e) No Proceedings. There are no actions, orders, suits or proceedings pending or, to the knowledge of Santander Consumer, threatened against Santander Consumer before or by any Governmental Authority that (i) assert the invalidity or unenforceability of this Agreement or any of the other Transaction Documents, (ii) seek to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the other Transaction Documents, (iii) seek any determination or ruling that would materially and adversely affect the performance by Santander Consumer of its obligations under this Agreement or any of the other Transaction Documents or (iv) relate to Santander Consumer that would materially and adversely affect the federal or Applicable Tax State income, excise, franchise or similar tax attributes of the Notes. (f) Lien Filings. Santander Consumer is not aware of any material judgment, ERISA or tax lien filings against Santander Consumer. SECTION 3.2 Representations and Warranties of Santander Consumer Regarding the Purchased Assets. On the date hereof, Santander Consumer hereby makes the following      -3-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- representations and warranties to the Purchaser, on which the Purchaser will be deemed to have relied in acquiring the Purchased Assets. Such representations and warranties will survive the conveyance of the Purchased Assets to the Purchaser pursuant to this Agreement, the sale of the Purchased Assets to the Issuer under the Sale and Servicing Agreement, and the Grant of the Purchased Assets and other collateral by the Issuer to the Indenture Trustee pursuant to the Indenture. (a) The Receivables were selected using selection procedures that were not known or intended by Santander Consumer to be adverse to the Issuer. (b) The Receivables and the other Purchased Assets have been validly assigned by Santander Consumer to the Purchaser. (c) The information with respect to the Receivables transferred on the Closing Date as set forth in the Schedule of Receivables was true and correct in all material respects as of the Cut-Off Date. (d) No Receivables are pledged, assigned, sold, subject to a security interest or otherwise conveyed other than pursuant to the Transaction Documents. Santander Consumer has not authorized the filing of and is not aware of any financing statements against Santander Consumer or an Originator that includes a description of collateral covering any Receivable other than any financing statement relating to security interests granted under the Transaction Documents or that have been or, prior to the assignment of such Receivables hereunder, will be terminated, amended or released. This Agreement creates a valid and continuing security interest in the Receivables (other than the Related Security with respect thereto, to the extent that an ownership interest therein cannot be perfected by the filing of a financing statement) in favor of the Purchaser which security interest is prior to all other Liens (other than Permitted Liens) and is enforceable as such against all other creditors of and purchasers and assignees from Santander Consumer. (e) The representations and warranties regarding creation, perfection and priority of security interests in the Purchased Assets, which are attached to this Agreement as Schedule I, are true and correct. SECTION 3.3 Representations and Warranties of Santander Consumer as to each Receivable. On the date hereof, Santander Consumer hereby makes the representations and warranties set forth on Schedule II to the Purchaser as to the Receivables sold, transferred, assigned, contributed and otherwise conveyed to the Purchaser under this Agreement on which such representations and warranties the Purchaser relies in acquiring the Receivables. Such representations and warranties shall survive the conveyance of the Purchased Assets to the Purchaser pursuant to this Agreement, the sale of the Purchased Assets to the Issuer under the Sale and Servicing Agreement, and the Grant of the Purchased Assets by the Issuer to the Indenture Trustee pursuant to the Indenture. Notwithstanding any statement to the contrary contained herein or in any other Transaction Document, Santander Consumer shall not be required to notify any insurer with respect to any Insurance Policy obtained by an Obligor or to notify any Dealer about any aspect of the transaction contemplated by the Transaction Documents. Santander Consumer hereby agrees that the Issuer shall have the right to enforce      -4-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- any and all rights under this Agreement assigned to the Issuer under the Sale and Servicing Agreement, including the right to cause Santander Consumer to repurchase any Receivable with respect to which it is in breach of any of its representation and warranties set forth in Schedule II, directly against Santander Consumer as though the Issuer were a party to this Agreement, and the Issuer shall not be obligated to exercise any such rights indirectly through the Depositor. SECTION 3.4 Repurchase upon Breach. Upon discovery by or notice to the Purchaser or Santander Consumer of a breach of any of the representations and warranties set forth in Section 3.3 with respect to any Receivable at the time such representations and warranties were made which materially and adversely affects the interests of the Issuer or the Noteholders in such Receivable, the party discovering such breach or receiving such notice shall give prompt written notice thereof to the other party; provided, that delivery of a Servicer’s Certificate shall be deemed to constitute prompt notice by Santander Consumer and the Purchaser of such breach; provided, further, that the failure to give such notice shall not affect any obligation of Santander Consumer hereunder. If the breach materially and adversely affects the interests of the Issuer or the Noteholders in such Receivable, then Santander Consumer shall either (a) correct or cure such breach or (b) repurchase such Receivable from the Purchaser (or its assignee), in either case on or before the Payment Date following the end of the Collection Period which includes the 60th day (or, if Santander Consumer elects, an earlier date) after the date Santander Consumer became aware or was notified of such breach. Any such breach or failure will be deemed not to have a material and adverse effect if such breach or failure does not affect the ability of the Purchaser (or its assignee) to receive and retain timely payment in full on such Receivable. Any such purchase by Santander Consumer shall be at a price equal to the related Repurchase Price. In consideration for such repurchase, Santander Consumer shall make (or shall cause to be made) a payment to the Purchaser (or its assignee) equal to the Repurchase Price by depositing such amount into the Collection Account prior to noon, New York City time, on such date of repurchase (or, if Santander Consumer elects, an earlier date). Upon payment of such Repurchase Price by Santander Consumer, the Purchaser (or its assignee) shall release and shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse or representation, as may be reasonably requested by Santander Consumer to evidence such release, transfer or assignment or more effectively vest in Santander Consumer or its designee any Receivable and related Purchased Assets repurchased pursuant to this Section 3.4. It is understood and agreed that the obligation of Santander Consumer to repurchase any Receivable as described above shall constitute the sole remedy respecting such breach available to the Purchaser (or its assignee). SECTION 3.5 Protection of Title. (a) Santander Consumer shall authorize and file such financing statements and cause to be authorized and filed such continuation and other statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Purchaser under this Agreement in the Receivables (other than any Related Security with respect thereto, to the extent that the interest of the Purchaser therein cannot be perfected by the filing of a financing statement). Santander Consumer shall deliver (or cause to be delivered) to the Purchaser file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.      -5-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- (b) Santander Consumer shall notify the Purchaser in writing within ten (10) days following the occurrence of (i) any change in Santander Consumer’s organizational structure as a corporation, (ii) any change in Santander Consumer’s “location” (within the meaning of Section 9-307 of the UCC of all applicable jurisdictions) and (iii) any change in Santander Consumer’s name, and (A) shall have taken all action prior to making such change (or shall have made arrangements to take such action substantially simultaneously with such change, if it is not possible to take such action in advance) reasonably necessary or advisable in the opinion of the Purchaser to amend all previously filed financing statements or continuation statements described in paragraph (a) above and (B) shall have delivered to the Indenture Trustee within 30 days after such change an Opinion of Counsel either (a) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary to preserve and protect the interest of the Issuer in the Receivables or (b) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. (c) Santander Consumer shall maintain (or shall cause its Sub-Servicer to maintain) accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable. (d) Santander Consumer shall maintain (or shall cause its Sub-Servicer to maintain) its computer systems so that, from time to time after the conveyance under this Agreement of the Receivables, the master computer records (including any backup archives) that refer to a Receivable shall indicate clearly the interest of the Purchaser (or any subsequent assignee of the Purchaser) in such Receivable and that such Receivable is owned by such Person. Indication of such Person’s interest in a Receivable shall not be deleted from or modified on such computer systems until, and only until, the related Receivable shall have been paid in full or repurchased. (e) If at any time Santander Consumer shall propose to sell, grant a security interest in or otherwise transfer any interest in motor vehicle receivables to any prospective purchaser, lender or other transferee, Santander Consumer shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from backup archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Purchaser (or any subsequent assignee of the Purchaser). SECTION 3.6 Other Liens or Interests. Except for the conveyances and grants of security interests pursuant to this Agreement and the other Transaction Documents, Santander Consumer shall not sell, pledge, assign or transfer the Receivables or other property transferred to the Purchaser to any other Person, or grant, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any interest therein, and Santander Consumer shall defend the right, title and interest of the Purchaser in, to and under such Receivables or other property transferred to the Purchaser against all claims of third parties claiming through or under Santander Consumer.      -6-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- ARTICLE IV MISCELLANEOUS SECTION 4.1 Transfers Intended as Sale; Security Interest. (a) Each of the parties hereto expressly intends and agrees that the transfers contemplated and effected under this Agreement are complete and absolute sales, transfers, assignments, contributions and conveyances without recourse rather than pledges or assignments of only a security interest and shall be given effect as such for all purposes. It is further the intention of the parties hereto that the Purchased Assets shall not be part of Santander Consumer’s estate in the event of a bankruptcy or insolvency of Santander Consumer. The sales and transfers by Santander Consumer of the Receivables and related Purchased Assets hereunder are and shall be without recourse to, or representation or warranty (express or implied) by, Santander Consumer, except as otherwise specifically provided herein. The limited rights of recourse specified herein against Santander Consumer are intended to provide a remedy for breach of representations and warranties relating to the condition of the property sold, rather than to the collectability of the Receivables. (b) Notwithstanding the foregoing, in the event that the Receivables and other Purchased Assets are held to be property of Santander Consumer, or if for any reason this Agreement is held or deemed to create indebtedness or a security interest in the Receivables and other Purchased Assets, then it is intended that: (i) This Agreement shall be deemed to be a security agreement within the meaning of Articles 8 and 9 of the New York UCC and the UCC of any other applicable jurisdiction; (ii) The conveyance provided for in Section 2.1 shall be deemed to be a grant by Santander Consumer of, and Santander Consumer hereby grants to the Purchaser, a security interest in all of its right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to the Receivables and other Purchased Assets, to secure such indebtedness and the performance of the obligations of Santander Consumer hereunder; (iii) The possession by the Purchaser or its agent of the Receivable Files and any other property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be “possession by the secured party” or possession by the purchaser or a person designated by such purchaser, for purposes of perfecting the security interest pursuant to the New York UCC and the UCC of any other applicable jurisdiction; and (iv) Notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed to be notifications to, or acknowledgments, receipts or confirmations from, bailees or agents (as applicable) of the Purchaser for the purpose of perfecting such security interest under applicable law.      -7-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- SECTION 4.2 Notices, Etc. All demands, notices and communications hereunder shall be in writing and shall be delivered or mailed by registered or certified first-class United States mail, postage prepaid, hand delivery, prepaid courier service, or by facsimile or by electronic transmission, and addressed in each case as specified on Schedule I to the Sale and Servicing Agreement or at such other address as shall be designated by any of the specified addressees in a written notice to the other parties hereto. Any notice required or permitted to be mailed to a Noteholder shall be given by first class mail, postage prepaid, at the address of such Noteholder as shown in the Note Register. Delivery shall occur only upon receipt or reported tender of such communication by an officer of the recipient entitled to receive such notices located at the address of such recipient for notices hereunder; provided, however, that any notice to a Noteholder mailed within the time and manner prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder shall receive such notice. SECTION 4.3 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 4.4 Headings. The section headings hereof have been inserted for convenience only and shall not be construed to affect the meaning, construction or effect of this Agreement. SECTION 4.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. SECTION 4.6 Amendment. (a) Any term or provision of this Agreement may be amended by Santander Consumer and the Purchaser without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person subject to the satisfaction of one of the following conditions: (i) Santander Consumer or the Purchaser delivers an Opinion of Counsel to the Indenture Trustee to the effect that such amendment will not materially and adversely affect the interests of the Noteholders; or (ii) The Rating Agency Condition is satisfied with respect to such amendment and Santander Consumer or the Purchaser notifies the Indenture Trustee in writing that the Rating Agency Condition is satisfied with respect to such amendment; provided, that no amendment pursuant to this Section 4.6 shall be effective which affects the rights, protections or duties of the Indenture Trustee or the Owner Trustee without the prior written consent of such Person.      -8-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- (b) This Agreement may also be amended from time to time by Santander Consumer and the Purchaser, with the consent of the Holders of Notes evidencing not less than a majority of the aggregate principal balance of the Controlling Class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders. It will not be necessary for the consent of Noteholders to approve the particular form of any proposed amendment or consent, but it will be sufficient if such consent approves the substance thereof. The manner of obtaining such consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Noteholders will be subject to such reasonable requirements as the Indenture Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement. (c) Any term or provision of this Agreement may also be amended from time to time by Santander Consumer and the Purchaser for the purpose of conforming the terms of this Agreement to the description thereof in the Prospectus or, to the extent not contrary to the Prospectus, to the description thereof in an offering memorandum with respect to the 144A Notes or the Certificates without the consent of the Indenture Trustee, any Noteholder, the Issuer, the Owner Trustee or any other Person, provided, however, that Santander Consumer and the Purchaser shall provide written notification of the substance of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee and promptly after the execution of such amendment, Santander Consumer and the Purchaser shall furnish a copy of such amendment to the Indenture Trustee, the Issuer and the Owner Trustee. (d) Prior to the execution of any amendment or consent pursuant to this Section 4.6, Santander Consumer shall provide written notification of the substance of such amendment to each Rating Agency; and promptly after the execution of any such amendment or consent, Santander Consumer shall furnish a copy of such amendment or consent to each Rating Agency and the Indenture Trustee. (e) Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which adversely affects the Owner Trustee’s or the Indenture Trustee’s, as applicable, own rights, duties or immunities under this Agreement. (f) Notwithstanding subsections (a) and (b) of this Section 4.6, this Agreement may only be amended by the Seller and the Purchaser if (i) the Majority Certificateholders, or, if 100% of the aggregate Percentage Interests is then beneficially owned by Santander Consumer and/or its Affiliates, such Person (or Persons) consent to such amendment or (ii) such amendment shall not, as evidenced by an Officer’s Certificate of the Seller or the Purchaser or an Opinion of Counsel delivered to the Indenture Trustee and the Owner Trustee, materially and adversely affect the interests of the Certificateholders. In determining whether 100% of the aggregate Percentage Interests is then beneficially owned by Santander Consumer and/or its Affiliates for purposes of clause (i), any party shall be entitled to rely on an Officer’s Certificate or similar certification of Santander Consumer or any Affiliate thereof to such effect.      -9-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- SECTION 4.7 Waivers. No failure or delay on the part of the Purchaser, the Servicer, Santander Consumer, the Issuer or the Indenture Trustee in exercising any power or right hereunder (to the extent such Person has any power or right hereunder) shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Purchaser or Santander Consumer in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by either party under this Agreement shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. SECTION 4.8 Entire Agreement. The Transaction Documents contain a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter thereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter thereof, superseding all prior oral or written understandings. There are no unwritten agreements among the parties. SECTION 4.9 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 4.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time as the parties hereto shall agree. SECTION 4.11 Acknowledgment and Agreement. By execution below, Santander Consumer expressly acknowledges and consents to the sale of the Purchased Assets and the assignment of all rights of the Purchaser under this Agreement by the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement and the Grant of a security interest in the Receivables, the other Purchased Assets and the Issuer’s rights under this Agreement by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders. In addition, Santander Consumer hereby acknowledges and agrees that for so long as the Notes are outstanding, the Indenture Trustee will have the right to exercise all powers, privileges and claims of the Purchaser under this Agreement in the event that the Purchaser shall fail to exercise the same. SECTION 4.12 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 4.13 Nonpetition Covenant. Each party hereto agrees that, prior to the date which is one year and one day after payment in full of all obligations of each Bankruptcy Remote Party in respect of all securities issued by any Bankruptcy Remote Party (i) such party hereto shall not authorize any Bankruptcy Remote Party to commence a voluntary winding-up or      -10-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- other voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or other similar official with respect to such Bankruptcy Remote Party or any substantial part of its property or to consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other Proceeding commenced against such Bankruptcy Remote Party, or to make a general assignment for the benefit of its creditors generally, any party hereto or any other creditor of such Bankruptcy Remote Party, and (ii) such party shall not commence, join with any other Person in commencing or institute with any other Person, any Proceeding against such Bankruptcy Remote Party under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction. This Section shall survive the termination of this Agreement. SECTION 4.14 Submission to Jurisdiction; Waiver of Jury Trial. Each of the parties hereto hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement or any documents executed and delivered in connection herewith, or for recognition and enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought and maintained in such courts and waives any objection that it may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 4.2 of this Agreement; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) to the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, proceeding or counterclaim based on, or arising out of, under or in connection with this Agreement, any other Transaction Document, or any matter arising hereunder or thereunder. SECTION 4.15 Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and each of the Issuer and the Indenture Trustee shall be an express third-party beneficiary hereof and may enforce the provisions hereof as if it were a party hereto. Except as otherwise provided in this Section, no other Person will have any right hereunder. [Remainder of Page Intentionally Left Blank]      -11-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.   SANTANDER CONSUMER USA INC. By:     Name:   Corey Henry Title:   Vice President      S-1    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- SANTANDER DRIVE AUTO RECEIVABLES LLC By:     Name:   Steven R. Mark Title:   Vice President      S-2    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- EXHIBIT A FORM OF ASSIGNMENT PURSUANT TO PURCHASE AGREEMENT [            ], 2017 For value received, in accordance with the Purchase Agreement (the “Agreement”) dated as of May 30, 2017, between Santander Consumer USA Inc., an Illinois corporation (“Santander Consumer”), and Santander Drive Auto Receivables LLC, a Delaware limited liability company (the “Purchaser”), on the terms and subject to the conditions set forth in the Agreement, Santander Consumer does hereby irrevocably sell, transfer, assign, contribute and otherwise convey to the Purchaser on the Closing Date, without recourse (subject to the obligations in the Agreement), all right, title and interest of Santander Consumer, whether now owned or hereafter acquired, in, to and under the Receivables set forth on the schedule of Receivables delivered by Santander Consumer to the Purchaser on the date hereof, the Collections after the Cut-Off Date, the Receivable Files and the Related Security relating thereto, which sale shall be effective as of the Cut-Off Date. The foregoing sale does not constitute and is not intended to result in an assumption by the Purchaser of any obligation of the Originator to the Obligors, the Dealers, insurers or any other Person in connection with the Receivables, or the other assets and properties conveyed hereunder or any agreement, document or instrument related thereto. This assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Agreement and is governed by the Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Agreement. [Remainder of page intentionally left blank]      A-1    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- IN WITNESS HEREOF, the undersigned has caused this assignment to be duly executed as of the date first above written.   SANTANDER CONSUMER USA INC. By:     Name:   Title:        A-2    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- SCHEDULE I PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS In addition to the representations, warranties and covenants contained in the Agreement, Santander Consumer hereby represents, warrants, and covenants to the Purchaser as follows on the Closing Date: General 1. This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Purchased Assets in favor of the Purchaser, which security interest is prior to all other Liens, and is enforceable as such as against creditors of and purchasers from Santander Consumer. 2. The Receivables constitute “tangible chattel paper,” “electronic chattel paper,” “accounts,” “instruments” or “general intangibles,” within the meaning of the UCC. 3. Immediately prior to the sale, assignment and transfer thereof pursuant to this Agreement, each Receivable was secured by a first priority validly perfected security interest in the related Financed Vehicle in favor of the Originator (or its assignee), as secured party, or all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest in the related Financed Vehicle in favor of the applicable Originator (or its assignee), as secured party. Creation 4. Immediately prior to the sale, transfer, assignment and conveyance of a Receivable by Santander Consumer to the Purchaser, Santander Consumer owned and had good and marketable title to such Receivable free and clear of any Lien and immediately after the sale, transfer, assignment and conveyance of such Receivable to the Purchaser, the Purchaser will have good and marketable title to such Receivable free and clear of any Lien. 5. Santander Consumer has received all consents and approvals to the sale of the Receivables hereunder to the Purchaser required by the terms of the Receivables that constitute instruments. Perfection 6. Santander Consumer has caused or will have caused, within ten days after the effective date of this Agreement, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the sale of the Receivables from Santander Consumer to the Purchaser, and the security interest in the Receivables granted to the Purchaser hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies of such instruments or tangible chattel paper that constitute or evidence the Receivables, and all financing statements referred to in this paragraph contain a statement that: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party/Purchaser.”      -1-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- 7. With respect to Receivables that constitute instruments or tangible chattel paper, either:     (i) All original executed copies of each such instrument or tangible chattel paper have been delivered to the Indenture Trustee; or     (ii) Such instruments or tangible chattel paper are in the possession of the Servicer and the Indenture Trustee has received a written acknowledgment from the Servicer that the Servicer (in its capacity as custodian) is holding such instruments or tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee, as pledgee of the Issuer; or     (iii) The Servicer received possession of such instruments or tangible chattel paper after the Indenture Trustee received a written acknowledgment from the Servicer that the Servicer is acting solely as agent of the Indenture Trustee, as pledgee of the Issuer. Priority 8. Santander Consumer has not authorized the filing of, and is not aware of, any financing statements against Santander Consumer that include a description of collateral covering the Receivables other than any financing statement (i) relating to the security interest granted to the Purchaser hereunder or (ii) that has been terminated. 9. Santander Consumer is not aware of any material judgment, ERISA or tax lien filings against Santander Consumer. 10. Neither Santander Consumer nor a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an “authoritative copy” (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer. 11. None of the instruments, tangible chattel paper or electronic chattel paper that constitute or evidence the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Purchaser, the Issuer or the Indenture Trustee. Survival of Perfection Representations 12. Notwithstanding any other provision of this Agreement or any other Transaction Document, the perfection representations, warranties and covenants contained in this Schedule I shall be continuing, and remain in full force and effect until such time as all obligations under the Transaction Documents and the Notes have been finally and fully paid and performed. No Waiver 13. Santander Consumer shall provide the Rating Agencies with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule I, and shall not, without satisfying the Rating Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.      -2-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- SCHEDULE II REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE RECEIVABLES   (a) Characteristics of Receivables. As of the Cut-Off Date (or such other date as may be specifically set forth below), each Receivable: (i) has been fully and properly executed or electronically authenticated by the Obligor thereto; (ii) either (A) has been originated by a Dealer to finance the retail sale by that Dealer of the related Financed Vehicle and has been purchased by Santander Consumer in accordance with the terms of a dealer agreement between Santander Consumer and that Dealer, (B) has been originated by Santander Consumer or (C) has been acquired by Santander Consumer in accordance with the terms of a purchase agreement between the applicable originator and Santander Consumer; (iii) as of the Closing Date, is secured by a first priority validly perfected security interest in the Financed Vehicle in favor of the Originator, as secured party, or all necessary actions have been commenced that would result in a first priority security interest in the Financed Vehicle in favor of the Originator, as secured party; (iv) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security; (v) provided, at origination, for level monthly payments which fully amortize the initial Principal Balance over the original term; provided, that the amount of the first or last payment may be different from the level payment but in no event more than three times the level monthly payment; (vi) provides for interest at the Contract Rate specified in the Schedule of Receivables; (vii) was originated in the United States and denominated in Dollars; (viii) is secured by a new or used automobile, light-duty truck or van; (ix) has a Contract Rate of at least 0.00%; (x) had an original term to maturity of not more than 75 months and each Receivable has a remaining term to maturity, as of the Cut-Off Date, of not more than 75 months and not less than 4 months;      -1-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- (xi) has an outstanding Principal Balance of at least $502.80 and no more than $81,419.60; (xii) has a final scheduled payment due on or before August 15, 2023; (xiii) was not more than 30 days past due as of the Cut-Off Date; (xiv) was not noted in the records of the Originator or the Servicer as being the subject of any bankruptcy or insolvency proceeding; (xv) is not subject to a force-placed Insurance Policy on the related Financed Vehicle; (xvi) is a Simple Interest Receivable, and scheduled payments under such Receivable have been applied in accordance with the method for allocating principal and interest set forth in such Receivable; and (xvii) provides that a prepayment by the related Obligor will fully pay the Principal Balance and accrued interest through the date of prepayment based on the Receivable’s Contract Rate.   (b) Compliance with Law. The Receivable complied at the time it was originated or made in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder.   (c) Binding Obligation. The Receivable constitutes the legal, valid and binding payment obligation in writing of the related Obligor, enforceable by the holder thereof in accordance with its terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, liquidation or other similar laws and equitable principles relating to or affecting the enforcement of creditors’ rights generally and (ii) as such Receivable may be modified by the application after the Cut-Off Date of the Servicemembers Civil Relief Act, as amended, to the extent applicable to the related Obligor.   (d) Receivable in Force. The Receivable has not been satisfied, subordinated or rescinded nor has the related Financed Vehicle been released from the lien of such Receivable in whole or in part.   (e) No Default; No Waiver. Except for payment delinquencies continuing for a period of not more than 30 days as of the Cut-Off Date, the records of the Servicer did not disclose that any default, breach, violation or event permitting acceleration under the terms of the Receivable existed as of the Cut-Off Date or that any continuing condition that with notice or lapse of time, or both, would constitute a default, breach, violation or event permitting acceleration under the terms of the Receivable had arisen as of the Cut-Off Date and the Seller has not waived any of the foregoing.   (f) Insurance. The Receivable requires that the Obligor thereunder obtain comprehensive and collision insurance covering the related Financed Vehicle.      -2-    Purchase Agreement (2017-2) -------------------------------------------------------------------------------- (g) No Government Obligor. The Obligor on the Receivable is not the United States of America or any state thereof or any local government, or any agency, department, political subdivision or instrumentality of the United States of America or any state thereof or any local government.   (h) Assignment. No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer, assignment, setting over, conveyance or pledge of such Receivable would be unlawful, void, or voidable.   (i) Good Title. As of the Closing Date and immediately prior to the sale and transfer contemplated in the Sale and Servicing Agreement, the Seller had good and marketable title to and was the sole owner of each Receivable free and clear of all Liens (except any Lien which will be released prior to assignment of such Receivable thereunder), and, immediately upon the sale and transfer thereof, the Issuer will have good and marketable title to each Receivable, free and clear of all Liens (other than Permitted Liens).   (j) Characterization of Receivables. Each Receivable constitutes either “tangible chattel paper,” “electronic chattel paper,” an “account,” an “instrument,” or a “general intangible,” each as defined in the UCC.   (k) One Original. There is only one executed original, electronically authenticated original or authoritative copy of the Contract (in each case within the meaning of the UCC) related to each Receivable.   (l) No Defenses. The records of the Servicer do not reflect any facts which would give rise to any right of rescission, offset, claim, counterclaim or defense with respect to such Receivable or the same being asserted or threatened with respect to such Receivable.   (m) Early Payments. The Obligor on the Receivable has made, or will make, the first two monthly payments under such Receivable.      -3-    Purchase Agreement (2017-2)
-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Exhibit 10.9     EXECUTION COPY AMENDMENT NO. 1 TO CHANGE OF CONTROL AGREEMENT AMENDMENT NO. 1 TO CHANGE OF CONTROL AGREEMENT (“Amendment”), executed and effective as of December 30, 2008 by and between COLLECTIVE LICENSING INTERNATIONAL LLC (“CLI”), and Bruce Pettet (“Executive”). WHEREAS, CLI and Executive are parties to the change of control agreement executed in March 2007 (“Change of Control Agreement”). WHEREAS, in order to avoid certain adverse federal income tax consequences to Executive under the Change of Control Agreement as a result of 409A of the Internal Revenue Code of 1986, as amended, relating to deferred compensation, Collective desires to implement certain amendments to the Change of Control Agreement; and WHEREAS, CLI and its affiliates (“Collective”), and Executive desire to amend the Change of Control Agreement. NOW, THEREFORE: Section 1.  Amendment to Section 4(c).  Section 4(c) will be replaced in its entirety with the following: “(c)  Good Reason.  The Executive’s employment may be terminated by the Executive for Good Reason.  ‘Good Reason’ means in the absence of a written consent by the Executive:   1.   the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities;   2.   any other action or inaction that constitutes a material breach of the terms of the Agreement;   3.   the Company’s requiring the Executive to be based at any office or location different than the office the Executive was employed immediately preceding the Effective Date if such relocation increases Executive’s one-way commute from the Executive’s principal residence by more than 35 miles;   4.   any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or         --------------------------------------------------------------------------------     5.   any failure by the Company to comply with and satisfy Section 10(c).   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 a Change of Control shall be deemed to be a termination for Good Reason for all purposes of this Agreement.”     Section 2.  Addition of Section 4(f).  Section 4(f) shall be inserted as follows:   “(f)  Notice of Good Reason.  Prior to complying with Sections 4(d) and 11(b), (1) the Executive must provide written notification of the Executive’s intention to resign within 90 days after the Executive knows or has reason to know of the occurrence of any such event in Sections 4(c)(1)-(5) constituting Good Reason, (2) the Company shall have 30 days from the receipt of such notice to effect a cure of the condition constituting Good Reason under Section 4(c) and (3) if the Company is unable to cure the condition constituting Good Reason within the 30-day period then the Executive must terminate his employment within two years from the date such event constituting Good Reason occurred, otherwise the event will no longer constitute Good Reason.  For the avoidance of doubt, Good Reason will not include any isolated, insubstantial and inadvertent action not taken in bad faith by the Company and that is cured promptly upon receiving notice from the Executive.”   Section 3.  Amendment to Section 5(a).  The introductory language to Section 5(a)(1) shall be replaced in its entirety with the following: “the Company shall pay to the Executive, in a lump sum in cash within 30 days after the Date of Termination, (provided, however, that no amount shall be paid pursuant to this Subsection 5(a)(1) after March 15 of the year following the first anniversary of a Change of Control), the aggregate of the following amount:”   Section 4.  Amendment to Section 8(a).  The following language shall be included at the end of Section 8(a): “The reduction of amounts payable hereunder, if applicable, shall be determined in manner which has the least economic cost to the Executive and, to the extent the economic cost is equivalent, then all the Payments, in the aggregate will be reduced in the inverse order of when all the Payments, in the aggregate, would have been made to the Executive until the reduction specified is achieved.” Section 5.  Amendment to Section 12(f).  Section 12(f) shall be replaced in its entirety with the following. “(f)  From and after the Effective Date and except as expressly set forth herein, this Agreement shall supersede any other agreement between the parties with respect to the subject matter herein including the March 2007 employment agreement as amended (the ‘Employment Agreement’); provided, however that, to the extent not inconsistent with any provision hereof, the following provisions of the Employment Agreement shall remain in effect during the Change of Control Period: Section 5 (relating to non-competition), Section 10 (relating to certain remedies that the Company and the Executive shall have), and Section 16 (relating to Section 409A, with any references in that provision to other sections of the Employment Agreement also being deemed references to similar provisions of this Agreement, as appropriate, so as to give maximum effect to such provision).” -2-     --------------------------------------------------------------------------------   Section 6.  Effectiveness of Amendment.  This Amendment shall become effective on the date hereof. Section 7.  Definitions. Capitalized terms that are not defined in this Amendment shall have the meanings ascribed thereto in the Change of Control Agreement. Section 8.  Other Provisions Unaffected.  Except as modified by this Amendment, the existing provisions of the Change of Control Agreement shall remain in full force and effect.       COLLECTIVE LICENSING INTERNATIONAL LLC     By:   /s/ Matthew E. Rubel                              Name:   Matthew E. Rubel Its:   Director   EXECUTIVE     By:   /s/ Bruce Pettet                                        Name:   Bruce Pettet Title:   President & Chief Executive Officer           -3-   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Exhibit 10.3 This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. EOG RESOURCES, INC. PERFORMANCE UNIT AWARD AGREEMENT Grantee: [Name] [Employee ID] Congratulations! You have been granted an Award of EOG Resources, Inc. Performance Units as follows: Date of Grant: [Grant Date] Performance Units granted under this Award (subject to adjustment as set forth below): [Units Granted] Vesting Date: The February 28th immediately following the Certification Date (as defined below) The Compensation Committee of the Board of EOG Resources, Inc. (the “Company”) hereby grants to you, the above-named Grantee, effective as of the Date of Grant set forth above, a Performance Unit Award (the “Award”) in accordance with the terms set forth below. General. This Performance Unit Award Agreement (this “Agreement”) is governed by the terms and conditions of the Amended and Restated EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan (as may be amended from time to time, the “Plan”), which is hereby made a part of this Agreement. All capitalized terms that are not defined in this Agreement have the meanings ascribed to them under the Plan. Under the terms of this Agreement and the Plan, a Performance Unit ledger account will be maintained by the Company (or its agent) until you become vested in the Performance Units (i.e., the lapse of the forfeiture restrictions thereon) or the Performance Units are forfeited and canceled pursuant to this Agreement. Performance Period; TSR Rank; Performance Multiple. Upon the completion of the Performance Period (as defined on Annex A) and the certification (in writing) by the Committee of the Total Shareholder Return (as defined on Annex A) over the Performance Period of the Company and each Peer Company (as defined on Annex A) and the Company’s corresponding TSR Rank (see chart on Annex A) for the Performance Period and the applicable Performance Multiple (as specified in the chart on Annex A)(the date of such certification by the Committee, the “Certification Date”), such Performance Multiple shall be applied to the number of Performance Units granted hereunder and, except in the case of an applicable Performance Multiple of 100% or an applicable Performance Multiple of 0% (in which case all Performance Units granted hereunder shall be deemed forfeited and canceled), your Performance Unit ledger account shall be adjusted to reflect (i) the additional Performance Units credited to you (in the case of a Performance Multiple greater than 100%) or (ii) your decreased Performance Units (in the case of a Performance Multiple less than 100% but greater than 0%). Voting Rights; Dividend Equivalents. You will have no voting rights with respect to the Company common stock represented by your Performance Units (including any additional Performance Units which may be credited to you upon the completion of the Performance Period based on the applicable Performance Multiple) until such time as the Company common stock is issued to you upon your vesting in the Performance Units. Dividend equivalents on unvested Performance Units shall accrue and be credited by the Company for your benefit, and any such dividend equivalents accrued and credited for your benefit shall have the same Performance Multiple applied as is applied to your Performance Units. However, such dividend equivalents shall not be paid to you until you become vested in the related Performance Units and shall be forfeited in the event of the forfeiture and cancellation of the related Performance Units pursuant to this Agreement. Vesting. Assuming your continuous employment with the Company or an Affiliate, this Award shall vest as of the close of business on the Vesting Date, and the shares of Company common stock represented (on a one-for-one basis) by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple) and all dividend equivalents with respect to such Performance Units shall be distributed to you on the first business day following the Vesting Date or as soon as administratively practicable thereafter, but no later than 60 days after such date. Termination of Employment. If your employment with the Company or an Affiliate terminates prior to the Vesting Date, your Performance Units granted hereunder, and any dividend equivalents credited with respect to such Performance Units, shall vest and be distributed to you, or shall be forfeited and canceled, as set forth below. -------------------------------------------------------------------------------- Due to Death. If your employment with the Company or an Affiliate terminates due to death on or prior to the end date of the Performance Period, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the date of your death; (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be 100%; and (iii) all shares of Company common stock represented by the Performance Units granted hereunder shall be distributed to your beneficiary as soon as administratively practicable following your date of death, but no later than 60 days after such date. If your employment with the Company or an Affiliate terminates due to death subsequent to the end date of the Performance Period, but prior to the Vesting Date, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the date of your death; (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee; and (iii) all shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple) shall be distributed to your beneficiary as soon as administratively practicable following the Vesting Date, but no later than 60 days after such date. Due to Disability. If your employment with the Company or an Affiliate terminates due to Disability prior to the Vesting Date, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the date of such termination; (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee; and (iii) all shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple) shall be distributed to you as soon as administratively practicable following the later of (A) the date that is six months following the effective date of such termination (to account for the six-month delay applicable to specified employees described under “Section 409A” below) or (B) the Vesting Date, but no later than 60 days after the later of such dates. Due to Retirement After Age 62. If your employment with the Company or an Affiliate terminates due to Retirement prior to the Vesting Date and after attaining age 62 with at least five years of service with the Company, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the date of such termination; (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee; and (iii) all shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple) shall be distributed to you as soon as administratively practicable following the later of (A) the date that is six months following the effective date of such Retirement (to account for the six-month delay applicable to specified employees described under “Section 409A” below) or (B) the Vesting Date, but no later than 60 days after the later of such dates. Due to Retirement Prior to Age 62. If your employment with the Company or an Affiliate terminates voluntarily prior to the Vesting Date and your termination is designated in writing by the Company as a “Company-approved Retirement prior to age 62” with at least five years of service with the Company, subject to such restrictions as the Company may impose (including, but not limited to, a six-month post-employment non-competition agreement), (i) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee; and (ii) for each whole year that has passed since the Date of Grant set forth above up to and including the effective date of such Retirement, you shall be eligible to receive a distribution of one-third (33%) of the shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple). Such shares of Company common stock shall be distributed to you as soon as administratively practicable following the later of (A) the date that is six months following the effective date of such Retirement or (B) the Vesting Date, but no later than 60 days after the later of such dates, provided that you do not violate the provisions of any restrictive covenants to which you are subject (including those set forth in any post-employment non-competition agreement between you and the Company), in which case all Performance Units (including any additional Performance Units which may have been credited to you upon the completion of the Performance Period based on the applicable Performance Multiple) shall be forfeited and canceled. Due to Involuntary Termination for Other than Performance Reasons. In the event of your Involuntary Termination for any reason other than performance reasons prior to the Vesting Date, (i) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee; (ii) for each whole year that has passed since the Date of Grant set forth above up to and including the effective date of such termination, you shall be eligible to receive a distribution of one-third (33%) of the shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple); and (iii) such shares of Company common stock shall be distributed to you 2 -------------------------------------------------------------------------------- as soon as administratively practicable following the later of (A) the date that is six months following the effective date of such termination (to account for the six-month delay applicable to specified employees described under “Section 409A” below) or (B) the Vesting Date, but no later than 60 days after the later of such dates. Due to Performance Reasons, Cause or Voluntary Termination. In the event of your Involuntary Termination for performance reasons, Termination for Cause, or voluntary termination prior to the Vesting Date, all Performance Units granted hereunder shall be forfeited and canceled. Vesting Upon a Change in Control. Upon a Change in Control of the Company (as defined in the Plan) with an effective date on or prior to the end date of the Performance Period, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the effective date of the Change in Control of the Company; and (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be based on the respective Total Shareholder Return of the Company and each of the Peer Companies over the Performance Period (using, for purposes of such Total Shareholder Return calculations, the 30 calendar day period immediately preceding the effective date of the Change in Control of the Company as the end month of the Performance Period) as certified by the Committee (or its successor). Upon a Change in Control of the Company (as defined in the Plan) with an effective date subsequent to the end date of the Performance Period, but prior to the Vesting Date, (i) all forfeiture restrictions on the Performance Units granted hereunder shall lapse effective as of the effective date of the Change in Control of the Company; and (ii) the Performance Multiple to be applied to the number of Performance Units granted hereunder shall be the Performance Multiple for the Performance Period as certified by the Committee (or its successor). All shares of Company common stock represented by the Performance Units granted hereunder (as adjusted for the applicable Performance Multiple) shall be distributed to you as soon as administratively practicable following the effective date of such Change in Control of the Company, but no later than 60 days after such date; provided, however, that if the event constituting the Change in Control of the Company does not qualify as a change in effective ownership or control of the Company for purposes of Section 409A, then, pursuant to Section 13.2 of the Plan, such distribution shall be delayed until the earliest time that such distribution would be Permissible under Section 409A. Section 409A. The Plan and this Agreement are intended to meet the requirements of Section 409A and shall be administered such that any payment, settlement, or deferrals of amounts hereunder shall not be subject to any excise penalty tax that may be imposed thereunder. The Company, in its sole discretion, shall determine if you are a “specified employee” of the Company (as that phrase is defined for purposes of Section 409A) on the date of your termination of employment or your Retirement prior to the Vesting Date and whether you are subject to any six-month delay in distribution of amounts due you under this Agreement. Delivery of Documents. By accepting the terms of this Agreement, you consent to the electronic delivery of documents related to your current or future participation in the Plan (including the Plan documents; this Agreement; any other prospectus or other documents describing the terms and conditions of the Plan and this Award; and the Company’s then-most recent annual report to stockholders, Annual Report on Form 10-K and definitive proxy statement), and you acknowledge that such electronic delivery may be made by the Company, in its sole discretion, by one or more of the following methods: (i) the posting of such documents on the Company’s intranet website or external website; (ii) the posting of such documents on the UBS Financial Services, Inc. website; (iii) the delivery of such documents via the UBS Financial Services, Inc. website; (iv) the posting of such documents to another Company intranet website or third party internet website accessible by you; or (v) delivery via electronic mail, by attaching such documents to such electronic email and/or including a link to such documents on a Company intranet website or external website or third party internet website accessible by you. Notwithstanding the foregoing, you also acknowledge that the Company may, in its sole discretion (and as an alternative to, or in addition to, electronic delivery) deliver a paper copy of any such documents to you. You further acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost to you by contacting the Company (Attention: Human Resources Department) by telephone or in writing.      3 -------------------------------------------------------------------------------- This Agreement does not amend the terms and conditions of your current employment. To read and print the applicable plan or document, select the appropriate link below: • Annual Report • Proxy Statement • Amended and Restated EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan As part of your acceptance of this Agreement, you also agree to adhere to Company policies, including those listed below, some of which have terms or provisions that apply beyond the term of your employment with the Company. • Code of Business Conduct and Ethics • Conflicts of Interest Policy • Policy on Confidential Information • Policy on Inventions • Information Systems Security Policy By accepting this Agreement, you acknowledge that you have read and agree to all of the terms and conditions set forth above. If you decide to reject the terms and conditions of this Agreement, you will decline your right to the Award, and it may be cancelled. You are advised to print a copy of this Agreement for your records and reference. 4 -------------------------------------------------------------------------------- Annex A Definitions of Certain Terms “Performance Period” shall mean the three-year period from and including January 1 of the year immediately following the Grant Date through December 31 of the third year immediately following the year of the Grant Date. “Total Shareholder Return” for a company (i.e., for the Company or a Peer Company) shall mean such company’s average daily closing stock price for the month immediately preceding the commencement of the Performance Period (i.e., December of the year of the Grant Date) as compared to the average daily closing stock price for the end month of the Performance Period (i.e., December of the third year immediately following the year of the Grant Date), assuming the reinvestment of dividends and as adjusted for stock splits, recapitalizations, reorganizations or other similar adjustments or changes in the company’s capital structure, and expressed as a percentage increase or decrease (as the case may be) over the Performance Period. “Peer Company” shall mean each of (i) Anadarko Petroleum Corporation (ticker symbol: APC); (ii) Apache Corporation (ticker symbol: APA); (iii) ConocoPhillips (ticker symbol: COP); (iv) Devon Energy Corporation (ticker symbol: DVN); (v) Hess Corporation (ticker symbol: HES); (vi) Marathon Oil Corporation (ticker symbol: MRO); (vii) Noble Energy, Inc. (ticker symbol: NBL); (viii) Occidental Petroleum Corporation (ticker symbol: OXY); and (ix) Pioneer Natural Resources Company (ticker symbol: PXD) (collectively, and including any replacement Peer Company (as discussed below), the “Peer Companies”); provided, however, that should any Peer Company (including any replacement Peer Company) cease to be a publicly traded company as the result of the consummation of a merger, acquisition, consolidation or similar transaction during the Performance Period, then (A) such Peer Company shall, for purposes of the Committee’s certification referenced above, be replaced (1) by Concho Resources Inc. (ticker symbol: CXO), or (2) if Concho Resources Inc. has previously been selected as a replacement Peer Company pursuant to this proviso or it has ceased to be a publicly traded company as the result of the consummation of a merger, acquisition, consolidation or similar transaction during the Performance Period, by Continental Resources, Inc. (ticker symbol: CLR), and (B) the Total Shareholder Return over the Performance Period of such replacement Peer Company shall be measured from the beginning of the Performance Period; and, provided further, should any Peer Company (including any replacement Peer Company), due to its financial performance or financial condition (e.g., bankruptcy), cease to have its voting stock be publicly traded (either temporarily or permanently), such Peer Company shall nevertheless continue to be a Peer Company for purposes of the Committee’s certification referenced above. “TSR Rank” of the Company among the Ten Total Companies (i.e., the Company and Nine (9) Peer Companies) Applicable “Performance Multiple” 1 200% 2 175% 3 150% 4 125% 5 100% 6 75% 7 50% 8 25% 9 0% 10 0% 5
Exhibit 10.2 ENDEAVOUR INTERNATIONAL CORPORATION WARRANT AGREEMENT FOR THE PURCHASE OF SHARES OF COMMON STOCK BY THIS WARRANT AGREEMENT (this “Warrant Agreement”), ENDEAVOUR INTERNATIONAL CORPORATION, a Nevada corporation (the “Company”), certifies that, for good and valuable consideration in connection with the letters of credit issued on the date hereof to Hess Limited for the benefit of the Company’s subsidiary, Endeavour Energy UK Limited, the receipt and sufficiency of which are hereby acknowledged, the Person listed on the signature page hereto (along with its registered permitted assigns, each a “Holder”), are entitled to subscribe for and purchase from the Company, subject to the terms and conditions set forth herein, the respective number (subject to adjustment as set forth herein) of fully paid and non-assessable shares (the “Shares”) of the Company’s Common Stock (as defined herein) as set forth on Schedule 1 hereto, at a price per share equal to US$10.50 per Share (the “Exercise Price”), subject to adjustment as set forth herein. 1. Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated. “Accredited Investor” has the meaning set forth for such term in Rule 501 of Regulation D under the Securities Act (but excluding for such purposes Rule 501(a)(4) thereunder), as such rule may be amended, modified or superseded from time to time. “Affiliate” means, as to any Person, any other Person which, directly or indirectly, controls, or is controlled by, or is under common control with, such person (for this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership or voting of securities or partnership or other ownership interests, by contract or otherwise). In addition, with respect to any Holder who is a natural person, “Affiliate” shall be deemed to include a Holder’s Family Members and such Holder’s Family Trusts. “Board” means the Board of Directors of the Company. “Buy-In” has the meaning set forth in Section 2(e). “Cashless Exercise Notice” has the meaning set forth in Section 2(c)(ii). “Cashless Exercise Right” has the meaning set forth in Section 2(c)(i). “Cashless Exercise Shares” has the meaning set forth in Section 2(c)(i). “Closing Price” means the closing sale price (or, if no closing sale price is reported, the last sale price) of the Common Stock on the New York Stock Exchange on such date. “Common Stock” means the Company’s common stock, par value US$0.001 per share. “Common Stock Equivalents” means Common Stock and all shares of Common Stock issuable upon conversion, exercise or exchange of all options, warrants or other securities convertible into or exercisable or exchangeable for shares of Common Stock or other securities of the Company that are convertible into or exercisable or exchangeable for shares of Common Stock. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. “Exercise Notice” has the meaning set forth in Section 2(b). “Exercise Price” means the initial Exercise Price specified in the first paragraph of this Warrant Agreement, as adjusted from time to time as provided in Section 8. “Expiration Time” means 5:30 p.m., local time in Houston, Texas (USA), on January 24, 2016. “Family Member” means, with respect to any Holder that is a natural person, a spouse, lineal ancestor, lineal descendant, legally adopted child, brother or sister of such Holder, or a lineal descendant or legally adopted child of a brother or sister of such Holder. “Family Trust” means any trust of a Holder whose exclusive beneficiaries are such Holder and/or Family Members of such Holder. “Market Price” has the meaning set forth in Section 8(d). “Other Property” has the meaning set forth in Section 9. “Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, limited liability company, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. “Securities Act” means the U.S. Securities Act of 1933, as amended. “Shares” has the meaning set forth in the first paragraph of this Warrant Agreement. “Trading Day” means a day on which trading in the Common Stock generally occurs on the New York Stock Exchange. “Warrant” has the meaning set forth in the Warrant Certificate. “Warrant Certificate” means a Warrant Certificate in substantially the form attached hereto as Exhibit A. “Warrant Register” has the meaning set forth in Section 4. 2. Exercise of Warrant; Company Office; Expiration. (A) General. A Warrant may be exercised at any time or from time to time on or after the date hereof and shall remain exercisable thereafter until the Expiration Time, as to the entire number or any lesser number of whole Shares covered by the Warrant Certificate. A Warrant shall be deemed exercised in full on a cashless basis pursuant to Section 2(c) immediately prior to the Expiration Time if such exercise would result in the issuance of any Common Stock or other consideration (if not previously exercised in full); if such exercise would not result in such issuance, then such Warrant shall expire and be deemed cancelled immediately after the Expiration Time. Any exercise pursuant to this Section 2 shall be in compliance with applicable federal and state securities laws and in accordance with a valid exemption from registration in connection with the issuance of such Shares, and the Company may refuse to give effect to any exercise of a Warrant pursuant to this Warrant Agreement in the event that the Company reasonably believes that such exercise would not be consistent with the foregoing. (b) Cash Exercise. Subject to the last sentence in this Section 2(b), at any time prior to the Expiration Time, the Holder may exercise a Warrant, in whole or in part, by delivering to the Company at its principal executive offices or at such other office or agency designated in writing by the Company the following: (i) the Warrant Certificate evidencing such Warrants together with the Exercise Notice attached to the Warrant Certificate as Annex I (an “Exercise Notice”), properly completed and executed by the Holder thereof or by the duly appointed legal representative thereof or by a duly authorized attorney, and (ii) the payment in full of the aggregate Exercise Price by wire transfer for each such Warrant exercised and any other amounts required to be paid pursuant hereto. (c) Cashless Exercise. (i) Except as otherwise provided in this Section 2(c), at any time and from time to time prior to the Expiration Time, in lieu of payment of the Exercise Price, a Holder shall have the right (but not the obligation) to require the Company to allow the exercise of a Warrant, in whole or in part, for Shares (the “Cashless Exercise Right”) as provided for in this Section 2(c). Upon exercise of the Cashless Exercise Right by a Holder, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price) that number of Shares (the “Cashless Exercise Shares”) equal to the quotient obtained by dividing (x) the net value of the aggregate Shares (or portion thereof as to which the Cashless Exercise Right is being exercised if the Cashless Exercise Right is being exercised in part) at the time the Cashless Exercise Right is exercised (determined by subtracting (A) the sum of the aggregate Exercise Price of the Shares as to which the Cashless Exercise Right is being exercised in effect immediately prior to the exercise of the Cashless Exercise Right from (B) the aggregate Market Price of the Shares as to which the Cashless Exercise Right is being exercised immediately prior to the exercise of the Cashless Exercise Right) by (y) the Market Price of one Share immediately prior to the exercise of the Cashless Exercise Right. (ii) In order to exercise the Cashless Exercise Right, a Holder shall surrender to the Company at its principal executive offices or at such other office or agency designated in writing by the Company the following: the Warrant Certificate evidencing such Warrants together with the Cashless Exercise Notice attached to the Warrant Certificate as Annex II (a “Cashless Exercise Notice”), properly completed and executed by the Holder or Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. The presentation and surrender of the Cashless Exercise Notice shall be deemed a waiver of the Holder’s obligation to pay all or any portion of the aggregate purchase price payable for the Shares as to which such Cashless Exercise Right is being exercised. Notwithstanding anything to the contrary herein, the Warrants shall be deemed to be exercised in accordance with this Section 2(c) and the Holders thereof shall be deemed to have exercised their Cashless Exercise Right immediately prior to the Expiration Time if the net value of the aggregate Shares (determined in accordance with Section 2(c)(i) above) is a positive amount as of the Expiration Time. The Warrants (or so much thereof as shall have been surrendered for exercise or deemed to have been exercised pursuant to this Section 2(c)(ii)) shall be deemed to have been exercised immediately prior to the close of business on the earlier of (A) the day of surrender of the Cashless Exercise Notice and such Warrant Certificate for conversion in accordance with the foregoing provisions and (B) the Expiration Time, as the case may be. In connection with any conversion in accordance with this Section 2(c), the Company shall pay, on behalf of a Holder, all stamp, capital or other similar taxes imposed by law upon the Holder, if any, in accordance with to Section 7. (d) Effect of Exercise. All Warrant Certificates surrendered to the Company shall be promptly cancelled by the Company and shall not be reissued by the Company. (e) Compensation for Buy-In. In addition to any rights available to the Holder, if the Company fails to transmit to the Holder a certificate or certificates representing the Shares pursuant to an exercise on or before the third Trading Day following such exercise, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price per Share at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Warrants for shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. 3. Stock Ownership; Stock Certificates; Partial Exercise. (a) Upon each exercise of a Warrant, (x) the Holder shall be deemed to be the holder of record of the Shares issuable upon such exercise and (y) such Shares shall be deemed to have been issued as of the close of business on the day the Warrant is exercised in accordance with Section 2 above, notwithstanding that the stock transfer books of the Company shall then be closed or certificates representing such Shares shall not then have been actually delivered to the Holder. (b) As soon as possible after each such exercise of a Warrant, but in any event within three (3) Trading Days after such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Shares (or Cashless Exercise Shares, as the case may be) issuable upon such exercise issued in such denominations as may be specified by the Holder in the Exercise Notice or Cashless Notice, as applicable, and registered in the name of the Holder or, subject to Section 11(b), such other name or names as shall be designated in the Holder’s Exercise Notice or Cashless Exercise Notice, as applicable, along with cash in lieu of any fractional shares pursuant to Section 8(h) and to the extent applicable in accordance with Section 3(c), a new Warrant Certificate representing any un-exercised balance. At the written request of the Holder, in lieu of transmitting certificates to the Holder, the Company may credit the account of the Holder’s prime broker with The Depository Trust Company. (c) If any Warrant shall be exercised in part only, the Company shall, upon surrender of the Warrant Certificate for cancellation, execute and deliver a new Warrant Certificate evidencing the right of the Holder to purchase the balance of the Shares subject to purchase hereunder on the terms and conditions set forth herein (including all changes and adjustments that have occurred hereunder). The Company will not close its stockholder books or records in any manner which prevents the timely exercise of a Warrant. 4. Company Records; Transfer or Assignment of Warrant; Exchange of Warrant. Any Warrant issued in connection herewith or in substitution herefor, upon complete or partial transfer, assignment or exercise shall be numbered and shall be registered in the warrant register of the Company (the “Warrant Register”) as it is issued. The Warrant Register shall be in written form in the English language, shall include a record of the certificate number of each Warrant issued by the Company and shall show the number of Warrants, the date of issuance, all subsequent transfers and changes of ownership in respect thereof, including the name and address of any subsequent Holder. The Company shall treat the registered holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes, except that if a Warrant is properly transferred or assigned in accordance with the terms hereof, the Company shall treat the transferee or assignee as the owner thereof for all purposes. Other than transfers or assignments by the Holder to one or more of its Affiliates, a Warrant may not be transferred or assigned by the Holder without the prior written consent of the Company. If such transfer or assignment shall be permitted by the preceding sentence or the Company shall consent in writing to such a transfer or assignment by the Holder, title to a Warrant shall be transferred upon delivery thereof duly endorsed by the Holder or by his duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment or authority to transfer, together with a properly completed Form of Assignment in substantially the form attached hereto as Exhibit B. The Company shall immediately register all properly completed assignments and transfers in the Warrant Register and, upon any registration of assignment or transfer, the Company shall deliver a new Warrant Certificate or Warrant Certificates to, and in the name of, the Person entitled thereto on the terms and conditions set forth herein (including all changes and adjustments that have occurred hereunder). A Warrant, if properly transferred or assigned, may be exercised by a subsequent Holder without having a new Warrant Certificate issued. The Warrant Certificate may be exchanged at the option of the Holder thereof for another Warrant Certificate, or other Warrant Certificates, of different denominations and representing in the aggregate the right to purchase the same number of shares of Common Stock on the terms and conditions set forth herein (including all changes and adjustments that have occurred hereunder) upon surrender to the Company or its duly authorized agent. All provisions of this Section 4 shall be subject to Section 10. 5. Reserved Stock. The Company shall reserve and keep available at all times solely for the purpose of providing for the exercise of the Warrants the maximum number of shares of Common Stock as to which the Warrants may then be exercised. All such shares of Common Stock shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable. In addition, all such shares of Common Stock shall be free from all taxes, liens, charges, encumbrances, security interests and restrictions on transfer (other than as described herein or as required by applicable law) and shall be free of pre-emptive or similar rights (whether arising under applicable law, the Company’s organizational documents or any agreement or instrument to which the Company is a party). 6. Representations, Warranties and Covenants of the Company. (a) As of the date hereof, the Company represents and warrants to the Holder that: (i) it has the corporate power to enter into, perform and deliver, and has taken all necessary action to authorize its entry into, and performance and delivery of, this Warrant Agreement and the transactions contemplated by this Warrant Agreement; (ii) this Warrant Agreement constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, subject to (x) the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereinafter in effect relating to or affecting the rights and remedies of creditors and (y) the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief regardless of whether considered in a proceeding in equity or at law; (iii) the execution of this Warrant Agreement and the performance of the Company’s obligations hereunder do not conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of the Company’s or any of its subsidiaries pursuant to: (x) the Company’s organizational documents; (y) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of its subsidiaries is a party or bound or to which its or their property is subject; or (z) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over it or any of its subsidiaries or any of its or their properties; and (iv) assuming the accuracy of the representations and warranties of the Holder contained in this Warrant Agreement, the sale and issuance of the Warrants pursuant to this Warrant Agreement is intended to be exempt from the registration requirements of the Securities Act, and neither the Company nor any person acting on its behalf has taken or will take any action hereafter that would cause the loss of such exemption. (b) At the time of execution of this Warrant Agreement, the Company shall cause to be delivered to the Holder: (i) the legal opinion of Woodburn & Wedge, Nevada counsel to the Company, in form and substance reasonably acceptable to the Holder and (ii) the legal opinion of Vinson & Elkins L.L.P., securities counsel to the Company, in form and substance reasonably acceptable to the Holder. (c) As soon as reasonably practicable after the date hereof, the Company shall provide the Holder with registration rights in form and substance substantially similar to those granted to holders of the Convertible Bonds as set forth in that certain Registration Rights Agreement dated January 24, 2008 by and between the Company and Smedvig QIF plc. (d) The Company shall, for so long as any Warrants remain outstanding: (i) timely file all reports and other documents required to be filed by it pursuant to the Securities Act or the Exchange Act and (ii) use commercially reasonable efforts to maintain the trading of the Common Stock on the New York Stock Exchange. (e) The Company shall not, for so long as any Warrants remain outstanding, by any action, including amending its organizational documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant Agreement or the Warrants. The Company will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will use its commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. 7. Payment of Taxes. All Common Stock issuable upon the exercise of the Warrants pursuant to the terms hereof shall be validly issued as fully paid and non-assessable and without any pre-emptive rights. Subject to the last sentence of this Section 7, the Company shall bear all expenses in connection with, and all stamp, capital or other similar taxes and other governmental charges that may be imposed in the United States with respect to, the issue or initial delivery of Shares or Cashless Exercise Shares hereunder. All other such taxes or charges shall be borne by the Holder. For the avoidance of doubt, the Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer of any Warrants or Common Stock (or interest or entitlement therein) or to pay any tax or other charge involved in the issue of any certificate for Common Stock issuable upon exercise of a Warrant in any name other than that of the Holder, and in such case the Company shall not be required to issue or deliver any share certificate until such tax or other charge has been paid or it is has been established to the satisfaction of the Company that no such tax or other charge is due. 8. Certain Adjustments. The Exercise Price shall be subject to adjustment from time to time as set forth in this Section 8. The Company shall give the Holder notice of any event described in this Section 8 which requires an adjustment pursuant to this Section 8 either at the time of such event or promptly thereafter. (a) If the Company shall hereafter pay a Common Stock dividend or make a distribution of Common Stock to all holders of its outstanding shares of Common Stock, the Exercise Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be adjusted by multiplying such Exercise Price by a fraction: (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the record date fixed for such determination; and (ii) the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall be become effective immediately after the opening of business on the day following the relevant record date. For the purpose of this Section 8(a), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. If any dividend or distribution described in this Section 8(a) is declared but not so paid or made, the Exercise Price shall again be adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared. (b) If the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Exercise Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Exercise Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased; such reduction or increase, as the case may be, will become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (c) If the Company shall hereafter pay a cash dividend or other distribution (whether of assets, debt securities, preferred stock or any rights or warrants to purchase assets, debt securities, preferred stock or other securities of the Company) to all holders of its outstanding shares of Common Stock, the Exercise Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be adjusted by multiplying such Exercise Price by a fraction: (i) the numerator of which shall be the Market Price (as defined below) on the record date fixed for such determination minus the fair market value on the record date of the debt securities, preferred stock, assets (including cash), securities, rights or warrants to be distributed in respect of one share of Common Stock as determined in good faith by the Board based on a written opinion of an internationally recognized investment banking, appraisal or valuation firm that is not an Affiliate of the Company; and (ii) the denominator of which shall be the Market Price on the record date fixed for such determination. Such reduction shall be become effective immediately after the opening of business on the day following the relevant record date. For the purpose of this Section 8(c), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. If any dividend or distribution described in this Section 8(c) is declared but not so paid or made, the Exercise Price shall again be adjusted to the Exercise Price which would then be effect if such dividend or distribution had not been declared. This Section 8(c) shall not apply to distributions of securities referred to Section 8(a) or (b) or of rights, options and warrants referred to in Section 8(d). (d) If the Company shall issue rights or warrants to all holders of its outstanding Common Stock entitling them (for a period expiring within forty-five (45) days after the date fixed for determination of stockholders entitled to receive such rights or warrants) to subscribe for or purchase shares of Common Stock (or Common Stock Equivalents) at a price per share less than the Closing Price on the Trading Day immediately preceding the time of announcement of such issuance (the “Market Price”), or issue shares of Common Stock at a price below the Market Price, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction: (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the record date plus the number of shares which the aggregate offering price of the total number of shares so issued or offered for subscription or purchase (or the aggregate conversion or exercise price of the Common Stock Equivalents so offered) would purchase at the relevant Market Price; and (ii) the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the record date plus the total number of additional shares of Common Stock so issued or offered for subscription or purchase (or into which or for which the Common Stock Equivalents so offered are convertible or exercisable). Such adjustment shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the opening of business on the day following the record date fixed for determination of stockholders entitled to receive such rights, warrants or securities or, in the case of the sale of shares of Common Stock below the Market Price, the date of such sale. To the extent that shares of Common Stock (or Common Stock Equivalents) are not delivered pursuant to such rights, warrants or securities, upon the expiration or termination of such rights, warrants or securities the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights, warrants or securities been made on the basis of the delivery of only the number of shares of Common Stock (or Common Stock Equivalents) actually delivered. In the event that such rights, warrants or securities are not so issued, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed. In determining whether any rights, warrants or securities entitle the holders to subscribe for, purchase or receive shares of Common Stock at less than the relevant Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights, warrants or entitlement to receive such shares of Common Stock and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board. (e) The Company shall not be required to issue fractions of shares of Common Stock of the Company upon the exercise of a Warrant. If any fraction of a Share would be issuable upon the exercise of any Warrant (or specified portions thereof), the Company shall purchase such fraction for an amount in cash equal to the same fraction of the Closing Price of such Share of Common Stock on the date of exercise of such Warrant. (f) If, after an adjustment, a holder of a Warrant is entitled to receive shares of two or more classes of capital stock of the Company upon exercise of such Warrant, the Company shall determine, in good faith, the allocation of the adjusted Exercise Price between the classes of capital stock. After such allocation, the exercise privilege and the applicable Exercise Price of each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section 8. Such adjustment shall be made successively whenever any event listed above shall occur. (g) Notwithstanding anything herein, if proceedings commence for the voluntary or involuntary dissolution, liquidation or winding up of the Company, then, unless the holder voluntarily elects to exercise its Warrants pursuant to Section 2(b) hereof, the Warrants shall be deemed automatically be exercised pursuant to Section 2(c)) hereof, and the Warrant Certificates representing such Warrants shall be deemed canceled. As a result of such exercise, each holder of Shares or Cashless Exercise Shares shall be entitled to receive distributions on an equal basis with the holders of the shares of Common Stock. If this Section 8(g) applies to a transaction, no other adjustment to the exercise price shall be made pursuant to this Section 8. (h) Notwithstanding the foregoing, whenever successive adjustments to the Exercise Price are called for pursuant to this Section 8, such adjustments shall be made to the Exercise Price as may be necessary or appropriate to effectuate the intention of this Section 8 and to avoid unjust or inequitable results as determined in good faith by the Board. (i) Before taking any action which would cause an adjustment pursuant to Section 8 hereof to reduce the Exercise Price below the then par value (if any) of the Common Stock, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Shares (or Cashless Exercise Shares) at the Exercise Price as so adjusted. 9. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. If the Company reorganizes its capital, reclassifies its capital securities, consolidates or merges with or into another Person (where the Company is not the surviving Person or where there is a change in or distribution with respect to the Common Stock of the Company), or sells, transfers or otherwise disposes of all or substantially all its property, assets or business to another Person and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, units, shares or stock of the successor or acquiring Person, or any cash, units, shares or 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 the units, shares or stock of the successor or acquiring Person (“Other Property”), are to be received by or distributed to holders of the Common Stock of the Company, then each Holder shall have the right thereafter to receive, upon exercise of a Warrant, the number of units, shares or stock of the successor or acquiring Person or of the Company, if it is the surviving Person, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of Shares for which such Warrant is exercisable immediately prior to such event. If any such reorganization, reclassification, merger, consolidation or disposition of assets occurs, the successor or acquiring Person (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 Agreement and any registration rights agreement entered into between the Company and the Holder relating to the resale of the Warrants or the Shares (or the Cashless Exercise Shares, as the case may be) 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 the Board) in order to provide for adjustments of the Common Stock for which each Warrant is exercisable, which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 9, and all references in this Warrant Agreement to the “Company” shall be deemed to be a reference to such successor or acquiring Person. In determining the kind and amount of stock, securities and/or property receivable upon consummation of such reorganization, reclassification, merger, consolidation or disposition of assets if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such transaction, then the Holders of the Warrants, in connection with such transaction and at the same time holders of Common Stock are allowed to make such election, shall be given the right to make a similar election with respect to the number of shares of stock or Other Property for which the Holder’s Warrant shall thereafter be exercisable. For purposes of this Section 9, “units, shares or stock of the successor or acquiring Person” includes units, shares or stock of such Person of any class that is not preferred as to distributions or assets over any other class of units, shares or stock of such entity and that is not subject to redemption and shall also include any evidences of indebtedness, units, shares or stock or other securities that are convertible into or exercisable or exchangeable for any such units, shares or 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 units, shares or stock, and all references in this Agreement to “Common Stock” shall be deemed to be a reference to such units, shares or stock of the successor or acquiring Person. The foregoing provisions of this Section 9 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations, or disposition of assets. 10. Expenses. Subject to Section 7, the Company shall pay all costs, fees, taxes (other than any federal or state income or stock transfer taxes) and expenses payable in connection with the preparation and delivery of this Warrant Agreement and the preparation, issuance and initial delivery from time to time of any Warrants and Shares (or Cashless Exercise Shares, as the case may be) or other securities issued upon the exercise, transfer or assignment of this Warrant Agreement or any Warrant. 11. Representations and Warranties of the Holder; Restrictions on Transfer. (a) The Holder, by its acceptance hereof and its acceptance of any Warrants or Warrant Certificates, represents and warrants to the Company: (i) The Holder is acquiring the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) or other securities issued upon the exercise of such Warrant for investment purposes, for its own account, and not with an intent to sell or distribute such Warrant or any such Shares (or Cashless Exercise Shares, as the case may be) or other securities except in compliance with applicable United States federal and state securities law. The Holder understands and acknowledges that the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering. The Holder has been advised and understands and acknowledges that the issuance and sale of the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) has not been registered under the Securities Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act (or if eligible, sold pursuant to the provisions of Rule 144 promulgated under the Securities Act or pursuant to another available exemption from the registration requirements of the Securities Act or in a transaction not subject thereto). (ii) The Holder is an Accredited Investor and has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of the purchase of any Warrants and any Shares (or Cashless Exercise Shares, as the case may be). (iii) The Holder has been furnished with all materials relating to the business, finances and operations of the Company and relating to the offer and sale of the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) that have been requested by the Holder. The Holder understands and acknowledges that its purchase of the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) involves a high degree of risk and uncertainty. The Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its purchase of the Warrants and any Shares (or Cashless Exercise Shares, as the case may be). (iv) The Holder understands and acknowledges that the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws, and that the Company, and Vinson & Elkins L.L.P., securities counsel to the Company, are relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth in this Warrant Agreement (x) in concluding that the offer and sale of the Warrants and any Shares (or Cashless Exercise Shares, as the case may be) is a “private offering” and, as such, is exempt from the registration requirements of the Securities Act, and (y) to determine the applicability of such exemptions in evaluating the suitability of the Holder to purchase the Warrants and any Shares (or Cashless Exercise Shares, as the case may be). (b) The Holder acknowledges that neither the Warrant nor any of the Shares (or Cashless Exercise Shares, as the case may be) or other securities issued upon the exercise of such Warrant, nor any interest in either, may be sold, assigned, pledged, hypothecated, encumbered or in any other manner transferred or disposed of, in whole or in part, except in compliance with applicable United States federal and state securities laws and the terms and conditions hereof. The provisions of this Section 11 shall be binding upon all subsequent holders of the Warrant, if any. The Shares (or Cashless Exercise Shares, as the case may be) or other securities issued upon exercise of the Warrant shall be subject to a stop-transfer order and the certificate or certificates evidencing any such shares shall bear the following legend: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE OR IN A TRANSACTION NOT SUBJECT THERETO (AND, IN EACH SUCH CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH OFFER, SALE, TRANSFER OR DISPOSITION IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT HAS BEEN PROVIDED TO THE COMPANY). (c) The legend described in Section 11(b) shall be removed and the Company shall cause its transfer agent to issue a certificate or certificates without such legend to the Holder of the Shares (or Cashless Exercise Shares, as the case may be) upon which the legend is stamped if, unless otherwise required by state securities laws or unless the Company, with the advice of counsel, reasonably determines that such removal is inappropriate, (i) such Shares (or Cashless Exercise Shares, as the case may be) are sold pursuant to an effective registration statement, (ii) in connection with a sale, assignment or other transfer, the Holder provides the Company with an opinion of a law firm reasonably acceptable to the Company, in generally acceptable form, to the effect that such sale, assignment or transfer may be made without registration under the applicable requirements of the Securities Act or (iii) the Holder provides the Company with reasonable assurance that such Shares (or Cashless Exercise Shares, as the case may be) can be sold, assigned or transferred pursuant to Rule 144 under the Securities Act; provided, that in each case the Holder shall submit to the Company such other documentation as may reasonably be requested by the Company or required by its transfer agent.   12.   Warrants. (a) Issuance of Warrants. Each Warrant shall be evidenced by a Warrant Certificate in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by or bear the facsimile signature of the Company. In the event the person whose signature has been placed upon any Warrant Certificate shall have ceased to serve in the capacity in which such person signed the Warrant Certificate before such Warrant Certificate is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance. (b) Effect of Signature. Unless and until signed by the Company pursuant to this Warrant Agreement, a Warrant Certificate shall be invalid and of no effect and may not be exercised by the Holder thereof. 13. Loss, Theft, Etc. Upon receipt of evidence satisfactory to the Company of the loss (which shall not include the posting of any bond), theft, destruction or mutilation of any Warrant Certificate and upon surrender and cancellation of any Warrant Certificate if mutilated, the Company shall execute and deliver to the Holder thereof a new Warrant Certificate in the form and substance of the lost, stolen, destroyed or mutilated Warrant Certificate (including all changes and adjustments that have occurred hereunder). 14. No Rights or Liabilities as a Stockholder. Nothing contained in this Warrant Agreement shall be construed as conferring upon the Holder hereof any rights as a stockholder of the Company or as imposing any obligation upon the Holder to purchase any securities or as imposing any liability upon the Holder as a holder of Common Stock of the Company, whether such obligation or liability is asserted by the Company or by creditors of the Company at law or in equity. 15. Governing Law. This Warrant Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada, without giving effect to conflicts of laws principles thereof. 16. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given or made (a) when delivered if delivered in person or sent by an internationally recognized overnight or second day courier service, (b) upon transmission by fax if transmission is confirmed, or (c) three Business Days after deposit with a United States post office if delivered by registered or certified mail (postage prepaid, return receipt requested) to the respective parties and addressed (i) if to any Holder of any Warrant, to the address of the Holder as set forth in the Warrant Register or to such other address as the Holder has notified the Company of in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt or (ii) if to the Company, to such address as the Company may designate by written notice in accordance herewith, except that notices of change of address shall only be effective upon receipt; provided, however, that the exercise of any Warrant shall be effected only in the manner provided in Section 2. 17. Miscellaneous. (a) This Warrant Agreement and any terms hereof may be changed, waived, discharged, modified, amended or terminated only by an instrument in writing signed by the Company and the Holder. Any provision of this Warrant Agreement which shall be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Company waives any provision of law which shall render any provision hereof prohibited or unenforceable in any respect. Each Holder, by acceptance of a Warrant Certificate, agrees to all of the terms and provisions of this Warrant Agreement applicable thereto. (b) If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day. (c) The Holder shall be (i) notified by the Company of, and invited to attend, any stockholders’ meeting of the Company have on its agenda the possible voluntary winding up of the Company by operation of law and (ii) notified by the Company as soon as reasonably practicable of any order of involuntary winding up of the Company. 18. Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. If the Company fails to comply with any other provision of this Warrant Agreement as determined by a court of law or as mutually determined by the Holder and the Company, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 19. Successors and Assigns. Subject to the provisions of Section 4 and Section 11(b) hereof, this Warrant Agreement and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder. The provisions of this Warrant Agreement are intended to be for the benefit of all Holders from time to time of this Warrant Agreement and shall be enforceable by any the Holder. 20. Headings. The headings used in this Warrant Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant Agreement. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be duly executed. Dated: May 23, 2012 ENDEAVOUR INTERNATIONAL CORPORATION By: Name: Title: HOLDER: Schedule 1           Name of Warrant Holder   Number of Shares Exhibit A FORM OF WARRANT CERTIFICATE [FACE] EACH OF THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE OR IN A TRANSACTION NOT SUBJECT THERETO (AND, IN EACH SUCH CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH OFFER, SALE, TRANSFER OR DISPOSITION IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT HAS BEEN PROVIDED TO THE COMPANY). No. [      ] [      ] Shares WARRANT CERTIFICATE ENDEAVOUR INTERNATIONAL CORPORATION This Warrant Certificate certifies that [      ], or registered assigns, is the registered Holder of warrants (the “Warrants”) expiring on the Expiration Time to subscribe for and purchase from Endeavour International Corporation, a Nevada corporation (the “Company”) fully paid and non-assessable shares of common stock, par value US$0.001 per share, of the Company (the “Common Stock”). Each Warrant entitles the Holder, upon exercise at any time and from time to time until the Expiration Time, to receive from the Company the number of fully paid and non-assessable shares of Common Stock of the Company set forth above (the “Shares”) at the Exercise Price payable upon surrender of this Warrant Certificate, with the form of election to purchase set forth as Annex I hereto or the form of cashless exercise notice as set forth as Annex II hereto, as applicable, properly completed and executed, together with payment of the Exercise Price (or through “cashless exercise” if permitted by the Warrant Agreement) at the office of the Company, subject to the conditions set forth herein and in that certain Warrant Agreement between the Company and the Holder dated as of May 23, 2012 (the “Warrant Agreement”). The Exercise Price and number of Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement. Terms used but not defined in this Warrant Certificate shall have the meaning ascribed to such term in the Warrant Agreement. Upon any exercise of the Warrant for less than the total number of Shares provided for herein, there shall be issued to the Holder or the Holder’s permitted assignee a new Warrant Certificate covering the number of Shares for which the Warrant has not been exercised. Warrant Certificates, when surrendered at the office of the Company by the Holder hereof in person or by attorney duly authorized in writing, may be exchanged in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of the Warrant Certificate at the office of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any applicable tax or governmental charge payable upon issuance in the name of Holder. The Company may deem and treat the registered Holder as the absolute owner of this Warrant Certificate (unless a Warrant shall be properly transferred or assigned in accordance with the terms of the Warrant Agreement) for the purpose of any exercise hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Warrant Certificate does not entitle the Holder to any of the rights of a stockholder of the Company. This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of Nevada. [Remainder of Page Left Intentionally Blank] 1 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed below. Dated: [      ] ENDEAVOUR INTERNATIONAL CORPORATION By:        Name: Title: ANNEX I To: ENDEAVOUR INTERNATIONAL CORPORATION ELECTION TO EXERCISE The undersigned hereby exercises its rights to subscribe for        shares covered by the Warrant Certificate. The undersigned hereby confirms as of the date hereof the representations and warranties of the undersigned contained in Section 11 of the Warrant Agreement. The undersigned tenders payment herewith in the amount of $      and requests that certificates for such shares in the following denominations be issued in the name of, and delivered to, the person at the following address: Denominations: (Print Address and Social Security Number or Employer Identification Number as applicable) and, if said number of Shares shall not be all the Shares covered by the within Warrant Certificate, that a new Warrant Certificate for the balance remaining of the Shares covered by the within Warrant Certificate be registered in the name of, and delivered to, the undersigned at the address stated below:           Date:       ,          Name:                     (Print) (Signature) Address: ANNEX II To: ENDEAVOUR INTERNATIONAL CORPORATION CASHLESS EXERCISE NOTICE (To be executed upon conversion of the attached Warrant) The undersigned irrevocably elects to surrender this Warrant Certificate for the number of Cashless Exercise Shares as shall be issuable pursuant to the cashless exercise provisions of Section 2(c) of the Warrant Agreement, in respect of        Shares underlying this Warrant Certificate, and requests that the Company execute or cause to be executed a certificate or certificates reflecting the undersigned’s ownership of the aggregate number of Cashless Exercise Shares issuable upon such exercise, together with cash in lieu of any fraction of a Conversion Share (and any securities or other property issuable upon such exercise) and deliver or cause to be delivered to the undersigned such certificate or certificates the undersigned as follows: Name Address and, if said number of Shares shall not be all the Shares covered by the within Warrant Certificate, that a new Warrant Certificate for the balance remaining of the Shares covered by the within Warrant Certificate be registered in the name of, and delivered to, the undersigned at the address stated below:           Date:       ,          Name:                     (Print) (Signature) Address: 2 Exhibit B FORM OF ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfer all of the rights of the undersigned under the within Warrant, unto:           Name of Assignee   Address   Date:       ,          Name:                     (Print) (Signature) Address: 3
Exhibit 10.5 TAX AGREEMENT Between CONTRAN CORPORATION and VALHI, INC.     This Tax Agreement (the “Agreement”) dated as of January 1, 2020 is between Contran Corporation (“Contran”), a Delaware corporation having its principal executive offices at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240, and Valhi, Inc. (“VHI”), a Delaware corporation having its principal executive offices at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240.     WHEREAS, Contran and VHI file consolidated returns of federal income taxes and, subject to certain jurisdictional limitations, are subject to combined state and local tax reporting;   WHEREAS, this Agreement supersedes and amends and restates the Tax Agreement dated June 3, 2015, previously entered into between Contran and VHI;   WHEREAS, Contran and VHI wish to provide for the allocation of liabilities, and procedures to be followed, with respect to federal income taxes of VHI and any subsidiaries of VHI and with respect to certain combined state and local taxes on the terms of this Agreement; and   WHEREAS, Contran and VHI have historically followed the terms and conditions as provided in this Agreement, and this Agreement serves to formally document such terms and conditions which Contran and Valhi previously followed.   NOW, THEREFORE, in consideration of the promises and agreements herein contained, the parties hereto agree as follows:   1.Definitions. As used in this Agreement, the following terms have the meanings set forth below:   (a)Code: The Internal Revenue Code of 1986, as amended, and with respect to any section thereof any successor provisions under such Code or any successor Code.   (b)Combined Foreign, State and Local Taxes: For a taxable period, and with respect to a specified group of entities, the amount of all Foreign, State and Local Taxes, for which liability is computed on the basis of a combined, unitary or consolidated return (whether at the initiative of the tax authority or of the taxpayer).   (c)Contran Corporation: A Delaware corporation that is the common parent of a group of corporations, which group of corporations includes the VHI Group and Contran Group, electing to file a consolidated federal income tax return.     --------------------------------------------------------------------------------   (d)Federal Taxes: All federal income taxes, together with all interest and penalties with respect thereto.   (e)Foreign, State and Local Taxes: All foreign, state and local taxes, including franchise and similar taxes, together with all interest and penalties with respect thereto.   (f)Contran Group: Contran and each of its direct and indirect subsidiaries which would be a member of an affiliated group, within the meaning of section 1504(a) of the Code, and eligible to file a combined, unitary or consolidated return of which Contran was the common parent (the “Contran Tax Group”), as such Contran Group is constituted from time to time. For purposes of this Agreement (to the extent related to the determination of Combined Foreign, State and Local Taxes for the Contran Group), the term “Contran Group” shall include all direct and indirect subsidiaries of Contran with reference to which Combined Foreign, State and Local Taxes are determined.   (g)VHI Group: VHI and each of its direct or indirect subsidiaries which would be a member of an affiliated group, within the meaning of section 1504(a) of the Code, and eligible to file a combined, unitary or consolidated return of which VHI was the common parent, as such VHI Group is constituted from time to time. For purposes of this Agreement (to the extent related to the determination of Combined Foreign, State and Local Taxes for the VHI Group), the term “VHI Group” shall include all direct and indirect subsidiaries of VHI with reference to which Combined, Foreign, State and Local taxes are determined.   (h)VHI Group Tax Liability: For a taxable period, the liability for Federal Taxes and Combined Foreign, State and Local taxes, as applicable, that the VHI Group would have had if it were not a member of the Contran Tax Group during such taxable period (or during any taxable period prior thereto), and instead filed a separate consolidated or combined return, as applicable, for such taxable period; provided, however, that for purposes of determining such liability for a taxable period all tax elections shall be consistent with the tax elections made by Contran for such period. In making such tax elections it is understood Contran will make those tax elections which are beneficial to the Contran Tax Group on a consolidated basis. Nevertheless, Contran will use its best efforts in the case of those elections which affect the computation of the VHI Group Tax Liability, to make elections in a reasonable manner so as to minimize the VHI Group Tax Liability.  For purposes of this Agreement, in determining the Combined Foreign, State and Local Taxes for the VHI Group, such determination shall be made based on a separate Foreign, State and Local Tax Calculation as if the VHI Group were a separate unitary filer with respect to states and other jurisdictions in which Contran is required to file on a unitary or combined basis.   (i)Foreign, State and Local Tax Calculation: For each reporting period, the Tax Calculation will be based on the estimated taxable income of the VHI Group for the taxable period that includes such reporting period, applied to current year tax rates and using the VHI Group’s applicable apportionment factors and state, local or other applicable adjustments, in each case based on the applicable combined or unitary return most recently-filed as of each reporting period by the Contran Tax Group for each applicable tax jurisdiction (as modified for extraordinary, one-time event adjustments or tax law changes, if any, impacting the unitary calculation for the VHI Group). 2   --------------------------------------------------------------------------------     2.Contran as Agent. Contran shall be the sole agent for the VHI Group in all matters relating to the VHI Group Tax Liability. The VHI Group shall not (a) terminate such agency or (b) without the consent of Contran, participate, or attempt to participate, in any matters related to the VHI Group Tax Liability, including, but not limited to, preparation or filing of, or resolution of disputes, protests or audits with the Internal Revenue Service, state or local taxing authorities concerning, the Contran Tax Group’s consolidated returns of Federal Taxes, returns of Combined Foreign, State and Local Taxes or the VHI Group Tax Liability with respect thereto. The VHI Group shall cooperate fully in providing Contran with all information and documents necessary or desirable to enable Contran to perform its obligations under this Section, including completion of Internal Revenue Service and state or local tax audits in connection with such VHI Group Tax Liability and determination of the proper liability for such VHI Group Tax Liability.   3.Liability for Taxes; Refunds.   (a)Contran, as the common parent of the VHI Group, shall be responsible for, and shall pay to the appropriate taxing authority, as applicable, the consolidated tax liability for Federal Taxes and Combined Foreign, State and Local Taxes for the Contran Group and has the sole right to any refunds received from such taxing authority subject to the provisions of Sections 5 and 6 of this Agreement.   (b)Notwithstanding any other provision of this Agreement, VHI and each subsidiary of VHI which is a member of the VHI Group shall be severally liable to Contran for the VHI Group Tax Liability.   (c)VHI shall indemnify Contran and hold it and the Contran Group other than the VHI Group, harmless from and against any deficiency in the VHI Group Tax Liability that may be due to Contran.   (d)Contran shall indemnify VHI and hold it and the VHI Group harmless from and against any Federal Taxes and Combined Foreign, State and Local Taxes attributable to the Contran Group or any other member of the Contran Tax Group, other than the VHI Group, as such taxes are determined under this and other tax sharing agreements.   4.Tax Returns. Contran shall file on behalf of the VHI Group any and all federal, foreign, state and local tax returns that are required as they pertain to the VHI Group Tax Liability. The VHI Group, at Contran’s request, shall join in any applicable consolidated returns of Federal Taxes and any returns of Combined Foreign, State and Local Taxes (for which returns have not been theretofore filed) and execute its consent, if such consent has not previously been executed, to each such filing on any form as may be prescribed for such consent if such consent is required. The decision of Contran’s Chief Tax Officer (or any other officer so designated by Contran) with responsibility for tax matters shall, subject to the provisions of this Agreement, be binding in any dispute between Contran and the VHI as to what tax position should be taken with respect to any item or transaction of the VHI Group. The preceding sentence is limited to the tax positions that affect the VHI Group Tax Liability and the combined Contran Group and Contran Tax Group. In addition, Contran and members of the Contran Group, including VHI and members of the VHI Group, shall provide each other with such cooperation, assistance and information as each of them may request of the other with respect to the filing of any tax return, amended return, claim for 3   --------------------------------------------------------------------------------   refund or other document with any taxing authority. VHI shall be solely responsible for all taxes due for the VHI Group with respect to tax returns filed by VHI or a member of the VHI Group that are required to be filed on a separate company basis, independent of Contran.   5.Payment of VHI Group Tax Liability for Federal Taxes and Foreign, State and Local Taxes. On or before each date, as determined under section 6655 of the Code (with respect to Federal Taxes) and the applicable tax provisions with respect to any Foreign, State and Local Taxes due pursuant to this Agreement, for payment of an installment of estimated Federal Taxes or any Foreign, State and Local Taxes, VHI shall pay to Contran an amount equal to the installment which the VHI Group would have been required to pay as an estimated payment of Federal Taxes to the Internal Revenue Service or any Foreign, State and Local Taxes to the applicable taxing authority if it were filing a separate consolidated, combined or unitary return in respect of the VHI Group Tax Liability. Any balance owed with respect to the VHI Group Tax Liability for such taxable period shall be paid to Contran on or before the 15th day of the third month after the close of such taxable period. If it is not possible to determine the amount of such balance on or before such day, (a) a reasonable estimate thereof shall be paid on or before such day, (b) the amount of such balance shall be finally determined on or before the earlier of; (i) the 15th day of the ninth month after the close of such taxable period (or the applicable due date for the Contran foreign, state or local combined or unitary return) and (ii) the date on which the Contran Group consolidated tax return for such period is filed with the Internal Revenue Service or the applicable tax authority, and (c) any difference between the amount so determined and the estimated amount paid shall; (i) in the case of an underpayment, be promptly paid to Contran and (ii) in the case of an overpayment, be promptly refunded or applied against the estimated VHI Group Tax Liability for the immediately following tax period, at the option of Contran. If the overpayment is not applied to the immediately following tax period, such overpayment shall be promptly refunded to the VHI Group. As between the parties to this Agreement, the VHI Group shall be solely responsible for the VHI Group Tax Liability and shall have no responsibility for Federal Taxes of the Contran Group other than payment of the VHI Group Tax Liability in accordance with the terms of this Agreement.  Notwithstanding the foregoing, Contran at its option may extend the payment due date for any of the payments referenced above.   6.Refunds for VHI Group Losses and Credits for Federal Taxes. If the calculation with respect to the VHI Group Tax Liability for Federal Taxes results in a net operating loss (“NOL”) for the current tax period that, in the absence of a Code Section 172(b)(3) election made by Contran, is carried back under Code Sections 172 and 1502 to a prior taxable period or periods of the VHI Group with respect to which the VHI Group previously made payments to Contran, then, in that event, Contran shall pay (or credit) VHI an amount equal to the tax refund to which the VHI Group would have been entitled had the VHI Group filed a separate consolidated federal income tax return for such year (but not in excess of the net aggregate amount of the VHI Group Tax Liability paid to Contran with respect to the preceding two taxable periods). If the calculation with respect to the VHI Group Tax Liability results in an NOL for the current tax period, that subject to the Code Section 172(b)(3) election made by Contran, is not carried back under Code Sections 172 and 1502 to a prior taxable period or periods of the VHI Group with respect to which VHI made payments to Contran or is not carried back because the Contran Tax Group does not have a consolidated net operating loss for the current tax period, then, in that event such NOL shall be an NOL carryover to be used in computing the VHI Group Tax Liability for future taxable periods, under the law applicable to NOL carryovers in general, as such law applies to the relevant taxable period. Payments made pursuant to this Section 6 shall be made on the date that Contran 4   --------------------------------------------------------------------------------   (or any successor common parent of a tax group to which the Contran Group is a member) files its consolidated federal income tax return for the taxable period involved. Principles similar to those discussed in this Section 6 shall apply in the case of the utilization of all VHI Group loss and credit carrybacks and carryovers.   7.Refunds for VHI Group Combined or Unitary Foreign, State and Local Losses and Credits. The foregoing principles contained in Section 6 shall apply in similar fashion to any consolidated, unitary or combined foreign, state or other local income tax returns, containing any member of the VHI Group, which may be filed based on the VHI Group Tax Liability for Foreign, State and Local Taxes.   8.Subsequent Adjustments. If any settlement with the Internal Revenue Service, foreign, state or local tax authority or court decision which has become final results in any adjustment to any item of income, deduction, loss or credit to the Contran Group in respect of any taxable period subject to this Agreement, which, in any such case, affects or relates to any member of the VHI Group as constituted during such taxable period, the VHI Tax Group Liability shall be re-determined to give effect to such adjustment as if it had been made as part of or reflected in the original computation of the VHI Tax Group Liability and proper adjustment of amounts paid or owing hereunder in respect of such liability and allocation shall be promptly made in light thereof.   9.Term; Amendments.   a.The term of this Agreement shall end on December 31, 2024 and will automatically be renewed for successive five-year periods unless terminated by either party by giving the other written notice of termination at least ninety (90) days prior to the expiration of the then-current term; provided, however, that this Agreement shall automatically terminate at such time as VHI is no longer a member of the Contran Group.   b.This Agreement may be amended, modified, superseded or cancelled, and any of the terms, covenants, or conditions hereof may be waived, only by a written instrument specifically referring to this Agreement and executed by all parties (or, in the case of a waiver, by or on behalf of the party waiving compliance). The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right at a later time to enforce the same. No waiver by any party of any condition, or of any breach of any term or covenant, contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term or covenant.   10.Retention of Records. Contran shall retain all tax returns, tax reports, related workpapers and all schedules (along with all documents that pertain to any such tax returns, reports or workpapers) that relate to a taxable period in which the VHI Group is included in a consolidated or combined tax return with Contran. Contran shall make such documents available to VHI at VHI’s request. Contran shall not dispose of such documents without the permission of VHI.   11.Headings. The headings of this Agreement are for convenience of reference only, and shall not in any way affect the meaning or interpretation of this Agreement.   5   --------------------------------------------------------------------------------   12.Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware without regard to conflicts of laws provisions.   13.Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one agreement.   14.Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective subsidiaries, and their respective successors and assigns.   15.Amendment and Restatement. Effective as of January 1, 2020, this Agreement supersedes and amends and restates the Tax Agreement dated as of June 3, 2015, previously entered into between Contran and VHI.   IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.         CONTRAN CORPORATION   By:__/s/ Gregory M. Swallwell______ Gregory M. Swalwell Executive Vice President, Chief Financial Officer and Chief Accounting Officer     VALHI, INC.   By:__/s/ Kelly D. Luttmer__________ Kelly D. Luttmer Executive Vice President and Chief Tax Officer     6
AMENDMENT TO THE EMPLOYMENT AGREEMENT This Amendment (this “Amendment”) is made and entered into as of August 8, 2016, by and between Astoria Financial Corporation, a Delaware corporation (the “Company”), and Stephen J. Sipola (the “Executive”). WHEREAS, the Company and the Executive have entered into that certain Employment Agreement, dated as of January 1, 2013 (the “Employment Agreement”); WHEREAS, the Company has entered into that certain Agreement and Plan of Merger, dated as of October 28, 2015 (the “Merger Agreement”), with New York Community Bancorp, Inc., a Delaware corporation (“Parent”), pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will merge with and into Parent, with the Parent surviving (the “Merger”); WHEREAS, in connection with the Merger, the Company and the Executive desire to amend the Employment Agreement as set forth herein; and WHEREAS, Section 5.2 of the Company Disclosure Schedule (as defined in the Merger Agreement) permits the adoption of this Amendment. NOW, THEREFORE, pursuant to Section 23 of the Employment Agreement, the Employment Agreement is hereby amended as follows, effective as of immediately prior to the Effective Time (as defined in the Merger Agreement): 1. A new sentence is hereby added to Section 2(b) of the Employment Agreement as follows: Notwithstanding the foregoing, upon the occurrence of a Change of Control, the Employment Period shall automatically be extended to the second anniversary of the date of such Change of Control. 2. A new Section 11(c) is hereby added as follows: (c)    From and after a Change of Control, whether or not Executive’s employment terminates, at Executive’s election, Executive shall be entitled to purchase the automobile provided by the Association that Executive is using (or has ordered) as of October 28, 2015 at book value as reflected in the Company’s books, plus any sales tax and registration fees. 3. Except as expressly amended by this Amendment, all terms and conditions of the Employment Agreement shall remain in full force and effect. This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to contracts entered into and to be performed W/2619282 -------------------------------------------------------------------------------- entirely within the State of New York. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument. If the Merger Agreement is terminated by the parties thereto without the consummation of the transactions contemplated thereby, this Amendment shall be null and void ab initio. [Signature Page Follows] 2 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. ATTEST:                    ASTORIA FINANCIAL CORPORATION /s/    Alan P. Eggleston            By:    /s/    Monte N. Redman         Name:    Alan P. Eggleston             Name:    Monte N. Redman Title:    Senior Executive Vice President,     Title:    President & Chief Executive Officer Chief Risk Officer & Assistant Secretary /s/    Stephen J. Sipola         Stephen J. Sipola [Signature Page to Employment Agreement Amendment]
EXHIBIT 10(ee) PROMISSORY NOTE       $11,860,758   November 26, 2003 Salt Lake City, Utah      FOR VALUE RECEIVED, REGIS CORPORATION, a Minnesota corporation (the “Borrower”) hereby promises to pay to the order of INFORMATION LEASING CORPORATION, an Ohio corporation, for Itself and as Agent for Certain Participants (the “Lender”), in lawful money of the United States of America and in immediately available funds, the principal sum of ELEVEN MILLION EIGHT HUNDRED SIXTY THOUSAND SEVEN HUNDRED FIFTY-EIGHT DOLLARS ($11,860,758) (hereinafter, the “Principal Sum” or the “Loan”), together with interest on the Principal Sum outstanding from time to time at the rate or rates hereinafter described, all upon the terms and conditions hereinafter set forth (computed on the basis of a 360-day year consisting of twelve (12) 30-day months).      1. Defined Terms. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Loan Agreement (as hereinafter defined).      2. Repayment of the Loan. The Borrower shall pay the principal amount of the Loan, together with interest thereon, until maturity (whether by acceleration, extension or otherwise) at the rate of 7.16% per annum over a period of 7 years in 28 consecutive quarterly installments of principal and interest, payable on the first of February, May, August and November in each year, commencing on February 1, 2004. Each installment of principal and interest shall be in the amount of $ 539,636.35. The entire unpaid principal balance of the Loan, together with all accrued and unpaid interest thereon (and all other amounts due hereunder and under the other Financing Documents), shall be due and payable on November 1, 2010 (the “Maturity Date”).      3. Default Rate. In the event any payment is not made when due (whether at maturity, by acceleration or otherwise, or on demand) such payment shall thereafter bear interest from the date such payment was due until such payment is received at the Default Rate. Upon the occurrence of a Default, the entire unpaid principal balance of this Note shall bear interest at the Default Rate.      4. Prepayments. The Borrower may prepay this Note in whole, but not in part, at any time on or after November 1, 2005, subject to the provisions of this paragraph 4. If Borrower is required or allowed to prepay this Note for any reason under the terms hereof or under any other Financing Document, including (without limitation) damage, destruction, condemnation or acceleration, Borrower shall pay to Lender a prepayment fee in an amount equal to the greater of (a) three percent of the amount prepaid or (b) an amount equal to the excess, if any, of (i) the present value, in the aggregate, of the then remaining monthly principal and interest payments due under this Note from the date of prepayment through the Maturity Date for this Note, absent the prepayment, using a discount rate equal to the yield to maturity of the U.S. Treasury Note with a maturity date closest to the remaining term of this Note, as published in the Wall Street Journal on the Business Day immediately preceding the date of the prepayment plus 175 basis points over (ii) the then outstanding principal balance of this Note, absent the prepayment. Notwithstanding the aforegoing, in the event that the Borrower elects to repay the Loan simultaneously with the consummation of a refinancing which involves the sale of real estate holdings of the Borrower and/or its subsidiaries (including the Property), the Borrower may prepay the Loan in whole, but not in part, at any time after November 1, 2005 upon payment to the Lender of a prepayment fee in an amount equal to the Swap Breakage (hereinafter defined) plus an amount equal to (a) 2.25% of the original amount of the Loan if the prepayment occurs between November 1, 2005 and October 31, 2006, (b) 1.625% of the original amount of the Loan if the prepayment occurs between November 1, 2006   --------------------------------------------------------------------------------   and October 31, 2007, (c) 1.065% of the original amount of the Loan if the prepayment occurs between November 1, 2007 and October 31, 2008, (d) 0.6% of the original amount of the Loan if the prepayment occurs between November 1, 2008 and October 31, 2009, and (e) 0.25% of the original principal amount of the Loan if the prepayment occurs at any time thereafter prior to the Maturity Date. As used herein, the term “Swap Breakage” means any loss sustained by the Lender (or any of its participants) which is directly incurred or incurred through a payable or in any other way arises out of the termination of any interest rate swap agreement entered into in connection with the funding of the Loan. The amount of the loss, if any, resulting from the termination of such interest rate swap agreement will be directly born by the Borrower. The Lender (and its participants) will provide to the Borrower written documentation regarding the calculation of the specific amount of any such loss upon the written request of the Borrower, which documentation shall be conclusive and binding on the Borrower in the absence of manifest error.      5. Manner of Making Payments. Unless otherwise instructed by the Lender, all payments of principal and interest due hereunder shall be made to the Lender, in immediately available funds during regular business hours, at the Lender’s office or such other place as so designated by Lender, and such payments shall be effective only upon receipt. All payments made hereunder shall be applied first to accrued and unpaid interest and then to principal and shall be made in U.S. Dollars, which shall be the exclusive currency for payment of the obligations hereunder, free of any restrictions or deductions whatsoever for present or future taxes, charges, assessments, withholdings or costs, the payment of which shall be the sole responsibility of the Borrower.      6. Loan Agreement and Other Financing Documents. This Note is the “Note” referred to in the Loan Agreement of even date herewith by and between the Borrower and the Lender (as the same may from time to time be amended, restated, supplemented or otherwise modified being hereinafter called the “Loan Agreement”). The Lender is entitled to all of the benefits of the Loan Agreement and the other Financing Documents.      7. Defaults. In the event the Borrower fails to pay any amount payable hereunder or under the Loan Agreement within ten (10) days of the date due and payable or upon the occurrence of any other Default (as defined in the Loan Agreement), after giving effect to any applicable grace or cure period, then the Lender may, by notice to the Borrower, declare the outstanding Principal Sum, together with all accrued but unpaid interest due thereon, any prepayment fee, and all other amounts payable hereunder to be forthwith due and payable, whereupon all such sums shall become immediately due and payable without further demand, notice, presentment or protest, all of which are hereby waived by the Borrower; provided, however, that in the case of a default under Sections 6.11 or 6.12 of the Loan Agreement, the balance of this Note, together with all interest accrued thereon and all other amounts payable hereunder shall become automatically due and payable, without in each instance having given the Borrower any notice. In addition, the Borrower shall be liable to the Lender for all reasonable costs of collection including, without limitation, all court costs, attorney’s fees and expenses. Upon a Default hereunder or under any other Financing Document, the Lender may exercise all rights and remedies under the Financing Documents.      8. Late Charge. In addition, and without waiving any of its other rights and remedies, if the Borrower fails to make any payment of principal or interest as and when due hereunder, the Lender, at its option, may charge a late charge equal to 5% of the amount delinquent if not paid within ten (10) days after the same was due. The late charge may be collected only once for each late payment.      9. Waiver of Presentment, Etc. The Borrower hereby waives presentment for payment, demand, notice of demand, notice of non-payment or dishonor, protest and notice of protest of this Note,   --------------------------------------------------------------------------------   and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note.      10. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES ARISING OUT OF OR IN ANY WAY PERTAINING TO THE FINANCING DOCUMENTS AND SUCH WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THE FINANCING DOCUMENTS. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER AND THE LENDER AND THE BORROWER AND THE LENDER HEREBY ACKNOWLEDGE THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE BORROWER AND THE LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THE FINANCING DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH THEIR COUNSEL.      11. Remedies. The remedies of the Lender as provided herein and in the Loan Agreement and in the other Financing Documents shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.      12. GOVERNING LAW. THE PARTIES AGREE THAT THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.      13. Submission to Jurisdiction. The Borrower hereby irrevocably submits itself to the non-exclusive jurisdiction of the appropriate Federal and state courts located in the State of New York for the purposes of any suit, action or other proceeding arising out of this Note or with respect to the subject matter hereof, and, to the extent permitted by applicable law, hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding any claim that it is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Note or the subject matter hereof may not be enforced in or by such court.      14. Partial Invalidity. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in any of those events, such provision or provisions only shall be deemed null and void and shall not affect any other provision of this Note and the remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be effected, prejudiced or disturbed thereby.   --------------------------------------------------------------------------------        15. Notices. Unless otherwise specifically provided herein, all notices (excluding billings and other communications in the ordinary course of business) required or permitted by the terms hereof shall be given in the manner and with the effect provided for in the Loan Agreement.        16. Conflicts. In the event of any conflict between the provisions of this Note and those of the Loan Agreement, the terms of the Loan Agreement shall control. [SIGNATURE FOLLOWS ON NEXT PAGE]   --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of the date first written above.           WITNESS:   REGIS CORPORATION           --------------------------------------------------------------------------------   By:           --------------------------------------------------------------------------------   Name:       Title:   --------------------------------------------------------------------------------       --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- --------------------------------------------------------------------------------     "**"Denotes certain parts that have not been disclosed and have been filed separately with the Secretary, Securities and Exchange Commission, and is subject to a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.   May 18th, 2011 Mr. James Briscoe Chairman, President, Chief Executive Officer and Chief Financial Officer Liberty Star Uranium and Metals Corp. 5610 E Sutler Lane Tucson, AZ     85712 Re: Engagement Letter for Exclusive Financial Advisory Services Dear Mr. Briscoe: McNicoll, `Lewis & Vlak LLC, is pleased to provide this Engagement Letter (the “Letter”) to Liberty Star Uranium Metals Corp (“Company” or “Liberty Star” or “you”). The purpose of this Letter is to set forth the terms and conditions under which MLV will provide certain exclusive and other non-exclusive financial advisory services to the Company as described herein.  Upon the Company’s acceptance of this Letter, MLV will commence the activities and services as outlined herein. 1. Engagement.  The Company engages McNicoll, Lewis & Vlak LLC (“Financial Advisor” or “we” or “us”) to act as your exclusive financial advisor, with such activities to include general corporate advisory and possible merger/acquisition work involving the Company or core Company assets including Big Chunk in Alaska, and Tombstone (and related opportunities) and North Pipes in Arizona (together, the “Properties”).  The Engagement may also include, as directed by the Company and on a non-exclusive basis, arranging, placing and/or underwriting debt or equity securities of the Company (the “Securities”) in the public or private markets.  Any placement of securities (the “Placement”) shall be on a “best efforts” basis.   During the term of our Engagement, we will as appropriate:     a) Review information related to the business, operations and financial performance of Liberty Star which MLV considers to be relevant, including asset valuations, corporate valuations, feasibility studies, historical and management prepared projected exploration, development and operating statements and capital expenditure requirements;     b) Review such financial, market and industry information and conduct such other analyses as it considers relevant and appropriate in the circumstances;     c) Provide the Company with an estimate of value for Big Chunk;     d) Assist the Company in evaluating its strategic options related to Big Chunk;     e) Provide the Company with an estimate of value of its Arizona Properties;       f) Assist the Company in evaluating strategic options regarding its Arizona Properties including a review of Nord Resources as a potential party for amalgamation, sale or acquisition;       --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011   g) Assist the Company in assessing the best corporate structure for financing and developing the Company’s Properties for maximizing shareholder value;     h) Further to 1(d) and 1(f), identify potential merger partners or acquisition targets for the Company; and, with the concurrence of the Company, approach potential merger partners or acquisition targets to investigate their interest in entering into a transaction with the Company;     i) Further to 1 (d) and 1(f), provide the Company structuring, pricing and negotiation advice for the sale of, acquisition by, merger or joint venture of the Company’s Properties;     j) Arrange, place and/or underwrite, as directed by the Company, any corporate equity or debt financing;     k) Other tasks to be mutually agreed upon between the Company and MLV.     The term of the Financial Advisor Engagement hereunder shall extend for twelve months (plus any Tail as applicable) commencing with the signing of the Letter unless terminated by either party on thirty days' written notice and may be extended if the parties mutually agree.  The Company may terminate the engagement after four months subject to paragraph 6 below. You acknowledge and agree that our Engagement pursuant to this Letter is not an agreement by us or any of our affiliates to underwrite or purchase any Securities or otherwise provide neither any financing, nor an agreement by you to issue and sell any Securities. You may in your discretion postpone, modify, abandon or terminate any transaction prior to closing. We may decline to participate in any Placement if we reasonably determine that the offering has become impractical, undesirable, or for any other reason that we determine may be detrimental to us.  We may retain other brokers or dealers to act as sub-agents on our behalf in connection with the Placement, in which case we will share the fees charged with them. 2. Fees.  For our services, you agree to pay us:     a) A retainer fee of $20,000 per month (the “Retainer”) commencing at the start of the Engagement and payable for a minimum of four months provided we have not been terminated for cause. “Cause” includes illegal activity, fundamental breach of contract, other acts of gross negligence and willful misconduct, or the inability or unwillingness of Roman Friedrich to personally carry out MLV’s obligations under this Agreement. The Retainer may be in the form of cash or common shares of Liberty Star, however the minimum cash payment shall be $10,000 per month and common shares shall be paid in accordance with paragraph 2(e) of this Letter.  Fifty percent of the retainer shall be offset against any success fees payable under (b) and (c) below;     b) With regard to any merger, acquisition, joint venture, sale, asset sale, asset purchase, strategic investment from a company or companies engaged in the metals and mining industry, vend-in or strategic partnership (a “Strategic Event”), a success fee equal to the product of the Transaction Value times the success fee percentage as described below (“Success Fee”):   Transaction Value Success Fee Percentage $0 - $10,000,000 5% $10 - $25,000,000 3% >$25,000,000 2%   For purposes of this Letter, “Transaction Value” shall include any consideration paid for the shares or assets of Liberty Star or consideration paid by Liberty Star in the acquisition of the shares or assets of another company, including but not limited to cash, securities, options or rights, property, joint venture interests and the net present value of future receipts or benefits received, or obligations assumed or forgiven. Any non-cash consideration will be assessed at its estimated fair market value at the time of closing.   For clarification, if the Transaction Value was determined to be $27,000,000 then the Success Fee would be ($10,000,000 x 5%) plus ($15,000,000 x 3%) plus ($2,000,000 x 2%) for a total Success Fee of $990,000.  Up to 30% of the Success Fee in this subsection (b) may be paid in the form of Company shares at the Company’s discretion.  All Success Fees are payable at financial closing;   However, if a Strategic Event involves a Company Candidate (please see Annex B, “Company Candidate List”, then MLV shall be entitled to fifty percent (50%) of the Success Fee as described in this paragraph 2(b).     c) With regard to any equity or debt offering by Liberty Star of which MLV introduced the investor or at the request of Liberty Star had an active role in closing, an underwriting or placement fee (as the case may be) equal to 7% of the gross proceeds of such offering, of which 5% shall be in the form of a cash payment and 2% shall be in the form of Company common shares, payable at financial closing;     d) All share issuances may be to MLV, an affiliate and/or our assigns, and are subject to regulatory approval where applicable, and must be made full compliance with all securities laws, regulations policies and rules. , Securities will be subject to such hold periods as are required by  securities regulatory authorities. The number of common shares to be issued by Liberty Star under any of the provisions of this Letter shall be calculated by dividing the dollar amount to be paid in common shares of the Company by the  Market Price (being the five day closing average price) on the date prior to the due date of those shares, less a 25% discount . Shares issued under 2(a) shall be issued quarterly within five business days of the due date for the shares at the end of each calendar quarter. Shares issued under 2(b) and 2(c) shall be issued within five business days of the due date of the shares. Liberty Star shall use its best efforts to obtain regulatory approval as required. However, if after 60 days from the respective due date Liberty Star has not received regulatory approval, MLV shall have the option to elect to receive the equivalent amount in cash in lieu of shares, unless such failure is a result of the act or omission of MLV.     e) You will also pay us the same selling commission on any Placement by you or any affiliate or Success Fee on any Strategic Event that is closed within twelve months from the date of the termination of this engagement (the “Tail”); provided, however, that (i) with respect to a Strategic Event, MLV shall be entitled to the Success Fee if the Company closes a transaction with a party that has been identified  by MLV under Section 1 or identified and contacted by the Company as a potential party interested in a Strategic Event during the Term; and (ii) with respect to a Placement, this shall only apply to Securities sold to investors participating in a Placement during the Term of this agreement or have been introduced to the Company during the Term by the Financial Advisor       2 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011   f) You agree to reimburse us for our reasonable expenses incurred in preparing to market and marketing the Securities, including, but not limited to, legal, travel, fees and disbursements, and printing and distribution of Offering Materials, whether or not a closing occurs. MLV will seek pre-approval from the Company for any expense item greater than $2500. 3. Indemnification and Contribution.  Annex A is hereby incorporated into this agreement by reference and made a part of this agreement. 4. Representations, Warranties and agreements of the Company.  You represent and warrant to, and agree with us, that:   (a) the Securities will be offered and sold by you in compliance with the requirements for exemptions from registration or qualification of, and otherwise in accordance with, all federal and state securities laws and regulations;   (b) you will have responsibility for the accuracy and completeness of any Offering Materials.  You agree to notify us promptly of any material adverse changes, or development that may lead to any material adverse change, in your business, properties, operations, financial condition or prospects that concern any statement contained in the Offering Materials, or in any other information provided to us in connection with the Offering Materials, which is inaccurate, incomplete or misleading in any material respect;   (c) you will make available to us such documents and other information which we reasonably deem appropriate in connection with preparing the Offering Materials or conducting the Placement and will provide us with reasonable access to your officers, directors, employees, accountants, counsel and other representatives in connection therewith; it being understood that we will rely solely upon such information supplied by you and your representatives without assuming any responsibility for independent investigation or verification thereof; and   (d) at each closing, you will permit us to rely on the representations and warranties of the Company. For purposes of clarification, the representation contained in Section 4(a) above is intended solely to cover the Company and its officers, directors and employees, and will not be interpreted as a representation as to the Financial Advisor or any of its employees’ or agents’ compliance with applicable laws and regulations in connection with the Placement. Representations, Warranties and agreements of the Financial Advisor.  We represent and warrant to, and agree with you that we will conduct ourselves completely in compliance with all applicable laws, rules and regulations and we will hold any confidential information of Liberty Star in the strictest confidence and we will not trade in the securities of Liberty Star while in possession of material information that has not been publicly disclosed by Liberty Star.   3 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011 5.           Other Matters Relating to Our Engagement.  You acknowledge that you have retained us solely to provide the services set forth in this agreement.  In rendering such services, we will act as an independent contractor, and we owe our duties arising out of this Engagement solely to the Company.  You acknowledge that nothing in this agreement is intended to create duties to you or your creditors or security holders beyond those expressly provided for in this agreement, and we and you specifically disclaim the creation of any fiduciary relationship between, or the imposition of any fiduciary duties on, either party. You agree that upon completion of a Strategic Event and/or Placement for which we have earned a fee, we may, at our option and expense and in full compliance with securities laws, place an announcement in such print and electronic news media as we may choose, stating that we have acted as financial advisor to the Company and/or placement agent in the Placement.  We will provide a draft of such announcement to you for your review prior to distribution of it.   You acknowledge that we are a securities firm engaged in securities trading and brokerage activities and providing investment banking and financial advisory services.  In the ordinary course of business, we and our affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for our own account or the accounts of customers, in your debt or equity securities, or the debt or equity securities of your affiliates or other entities that may be involved in the transactions contemplated by this agreement.   In addition, we and our affiliates may from time to time perform various investment banking, commercial banking and financial advisory services for other clients and customers who may have conflicting interests with respect to you or the Placement.  You also acknowledge that we and our affiliates have no obligation to use in connection with this Engagement or to furnish you confidential information obtained from other companies.   Furthermore, you acknowledge we may have fiduciary or other relationships whereby we or our affiliates may exercise voting power over securities of various persons, which securities may from time to time include securities of the Company or of potential investors or others with interests in respect of the Placement.  You acknowledge that we or such affiliates may exercise such powers and otherwise perform our functions in connection with such fiduciary or other relationships without regard to our relationship with you hereunder.   You acknowledge that we are not an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction.  You should consult with your own advisors concerning such matters and are responsible for making your own independent investigation and appraisal of the transactions contemplated by this agreement, and we have no responsibility or liability to you with respect to such matters. 6. Termination.  You or we may terminate our Engagement under this agreement, with or without cause, upon thirty days’ written notice to the other party; provided, however, no such notice may be given by you with effective termination prior to four months from the date of this agreement.  You or we may terminate immediately at any time for Cause, as defined above.-  The Success Fee earned during the Term or the Tail (subject to the provision in paragraph 2(e)), expense reimbursement, indemnity, contribution and exculpation, your representations, warranties and agreements, and miscellaneous provisions of this agreement (including Annex A) will survive any termination of our Engagement under this agreement.   4 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011     7. Miscellaneous. This agreement will be governed by and construed in accordance with the laws of New York, without regard to its conflict of law principles.  You and we hereby waive all right to trial by jury in any action, proceeding, or counterclaim (whether based upon contract, tort or otherwise) in connection with any dispute arising out of this agreement or any matters contemplated by this agreement.  This agreement embodies the entire agreement and understanding between you and us and supersedes all prior agreements and understandings relating to the subject matter of this agreement.  This agreement may be executed in any number of counterparts.  The invalidity or unenforceability of any provision of this agreement will not affect the validity or enforceability of any other provisions of this agreement, which will remain in full force and effect.  This agreement is solely for the benefit of you and us, and no other person (other than the Indemnified Persons set forth in Annex A hereto) will acquire or have any rights by virtue of this agreement. 9. Notices.   Any notice provided for or permitted under this Letter will be treated   as having been given (a) when delivered personally, on the next business day after the day on which it is sent, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth (5) business day after its date of posting.  Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section: If to MLV:                                              MLV LLC 1251 Avenue of the Americas, 41st Floor New York, NY  10020 (O) – (212) 542-5870 Attention: General Counsel dcolucci@mlvco.com If to Company:                                      Liberty Star Uranium and Metals Corp. 5610 E Sutler Lane Tucson, AZ     85712 Attn:  Mr. James Briscoe Chairman, President, CEO and CFO (O) – (520) 731-8786 jbriscoe@libertystaruranium.com Please confirm that the foregoing correctly and completely sets forth our understanding by signing and returning to us the enclosed duplicate of this Engagement agreement.       5 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011 Sincerely, McNicoll, Lewis & Vlak LLC   By     /s/ Brent Lewis Brent Lewis Title:  Principal   Agreed and accepted as of the date first above written. Liberty Star Uranium and Metals Corp. By    /s/ James Briscoe   James Bricoe   Title:  Chairman, President, Chief Executive Officer and Chief Financial Officer   6 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011 Annex A to Engagement Letter You (the “Indemnifier”) agree to (i) indemnify and hold harmless us, our affiliates (within the meaning of the Securities Act of 1933), and each of our respective partners, directors, officers, agents, consultants, employees and controlling persons (within the meaning of the Securities Act of 1933) (Financial Advisor) and such other person or entity is hereinafter referred to as an “Indemnified Person”), from and against any losses, claims, damages, liabilities and expenses, joint or several, and all actions, inquiries, proceedings and investigations in respect thereof, to which any Indemnified Person may become subject arising out of or in connection with our Engagement or any matter referred to in the agreement to which this Annex A is attached and of which this Annex A forms a part (the “agreement”), regardless of whether any of such Indemnified Persons is a party thereto, and (ii) periodically reimburse an Indemnified Person for such person’s legal and other expenses as may be incurred in connection with investigating, preparing, defending, paying, settling or compromising any such action, inquiry, proceeding or investigation; provided, however, the indemnity provided in this Annex A shall not apply in connection with any losses, claims, damages, liabilities, expenses, actions, inquiries, proceedings, and investigations brought against an Indemnified Person by the Indemnifier, or in the name of or on behalf of the Indemnifier.  The Indemnifier is not responsible under the foregoing sentence for any losses, claims, damages, liabilities or expenses to the extent that such loss, claim, damage, liability or expense has been finally judicially determined to have resulted from actions taken or omitted to be taken by such Indemnified Person due to such person’s negligence or willful misconduct.  To the extent that any prior payment you made to an Indemnified Person is determined to have been improper by reason of such Indemnified Person’s negligence or willful misconduct, such Indemnified Person shall promptly pay you such amount.   If the indemnity or reimbursement referred to above is, for any reason whatsoever, unenforceable, unavailable or otherwise insufficient to hold each Indemnified Person harmless to the extent provided for under the preceding paragraph, you agree to pay to or on behalf of each Indemnified Person contributions for losses, claims, damages, liabilities or expenses so that each Indemnified Person ultimately bears only a portion of such losses, claims, damages, liabilities or expenses as is appropriate (i) to reflect the relative benefits received by each such Indemnified Person, respectively, on the one hand and you and your stockholders on the other hand in connection with the Placement or Sale, or (ii) if the allocation on that basis is not permitted by applicable law, to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of each such Indemnified Person, respectively, and the Indemifier as well as any other relevant equitable considerations; provided, however, that in no event will the aggregate contribution of all Indemnified Persons to all losses, claims, expenses, damages, liabilities or expenses in connection with any Placement or Sale exceed the amount of the fee actually received by the Financial Advisor pursuant to this agreement.  The respective relative benefits received by us and you in connection with any Placement or Sale will be deemed to be in the same proportion as the aggregate fee paid to the Financial Advisor in connection with the Placement or Sale bears to the aggregate consideration paid to you in the Placement or Sale.   Promptly after its receipt of notice of the commencement of any action or proceeding, any Indemnified Person will, if a claim in respect thereof is to be made against you pursuant to this letter, notify the Indemnifier in writing of the commencement thereof; but omission so to notify the Indemnifier will not relieve the Indemnifier from any liability which the Indemnifier may have to any Indemnified Person, except your obligation to provide reimbursement of expenses or liabilities which were incurred prior to such notice or the Indemnifier’s obligation to indemnify for losses, claims, damages, liabilities or expenses to the extent that the Indemnifier suffers actual   7 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011 prejudice as a result of such failure.  If the Indemnifier so elects, it may assume the defense of such action or proceeding in a timely manner, including the employment of counsel (reasonably satisfactory to the Indemnified Party) and payment of expenses, provided the Indemnifier permits an Indemnified Person and counsel retained by an Indemnified Person at its own expense to participate in such defense.  Notwithstanding the foregoing, in the event (i) the Indemnifier fails promptly to assume the defense and employ counsel reasonably satisfactory to the Indemnified Party, or (ii) the Indemnified Person has been advised by counsel that there exist actual or potential conflict of interests between the Indemnifier or its counsel and such Indemnified Person, an Indemnified Person may employ separate counsel (in addition to any local counsel) to represent or defend such Indemnified Person in such action or proceeding, and the Indemnifier agrees to pay the reasonable fees and disbursements of such separate counsel as incurred; provided however, that the Indemnifier will not, in connection with any one such action or proceeding, or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for fees and expenses of more than one separate firm of attorneys (in addition to any local counsel). The Indemnifier will not, without the Indemnified Party’s prior written consent, which will not be unreasonably withheld, delayed or conditioned, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought under this agreement, unless such settlement, compromise or consent includes an express, complete and unconditional release of each Indemnified Person from all liability and obligations arising therefrom. Without the Indemnifier’s prior written consent, which will not be unreasonably withheld, delayed or conditioned, no Indemnified Person will settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding for which indemnification or contribution may be sought hereunder.  Notwithstanding the foregoing sentence, if at any time an Indemnified Person requests that the Indemnifier reimburse the Indemnified Person for fees and expenses as provided in this agreement, the Indemnifier agrees that it will be liable for any settlement of any proceeding effected without its prior written consent if (i) such settlement is entered into more than 60 days after receipt by the Indemnifier of the request for reimbursement, and (ii) the Indemnifier will not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. You also agree that no Indemnified Person will have any liability to you or your affiliates, directors, officers, employees, agents, creditors or stockholders, directly or indirectly, related to or arising out of the agreement or the services performed thereunder, except losses, claims, damages, liabilities and expenses you incur which have been finally judicially determined to have resulted from actions taken or omitted to be taken by such Indemnified Person due to such person’s negligence or willful misconduct.  In no event, regardless of the legal theory advanced, will any Indemnified Person be liable for any consequential, indirect, incidental or special damages of any nature.  Your indemnification, reimbursement, exculpation and contribution obligations in this Annex A will be in addition to any rights that any Indemnified Person may have at common law or otherwise. The Indemnifier understands that in the event that it reimburses an Indemnified Party pursuant to this Annex A for the fees and expenses of its counsel, such reimbursement will be made on the basis of counsel's generally applicable rates, provided, however, that such reimbursement will be limited to our reasonable attorney’s fees and expenses. Capitalized terms used, but not defined in this Annex A, have the meanings assigned to such terms in the agreement.     8 --------------------------------------------------------------------------------   Liberty Star Uranium and Metals Corp. May 18th, 2011 Annex B to Engagement Letter   Company Candidate List   **     9 --------------------------------------------------------------------------------
Ex. 10.4 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT, dated as of 16, 2019 (this “Pledge Agreement”), is entered into by and among Lamington Road Designated Activity Company, a designated activity company limited by shares (incorporated and existing under the laws of Ireland with its registered office at 1-2 Victoria Buildings, Haddington Road, Dublin 4, Ireland and registration number 541559) (the “Pledgor”), Wilmington Trust, National Association (“Wilmington Trust”), as collateral agent (in such capacity, the “Collateral Agent”), and Palomino JV, L.P., a Cayman exempted limited partnership (together with any subsequent, successor or additional Purchaser Indemnified Party, the “Secured Parties” and each, a “Secured Party”) RECITALS A.Substantially concurrently herewith, the Pledgor is executing that certain Amended and Restated Agreement of Limited Partnership, dated on or about the date hereof (as amended, restated, supplemented, replaced or modified from time to time, the “A&R LPA”), and that certain Subscription Agreement, dated on or about the date hereof (as amended, restated, supplemented, replaced or modified from time to time, the “Subscription Agreement”). B.To induce the Secured Parties to enter into the A&R LPA, the Subscription Agreement and the other Transaction Documents, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor has agreed to execute and deliver this Pledge Agreement. AGREEMENT NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1.Definitions and Interpretation. (a)    Definitions. When used in this Pledge Agreement, the following terms have the following respective meanings: “A&R LPA” has the meaning set forth in the Recitals. “Act” has the meaning given to such term in Section 6(b). “Advance Facility Obligations” shall mean and include, without limitation, all present and future loans, advances, debts, liabilities and obligations, howsoever arising, owed or owing by the Class B Limited Partners of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money) or otherwise owed or owing to the Class A Limited Partners, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of the A&R LPA or any of the other Transaction Documents relating to the repayment of -------------------------------------------------------------------------------- the Advance Facility, including, without limitation, all interest (including interest that accrues after the commencement of any bankruptcy or other insolvency proceeding by or against the Class B Limited Partners or any other Person, whether or not allowed or allowable), fees, charges, expenses, attorneys’ fees and accountants’ fees chargeable to and payable by the Class B Limited Partners hereunder and thereunder in relation to the Advance Facility. “Class A Limited Partner” shall mean Palomino JV, L.P. or such other Person as identified by the General Partner to the Collateral Agent in writing as the Class A Limited Partner. “Class B Limited Partner” shall mean Lamington Road Designated Activity Company or such other Person as identified by the General Partner to the Collateral Agent in writing as the Class B Limited Partner. “Class B Partnership Equity Securities” of any Person shall mean (i) Class B Partnership Units and (ii) all warrants, options and other rights to acquire any of the foregoing. “Class B Partnership Units” has the meaning given to such term in the A&R LPA. “Class D Limited Partner” shall mean Palomino JV, L.P. or such other Person as identified by the General Partner to the Collateral Agent in writing as the Class D Limited Partner. “Class D Obligations” shall mean and include, without limitation, all present and future loans, advances, debts, liabilities and obligations, howsoever arising, owed or owing by the Class B Limited Partners to the Class D Limited Partners of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money) or otherwise owed or owing to the Class D Limited Partners, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of the A&R LPA or any of the other Transaction Documents relating to the Class D Partnership Units, the Class D Return, the Class D Payment Amount, including, without limitation, all interest (including interest that accrues after the commencement of any bankruptcy or other insolvency proceeding by or against the Class B Limited Partners or any other Person, whether or not allowed or allowable), fees, charges, expenses, attorneys’ fees and accountants’ fees chargeable to and payable by the Class B Limited Partners hereunder and thereunder in relation to the Class D Partnership Units. “Class D Return” has the meaning given to such term in the A&R LPA. “Collateral” shall have the meaning given to such term in Section 2. “Collateral Agent” has the meaning given to such term in the Preamble. “Collections Account” has the meaning given to such term in the SACCA. -------------------------------------------------------------------------------- “Directing Secured Parties” shall have the meaning given to such term in Section 9.4. “Distributions” shall mean the declaration or (without duplication) payment of any distributions or dividends (in cash, property or obligations) on, or other payments on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, repurchase, redemption, retirement or other acquisition of, any Equity Securities of any Person or of any warrants, options or other rights to acquire the same (or to make any payments to any Person, such as “phantom membership” or “phantom stock” payments or similar payments, where the amount is calculated with reference to the fair market or equity value of any Person), but excluding distributions or dividends payable by a Person solely in common membership interests or common shares of Equity Securities of such Person. “Equity Securities” of any Person shall mean (i) all common stock, preferred stock, participations, shares, partnership interests, limited liability company interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (ii) all warrants, options and other rights to acquire any of the foregoing. “Event of Default” means the occurrence of one or more of the following events: i. prior to the three year and six month anniversary of the Effective Date, any Seller Party shall fail to pay any amount due on account of any of the Indemnity Obligations when the same shall become due and payable under the terms of the Subscription Agreement, the A&R LPA and this Pledge Agreement, whether at the due date thereof or at a date fixed for payment thereof or otherwise; ii. after the three year and six month anniversary of the Effective Date, the Secured Parties shall fail to receive any amount due on account of any of the Indemnity Obligations on the first Distribution Date after the same shall become due and payable under the terms of the Subscription Agreement, the A&R LPA and this Pledge Agreement; iii. any Secured Party shall fail to receive any amount due on account of the Advance Facility Obligations or the Class D Obligations when due under the terms of the A&R LPA; iv. any event or condition occurs that results in any Material Indebtedness of the Pledgor incurred on or after the Effective Date becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Material Indebtedness or any trustee or agent on its or their behalf to cause any 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 or require the Pledgor to make an offer in respect thereof; -------------------------------------------------------------------------------- v. reversal of the Approval Order by the Bankruptcy Court or modification of the Approval Order by the Bankruptcy Court that has an adverse effect on (i) any Secured Party’s rights under any Transaction Document, (ii) the release of the Issuer pursuant to the Approval Order and the Assumption Agreement or (iii) any further obligation of the Issuer or the Pledgor under any Transaction Document, in any case without the consent of the Secured Parties; vi. failure of the Pledgor to comply with the terms of the Approval Order; vii. with respect to the Pledgor (i) one or more judgments for the payment of money in an aggregate amount in excess of $1,000,000 (to the extent not (i) covered by independent third party insurance provided by insurers of the highest claims paying rating or financial strength 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 that have, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect, shall be rendered against the Pledgor or any combination thereof; and, in case of each of clause (i) or (ii), the same shall remain unpaid, unsatisfied, undischarged or unsettled for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Pledgor to enforce any such judgment, and unless, with respect to any of the foregoing, the same shall be effectively stayed pursuant to the Bankruptcy Code; (i) the Pledgor or any subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall take any corporate action to authorize any of the foregoing; and (ii) an involuntary case or other proceeding shall be commenced against the Pledgor or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall -------------------------------------------------------------------------------- be entered against the Pledgor or any subsidiary under the applicable insolvency, bankruptcy laws or other similar law as now or hereafter in effect. “General Partner” means Palomino GP Limited, an entity form under the laws of the Cayman Islands. “Holder” shall have the meaning given to such term in Section 4.10(f). “Indemnified Claims” has the meaning given to such term in the Subscription Agreement. “Indemnity Obligations” shall mean and include, without limitation, all present and future loans, advances, debts, liabilities and obligations, howsoever arising, owed or owing by the Parent, Seller, Pledgor or any Class B Limited Partner to the Purchaser Indemnified Parties of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of the Subscription Agreement or any of the other Transaction Documents relating to the Indemnified Claims or other indemnity obligations due from Parent, Seller, Pledgor or any subsequent Class B Limited Partner to the Purchaser Indemnified Parties, including, without limitation, all interest (including interest that accrues after the commencement of any bankruptcy or other insolvency proceeding by or against the Parent, Seller, Pledgor or any subsequent Class B Limited Partner or any other Person, whether or not allowed or allowable), fees, charges, expenses, attorneys’ fees and accountants’ fees chargeable to and payable by the Parent, Seller, Pledgor or any subsequent Class B Limited Partner hereunder and thereunder relating to such Indemnified Claims. “Issuer” shall mean White Eagle Asset Portfolio, LP. “Material Indebtedness” shall mean any Indebtedness the outstanding principal amount of which is in excess of $1,000,000. “Parent” has the meaning given to such term in the Subscription Agreement. “Pledge Agreement” shall mean this Pledge Agreement and all schedules, exhibits, annexes, joinders and attachments hereto, as the same may from time to time be amended, restated, supplemented or otherwise modified. “Pledged Securities” shall have the meaning given to such term in Section 2(a). “Pledgor” has the meaning given to such term in the Preamble. “Purchaser Indemnified Parties” has the meaning given to such term in the Subscription Agreement. “Redemption Right” shall have the meaning given to such term in Section 4.10(g). -------------------------------------------------------------------------------- “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors (including, without limitation, attorneys, accountants and experts) of such Person and such Person’s Affiliates. “Responsible Officer” means any officer within the Collateral Agent’s Corporate Trust Services department with direct responsibility for the administration of this Agreement, or to whom any matter contemplated by this Agreement is referred because of his or her knowledge of or familiarity with a particular subject. “SACCA” shall have the meaning given to such term is Section 4.10(h). “Secured Obligations” shall mean and include the Class D Obligations, the Indemnity Obligations and the Advance Facility Obligations. “Secured Parties” has the meaning set forth in the preamble hereto. For the avoidance of doubt, the Collateral Agent shall not be considered a Secured Party. “Seller Parties” means Emergent Capital, Inc., the Pledgor, and the Withdrawing General Partner (as defined in the Subscription Agreement). “Subscription Agreement” has the meaning set forth in the Recitals. “Transaction Documents” has the meaning given to such term in the Subscription Agreement. “UCC” shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the creation or attachment, perfection or priority of the Collateral Agent’s security interest in any collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such creation or attachment, perfection of priority and for purposes of definitions related to such provisions. “Wilmington Trust” has the meaning given to such term in the Preamble. (b)    Other Definitions; Interpretation. Unless otherwise defined herein, all other capitalized terms used herein and defined in the Subscription Agreement or the A&R LPA shall have the respective meanings given to those terms in the Subscription Agreement or the A&R LPA, and all terms defined in the UCC shall have the respective meanings given to those terms in the UCC. The Pledgor and the Secured Parties hereby agree not to permit any amendment to any term used herein but defined in the Subscription Agreement or the A&R LPA that would impact the Collateral Agent's rights or obligations herein without the Collateral Agent’s prior written consent. 2.    Pledge. The Pledgor hereby assigns, conveys, mortgages, pledges, grants, hypothecates and transfers to the Collateral Agent, on behalf of the Secured Parties, as security for the full, prompt, -------------------------------------------------------------------------------- complete and final payment when due and prompt performance and observance of all of the Secured Obligations of the Pledgor, and in order to induce the Secured Parties to enter into the Subscription Agreement, the A&R LPA and the other Transaction Documents, a security interest in and to all of the Pledgor’s right, title and interest in, to and under each of the following property, whether now owned or hereafter acquired by the Pledgor or in which the Pledgor now holds or hereafter acquires any interest (all of which being hereinafter collectively called the “Collateral”): (a)    All Class B Partnership Equity Securities issued by the Issuer (all such Class B Partnership Equity Securities, whether certificated or uncertificated, to be referred to herein collectively as the “Pledged Securities”); (b)    All rights of the holder of Pledged Securities with respect thereto, including, without limitation, all voting rights and all rights to cash and noncash Distributions and other distributions on account thereof; (c)    All other certificated and uncertificated securities and any other evidence of a Class B Partnership Equity Security issued by the Issuer; (d)    All books and records relating to the foregoing Collateral; (e)    All accounts, documents, general intangibles, instruments, investment property and all supporting obligations with respect any of the property described in this Section 2; (f)    All Distributions, cash, instruments, products, accessions, rents, profits, income, interest, earnings, revenues, money, benefits, substitutions and replacements of and to, and other property from time to time received, receivable or otherwise distributed or distributable in each case on and after the date hereof in respect of or in exchange for any of the property described in clauses (a) – (e) above; and (g)    All Proceeds of or relating to the foregoing. 3.    Representations and Warranties. The Pledgor represents, warrants and covenants to the Secured Parties and the Collateral Agent that: (a)    The Pledgor is the sole holder of record and the sole legal and beneficial owner of the Collateral in which it purports to assign, convey, mortgage, pledge, grant, hypothecate and transfer as security for the Secured Obligations (or, in the case of after-acquired Collateral, at the time the Pledgor acquires rights in such Collateral, will be the record legal and beneficial owner thereof), free and clear of any adverse claim, as defined in Section 8‑102(a)(1) of the UCC (or any other then applicable provision of the UCC), except for the Lien created in favor of the Collateral Agent by this Pledge Agreement and the other Transaction Documents. No other Person has (or, in the case of after-acquired Collateral, at the time the Pledgor acquires rights therein, will have) any right, title, claim or interest (by way of Lien, purchase option or otherwise) in, against or to such Collateral. -------------------------------------------------------------------------------- (b)    No effective security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Collateral exists, except such as may have been filed by the Pledgor in favor of the Collateral Agent pursuant to this Pledge Agreement. (c)    The execution and delivery of this Pledge Agreement creates a legal and valid security interest on and in all of the Collateral in which the Pledgor now has rights and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. Accordingly, the Collateral Agent has a fully perfected first priority security interest in all of the Collateral in which the Pledgor now has rights. This Pledge Agreement will create a legal and valid and fully perfected first priority security interest in the Collateral in which the Pledgor later acquires rights, when the Pledgor acquires those rights. (d)    The Pledgor’s exact legal name, jurisdiction of organization and chief executive office and/or place of business are set forth on Schedule I attached hereto or as otherwise set forth in a written notice given to the Collateral Agent pursuant to Section 4.7 below. The Pledgor shall not change such legal name, jurisdiction of organization, chief executive office or place of business without thirty (30) days’ prior written notice to the Collateral Agent. (e)    All Pledged Securities of the Pledgor have been (or in the case of after-acquired Pledged Securities, at the time the Pledgor acquires rights therein, will have been) duly authorized, validly issued and fully paid and are (or in the case of after-acquired Pledged Securities, at the time the Pledgor acquires rights therein, will be) non-assessable. (f)    The Pledgor has delivered to the Collateral Agent, together with all necessary stock powers (or equivalent for non-stock equity), endorsements, assignments and other necessary instruments of transfer, the originals of all stock certificates (or equivalent for non-stock equity), instruments, notes, other certificated securities, other Collateral and all certificates, instruments and other writings evidencing the same. (g)    No authorization, approval or other action by, and no notice to or filing, declaration or registration with, any governmental entity is required for the exercise by the Collateral Agent of the voting or other rights provided for in this Pledge Agreement, except for those already obtained and those in connection with a disposition of the Investment Property as may be required by applicable law affecting the offering and sale of securities generally or as may be required by applicable law. 4.    Covenants. The Pledgor covenants and agrees with the Collateral Agent and the Secured Parties that from and after the date of this Pledge Agreement and until the Secured Obligations have been completely and finally paid in full (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) and this Pledge Agreement has terminated in accordance with Section 10.6. 4.1    Further Assurances; Pledge of Instruments. At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of the Pledgor, the Pledgor shall promptly and duly execute and deliver any and all such further instruments and documents and take -------------------------------------------------------------------------------- such further action as the Collateral Agent or the Directing Secured Parties may deem desirable to obtain the full benefits of this Pledge Agreement and of the rights and powers herein granted, including, without limitation, (a) using its best efforts to secure all consents and approvals necessary or appropriate for the grant of a security interest to the Collateral Agent hereunder, (b) filing any financing statements, amendments or continuation statements under the UCC with respect to the security interests granted hereby, (c) filing or cooperating with the Collateral Agent or the Directing Secured Parties in filing any forms or other documents required to be filed with any governmental entity required in connection with this Pledge Agreement, and (d) transferring Collateral to the Collateral Agent’s possession. Without limiting the generality of the preceding sentence, and with respect to the Collateral, the Pledgor shall (i) procure, execute and deliver to the Collateral Agent all stock powers (or equivalent for non-stock equity), endorsements, assignments and other instruments of transfer reasonably requested by the Collateral Agent or the Directing Secured Parties, (ii) deliver to the Collateral Agent promptly upon receipt the originals of all Pledged Securities, other certificated securities representing or comprising Collateral, other Collateral and all certificates, instruments and other writings evidencing the same, (iii) cause the Lien of the Collateral Agent to be recorded or registered in the books of any financial intermediary or clearing corporation holding any Collateral as and when requested by the Collateral Agent or the Directing Secured Parties or (iv) at the request of the Collateral Agent or the Directing Secured Parties, mark conspicuously each of its records pertaining to the Collateral with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such Collateral is subject to the security interest granted hereby. Each of the other parties hereto shall provide the Collateral Agent with copies of all financing statements (including all continuations, amendments and terminations related thereto) regarding the Collateral promptly following such party’s filing any such document with any governmental authority, and each of the parties hereto shall provide the Collateral Agent with copies of any such filings in such party’s possession upon the Collateral Agent’s request. The Pledgor also hereby authorizes the Collateral Agent, to the extent not prohibited by applicable law, to file any such financing statement, amendment or continuation statement without the signatures of the Pledgor; provided, that, anything contained herein to the contrary notwithstanding, the Collateral Agent shall not have any duty or responsibility in respect of, and makes no representation or warranty with respect to the preparation, filing, correctness, maintenance or accuracy of any financing statement or continuation statement evidencing any Lien in any Collateral. 4.2    Indemnification. The Pledgor shall save, indemnify, defend, protect and keep the Secured Parties and Collateral Agent (in its individual capacity and in its capacity as such) and their respective affiliates, and of their and their affiliates’ shareholders, partners, equityholders, members, insiders, officers, directors, managers, employees, advisors, agents, representatives, subsidiaries, successors and assigns harmless from and against any and all expenses, losses, claims, liabilities, penalties, causes of action, demands, judgments, suits, costs, taxes or damages (in each case, including, but not limited to, reasonable and documented attorneys’ fees and expenses, court costs and costs of investigation) of any kind or nature whatsoever (collectively, “Expenses”) related to, arising out of or in connection with this Agreement, the creation, grant or perfection of the security interest contemplated by this Agreement and the other Transaction Documents or a breach by the Pledgor of any obligation hereunder, including, without limitation, the Expenses of the Secured Parties or the Collateral Agent incurred in connection with any enforcement (including any action, claim or suit brought) by the Secured Parties or the Collateral Agent of any indemnification or other -------------------------------------------------------------------------------- obligation of the Pledgor, except to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have been caused by the gross negligence or willful misconduct of such Secured Party or Collateral Agent, as applicable, and all such obligations of the Pledgor shall be and remain enforceable against and only against the Pledgor and shall not be enforceable against the Secured Parties or Collateral Agent. To the fullest extent permitted by law, Expenses incurred by the Secured Parties or the Collateral Agent in defending or preparing to defend any Indemnified Claims shall, from time to time, be reimbursed by the Pledgor prior to the final disposition of any matter upon receipt by the Pledgor of a written undertaking (in form and substance acceptable to the Pledgor) to repay such amount if it shall be determined that the Secured Parties or the Collateral Agent, as applicable, is not entitled to be indemnified hereunder. Nothing contained herein shall serve to amend, modify, alter or change the terms of the Indemnity Obligations owed by the Pledgor to the Secured Parties. For the avoidance of doubt, as between the Pledgor and the Secured Parties, this Section 4.2 shall only relate to indemnity obligations and Expenses arising under, related to or in connection with this Agreement. Each Secured Party agrees to severally, based on its pro rata percentage of the total issued and outstanding Class A Partnership Units, save, indemnify, defend, protect and keep the Collateral Agent (in its individual capacity and in its capacity as such), its affiliates, and its respective directors, officers, employees, agents and shareholders (each, an “Collateral Agent Indemnitee Party”) harmless, to the extent that such Collateral Agent Indemnitee Party shall not have been promptly reimbursed by the Pledgor, from and against any and all expenses, losses, claims, liabilities, penalties, causes of action, demands, judgments, suits, costs, taxes or damages (in each case, including, but not limited to, reasonable and documented attorneys’ fees and expenses, court costs and costs of investigation) of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Collateral Agent Indemnitee Party in exercising its powers, rights, and remedies or performing its duties hereunder or otherwise in its capacity as such Collateral Agent Indemnitee Party in any way relating to or arising out of this Agreement, except to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have been caused by the gross negligence or willful misconduct of the Collateral Agent Indemnitee Party. If any indemnity furnished to any Collateral Agent Indemnitee Party for any purpose shall, in the opinion of such Collateral Agent Indemnitee Party, be insufficient or become impaired, such Collateral Agent Indemnitee Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. Notwithstanding the foregoing, no Collateral Agent Indemnitee Party shall seek payment from the Secured Parties of any indemnity obligations (i) owed to Wilmington Trust solely in its capacity as Securities Intermediary, Custodian or Paying Agent and arising under a Transaction Document other than this Pledge Agreement, and (ii) unless such obligation has not been fulfilled to the reasonable satisfaction of the Collateral Agent Indemnitee Party within thirty (30) days after written demand is made by a Collateral Agent Indemnitee Party to the Pledgor with respect to such obligation. This Section 4.2 shall survive the termination or assignment of this Pledge Agreement and the resignation or removal of the Collateral Agent. 4.3    Limitation on Liens on Collateral. The Pledgor shall not create, permit or suffer to exist, and shall defend the Collateral against and take such other action as is necessary to remove, -------------------------------------------------------------------------------- any lien on the Collateral, except for the Lien in favor of the Collateral Agent. The Pledgor shall further defend the right, title and interest of the Collateral Agent in and to any of the Pledgor’s rights under any Collateral and in and to the Proceeds thereof against the claims and demands of all Persons whomsoever. 4.4    Taxes, Assessments, Etc. The Pledgor shall pay promptly when due all property and other taxes, assessments and government charges or levies imposed upon, and all claims against, any Collateral, except to the extent the validity thereof is being contested in good faith and adequate reserves are being maintained in connection therewith and there is no risk of forfeiture of any Collateral. Anything contained herein to the contrary notwithstanding, the Collateral Agent shall not have any duty or responsibility in respect of, and makes no representation or warranty with respect to the payment or discharge of any tax, assessment, or other governmental charge or any Lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Collateral. 4.5    Limitations on Disposition. The Pledgor shall keep the Collateral separate and identifiable from other property that is not Collateral and the Pledgor shall not sell, lease, license, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so. Any such action in violation of this Section 4.5 shall be null and void. 4.6    Further Identification of Collateral. The Pledgor shall, if so requested by the Collateral Agent, furnish to the Collateral Agent, as often as the Collateral Agent shall reasonably request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail. 4.7    Continuous Perfection. The Pledgor shall not change its legal name in any manner or its jurisdiction of organization, chief executive office or place of business to a country or state outside of the country or state of its jurisdiction of organization, chief executive office and place of business as of the date hereof unless the Pledgor shall have given the Collateral Agent at least thirty (30) days’ prior written notice thereof and shall have taken all action (or made arrangements to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by the Collateral Agent to ensure that the Collateral Agent at all times has and continues to maintain a valid, enforceable, first priority, perfected security interest in the Collateral. 4.8    Authorizations with Respect to Financing Statements, etc. The Pledgor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any filing office in any UCC jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment. The Pledgor agrees to promptly furnish any such information that the Collateral Agent may reasonably request. The Pledgor also ratifies its authorization for the Collateral Agent to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. -------------------------------------------------------------------------------- 4.9    Terminations and Amendments Not Authorized. The Pledgor acknowledges that it is not authorized to file any amendment or termination statement with respect to any financing statement relating to any security interest granted hereunder without the prior written consent of the Collateral Agent and agrees that it will not do so without the prior written consent of the Collateral Agent, subject to the Pledgor’s rights under Section 9‑509(d)(2) of the UCC. 4.10    Pledged Collateral; Voting Rights and Distributions. (a)    Prior to an Event of Default, the Pledgor shall deliver to the Collateral Agent all certificates or instruments representing or evidencing any Collateral, whether now existing or hereafter acquired, in suitable form for transfer by delivery or, as applicable, accompanied by the Pledgor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent and the Secured Parties. The Collateral Agent shall have the right, at any time in its discretion and after an Event of Default without prior notice to the Pledgor, to transfer to or to register in its name or in the name of its nominees any or all of the Collateral. The Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing any of the Pledged Collateral for certificates or instruments of smaller or larger denominations. (b)    After an Event of Default, Pledgor shall, promptly but in no event more than two business days of receipt, remit (or shall permit the Paying Agent to remit, on the Pledgor’s behalf) all cash Distributions thereafter paid in respect of the Pledged Securities to the Collateral Agent, which Distributions the Secured Parties shall ensure shall be applied to the Secured Obligations or held as proceeds of the Collateral to secure the Secured Obligations. Any sums paid upon or in respect of any of the Pledged Securities after any Event of Default and upon the liquidation or dissolution of the Issuer, any Distribution of capital made on or in respect of any of the Pledged Securities or any property distributed upon or with respect to any of the Pledged Securities pursuant to the recapitalization or reclassification of the capital of the Issuer of Pledged Securities or pursuant to the reorganization thereof shall, unless otherwise subject to a perfected security interest in favor of the Collateral Agent, be delivered to the Collateral Agent to be held by it hereunder as additional collateral security for the Secured Obligations until distributed pursuant to the instructions of the Directing Secured Parties. If any sums of money or property so paid or distributed pursuant to the immediately preceding sentences in respect of any of the Pledged Securities shall be received by the Pledgor, the Pledgor shall, until such money or property is paid or delivered to the Collateral Agent, hold such money or property in trust for the Collateral Agent, segregated from other funds of the Pledgor, as additional security for the Secured Obligations. (c)    Except as provided in Section 6, the Pledgor will be entitled to exercise all voting, consent and corporate rights with respect to the Pledged Securities; provided, however, that no vote shall be cast, consent given or right exercised or other action taken by the Pledgor which would (i) be inconsistent with or result in any violation of any provision of the Subscription Agreement, the A&R LPA, this Pledge Agreement, any other Transaction Document or would adversely affect the Collateral Agent’s Lien on the Collateral or its remedies with respect thereto or (ii) without prior notice to the Collateral Agent and the Secured Parties, permit the Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or -------------------------------------------------------------------------------- granting the right to purchase or exchange for any stock or other equity securities of any nature of the Issuer. (d)    The Pledgor shall not grant “control” (within the meaning of such term under Section 9‑106 of the UCC) over any Collateral to any Person other than the Collateral Agent. (e)    The Pledgor shall not agree to any provision in, or amendment of, a limited liability company agreement or partnership agreement that adversely affects the perfection of the security interest of the Collateral Agent in any pledged partnership interests or pledged limited liability company interests pledged by the Pledgor hereunder, including electing to treat the membership interest or partnership interest of the Issuer as a security under Section 8‑103 of the UCC. (f)    If, at any time and from time to time, any Collateral (including any certificate or instrument representing or evidencing any Collateral) that has not been delivered to the Collateral Agent is in the possession of a Person other than the Collateral Agent or the Pledgor (a “Holder”), then the Pledgor shall immediately, at the Collateral Agent’s request, cause such Collateral to be delivered into the Collateral Agent’s possession or, if the Pledgor, after exercise of its best efforts, is unable to cause such Collateral to be delivered to the Collateral Agent, execute and deliver to such Holder a written notification/instruction, and take all other steps necessary to perfect the security interest of the Collateral Agent in such Collateral, including, without limitation, obtaining from such Holder a written acknowledgement that such Holder holds such Collateral for the Collateral Agent, all pursuant to Section 8‑106 of the UCC or other applicable law governing the perfection of the Collateral Agent’s security interest in the Collateral in the possession of such Holder. Each such notification/instruction and acknowledgement shall be in form and substance satisfactory to the Collateral Agent. (g)    The Pledgor agrees that, to the extent the Pledgor has a right, upon the occurrence of an event or otherwise, to cause the Issuer to redeem, purchase or otherwise acquire some or all of the Collateral (a “Redemption Right”), upon completion of the exercise of such right (which has not been withdrawn prior to such completion) to the extent that some or all of such Collateral is in fact redeemed and converted into a liquidated right to receive a designated amount of funds, so long as any Secured Obligations remain outstanding, any obligation of the Issuer or any subsidiary of the Issuer or any guarantor to make a payment in respect thereof to the Pledgor shall be and is hereby subordinated to the payment of all Secured Obligations as and to the extent specified in the A&R LPA and the Subscription Agreement. In connection therewith, the Pledgor shall not accept or receive any payment or Distribution on or in respect of such Redemption Right or any obligation arising in connection therewith that exceeds amounts then payable or distributable to the Pledgor as holder of the Class B Partnership Interests, of any kind or character (including cash, securities or other property), unless and until all Secured Obligations then due and payable have been paid in accordance with the A&R LPA and the Subscription Agreement, or until this Pledge Agreement has terminated in accordance with Section 10.6. If the holder of any Redemption Right shall receive any payment or Distribution on or in respect of such Redemption Right in violation of the provisions of this section, it shall hold such payment in trust for the benefit of the Collateral Agent and shall forthwith remit the same in the form in which it was received, together -------------------------------------------------------------------------------- with such endorsements or documents as may be necessary to effectively negotiate or transfer the same, to the Collateral Agent for application to the Secured Obligations. (h)    The Collateral Agent is hereby directed by the Secured Parties, and hereby agrees, to deposit any amounts that the Collateral Agent actually receives as to which it is notified are in respect of any of the Pledged Securities, any Distribution or as a result of the exercise of its duties hereunder to the Collections Account established pursuant to that certain Securities Account Control, Paying Agent and Custodian Agreement, dated as of the date hereof by and among the Issuer and Wilmington Trust, acting solely as securities intermediary, paying agent and custodian (the “SACCA”). 5.    The Collateral Agent’s Appointment as Attorney-in-Fact. (a)    Subject to Section 5(b) below, the Pledgor hereby irrevocably constitutes and appoints the Collateral Agent, and any 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 the Pledgor and in the name of the Pledgor or in its own name, from time to time at the Collateral Agent’s discretion, for the purpose of carrying out the terms of this Pledge Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Pledge Agreement. (b)    The Collateral Agent agrees that, except upon the occurrence and during the continuation of an Event of Default, it shall not exercise the power of attorney or any rights granted to the Collateral Agent pursuant to this Section 5. The Pledgor hereby ratifies, to the extent not prohibited by applicable law, all that said attorney shall lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this Section 5 is a power coupled with an interest and shall be irrevocable until the Secured Obligations are completely paid and performed in full and this Pledge Agreement has terminated in accordance with Section 10.6. (c)    The powers conferred on the Collateral Agent hereunder are solely to protect the Collateral Agent’s interests in the Collateral and shall not impose any duty upon the Collateral Agent to exercise any such powers. The Collateral Agent shall have no duty as to any Collateral, including, without limitation, any responsibility for (i) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral or (ii) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property, whether or not the Collateral Agent has or is deemed to have knowledge of such matters. Without limiting the generality of the preceding sentence, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral if it takes such action for that purpose as the Pledgor reasonably requests in writing (with the prior written consent of the Directing Secured Parties) at times other than upon the occurrence and during the continuance of any Event of Default. Failure of the Collateral Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care. Notwithstanding anything to the contrary herein, the Collateral Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and neither it nor any of its officers, directors, employees, agents or representatives shall be responsible to the Pledgor for -------------------------------------------------------------------------------- any act or failure to act, except for its own gross negligence or willful misconduct as determined by a final, non-appealable judgment of a court of competent jurisdiction. The Pledgor hereby ratifies all that the Collateral Agent as its attorney-in-fact shall do or cause to be done by virtue of this Pledge Agreement. 6.    Rights and Remedies Upon Default. (a)    If any Event of Default shall occur and be continuing, the Collateral Agent may, and in accordance with the written direction of the Directing Secured Parties shall, exercise, in addition to all other rights and remedies granted to it under this Pledge Agreement and under any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under applicable law, including, without limitation, the UCC. Without limiting the generality of the foregoing, the Pledgor expressly agrees that in any such event the Collateral Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon the Pledgor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent not prohibited by the UCC and other applicable law), shall have the right to collect the Proceeds from all Collateral (including, without limitation, Distributions on Pledged Securities) and may (i) collect, receive, appropriate, foreclose upon and realize upon the Collateral, or any part thereof, (ii) transfer to or to register on the books of the Issuer (or of any other Person maintaining records with respect to the Collateral) in the name of the Collateral Agent or any of its nominees any or all of the Collateral, (iii) exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations, and (iv) to the exclusion of the Pledgor, exercise (A) all voting, consent, corporate and other rights pertaining to the Pledged Securities at any meeting of shareholders, partners, members or other equity holders, as the case may be, of the Issuer or otherwise and (B) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to the Pledged Securities as if it were the absolute owner thereof (including the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of the Issuer of securities pledged hereunder, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to the 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. The Pledgor authorizes the Collateral Agent, on the terms set forth in this Section 6, to enter the premises where the Collateral is located, to take possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which, in the opinion of the Collateral Agent, appears to be prior or superior to its security interest. The Collateral Agent shall have the right upon any such public sale or sales, and, to the extent not prohibited by applicable law, upon any such private sale or sales, to purchase the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption the Pledgor hereby releases. The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral and may specifically disclaim any warranties of title, which procedures shall not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. The Collateral Agent -------------------------------------------------------------------------------- shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale as provided in Section 6(j), below, and the Pledgor shall remain liable for any deficiency remaining unpaid after such application, and only after so paying over such net proceeds and after the payment by the Collateral Agent of any other amount required by any provision of law, including, without limitation, Section 9‑608(a)(1)(c) of the UCC (or any other then applicable provision of the UCC), need the Collateral Agent account for the surplus, if any, to the Pledgor. To the maximum extent not prohibited by applicable law, the Pledgor waives all claims, damages, and demands against the Collateral Agent arising out of the repossession, retention or sale of the Collateral except such as are determined by a final, non-appealable judgment of a court of competent jurisdiction to arise out of the gross negligence or willful misconduct of the Collateral Agent. The Pledgor agrees that the Collateral Agent need not give more than ten (10) days’ prior written notice of the time and place of any public sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. The Pledgor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which the Collateral Agent or Secured Parties are entitled, and the Pledgor shall also be liable for attorneys’ fees or costs of any attorneys employed by the Collateral Agent to collect such deficiency. (b)    As to any Collateral, if, at any time when the Collateral Agent shall determine to exercise its right to sell the whole or any part of such Collateral, such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under Securities Act of 1933, as amended (as so amended the “Act”), the Collateral Agent may, in its discretion (subject only to applicable requirements of law), sell such Collateral or part thereof by private sale in such manner and under such circumstances as the Collateral Agent may deem necessary or advisable, but subject to the other requirements of this Section 6(b), and shall not be required to effect such registration or cause the same to be effected. Without limiting the generality of the foregoing, in any such event the Collateral Agent may, in its sole discretion, (i) in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof could be or shall have been filed under the Act; (ii) approach and negotiate with a single possible purchaser to effect such sale; and (iii) restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In addition to a private sale as provided above in this Section 6(b), if any of such Collateral shall not be freely distributable to the public without registration under the Act at the time of any proposed sale hereunder, then the Collateral Agent shall not be required to effect such registration or cause the same to be effected but may, in its sole discretion (subject only to applicable requirements of law), require that any sale hereunder (including, without limitation, a sale at auction) be conducted subject to such restrictions as the Collateral Agent may, in its sole discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors’ rights and the Act and all applicable state securities laws. (c)    The Collateral Agent shall incur no liability as a result of the sale, lease or other disposition of all or any part of the Collateral at any private sale conducted in a commercially reasonable manner, which shall be conducted at the direction of the Directing Secured Parties. Each party hereto agrees that any private sales may be at prices and on terms less favorable to the Collateral -------------------------------------------------------------------------------- Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that neither the Collateral Agent nor the Secured Parties shall have any obligation to engage in public sales and no obligation to delay the sale of any Collateral for the period of time necessary to permit the issuer thereof to register it for public sale. The purchase price received by the Collateral Agent on behalf of the Secured Parties in respect of any sale of Collateral shall be deemed conclusive and binding on the parties hereto. Each party hereto hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the obligations owed under the Transaction Documents, even if the Collateral Agent accepts the first offer received and does not offer the Collateral to more than one offeree. (d)    At the direction of the Directing Secured Parties, the Collateral Agent may retain the services of a financial advisor in connection with any such sale under this Agreement, and the Collateral Agent may retain such a financial advisor prior to an Event of Default if it shall have received the prior written consent of the Directing Secured Parties (such consent not to be unreasonably withheld, delayed or conditioned). The fees and expenses of such financial advisor shall be paid by the Pledgor and shall be deemed part of the Secured Obligations. (e)    In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to this Pledge Agreement with respect to the Collateral and to receive all Distributions which it may be entitled to receive under this Pledge Agreement with respect to the Collateral, from and after the occurrence and during the continuance of an Event of Default, (i) the Pledgor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies, dividend payment orders, Distribution payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, the Pledgor hereby grants to the Collateral Agent an irrevocable proxy to vote all or any part of the Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of such Collateral would be entitled (including giving or withholding written consents of shareholders, partners, members or other equity holders, as the case may be, calling special meetings of shareholders, partners, members or other equity holders, as the case may be, and voting at such meetings), which proxy shall be effective automatically and without the necessity of any action (including any transfer of such Collateral on the record books of the Issuer) by any other Person (including the Issuer or any officer or agent thereof) during each period of time that an Event of Default has occurred and is continuing. The Pledgor acknowledges and agrees that the irrevocable proxy granted to the Collateral Agent by the Pledgor pursuant to the preceding sentence with respect to the Collateral is coupled with an interest and shall be exercisable by the Collateral Agent during each period of time that an Event of Default has occurred and is continuing, regardless of the length of any such period of time. The Pledgor hereby expressly authorizes and instructs the Issuer to (i) comply with any instruction received by it from the Collateral Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from the Pledgor, and the Pledgor agrees that the Issuer shall be -------------------------------------------------------------------------------- fully protected in so complying and (ii) pay any Distributions or other payments with respect to the Collateral directly to the Collateral Agent in compliance with any such instructions. (f)    The Pledgor agrees that in any sale of any of such Collateral, whether at a foreclosure sale or otherwise, the Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental entity, and the Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Collateral Agent be liable nor accountable to the Pledgor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. (g)    The Pledgor agrees to pay all fees, costs and expenses of the Collateral Agent, including, without limitation, attorneys’ fees and costs, incurred in connection with the enforcement of any of its rights and remedies hereunder. This Section 6(g) shall survive the termination or assignment of this Pledge Agreement and the removal or resignation of the Collateral Agent. (h)    The Pledgor hereby waives presentment, demand, protest or any notice (to the maximum extent not prohibited by applicable law) of any kind in connection with this Pledge Agreement or any Collateral in accordance with the A&R LPA. (i)    The Pledgor agrees that a breach of any covenants contained in this Section 6 will cause irreparable injury to the Collateral Agent and the Secured Parties, that in such event the Collateral Agent and the Secured Parties would have no adequate remedy at law in respect of such breach and, as a consequence, agrees that in such event each and every covenant contained in this Section 6 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that the Secured Obligations are not then due and payable. (j)    The Secured Parties shall cause the proceeds of any sale, disposition or other realization upon all or any part of the Collateral to be applied to the Secured Obligations in the order prescribed for such Secured Obligations in the A&R LPA. (k)    Notwithstanding the foregoing in this Section 6 but without limiting the right of set off or any other rights of the Purchaser Indemnified Parties, to the extent that the Pledgor in good faith disputes its obligations with respect to any Indemnified Claim, the Purchaser Indemnified Parties shall not foreclose or cause the foreclosure on the Class B Partnership Units pledged under this Pledge Agreement as a result of such Indemnified Claim until such Indemnified Claim has been settled or adjudicated by a final and non-appealable judgment of a court of competent jurisdiction; provided however, that while the dispute, negotiations, settlement or adjudicating proceedings are undergoing, the Pledgor shall reimburse the relevant Purchaser Indemnified Parties (and the -------------------------------------------------------------------------------- Collateral Agent (if applicable)) for reasonable and documented costs or expenses (including reasonable and documented attorneys’ fees and Expenses) and nothing contained herein shall prevent the Collateral Agent or any Secured Party from foreclosing or causing a foreclosure on the Collateral as a result of an Event of Default on account of Class D Obligations or Advance Facility Obligations. 7.    RESERVED. 8.    Reinstatement. This Pledge Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Pledgor for liquidation or reorganization, should the Pledgor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Pledgor’s property and assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. This Section 8 shall survive the termination of this Pledge Agreement. 9.    Collateral Agent. 9.1    Collateral Agent. Each Secured Party hereby irrevocably appoints the Collateral Agent as its agent and authorizes the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms of this Pledge Agreement, together with such actions and powers as are reasonably incidental thereto. The Collateral Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights or remedies, and to take or refrain from taking any action (including, without limitation, the release or substitution of Collateral), solely in accordance with this Pledge Agreement and the written instructions of the Directing Secured Parties. In furtherance of the foregoing provisions of this Section 9.1, each Secured Party, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Secured Party that all rights and remedies hereunder may be exercised solely by the Collateral Agent for the benefit of the Secured Parties in accordance with the terms of this Section 9.1. 9.2    Collateral Agent Standard of Care. The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care of a prudent collateral agent in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody, preservation and disposition of Collateral in its possession and in the accounting for moneys received by it hereunder if such Collateral and moneys are accorded treatment reasonably equal to that which the Collateral Agent accords similar property it holds for other Persons when providing the same -------------------------------------------------------------------------------- or substantially similar services for such other Persons. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part 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 the Pledgor or otherwise. If an Event of Default occurs and is continuing and the Pledgor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith (including fees and expenses of counsel) shall be payable in accordance with Section 6(e) of this Agreement until paid in full. 9.3    Duties and Obligations of Collateral Agent. The Collateral Agent shall have no duties or obligations except those expressly set forth in this Pledge Agreement. Without limiting the generality of the foregoing, %3. the Collateral Agent shall not be subject to any fiduciary or other implied duties, covenants, liabilities or obligations, regardless of whether an Event of Default has occurred and is continuing (the use of the term “agent” herein and in the other Transaction Documents with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law; rather, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties), (a) the Collateral Agent shall have no duty to take any discretionary action or exercise any discretionary powers, and (b) except as expressly set forth herein, the Collateral Agent shall have no duty to disclose, and shall not be liable under any circumstances for the failure to disclose, any information relating to the Pledgor or any of its Subsidiaries that is communicated to or obtained by the Collateral Agent or any of its Affiliates in any capacity. The Collateral Agent shall be deemed not to have knowledge of any Event of Default unless and until written notice thereof is given to a Responsible Officer of the Collateral Agent by the Pledgor or a Secured Party and such notice references such Event of Default (and, in the absence of receipt by a Responsible Officer of such notice, the Collateral Agent may conclusively assume that no such Event of Default has occurred and shall have no obligation to investigate or verify that such event has in fact occurred), and shall not be responsible for or have any duty to ascertain or inquire into %4. any statement, warranty or representation made in or in connection with this Pledge Agreement or any other Transaction Document, %4. the contents of any certificate, report or other document delivered hereunder or under any other Transaction Document or in connection herewith or therewith, %4. the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Transaction Document, %4. the validity, enforceability, effectiveness or genuineness of this Pledge Agreement, any other Transaction Document or any other agreement, instrument or document, %4. the satisfaction of any condition set forth herein, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent, %4. the existence, value, perfection or priority of any collateral security or the financial or other condition of the Pledgor and its Subsidiaries or any other obligor or guarantor, or %4. any failure by the Pledgor or any other Person (other than itself) to perform any of its obligations hereunder or under any other Transaction Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein. For purposes of determining compliance with the conditions set forth herein, each Secured Party shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or -------------------------------------------------------------------------------- acceptable or satisfactory to a Secured Party unless the Collateral Agent shall have received written notice from such Secured Party prior to the proposed closing date specifying its objection thereto. 9.4    Action by Collateral Agent. The Collateral Agent shall have no duty to take any discretionary or permissive action or exercise any discretionary or permissive powers. In the event that any provision of this Agreement or any other Transaction Document implies or requires that action or forbearance from action be taken by a party but is silent as to which party has the duty to act or refrain from acting, the parties hereto agree that the Collateral Agent shall not be the party required to take the action or refrain from acting. In all cases, the Collateral Agent shall be fully justified in failing or refusing to act hereunder unless it shall %3. receive reasonable, written instructions from (i) the holders of a majority in interest of the Class A Partnership Units, (collectively, such Persons the “Directing Secured Parties”), or (ii) all the Secured Parties, as applicable, in each case, together with a certificate from the General Partner certifying, as applicable, as to the holdings of the Class A Partnership Units or the identity of each Secured Party and specifying the action to be taken and %3. be indemnified to its satisfaction by the Secured Parties against any and all liability and expenses (including, without limitation, counsel fees 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 Collateral Agent shall be binding on all of the Secured Parties. Each party hereto (other than the Collateral Agent) hereby agrees to cause the General Partner to confirm in writing to Collateral Agent, promptly upon the request of Collateral Agent and promptly following any transfer or new issuance of any Partnership Units, the identity of, contact information for, and, if applicable, the Percentage Interest, of each Secured Party, upon which confirmation the Collateral Agent may conclusively rely without investigation. If an Event of Default has occurred and is continuing, then the Collateral Agent shall take such action with respect to such Event of Default as shall be directed by the Directing Secured Parties in the written instructions (with indemnities) described in this Section 9.4, provided that, unless and until the Collateral Agent shall have received such directions, the Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interests of the Secured Parties. In no event, however, shall the Collateral Agent be required to take any action if it shall have reasonably determined, or shall have been advised by its counsel, that such action is likely to result in liability on the part of the Collateral Agent or which is contrary to this Pledge Agreement, the Transaction Documents or applicable law. The Collateral Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Directing Secured Parties or the Secured Parties. Notwithstanding anything to the contrary herein, the Collateral Agent shall not be liable for any action taken or not taken by it hereunder 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 gross negligence or willful misconduct as determined by a court of competent jurisdiction by a final and non-appealable judgment. 9.5    Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely conclusively upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. The Collateral Agent -------------------------------------------------------------------------------- shall not be responsible for the content or accuracy of any such writings provided to the Collateral Agent, and shall not be required to recalculate, certify, or verify any information contained therein. The Collateral Agent also may rely upon any statement made 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 Pledgor and the Secured Parties hereby waives the right to dispute the Collateral Agent’s record of such statement, except in the case of gross negligence or willful misconduct by the Collateral Agent. The Collateral Agent may, at the expense of the Pledgor, consult with legal counsel (who may be counsel for the Pledgor), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Collateral Agent may, at the expense of the Pledgor, request, rely on and act in accordance with, and shall be protected in relying on, officer’s certificates and opinions of counsel in form and substance acceptable to the Collateral Agent. The Collateral Agent may deem and treat the payee of any note or Equity Security as the registered holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed with a Responsible Officer of the Collateral Agent. 9.6    Subagents. The Collateral Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents (which sub-agents shall be subject to the prior written consent of the Secured Parties, not to be unreasonably withheld), attorneys, custodians, servicers, managers, nominees or other skilled professionals appointed by the Collateral Agent. The Collateral Agent shall not be held responsible or liable for any action, inaction, misconduct or negligence of any Persons selected by the Collateral Agent in good faith. The exculpatory provisions of the preceding Sections of this Section 9 shall apply to any such sub-agents, attorneys, custodians, servicers, managers, nominees or other skilled professionals and to the Related Parties of the Collateral Agent, and shall apply to their respective activities in connection with the transactions contemplated herein as well as activities as Collateral Agent. 9.7    Resignation or Removal of Collateral Agent; Merger. Subject to the appointment and acceptance of a successor Collateral Agent as provided in this Section 9.7, the Collateral Agent may resign at any time by notifying the Secured Parties and the Pledgor, and the Collateral Agent may be removed at any time with or without cause by thirty (30) days’ prior written notice given by the Directing Secured Parties. Upon any such resignation or removal, the Directing Secured Parties shall have the right, in consultation with the Pledgor, to appoint a successor. If no successor shall have been so appointed by the Directing Secured Parties and shall have accepted such appointment within thirty (30) days after the retiring Collateral Agent gives notice of its resignation or after removal of the retiring Collateral Agent, then the retiring Collateral Agent may, at the expense of Pledgor (including with respect to attorney’s fees and expenses), petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. Upon the acceptance of its appointment as Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Pledgor to a successor Collateral Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Pledgor and such successor. After the Collateral Agent’s resignation or removal hereunder, the provisions of this Section 9, Section 4.2 and Section 10.8 shall continue in effect for the benefit of such retiring Collateral Agent, its sub-agents and their -------------------------------------------------------------------------------- respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Collateral Agent. Any Person (i) into which the Collateral Agent may be merged or consolidated, (ii) which may result from any merger, conversion or consolidation to which the Collateral Agent shall be a party or (iii) which may succeed to all or substantially all of the corporate trust business of the Collateral Agent shall be the successor of the Collateral Agent hereunder, without the execution or filing of any instrument or any further act on the part of any of the parties. 9.8    No Reliance. Each Secured Party acknowledges that it has, independently and without reliance upon the Collateral Agent, any other agent or any other Secured Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Pledge Agreement and each other Transaction Document to which it is a party. Each Secured Party also acknowledges that it will, independently and without reliance upon the Collateral Agent, any other agent or any other Secured Party and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Pledge Agreement, any other Transaction Document, any related agreement or any document furnished hereunder or thereunder. The Collateral Agent shall not be required to keep any Secured Party informed as to the performance or observance by the Pledgor or any of its Subsidiaries of this Pledge Agreement, the Transaction Documents or any other document referred to or provided for herein or to inspect the properties or books of the Pledgor or its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Secured Parties by the Collateral Agent hereunder, no agent shall have any duty or responsibility to provide any Secured Party with any credit or other information concerning the affairs, financial condition or business of the Pledgor (or any of its Affiliates) which may come into the possession of the Collateral Agent or any of its Affiliates. Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with this Pledge Agreement and each other Transaction Documents and the matters contemplated herein and therein. Each Secured Party hereby agrees that the Collateral Agent (A) has not provided nor will it provide in the future, any advice, counsel or opinion regarding this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, including, but not limited to, with respect to the tax (including gift tax and estate tax), financial, investment, securities law or insurance implications and consequences of the consummation, funding and ongoing administration of this Agreement or any other Transaction Document, or the initial and ongoing selection and monitoring of financing arrangements, (B) has not made any investigation as to the accuracy or completeness of any representations, warranties or other obligations of any Person under this Agreement or any other document or instrument and shall not have any liability in connection therewith (other than, in each case, the Collateral Agent's representations and warranties expressly set forth in this Agreement), and (C) has not prepared or verified, nor shall it be responsible or liable for, any information, disclosure or other statement in any disclosure or offering document delivered in connection with this Agreement. 9.9    Collateral 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 Pledgor or any of its Subsidiaries, the -------------------------------------------------------------------------------- Collateral Agent (irrespective of whether an Event of Default has occurred and irrespective of whether the Collateral Agent shall have made any demand on the Pledgor) shall be entitled and empowered, by intervention in such proceeding or otherwise: (a)    to file and prove a claim for the whole amount of the Secured Obligations owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Secured Parties and the Collateral Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Secured Parties and the Collateral Agent and their respective agents and counsel and all other amounts due the Secured Parties and the Collateral Agent under Section 4.2 and Section 10.8) allowed in such judicial proceeding; and (b)    to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Secured Party to make such payments to the Collateral Agent and, in the event that the Collateral Agent shall consent to the making of such payments directly to the Secured Parties, to pay to the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Collateral Agent and its agents and counsel, and any other amounts due the Collateral Agent under Section 4.2 and Section 10.8. Nothing contained herein shall be deemed to authorize the Collateral Agent to authorize or consent to or accept or adopt on behalf of any Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Secured Party or to authorize the Collateral Agent to vote in respect of the claim of any Secured Party in any such proceeding. 9.10    Authority of Collateral Agent to Release Collateral and Liens. Each Secured Party hereby authorizes the Collateral Agent to release any collateral that is permitted to be sold or released pursuant to the terms hereof or the direction of the Directing Secured Parties. Each Secured Party hereby authorizes the Collateral Agent to execute and deliver to the Pledgor, at the Pledgor’s sole cost and expense, any and all releases of Liens, termination statements, assignments or other documents reasonably requested by the Pledgor in connection with any sale or other disposition of property to the extent such sale or other disposition is permitted by the terms of this Agreement or pursuant to the direction of the Directing Secured Parties. 9.11    Special Provisions Relating to the Collateral Agent. The following rights, protections, privileges and immunities provided to the Collateral Agent shall govern the Collateral Agent’s rights, duties, obligations and liability under this Agreement and the other Transaction Documents (solely in its capacity as Collateral Agent under the Transaction Documents) notwithstanding anything herein or therein to the contrary, and shall survive the termination or assignment of this Agreement and the resignation or removal of the Collateral Agent: -------------------------------------------------------------------------------- (a)    No provision of this Agreement, any other Transaction Document or any other document or instrument shall require the Collateral Agent to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder or thereunder. (b)    The Collateral Agent shall have no liability for any action taken, or errors in judgment made, in good faith by it or any of its officers, employees or agents, except to the extent such action or error in judgment was the result of the gross negligence or willful misconduct of the Collateral Agent, as determined in a final non-appealable judgment by a court of competent jurisdiction. (c)    The Collateral Agent shall incur no liability if, by reason of any provision of any present or future law or regulation thereunder, or by any force majeure event, including, but not limited to, acts of God, flood, natural disaster, war (whether declared or undeclared), terrorism, fire, riot, strikes or work stoppages for any reason, embargo, the failure of equipment or interruption of communications or computer facilities or other circumstances beyond the Collateral Agent’s reasonable control, the Collateral Agent shall be prevented or forbidden from doing or performing any act or thing which the terms of this Agreement provide shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Agreement. (d)    Notwithstanding anything contained in this Agreement or any other Transaction Document to the contrary, neither Wilmington Trust nor any successor thereto, nor the Collateral Agent shall be required to take any action in any jurisdiction if the taking of such action will (i) require the consent or approval or authorization or order of or the giving of notice to, or the registration with or the taking of any other action in respect of, any State or other governmental authority or agency of any jurisdiction; (ii) result in any fee, tax or other governmental charge becoming payable by Wilmington Trust (or any successor thereto) (unless it is indemnified to its reasonable satisfaction for any such action); or (iii) subject Wilmington Trust (or any successor thereto) to personal jurisdiction in any jurisdiction for causes of action arising from acts unrelated to the consummation of the transactions by Wilmington Trust (or any successor thereto) or the Collateral Agent, as the case may be, contemplated hereby or thereby. (e)    In the event that (i) the Collateral Agent is unsure as to the application or interpretation of any provision of this Agreement or any related document, (ii) this Agreement or any related document is silent or is incomplete as to the course of action that the Collateral Agent is required or permitted to take with respect to a particular set of facts, or (iii) more than one methodology can be used to make any determination to be performed by the Collateral Agent hereunder, then the Collateral Agent may give written notice to the Secured Parties requesting written instruction and, to the extent that the Collateral Agent acts or refrains from acting in good faith in accordance with any written instruction of the Directing Secured Parties, the Collateral Agent shall not be personally liable to any Person. If the Collateral Agent shall not have received such written instruction within ten (10) calendar days of delivery of such notice (or within such shorter period of time as may reasonably be specified in such notice or as may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking any action, and shall have no liability to any Person for such action or inaction. -------------------------------------------------------------------------------- (f)    The Collateral Agent shall not be liable for failing to comply with its obligations under this Agreement or any related document in so far as the performance of such obligations is dependent upon the timely receipt of instructions and/or other information from any other Person which are not received by the time required. The Collateral Agent shall not have any responsibility for the accuracy of any information provided to any other Person that has been obtained from, or provided to the Collateral Agent by, any other Person. If any error, inaccuracy or omission exists in any information provided to the Collateral Agent, which causes or materially contributes to the Collateral Agent making or continuing any error, inaccuracy or omission, the Collateral Agent shall have no liability for such continuing error, inaccuracy or omission. (g)    The Collateral Agent shall not be responsible for preparing or filing any reports or returns relating to federal, state or local income taxes with respect to this Agreement other than for the Collateral Agent's compensation. (h)    The Collateral Agent shall have no notice of, shall not be subject to, and shall not be required to comply with, any other agreement, including any other Transaction Document, unless the Collateral Agent is a party thereto and has executed the same, even though reference thereto may be made herein. (i)    The Collateral Agent shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other party hereto. (j)    The Collateral Agent shall not be required to keep itself informed as to the performance or observance by the Pledgor or any other Person of its obligations to any other Person, or to inspect the Collateral or the books and records of the Pledgor, any of its Affiliates or any other Person. (k)    The Collateral Agent (a) may treat any Person reasonably believed by it in good faith to be the holder of any interest issued by the Issuer as the holder thereof until a Responsible Officer of the Collateral Agent receives and accepts a written notification from the General Partner, notifying the Collateral Agent of the transfer or assignment of such interest to an assignee, which notice shall identify the name and address of such assignee and such assignee shall automatically have the benefits and/or obligations as a Secured Party or Pledgor hereunder; and (b) may treat any Person reasonably believed by it in good faith to be the representative of a class of interests issued by the Issuer as the continuing representative of such class of interests until a Responsible Officer of the Collateral Agent receives and accepts a notification from the General Partner that a new representative has been designated for such class of interests, which notice shall identify the name and address of such new representative. (l)    The Collateral Agent shall not have any duty to conduct any initial or periodic examinations or inspections of, or to inspect the Collateral or any asset (including the books and records) of the Pledgor; (i) as to the presence or absence of defects, (ii) as to the occurrence of any breach of a representation or warranty of any Person, or (iii) for any other purpose. (m)    Each party shall, at the request of the Collateral Agent, deliver, and cause to be delivered, lists of the Persons authorized to give approvals, directions or instructions under this -------------------------------------------------------------------------------- Agreement or any related documents, using a form of such lists reasonably acceptable to the Collateral Agent. (n)    The Collateral Agent shall not be deemed to have knowledge of any event or information held by or imputed to any Person (including an Affiliate, or other line of business or division of the Collateral Agent) other than itself in its capacity as Collateral Agent. The Collateral Agent shall not be deemed to have notice or knowledge of any event or information, or be required to act upon any event or information (including the sending of any notice), unless a Responsible Officer of the Collateral Agent has received written notice referencing such event or information. The availability or delivery (including pursuant to this Agreement or any other Transaction Document) of reports or other documents (including news or other publicly available reports or documents) to the Collateral Agent shall not constitute actual or constructive knowledge or notice of information contained in or determinable from those reports or documents, except for such reports or documents, if any, that this Agreement expressly requires the Collateral Agent to review. (o)    The Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or any other Transaction Document, or to institute, conduct or defend any litigation under this Agreement or any other Transaction Document or otherwise in relation to this Agreement or any other Transaction Document, unless the Collateral Agent has been offered security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities that may be incurred by the Collateral Agent therein or thereby. (p)    The Collateral Agent shall not be held responsible or liable for, and shall have no duty to supervise, investigate or monitor, the actions or omissions of any other Person, including the other parties hereto, in connection with this Agreement, the other Transaction Documents or otherwise, and the Collateral Agent may assume performance by all such Persons of their respective obligations. (q)    The Collateral Agent shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (r)    Notwithstanding anything herein or otherwise to the contrary, any amounts that may be due from the Collateral Agent hereunder are payable only from proceeds of the Collateral held by or otherwise available to Wilmington Trust in its capacity as Collateral Agent and not from the individual or company assets of Wilmington Trust. (s)    The Collateral Agent shall not be liable for the supervision, default, misconduct or any other action or omission of the Pledgor, any Secured Party, or any purported representative of such Persons, and the Collateral Agent may assume each such Person’s performance of its respective obligations. (t)    In no event shall any party hereto be responsible or liable for any special, indirect, consequential, exemplary or punitive loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the party has been advised of the likelihood of such loss or damage and regardless of the form of action. -------------------------------------------------------------------------------- (u)    If the Collateral Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process which in any way affects the Collateral (including, but not limited to, orders of attachment or garnishment or other forms of levies or injunctions or stays related thereto), the Collateral Agent is authorized to comply therewith in any manner as it or its legal counsel of its own choosing deems in good faith appropriate; and if the Collateral Agent complies with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, the Collateral Agent shall not be liable to the Pledgor, the Secured Parties or any other Person even though such order, judgment, decree or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect. (v)    The Collateral Agent shall not be held responsible or liable for the correctness or enforceability of the recitals contained in this Agreement or in any related document. (w)    The parties hereto expressly acknowledge and consent to Wilmington Trust acting in the multiple capacities of the Collateral Agent, the Securities Intermediary, the Custodian and the Paying Agent under the Transaction Documents. The parties hereto agree that Wilmington Trust, in such multiple capacities, shall not be subject to any claim, defense or liability arising from its performance in any such capacity based on conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wilmington Trust of any other such capacity or capacities in accordance with this Agreement or any other Transaction Documents to which it is a party and to the extent that Wilmington Trust has not breached its standard of care hereunder and thereunder. 10.    Miscellaneous. 10.1    Notices. Any notices required to be delivered hereunder shall be in writing and personally delivered, mailed or sent by telecopy, electronic mail or other similar form of rapid transmission, and shall be deemed to have been duly given upon (i) receipt in the case of the Collateral Agent, to the address listed below or (ii) delivery in the case of the Pledgor or any Secured Party, listed below and (iii) in the case of either of the foregoing, receipt at such other address as may be designated by written notice to the other parties. If to the Collateral Agent, to: WILMINGTON TRUST, NATIONAL ASSOCIATION 300 Park Street Suite 390 Birmingham, MI 48009 Telephone: (248) 723-5421 Fax: (248) 723-5424 Attention: Capital Markets Insurance Services E-mail:     SpecializedInsurance@wilmingtontrust.com with a copy (which shall not constitute notice) to: -------------------------------------------------------------------------------- K&L Gates LLP Attention: Scott Waxman, Esq. E-mail: scott.waxman@klgates.com If to a Secured Party, then in accordance with notice instructions given to each other Party hereto in writing by such Secured Party from time to time, with a copy (which shall not constitute notice) to: Orrick, Herrington & Sutcliffe LLP 51 West 52nd Street New York, NY 10019 Attention: Laura Metzger Email: lmetzger@orrick.com If to the Pledgor, then to: Lamington Road Designated Activity Company 1 – 2 Victoria Buildings Haddington Road Dublin 4 with a copy (which shall not constitute notice) to: Winston & Strawn LLP Attention: Dan Passage 333 S. Grand Avenue Los Angeles, CA 90071-1543 D: +1 213-615-1739 F: +1 213-615-1750 Email: dpassage@winston.com 10.2    Partial Invalidity. If at any time any provision of this Pledge Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this Pledge Agreement nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 10.3    Headings. The section headings and captions appearing in this Pledge Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Pledge Agreement. 10.4    No Waiver; Cumulative Remedies. The Collateral Agent shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder or under the Subscription Agreement, the A&R LPA or the other Transaction Documents, nor shall any single or partial exercise of any right or remedy hereunder or thereunder on any one or more occasions -------------------------------------------------------------------------------- preclude the further exercise thereof or the exercise of any other right or remedy under any of the Transaction Documents. Except as expressly provided otherwise, the rights and remedies hereunder provided or provided under the Subscription Agreement, the A&R LPA or the other Transaction Documents are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law or by any of the other Transaction Documents. Unless otherwise specified in any such waiver or consent, a waiver or consent given hereunder shall be effective only in the specific instance and for the specific purpose for which given. 10.5    Time is of the Essence. Time is of the essence for the performance of each of the terms and provisions of this Pledge Agreement. 10.6    Termination of this Pledge Agreement. Subject to Section 8, above, this Pledge Agreement shall terminate upon the satisfaction of all of the following conditions: (a) the full, complete and final payment of the Secured Obligations and (b) the termination of the commitments under the Transaction Documents. 10.7    Successors and Assigns. This Pledge Agreement and all obligations of the Pledgor hereunder shall be binding upon the successors and assigns of the Pledgor, and shall, together with the rights and remedies of the Collateral Agent hereunder, inure to the benefit of the Collateral Agent and its successors and assigns and the Secured Parties and their successors and assigns, except that the Pledgor may not assign or transfer any of its rights or obligations hereunder. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Secured Obligations or any portion thereof or interest therein shall in any manner affect the security interest created herein and granted to the Collateral Agent hereunder. Any assignment or transfer in violation of the foregoing shall be null and void. 10.8    Further Indemnification. The Pledgor agrees to pay, and to save the Collateral Agent harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Pledge Agreement. This Section 10.8 shall survive the termination or assignment of this Pledge Agreement and the resignation or removal of the Collateral Agent. 10.9    Amendments, Etc. No provision of this Pledge Agreement may be amended or otherwise modified except pursuant to a written agreement executed and delivered by the parties hereto. No provision of this Pledge Agreement may be waived unless in writing and signed by the party providing such waiver. All fees, costs and expenses (including reasonable attorneys’ fees, costs and expenses) incurred in connection with any amendment, supplement or waiver of this Agreement shall be payable by the Pledgor. 10.10    Entire Agreement. This Pledge Agreement constitutes and contains the entire agreement of the Pledgor, the Secured Parties and the Collateral Agent and supersedes any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. 10.11    Intentionally omitted. -------------------------------------------------------------------------------- 10.12    Counterparts. This Pledge Agreement may be executed in any number of identical counterparts, any set of which signed by all the parties hereto shall be deemed to constitute a complete, executed original for all purposes. Transmission by facsimile, “PDF” or similar electronic format of an executed counterpart of this Pledge Agreement shall be deemed to constitute due and sufficient delivery of such counterpart. Any party hereto may request an original counterpart of any party delivering such electronic counterpart. 10.13    Payments Free of Taxes, Etc. All payments made by the Pledgor under this Pledge Agreement shall be made by the Pledgor free and clear of and without deduction for any and all present and future taxes, levies, charges, deductions and withholdings. In addition, the Pledgor shall pay upon demand any stamp or other taxes, levies or charges of any jurisdiction with respect to the execution, delivery, registration, performance and enforcement of this Pledge Agreement. Upon request by the Collateral Agent, the Pledgor shall furnish evidence satisfactory to the Collateral Agent that all requisite authorizations and approvals by, and notices to and filings with, governmental entity and regulatory bodies have been obtained and made and that all requisite taxes, levies and charges have been paid. 10.14    The Pledgor’s Continuing Liability. Notwithstanding any provision of this Pledge Agreement or any other Transaction Document or any exercise by the Collateral Agent of any of its rights hereunder or thereunder (including, without limitation, any right to collect or enforce any Collateral), (i) the Pledgor shall remain liable to perform its obligations and duties in connection with the Collateral and (ii) the Collateral Agent shall not assume or be considered to have assumed any liability to perform such obligations and duties or to enforce any of the Pledgor’s rights in connection with the Collateral. 10.15    Counsel; Drafting. Each of the parties to this Pledge Agreement states that they have read the Pledge Agreement carefully, that they have consulted with counsel regarding the terms and provisions of this Pledge Agreement (or have had the opportunity to consult with legal counsel and chosen not to do so), and that they have relied solely upon their own judgment without the influence of anyone in entering into this Pledge Agreement. Each party acknowledges that each was actively involved in the negotiation and drafting of this Pledge Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Pledge Agreement shall be construed in favor or against either party hereto because one is deemed to be the author thereof. 10.16    Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This Pledge Agreement and all matters, claims, controversies, disputes, suits, actions or proceedings arising out of or relating to this Pledge Agreement and the negotiation, execution or performance of this Pledge Agreement or any of the transactions contemplated hereby, including all rights of the parties (whether sounding in contract, tort, common or statutory law, equity or otherwise) in connection therewith, shall in all respects be interpreted, construed and governed by and in accordance with, and enforced pursuant to, the internal laws of the state of New York, without reference to conflicts of laws provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Each of the parties irrevocably submits to the co-exclusive jurisdiction of (a) any state or federal court sitting in New York County, New York (and, in each case, any appellate court therefrom) and (b) to the extent provided in the Approval Order, the Bankruptcy -------------------------------------------------------------------------------- Court in respect of any claim, action, suit or proceeding of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, arising out of, relating to or in connection with this Pledge Agreement. Each party irrevocably waives and agrees not to assert, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any such proceedings in any such court and any claim that any proceeding brought in any such court has been brought in an inconvenient forum. Each of the parties agrees that a final judgment in any claim, suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. EACH PARTY (A) ACKNOWLEDGES AND AGREES THAT ANY PROCEEDING THAT MAY ARISE UNDER OR RELATE TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND (B) HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS, OR IN ANY WAY IN CONNECTION WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES TO THIS PLEDGE AGREEMENT WITH RESPECT TO THE TRANSACTION DOCUMENTS OR IN CONNECTION WITH THIS PLEDGE AGREEMENT OR THE EXERCISE OF ANY PARTY’S RIGHTS AND REMEDIES UNDER THIS PLEDGE AGREEMENT OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. 10.17    The parties hereto acknowledge that in accordance with the Customer Identification Program (CIP) requirements established under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001) and its implementing regulations (collectively, USA PATRIOT Act), the Collateral Agent, in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Collateral Agent. Each party hereby agrees that it shall provide the Collateral Agent with such information as the Collateral Agent may request from time to time in order to comply with any applicable requirements of the USA PATRIOT Act. [This Space Intentionally Left Blank] -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be executed as of the day and year first above written. PLEDGOR: LAMINGTON ROAD DESIGNATED ACTIVITY COMPANY By:__/s/ Thomas Barry____________________ Name:    Thomas Barry Title:    Director SIGNATURE PAGE TO PLEDGE AGREEMENT -------------------------------------------------------------------------------- SECURED PARTY: PALOMINO JV, L.P. By:_/s/ Yun Zheng____________________ Name:    Yun Aheng Title:    Director SIGNATURE PAGE TO PLEDGE AGREEMENT -------------------------------------------------------------------------------- WILMINGTON TRUST: WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Collateral Agent By:__/s/ Robert J. Donaldson__________________ Name:    Robert J. Donaldson Title:    Vice President SIGNATURE PAGE TO PLEDGE AGREEMENT -------------------------------------------------------------------------------- ACKNOWLEDGED AND AGREED BY: WHITE EAGLE ASSET PORTFOLIO, LP, AS ISSUER By:__/s/ Miriam Martinez_________________ Name:    Miriam Martinez Title:    CFO SIGNATURE PAGE TO PLEDGE AGREEMENT -------------------------------------------------------------------------------- SCHEDULE I TO PLEDGE AGREEMENT Exact Legal Name, Address, Etc. Exact Legal Names Address of Chief Executive Office or Place of Business Jurisdiction of Organization Lamington Road Designated Activity Company 1 – 2 Victoria Buildings Haddington Road Dublin 4 Ireland       303637965 v4 4843-9759-7345V.2
Exhibit 10.26C          SECOND RESTATED COGNOVIT PROMISSORY NOTE   This note is a restatement and continuation of that certain Restated Cognovit Promissory Note dated December 21, 2011, in the original principal amount of $100,000 (the "2011 Note") from both The Guitammer Company, an Ohio corporation ("Guitammer-Ohio"), and The Guitammer Company, a Nevada corporation and parent company to Guitammer-Ohio (collectively, "Makers"), to the Revocable Trust created by Julie E. Jacobs under agreement dated November 25, 1999 ("Payee"), whose address is c/o 5050 Thornhill Lane, Dublin Ohio 43017. For value received, Makers hereby jointly and severally promise to pay the order of Payee the revised principal balance of $108,071.01, which is the sum of (a) $100,000, the original unpaid principal amount of the 2011 Note, plus (b) $8,071.01, which is the unpaid accrued interest on that original unpaid principal balance computed from January 1, 2013 through January 3, 2014, and which is being converted into unpaid principal as of January 3, 2014; with interest on that unpaid revised principal balance computed from January 4, 2014 until paid in full at a rate equal to the WSJ Prime Rate plus 4.75% (which sum is a rate of 8.00% as of the date of this note), compounded annually. "WSJ Prime Rate" shall mean the rate of interest that the Wall Street Journal publishes from time to time as its "U.S prime rate," and any change in the WSJ Prime Rate shall be effective with respect to this note immediately as of the date published by the Wall Street Journal. All accrued and unpaid interest on this note shall be payable to Payee on January 3, 2015, and all unpaid principal and all remaining accrued and unpaid interest shall be payable to Payee in full on January 3, 2016 (the "Maturity Date").   This note may be prepaid in full or in part at any time. Makers shall make a mandatory principal prepayment of $8,071.01 within two business days of the receipt after January 27, 2014 by either or both of Makers of additional new equity financing that aggregates to at least $100,000 to Makers. All payments and prepayments, if any, under this note shall be made to Payee at the foregoing address in Dublin, Ohio, or at such other address as may be designated by the holder of this note to Makers in writing from time to time, and shall be deemed received by Payee as of the first date that such payment is immediately available to Payee in collected federal funds. Any payment or prepayment on this note other than the mandatory principal repayment shall be applied, first, to the payment of any accrued and unpaid interest, if any, as of the date of receipt and, then, to the principal balance. In all events, this note shall be paid in full by the Maturity Date.   Payee's rights and remedies hereunder are cumulative, and may be exercised together, separately, and in any order. No delay on the part of Payee in the exercise of any such right or remedy shall operate as a waiver. No single or partial exercise by Payee of any right or remedy shall preclude any other further exercise of it or the exercise of any other right or remedy. No waiver or indulgence by Payee shall be effective unless in writing and signed by Payee, nor shall a waiver on one occasion be construed as a waiver of any other occurrence in the future.   This note, as a restatement and continuation of the 2011 Note, is secured in part by a certain Patent Pledge Agreement dated as of March 31, 2011 by Guitammer-Ohio in favor of Payee and the Doyle Trust regarding patents and patent applications of one or both of Makers (the "Pledge"). This note is deemed one of the "Obligations" secured by the Pledge.         --------------------------------------------------------------------------------       Makers hereby assent to the release in whole or in part of any collateral held by the holder of this Note as security for the payment of this Note, and further acknowledge that theholder need not proceed against any collateral held by the holder before proceeding against either of Makers or any endorser of this Note.   If Makers are in default in paying in full any installment of this note when due, or if there is any default under the Pledge, then this note shall automatically bear interest thereafter until this note is paid in full at the rate of the WSJ Prime Rate plus 8.75% per annum from the first date of such default until this note is paid in full, and the entire principal of this note then remaining unpaid, together with all accrued interest, shall, at option of the holder of this note, be immediately due and payable without any further notice or demand.   Makers hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance or default of this note. Makers hereby agree to reimburse the then holder of this note for all expenses of every kind, including reasonable attorneys' costs and fees, incurred by said holder in connection with the enforcement of the obligations under this note.   Makers hereby each irrevocably authorize any attorney at law to appear for each of Makers in any court in the county where either of Makers resides or signed this note, with or without process, at any time after this note becomes due (by acceleration or otherwise); to waive the issuance and service of process and confess judgment against any or all of Makers in favor of the holder of this note for the amount then appearing due, together with costs of suit, reasonable attorneys' costs and fees, and interest; and thereupon to release all errors and waive all right of second trial, appeal, and stay of execution; but no judgment against one of Makers shall be a bar to any subsequent judgment against the other of Makers against whom judgment has not yet been taken.   This note was executed and delivered by Makers to Payee in Franklin County, Ohio, as of January 27, 2014, and shall be construed under the laws of the State of Ohio. Makers acknowledge that, upon delivery of this note to Payee, Payee has returned the 2011 Note to Makers, which shall be deemed superseded and replaced in its entirety by this note.   THE GUITAMMER COMPANY THE GUITAMMER COMPANY an Ohio corporation a Nevada corporation     By: [mlsig.jpg] By: [mlsig.jpg] Mark A. Luden, President Mark A. Luden, President         WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE (Sec. 2323.13, O.R.C.).   Maker's Address 6117 Maxtown Road Westerville, Ohio 43082 Fax No. 1-815-346-9532       2 --------------------------------------------------------------------------------
Exhibit 10.17 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this “Agreement”), made effective as of November 19, 2019, is entered into by Intercept Pharmaceuticals, Inc. (the “Company”) and Jason Campagna (“Executive”). WHEREAS, Executive has been employed by the Company pursuant to that certain employment agreement, made effective as July 22, 2016, by the Company and Executive (the “Prior Agreement”); WHEREAS, the Company now desires to employ Executive, and Executive now desires to be employed by the Company, on the terms set forth in this Agreement; and WHEREAS, Executive has also entered into an Invention, Non-Disclosure, and Non-Solicitation Agreement as of even date herewith. NOW THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties to this Agreement, the parties agree as follows: 1.     Term of Employment.  The Company hereby agrees to employ Executive, and Executive hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on December 1, 2019 or such date as may be otherwise agreed upon with the Company (the “Commencement Date”) and ending on the one year anniversary thereof, unless sooner terminated in accordance with the provisions of Section 4 (such period, the “Initial Term”); provided,  however, that on each anniversary of the Commencement Date, the term of employment under this Agreement shall be automatically extended for an additional one-year period (each such period, a “Subsequent Term”) unless terminated sooner pursuant to Section 4 or if, at least thirty (30) days prior to the applicable anniversary date, either Executive or the Company provides written notice to the other party electing not to extend. The Initial Term together with each Subsequent Term, if any, are referred to hereinafter as the “Agreement Term.” 2.     Title; Capacity.  During the Agreement Term, the Company will employ Executive as its Chief Medical Officer to perform the duties and responsibilities inherent in such position and such other duties and responsibilities consistent with such position as the Chief Executive Officer of the Company (the “CEO”) shall from time to time reasonably assign to him. On an annual basis, the Company’s Board of Directors (the “Board”) in consultation with Executive and the CEO, will set reasonably attainable, specific goals pursuant to the objectives of the Company as in effect from time to time. Executive shall report directly to the CEO and shall be subject to the supervision of, and shall have such authority as is delegated to Executive by, the CEO, which authority shall be sufficient to perform Executive’s duties hereunder. Executive will be based in Massachusetts. Subject to Section 4.3 below, the location of Executive’s employment is subject to change during the course of the Agreement Term as determined by the CEO in consultation with the Executive. Executive hereby accepts such employment and agrees to undertake the duties and responsibilities inherent in such position and such other duties as may be reasonably assigned to Executive. Executive shall devote substantially all of his business time, energies and attention in the performance of the foregoing services. Notwithstanding the foregoing, nothing herein shall preclude Executive from (i) performing services for such other companies as the Company may designate or permit, (ii) serving, with the prior written consent of the Board, which consent shall not be unreasonably withheld, as an officer or member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses, (iii) serving as an officer or a member of charitable, educational or civic organizations, (iv) engaging in charitable activities and community affairs, and (v) managing Executive's personal investments and affairs; provided, however, that the activities set out in clauses (i) – (v) shall be limited by Executive so as not to materially interfere, individually or in the aggregate, with the performance of Executive's duties and responsibilities hereunder. 3.     Compensation and Benefits. 3.1          Salary.  The Company shall pay Executive an initial annualized base salary of $465,000.00, payable in accordance with the Company’s regular payroll practices. Such base salary shall be subject to annual review and increase (but not decrease) as may be determined and approved by the Board or the Company’s Compensation Committee in its sole discretion. 3.2          Bonuses. (a)          Annual Bonus. At the end of a given fiscal year, Executive will be eligible to receive a bonus based on a target equal to 50% of his base salary in effect at the end of such fiscal year. Executive’s annual bonus for the fiscal year in which the Commencement Date occurs shall be based upon his annualized base salary and shall not be prorated. The amount of any such bonus shall be based on factors including, but not limited to, Executive’s achievement, as determined by the Board or the Compensation Committee in its sole discretion, of reasonable goals and milestones established in advance by the Board or the Compensation Committee in consultation with the CEO and Executive. The period for calculation of the bonus shall be consistent with the Company’s fiscal year. Such bonus, if any, will be paid to Executive on or after January 1 and in any case no later than March 15 of the immediately succeeding fiscal year. The bonus shall be paid in cash; provided that, if requested by Executive and approved by the Board, some or all of the bonus may be paid in equity under the Company’s stockholder approved stock plan then in effect (valued at the fair market value thereof), or any combination of the foregoing. To the extent that the Company is required pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to develop and implement a policy (the “Policy”) providing for the recovery from the Executive of any payment of incentive-based compensation paid to the Executive that was based upon erroneous data contained in an accounting statement, this Agreement shall be deemed amended and the Policy incorporated herein by reference as of the date that the Company takes all necessary corporate action to adopt the Policy, without requiring any further action of the Company or the Executive, provided that any such Policy shall only be binding on the Executive if the same Policy applies to the Company's other executive officers. 3.3          Equity Awards.  At the sole discretion of the Board or the Company’s Compensation Committee, stock options or other equity-based awards may be granted to Executive from time to time under the Company’s 2012 Equity Incentive Plan (the “2012 Plan”). 3.4          Fringe Benefits.  Executive shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to its U.S.-based executives and/or employees from time to time, including, but not limited to, health care plans, dental care plans, vision care plans, supplemental retirement plans, life insurance plans, disability insurance plans and incentive compensation plans, to the extent that Executive is eligible under, and subject to the terms and conditions of, the applicable plan documents governing such programs. The Company shall pay 100% of the premium cost for health insurance coverage for Executive, his spouse and children, provided that his spouse and dependents are not covered by an equivalent health insurance plan provided by his spouse’s employer.  Executive shall be eligible to accrue up to four (4) weeks of paid vacation each calendar year (to be taken at such times and in such number of days as Executive shall determine in consultation with the CEO and in a manner so as not to impair or otherwise interfere with Executive’s ability to perform his duties and responsibilities hereunder). The vacation days for which Executive is eligible shall accrue at the rate of 1.67 days per month that Executive is employed during such calendar year. Vacation accrual will be capped at 1.75 times Executive’s annual vacation accrual. When Executive’s accrued vacation reaches the cap, he will not accrue additional vacation time until some of the previously accrued vacation is used and the accrued amount falls below the cap, unless the Company is acquired by another business venture, in which case none of the previous year’s accrued vacation will be subject to a cap. Executive shall also be eligible for paid holidays and paid sick days annually, in accordance with the Company’s policies for its senior executives as in effect from time to time. At the end of each calendar year, all unused sick days shall be forfeited. 3.5          Reimbursement of Expenses.  The Company shall reimburse Executive for reasonable travel, entertainment and other expenses incurred or paid in connection with, or related to the performance of Executive’s duties, responsibilities or services under this Agreement, upon presentation by Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may request. Executive must submit proper documentation for each such expense within sixty (60) days after the later of (i) his incurrence of such expense or (ii) his receipt of the invoice for such expense. The Company will reimburse Executive for that expense within thirty (30) days after receipt of the documentation. 3.6          Withholdings.  Payments made under this Section 3 shall be subject to applicable federal, state and local taxes and withholdings, if any. 4.     Termination of Employment Period.  The Agreement Term shall terminate upon the occurrence of any of the following: 4.1          Expiration of the Agreement Term.  This Agreement shall expire at the end of the Agreement Term; provided,  that notice is given in accordance with Section 1 of this Agreement. 4.2          Termination by the Company for Cause.   At the election of the Company, the Executive may be terminated by the Company for Cause (as defined below), immediately following written notice by the Company to Executive, which notice shall identify in reasonable detail the Cause upon which termination is based, except that for reason 4.2(a)(iv) below, termination may not occur prior to the expiration of the thirty (30) day period to cure. For the purposes of this Agreement, “Cause” for termination shall be deemed to exist upon: (a)          a good faith finding by the Company that (i) Executive has engaged in material dishonesty, willful misconduct or gross negligence in connection with the performance of his duties; (ii) Executive has committed any act of fraud or embezzlement with respect to the Company or any of its affiliates; (iii) Executive has breached or has threatened to breach his Invention, Non-Disclosure, and Non-Solicitation Agreement; or (iv) Executive has materially breached this Agreement, and Executive has failed to cure such conduct or breach within thirty (30) days after his receipt of written notice from the Company of such breach; or (b)          Executive’s conviction, guilty plea, or entry of nolo contendere to any crime involving moral turpitude, fraud or embezzlement, or any felony. 4.3          Termination By Executive with Good Reason.  Executive may terminate the Agreement Term with Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence, without Executive’s written consent, of any of the events or circumstances set forth in clauses (a) through (c) below. In addition, notwithstanding the occurrence of any of the events enumerated in clauses (a) through (c), such occurrence shall not be deemed to constitute Good Reason if, within thirty (30) days after the Company’s receipt of written notice from Executive of the occurrence or existence of an event or circumstance enumerated in clauses (a) through (c), such event or circumstance has been remedied by the Company. Executive shall not be deemed to have terminated his employment with Good Reason unless Executive first delivers a written notice of termination to the Company identifying in reasonable detail the acts or omissions constituting Good Reason within ninety (90) days after their occurrence and the provision of this Agreement relied upon, such acts or omissions are not cured by the Company within thirty (30) days of the receipt of such notice, and Executive actually ends his employment within one-hundred and twenty (120) days after the Company’s failure to cure. (a)          the assignment to Executive of duties inconsistent in any material respect with Executive’s position as Chief Medical Officer (including status, offices, titles, authority, or responsibilities) or any other action or omission by the Company which results in a material diminution in Executive’s position, status, offices, titles, authority, responsibilities, or reporting requirements; (b)          a change by the Company in the location at which Executive performs his principal duties for the Company to a different location that is outside a radius of fifty (50) miles from (i) Executive’s principal residence immediately prior to the date on which such change occurs and (ii) the location at which Executive performed his principal duties for the Company immediately prior to the date on which such change occurs; or (c)          any material breach by the Company of this Agreement or any other material agreement between the Company and Executive. 4.4          Death or Disability.  This Agreement shall terminate upon Executive’s death or disability. As used in this Agreement, the determination of “disability” shall occur when Executive, due to a physical or mental disability, for a period of 60 consecutive days, or 120 days in the aggregate whether or not consecutive, during any 360-day period, is unable to perform the services contemplated under this Agreement. A determination of disability shall be made by a physician satisfactory to both Executive and the Company; provided,  that, if Executive and the Company do not agree on a physician, Executive and the Company shall each select a physician and these two together shall select a third physician, whose determination as to disability shall be binding on all parties. 4.5          Termination by Executive Without Good Reason or Termination by the Company Without Cause. At the election of Executive without Good Reason or by the Company without Cause, upon not less than thirty (30) days’ prior written notice to the other party. 5.     Effect of Termination. 5.1          Payments Upon Termination for Any Reason.  In the event Executive’s employment terminates pursuant to Section 4, the Company shall pay to Executive (or Executive’s estate or legal representative, if applicable), on the date of Executive’s termination of employment with the Company (or as soon thereafter as is practicable, consistent with applicable law and the terms of any deferred compensation plan or agreement), the compensation and benefits under Sections 3.1, 3.4 and 3.5 that are accrued and unpaid through such termination date (including, without limitation, an amount equal to all accrued but unused vacation pay and unreimbursed expenses). In the event of termination of Executive’s employment by Executive by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, the Company for Cause pursuant to Section 4.2, by reason of Executive’s death or disability pursuant to Section 4.4, or by Executive without Good Reason pursuant to Section 4.5, Executive shall not receive any compensation or benefits other than as expressly stated in this Section 5.1 and as otherwise required by law. 5.2          Termination by the Company Without Cause, by the Company by Reason of Non-Renewal of Agreement Term, or by Executive for Good Reason.  Subject to Section 5.3 below, in addition to the payments and provisions under Section 5.1, in the event of termination of Executive’s employment by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, provided that Executive executes a release of claims substantially in the form attached hereto as Exhibit A (the “Release”), which Release must be effective and irrevocable prior to the sixtieth (60th) day following the termination of the Executive's employment (the “Review Period”), the Company shall provide Executive with the following: (a)          twelve (12) months of Executive’s base salary in effect at the time of termination of employment, payable according to the Company’s payroll commencing on the first payroll date following the date the Release is effective and irrevocable (the “Payment Date”), subject to compliance with Sections 5.5 and 12.6; and (b)          the Company will, for a period of twelve (12) months following Executive’s termination from employment, continue Executive’s participation in the Company’s group health plan and dental plan and shall pay that portion of the premiums that the Company paid on behalf of Executive and his dependents during Executive’s employment, provided,  however, that if the Company’s health insurance plan and/or dental plan does not permit such continued participation in such plan after Executive’s termination of employment, then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company paid on behalf of Executive and his dependents during Executive’s employment, including any administrative fee, on Executive’s behalf for such twelve-month period; and provided,  further, that if Executive becomes employed with another employer during the period in which continued health insurance and/or dental insurance is being provided pursuant to this Section, the Company shall not be required to continue such health and dental benefits, or if applicable, to pay the costs of COBRA, if Executive becomes covered under a health insurance plan of the new employer. (For purposes of this Section 5.2(b), the term “Executive” shall include, to the extent applicable, Executive’s spouse and any of Executive’s dependents covered under the Company’s group health plan and/or dental plan prior to his termination of employment.) 5.3          Termination in the Event of a Change in Control. (a)          In addition to the payments and provisions under Section 5.1 but in lieu of, and not in addition to, the payments required pursuant to Section 5.2 above, in the event Executive’s employment with the Company is terminated by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control (as defined below) provided that such Change in Control also qualifies as a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i) (where required to avoid the imposition of penalty taxes under Section 409A) and provided that Executive (or Executive’s legal representative, if applicable) executes a Release and the Release becomes effective and irrevocable prior to the end of the Review Period, Executive shall be entitled to the following: (i)           a lump sum cash amount equal to twelve (12) months of Executive’s base salary in effect at the time of Executive’s termination, such payment to be made on the Payment Date, subject to compliance with Sections 5.5 and 12.6; (ii)          for up to twelve (12) months after Executive’s date of termination, the Company shall continue Executive’s participation in the Company’s group health and dental plan and shall pay that portion of the premiums that the Company paid on behalf of Executive and his dependents during Executive’s employment; provided,  however, that if the Company’s health insurance plan and/or dental insurance plan does not permit Executive’s continued participation in such plan after his termination of employment, then the Company shall pay that portion of the premiums associated with COBRA continuation coverage that the Company paid on behalf of Executive and his dependents during Executive’s employment, including administrative fees, on Executive’s behalf for so long as COBRA continuation coverage is available, up to twelve (12) months; and provided,  further, that if Executive becomes employed with another employer during the period in which continued health insurance and/or dental insurance is being provided pursuant to this Section, the Company shall not be required to continue the relevant benefits, or if applicable, to pay the relevant costs of COBRA, if Executive becomes covered under a health insurance plan and/or dental plan of the new employer. (For purposes of this Section 5.3(a)(ii), the term “Executive” shall include, to the extent applicable, Executive’s spouse and any of Executive’s dependents covered under the Company’s group health plan and/or dental plan prior to his termination of employment.) (b)          As used herein, “Change in Control” shall occur or be deemed to occur if any of the following events occur: (i)           any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the Company; or (ii)          any consolidation or merger of the Company (including, without limitation, a triangular merger) where the shareholders of the Company immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly, shares representing in the aggregate more than fifty percent (50%) of the combined voting power of all the outstanding securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); or (iii)         a third person, including a “person” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (but other than (x) the Company, (y) any employee benefit plan of the Company, or (z) investors purchasing equity securities of the Company pursuant to a financing or a series of financings approved by the Board of Directors of the Company) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of Controlling Securities (as defined below). “Controlling Securities” shall mean securities representing 25% or more of the total number of votes that may be cast for the election of the directors of the Company.   5.4          Effect of Termination on Stock Options and Other Equity Compensation. (a)          In the event of Executive’s termination by Executive by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by the Company for Cause pursuant to Section 4.2, or by Executive without Good Reason pursuant to Section 4.5, all unvested stock options and other equity-based awards granted to Executive before and after the date of this Agreement shall be immediately forfeited upon the effective date of such termination of employment or as otherwise provided in the award agreement; provided,  that, Executive shall have until the earlier of the expiration date of the option or ninety (90) days from the date of termination of Executive to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company. (b)          In the event of Executive’s termination by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, and provided that Executive (or Executive’s legal representative, if applicable) executes a Release and the Release becomes effective and irrevocable prior to the end of the Review Period, that number of Executive’s unvested stock options and other equity-based awards that would otherwise have vested from the effective date of Executive’s termination to the first anniversary of such date shall vest as of the date the Release is effective and irrevocable and Executive (or Executive’s estate or legal representative, if applicable) shall have until the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s employment to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company. (c)          In the event Executive’s employment with the Company is terminated by the Company by reason of non-renewal of the Agreement Term pursuant to Sections 1 and 4.1, by Executive for Good Reason pursuant to Section 4.3, or by the Company without Cause pursuant to Section 4.5, in any such case, in anticipation of and/or within twelve (12) months following a Change in Control, in lieu of the acceleration provided for pursuant to Section 5.4(b) above, provided that Executive (or Executive’s legal representative, if applicable) executes a Release and the Release becomes effective and irrevocable prior to the end of the Review Period, to the extent vesting and acceleration will not result in a violation of Section 409A, all of Executive’s unvested stock options and other equity-based awards then in effect shall vest as of the date the Release is effective and irrevocable and Executive (or Executive’s estate or legal representative, if applicable) shall have until the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s employment to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company. (d)          In the event Executive’s employment with the Company is terminated by reason of disability pursuant to Section 4.4, all unvested stock and stock options granted to Executive before and after the date of this Agreement shall be immediately forfeited upon the effective date of such termination of employment or as otherwise provided in the option agreement; provided,  that, Executive shall have until the earlier of the expiration date of the option or one (1) year from the date of termination of Executive’s employment to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination in connection with a liquidation or sale of the Company. 5.5          Review Period.  In the event that the Review Period begins in one taxable year of the Executive and ends in a later taxable year, any payments contingent upon Executive’s execution without revocation of the Release prior to the end of the Review Period will commence to be paid (or as applicable, made in full) on the first payroll date in the later taxable year. In no event will any payments be made or commence to be paid later than the ninetieth (90th) day following the Executive’s date of termination, subject to compliance with Section 12.6 herein. 5.6        Limitation on Benefits.  The Company will make the payments under this Agreement without regard to whether the deductibility of such payments (or any other payments or benefits) would be limited or precluded by Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and without regard to whether such payments would subject Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code (the “Excise Tax”); provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the reduction or elimination of any payment and/or other benefit (including the vesting of the equity awards) under this Agreement, then the amounts payable under this Agreement will be reduced or eliminated as follows, if possible: (i) first, by reducing or eliminating any cash payments or other benefits (other than the vesting of the equity awards) and (ii) second, by reducing or eliminating the vesting of those equity awards that occur as a result of such Change in Control (as provided above), to the extent necessary to maximize the Total After-Tax Payments. The Company’s independent, certified public accounting firm (the “Accounting Firm”) will determine whether and to what extent payments or vesting under this agreement are required to be reduced in accordance with the preceding sentence. For purposes of this Agreement, “Total After-Tax Payments” means the total of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Executive (whether made under the Agreement or otherwise) by the Company or any of its affiliates, after reduction for all applicable federal, state and local income taxes, employment, social security and Medicare taxes, the imposition of the Excise Tax and all other taxes, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied (or is likely to apply) to the Executive’s taxable income for the tax year in which the transaction which causes the application of Section 280G of the Code occurs, or such other rate(s) as the Accounting Firm determines to be likely to apply to the Executive in the relevant tax year(s) in which any of the parachute payments are expected to be made. The Company agrees to pay for all costs associated with the Accounting Firm and the determination of the payments or vesting required to be reduced and for the avoidance of doubt, shall not be required to pay any taxes, penalties, interest or other expenses to which Executive may be subject. If it is ultimately determined (by IRS private letter ruling or closing agreement, court decision or otherwise) that Executive’s parachute payments were reduced by too much or by too little in order to accomplish the purpose of this Section 5.6, the Executive and the Company shall promptly cooperate to correct such underpayment or overpayment in a manner consistent with the purpose of this Section 5.6. 5.7          Withholdings.  Payments made under this Section 5 shall be subject to applicable federal, state and local taxes and withholdings. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code. 6.     Notices.  All notices, requests, consents and other communications hereunder will be in writing, will be addressed, if to the Company, at its principal corporate offices to the attention of the Legal Department, and if to Executive, at his address set forth on the signature page hereto or in the personnel records of the Company (as applicable), or in either case, such other address as a party may designate by notice hereunder, and will be either (i) delivered by hand, (ii) sent by overnight courier, or (iii) sent by registered or certified mail, return receipt requested, postage prepaid. All notices, requests, consents and other communications hereunder will be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iii) if sent by registered or certified mail, on the fifth business day following the day such mailing is made. 7.     Absence of Restrictions.  Executive represents and warrants that Executive is not bound by any employment contracts, restrictive covenants or other restrictions that prevent him from entering into employment with, or carrying out his responsibilities for, the Company, or which are in any way inconsistent with any of the terms of this Agreement. Executive further represents that, except as Executive has previously disclosed or described to the Company, Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company, to refrain from competing, directly or indirectly, with the business of such previous employer or any other party, or to refrain from soliciting employees, customers or suppliers of such previous employer or other party. Executive further represents that he will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others. 8.     Entire Agreement.  This Agreement constitutes the entire agreement between the parties and supersedes and replaces all prior agreements and understandings, whether written or oral relating to the subject matter of this Agreement (including, from and after the Commencement Date, the Prior Agreement), with the exception of any Invention, Non-Disclosure, Non-Competition and Non-Solicitation Agreement by and between the Company and Executive. Notwithstanding the foregoing, the parties to this Agreement acknowledge that stock options and other equity awards may be granted by the Company to Executive under and pursuant to the 2012 Plan and any amendments thereto, as well as any additional plans, and the award agreements related to such plans. 9.     Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive. 10.   Governing Law; Consent to Jurisdiction.  This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York without regard to conflict of law principles. Any action, suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of New York (or, if appropriate, a federal court located within the State of New York), and the Company and Executive each consents to the jurisdiction of such a court. THE COMPANY AND EXECUTIVE EACH HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING UNDER OR RELATING TO ANY PROVISION OF THIS AGREEMENT. 11.   Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation or other entity with which, or into which, the Company may be merged or which may succeed to the Company’s assets or business, provided,  however, that the obligations of Executive are personal and shall not be assigned by him. Notwithstanding the foregoing, if Executive dies the compensation and benefits stated in this Agreement will be paid to his beneficiary or his estate if no beneficiary. 12.   Miscellaneous. 12.1        No Waiver.  No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 12.2        Captions.  The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 12.3        Severability.  In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. 12.4        Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This Agreement may be delivered by facsimile, and facsimile signatures shall be treated as original signatures for all applicable purposes. 12.5        Blue Penciling.  To the extent that any provision herein or in any plan of nonqualified deferred compensation that this document is a part of contravenes the requirements of Code Section 409A (or the regulations thereunder), such provision shall be appropriately modified in accordance with available IRS guidance (including without limitation IRS Notice 2010-6 and related guidance) so that Executive is not subject to the adverse effects of Code Section 409A but will nevertheless retain, to the extent possible, the economic benefit of the provision. 12.6        Section 409A; Withholding. 12.6.1     The payments under this Agreement are intended either to be exempt from Section 409A of the Code under the short-term deferral, separation pay, or other applicable exception, or to otherwise comply with Section 409A. The parties agree that this Agreement shall be administered in a manner consistent with such intent. For purposes of Section 409A, all payments under this Agreement shall be considered separate payments. If any amount or benefit payable to the Executive under this Agreement upon a “termination of employment” is determined by the Company to constitute a “deferral of compensation” for purposes of Section 409A (after taking into account any applicable exceptions), such amount or benefit shall not be paid or provided until the Executive has also experienced a “separation from service” from the Company within the meaning of Section 409A. Notwithstanding any provision to the contrary, to the extent Executive is considered a specified employee under Section 409A and would be entitled during the six-month  period beginning on Executive’s separation from service to a payment that is not otherwise excluded under Section 409A, such payment will not be made until the earlier of the six-month anniversary of Executive’s separation from service or death; provided that the first payment made after the delay shall include all amounts that would have been paid earlier but for such six (6) month delay. At the request of the Executive, the Company shall set aside those payments that would otherwise be made in such six-month period in a trust is in compliance with Rev. Proc. 92-64. 12.6.2   If an expense reimbursement or provision of in-kind benefit provided to the Executive under this Agreement is not exempt from Section 409A of the Code, the following rules apply: (i) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (ii) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (iii) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit. 12.6.3   If an expense reimbursement or provision of in-kind benefit provided to the Executive under this Agreement is not exempt from Section 409A of the Code, the following rules apply: (i) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (ii) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (iii) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit. 12.6.4   All compensatory payments under this Agreement are subject to any required tax or other withholdings. 12.7        Interpretation. References to decisions by the Company will be made by the Board or the applicable Board committee. [signature page follows] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set first forth above.         THE COMPANY:         INTERCEPT PHARMACEUTICALS, INC.         By: /s/ Mark Pruzanski     Name: Mark E. Pruzanski, MD     Title: President and Chief Executive Officer         EXECUTIVE:         By: /s/ Jason Campagna     Name: Jason Campagna               Address for Notice Purposes:       [Last address in books and records of the Company]   Exhibit A RELEASE OF CLAIMS1 FOR AND IN CONSIDERATION OF the payments and benefits (the “Separation Benefits”) to be provided to me in connection with the separation of my employment, in accordance with the Employment Agreement between Intercept Pharmaceuticals, Inc. (the “Company”) and me dated [], 2019 (the “Agreement”), which Separation Benefits are conditioned on my signing this Release of Claims (“Release”) and which I will forfeit unless I execute and do not revoke this Release of Claims, I, on my own behalf and on behalf of my heirs and estate, voluntarily, knowingly and willingly release and forever discharge the Company, its subsidiaries, affiliates, parents, and, in their capacities as such, stockholders, together with each of those entities’ respective officers, directors, stockholders, employees, agents, fiduciaries and administrators, each in their capacities as such (collectively, the “Releasees”) from any and all claims and rights of any nature whatsoever which I now have or in the future may have against them up to the date I execute this Release, whether known or unknown, suspected or unsuspected. This Release includes, but is not limited to, any rights or claims relating in any way to my employment relationship with the Company or any of the other Releasees or the termination thereof, any contract claims (express or implied, written or oral), including, but not limited to, the Agreement, or any rights or claims under any statute, including, without limitation, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Rehabilitation Act of 1973 (including Section 504 thereof), Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Civil Rights Act of 1991, the Equal Pay Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family Medical Leave Act, the Lilly Ledbetter Fair Pay Act, the Genetic Information Non-Discrimination Act, the New York State Human Rights Law, the New York City Human Rights Law, and the Employee Retirement Income Security Act of 1974, all as amended, and any other federal, state or local law. This Release specifically includes, but is not limited to, any claims based upon the right to the payment of wages, incentive and performance compensation, bonuses, equity grants, vacation, pension benefits, 401(k) Plan benefits, stock benefits or any other employee benefits, or any other rights arising under federal, state or local laws prohibiting discrimination and/or harassment on the basis of race, color, age, religion, sexual orientation, religious creed, sex, national origin, ancestry, alienage, citizenship, nationality, mental or physical disability, denial of family and medical care leave, medical condition (including cancer and genetic characteristics), marital status, military status, gender identity, harassment or any other basis prohibited by law. As a condition of the Company entering into this Release, I further represent that I have not filed against the Company or any of the other Releasees, any complaints, claims or lawsuits with any arbitral tribunal, administrative agency, or court prior to the date hereof, and that I have not transferred to any other person any such complaints, claims or lawsuits. I understand that by signing this Release, I waive my right to any monetary recovery in connection with a local, state or federal governmental agency proceeding and I waive my right to file a claim seeking monetary damages in any arbitral tribunal, administrative agency, or court. This Release does not: (i) prohibit or restrict me from communicating, providing relevant information to or otherwise cooperating with the U.S. Equal Employment Opportunity Commission or any other governmental authority with responsibility for the administration of fair employment practices laws (including with respect to SEC Whistleblowing) regarding a possible violation of such laws or responding to any inquiry from such authority, including an inquiry about the existence of this Release or its underlying facts, or (ii) require me to notify the Company of such communications or inquiry. Furthermore, notwithstanding the foregoing, this Release does not include and will not preclude: (a) rights or claims to vested benefits under any applicable retirement and/or pension plans; (b) rights under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”); (c) claims for unemployment compensation; (d) rights to defense and indemnification or under the Company’s directors’ and officers’ liability insurance, if any, from the Company for actions or inactions taken by me in the course and scope of my employment with the Company and its parents, subsidiaries and/or affiliates; (e) any rights I may have to obtain contribution as permitted by law in the event of entry of judgment against the Company as a result of any act or failure to act for which I and the Company are held jointly   -------------------------------------------------------------------------------- 1        The Executive agrees that the Company may revise this release to satisfy the purpose of providing as full a release of claims (subject to payment of any benefits provided on the applicable termination of employment) as may be legally permissible. The Company may revise it to reflect changes in law for releases and may add language for ADEA compliance. liable; (f) any rights to vested equity that vested prior to or because of the termination of my employment and rights as a stockholder; and/or (g) any actions to enforce the Agreement. I acknowledge that, in signing this Release, I have not relied on any promises or representations, express or implied, other than those that are set forth expressly herein or in the Agreement and that are intended to survive separation from employment, in accordance with the terms of the Agreement. Nondisclosure; Continuing Obligations - I understand and agree that, to the extent permitted by law, the terms and contents of this Release (as modified before signature) and the contents of the negotiations and discussions resulting in this Release shall be maintained as confidential by me and must not be disclosed to anyone other than a member of my immediate family, my attorney, accountant or other advisor (and, even as to such a person, only if the person agrees to honor this confidentiality requirement) except to the extent required by federal or state law or as otherwise agreed to in writing by the Company. I acknowledge and reaffirm my obligation to keep confidential and not disclose any and all non-public information concerning the Company that I acquired during the course of my employment or other relationship with the Company, including any non-public information concerning the Company’s business affairs, business prospects and financial condition, as is stated more fully in any Invention, Non-Disclosure, Non-Competition and Non-Solicitation Agreement and that I will comply with such agreement in all other respects. The Company understands and agrees that the contents of the negotiations and discussions resulting in this Release shall be maintained as confidential and shall not be disclosed to any third parties, except to the extent required by federal or state law or as otherwise agreed to in writing with you. Mutual  Non-Disparagement – I understand and agree that I shall not make any false, disparaging or derogatory statements to any person or entity, including any media outlet, industry group or financial institution, regarding the Company, or any of the other Releasees or about the Company’s business affairs and financial condition. The Company confirms that it has instructed the members of its Board of Directors and its current executive officers to not make any false, disparaging or derogatory statements to any person or entity, including any media outlet, industry group or financial institution, regarding me, my employment with the Company, or my departure from the Company. Notwithstanding the foregoing,  nothing herein prevents either the Releasees or me from making truthful disclosures to any governmental entity or to enforce the Agreement or this Release. For the avoidance of doubt, nothing in this Release prohibits me from communicating with a government agency, regulator or legal authority concerning any possible violations of federal or state law or regulation. Nothing in this Release, however, authorizes the disclosure of information I obtained through a communication that was subject to the attorney-client privilege, unless disclosure of the information would otherwise be permitted by an applicable law or rule. Return of Company Property - I confirm that I have returned to the Company in good working order all Company-owned keys, files, records (and copies thereof), equipment (including computer hardware, software and printers, wireless handheld devices, cellular phones, tablets, smartphones, etc.), Company identification, the Company proprietary and confidential information, and any other Company-owned property in my possession or control and I have left intact with, or delivered intact to, the Company all electronic Company documents and internal and external websites, including those that I developed or helped to develop during my employment, and that I have thereafter deleted, and destroyed any hard copies of, all electronic files relating to the Company that are in my possession or control, including any that are located on any of my personal computers or external or cloud storage. I further confirm that I have cancelled all accounts for my benefit, if any, in the Company’s name including, but not limited to, credit cards, telephone charge cards, cellular phone and/or wireless data accounts and computer accounts. Notwithstanding the foregoing, I understand that I shall be permitted to retain my contacts and calendars and personal correspondence and any documents or data related to my compensation or reasonably needed for tax preparation purposes. Final Compensation – I acknowledge that I have received payment in full for all services rendered in conjunction with my employment by the Company, including payment for all wages, bonuses, and equity for any period before the date of this Release (other than any current salary and benefits due in the ordinary course in a final paycheck or thereafter), and that no other compensation is owed to me, except as provided in the applicable provisions of Section 5 of the Agreement; provided that nothing herein shall affect any claims of entitlement I may have to vested benefits under any 401(k) plan or other ERISA-covered benefit plan (excluding severance) provided by the Company. Cooperation – I agree to cooperate with, provide assistance to, and make myself reasonably available to the Company and its legal counsel in connection with any litigation (including arbitration or administrative hearings) or investigation or examination relating to the Company or any of its current or former employees, in which, in the reasonable judgment of the Company or its counsel, my assistance or cooperation is needed due to my personal involvement in or knowledge about the circumstances to which the litigation or investigation relates. I will, when the Company or its counsel requests, provide testimony, be available for interviews or other assistance and travel at the Company’s reasonable request in order to fulfill this obligation. In connection with such litigation or investigation, the Company will use its best efforts to accommodate my schedule, will provide me with as much notice as possible in advance of the times during which my cooperation or assistance is needed, and will reimburse me for any reasonable travel and lodging expenses incurred in connection with such matters (at a level of travel consistent with my travel while employed by the Company) and the reasonable fees of any independent counsel retained by me if I reasonably believe separate counsel to be appropriate. I agree not to assist or provide information to any adverse party in any litigation against the Company or any of its current or former employees, except as required under law or formal legal process, unless I provide advance notice to the Company at least 10 days before such assistance or provision of information (or, if I am so required to assist or provide such information within less than 10 days of receipt of such requirement, after I provide timely advance notice to the Company) to allow the Company to take legal action with respect to the matter. Finally, I will undertake to satisfy requests for information from the Company with respect to the above undertaking. Nothing in this Release is intended to restrict or preclude me from, or otherwise influence me in, testifying fully and truthfully in legal, administrative, or any other proceedings involving the Company, as required by law or formal legal process. Tax Provision – I acknowledge that I am not relying upon advice or representation of the Company with respect to the tax treatment of any of the payments or benefits provided by the Company. The benefits provided to me are intended to be exempt from or compliant with Section 409A of the Internal Revenue Code of 1986. The Company makes no representation or warranty and shall have no liability to me or to any other person if any of the provisions of the Agreement or this Release are determined to constitute deferred compensation subject to Section 409A but not to satisfy an exemption for, or the conditions of, that section. All payments stated will be reduced by all applicable taxes and withholdings. Nature of Agreement – I understand and agree that this Release is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company. Voluntary Assent – I affirm that no other promises or agreements of any kind have been made to or with me by any person or entity whatsoever to cause me to sign this Release, other than as reflected in the Agreement and that I fully understand the meaning and intent of the Release. I acknowledge that, in signing this Release, I have not relied on any promises or representations, express or implied, other than those that are set forth expressly herein or in the Agreement and that are intended to survive separation from employment, in accordance with the terms of the Agreement. I further state and represent that I have carefully read this Release, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign my name of my own free act. Validity – Should any provision of this Release be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Release. I further acknowledge that: (1)          I first received this Release on the date of the Agreement to which it is attached as Exhibit A; (2)          I understand that, in order for this Release to be effective, I may not sign it prior to the date of my separation of employment with the Company but that if I wish to receive the Separation Benefits, I must sign and return this Release prior to the sixtieth (60th) day following my separation of employment; (3)          I have carefully read and understand this Release; (4)          The Company advised me to consult with an attorney and/or any other advisors of my choice before signing this Release; (5)          I understand that this Release is LEGALLY BINDING and by signing it I give up certain rights; (6)          I have voluntarily chosen to enter into this Release and have not been forced or pressured in any way to sign it; (7)          I acknowledge and agree that the Separation Benefits are contingent on execution of this Release, which releases all of my claims against the Company and the Releasees, and I KNOWINGLY AND VOLUNTARILY AGREE TO RELEASE the Company and the Releasees from any and all claims I may have, known or unknown, in exchange for the benefits I have obtained by signing, and that these benefits are in addition to any benefit I would have otherwise received if I did not sign this Release; (8)          I have seven (7) days after I sign this Release to revoke it by notifying the Company in writing. The Release will not become effective or enforceable until the seven (7) day revocation period has expired; (9)          This Release includes a WAIVER OF ALL RIGHTS AND CLAIMS I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621 et seq.); and (10)        This Release does not waive any rights or claims that may arise after this Release becomes effective, which is seven (7) days after I sign it, provided that I do not exercise my right to revoke this Release. Intending to be legally bound, I have signed this Release as of the date written below.   Signature:                    Jason Campagna   Date signed
Exhibit 10.5   Goldman, Sachs & Co. One New York Plaza New York, NY 10004   April 30, 2009 To: Textron Inc. 40 Westminster Street Providence, RI 02903 Attention: Chief Financial Officer Telephone No.:     (401) 421-2800 Facsimile No.:       (401) 457-3533     Re:   Additional Convertible Bond Hedge Transaction A/C:   028320281 Ref. No.:   SDB1630442183   The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between Goldman, Sachs & Co. (“Bank”) and Textron Inc. (“Counterparty”) on the Trade Date specified below (the “Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction.   The definitions and provisions contained in the 1996 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms used herein have the meanings assigned to them in the Prospectus dated July 28, 2008, as supplemented by the Prospectus Supplement dated April 29, 2009 (as so supplemented, the “Prospectus”), relating to the USD 540,000,000 principal amount of 4.50% Convertible Senior Notes due 2013, (the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty pursuant to an Indenture dated as of September 10, 1999, as supplemented by the Supplemental Indenture (the “Supplemental Indenture”) thereto to be dated May 5, 2009, between Counterparty and The Bank of New York Mellon Trust Company, N.A., as trustee (as so supplemented, the “Indenture”). In the event of any inconsistency between the terms defined in the Prospectus, the Indenture and this Confirmation, this Confirmation shall govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Prospectus. If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Prospectus, the descriptions thereof in the Prospectus will govern for purposes of this Confirmation. The parties further acknowledge that the Supplemental Indenture section numbers used herein are based on the draft of the Supplemental Indenture last reviewed by Bank as of the date of this Confirmation, and if any such section numbers are changed in the Supplemental Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties. For the avoidance of doubt, references to the Indenture herein are references to the Indenture as in effect on the date of its execution and if the Indenture is amended following its execution, any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.   Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.   1.               THIS CONFIRMATION EVIDENCES A COMPLETE AND BINDING AGREEMENT BETWEEN BANK AND COUNTERPARTY AS TO THE TERMS OF THE TRANSACTION TO WHICH THIS CONFIRMATION RELATES. THIS CONFIRMATION SHALL SUPPLEMENT, FORM A PART OF, AND   1 --------------------------------------------------------------------------------   BE SUBJECT TO AN AGREEMENT IN THE FORM OF THE 2002 ISDA MASTER AGREEMENT (THE “AGREEMENT”) AS IF BANK AND COUNTERPARTY HAD EXECUTED AN AGREEMENT IN SUCH FORM (BUT WITHOUT ANY SCHEDULE) ON THE TRADE DATE. IN THE EVENT OF ANY INCONSISTENCY BETWEEN PROVISIONS OF THAT AGREEMENT AND THIS CONFIRMATION, THIS CONFIRMATION WILL PREVAIL FOR THE PURPOSE OF THE TRANSACTION TO WHICH THIS CONFIRMATION RELATES. THE PARTIES HEREBY AGREE THAT NO TRANSACTION OTHER THAN THE TRANSACTION TO WHICH THIS CONFIRMATION RELATES SHALL BE GOVERNED BY THE AGREEMENT.   2.               THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE AS FOLLOWS:   General Terms:           Trade Date:   April 30, 2009       Option Style:   “Modified American”, as set forth under “Exercise and Valuation” below       Option Type:   Call       Buyer:   Counterparty       Seller:   Bank       Shares:   The common stock of Counterparty, par value USD 0.125 per Share (Exchange symbol “TXT”)       Number of Options:   The number of “Option Securities” (as defined in the Underwriting Agreement (as defined below)) in denominations of USD 1,000 principal amount purchased by the Underwriters pursuant to the Underwriting Agreement on the “Option Closing Date” (as defined in the Underwriting Agreement) for such Option Securities (the “Option Closing Date”). For the avoidance of doubt, the Number of Options outstanding shall be reduced by each exercise of Options hereunder. In no event will the Number of Options be less than zero.       Option Entitlement:   As of any date, a number of Shares per Option equal to the Conversion Rate (as defined in the Supplemental Indenture, but without regard to any adjustments to the Conversion Rate pursuant to Section 9.03 or to Section 9.04(g) or (h) of the Supplemental Indenture), for each Convertible Note.       Strike Price:   As of any date, an amount in USD, rounded to the nearest cent (with 0.5 cents being rounded upwards), equal to USD 1,000 divided by the Option Entitlement.       Applicable Percentage:   50%       Number of Shares:   The product of the Number of Options and the Option Entitlement and the Applicable Percentage.       Premium:   USD 7,400,400       Premium Payment Date:   May 5, 2009   2 --------------------------------------------------------------------------------   Exchange:   The New York Stock Exchange       Related Exchange(s):   The principal exchange(s) for options contracts or futures contracts, if any, with respect to the Shares       Exercise and Valuation:           Exercise Date:   Each Conversion Date.       Conversion Date:   Each “Conversion Date” (as defined in the Supplemental Indenture) for Convertible Notes.       Relevant Convertible Notes:   For any Conversion Date, a number of Convertible Notes equal to (i) the number of Convertible Notes in denominations of USD 1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, minus (ii) the number of “Relevant Convertible Notes” (as defined in the Convertible Bond Hedge Transaction Confirmation dated April 29, 2009 between Bank and Counterparty (the “Initial Convertible Bond Hedge Confirmation”)) for such Conversion Date, if any; provided that if such number is less than zero, the number of Relevant Convertible Notes for such Conversion Date shall be zero.       Required Exercise on Conversion Dates:   On each Conversion Date for Convertible Notes, a number of Options (the “Exercisable Options”) equal to the number of Relevant Convertible Notes for such Conversion Date shall be automatically exercised, subject to Notice of Exercise and Notice of Settlement Method below.       Exercise Period:   The period from and excluding the Trade Date to and including the Expiration Date.       Expiration Date:   The earlier of (x) the last day on which any Convertible Notes remain outstanding and (y) the maturity date of the Convertible Notes (the “Convertible Maturity Date”).       Scheduled Trading Day:   As such term is defined in Section 1.02 of the Supplemental Indenture.       Notice of Exercise:   Notwithstanding anything to the contrary in the Equity Definitions, in order to exercise any Options,           (a)  if Physical Settlement applies, Counterparty must notify Bank in writing before 5:00 p.m. (New York City time) on the second Scheduled Trading Day immediately following the Conversion Date for the Relevant Convertible Notes, which notice shall specify (i) the number of Exercisable Options and (ii) the Conversion Date; and           (b)  if Low Cash Combination Settlement, High Cash Combination Settlement or Cash Settlement applies, Counterparty must notify Bank in writing before 5:00 p.m. (New York City time) on the Scheduled Trading Day immediately preceding the scheduled first day of the   3 --------------------------------------------------------------------------------       Settlement Period (as defined in the Supplemental Indenture) for the Relevant Convertible Notes, which notice shall specify (i) the number of Exercisable Options, (ii) the scheduled first day of the Settlement Period, and (iii) if Low Cash Combination Settlement or High Cash Combination Settlement applies, the fixed dollar amount per USD 1,000 of the principal amount of the Notes specified by Counterparty pursuant to Section 9.02(b)(3)(A) of the Supplemental Indenture (the “Specified Cash Amount”);           provided that with respect to Options relating to Relevant Convertible Notes with a Conversion Date on or following the fiftieth (50th) Scheduled Trading Day prior to the Convertible Maturity Date (the “Final Conversion Period”), such Notice of Exercise need only specify the number of Options being exercised and the Specified Cash Amount, if applicable.       Settlement Terms:           Physical Settlement:   Notwithstanding anything to the contrary in the Equity Definitions, means that Counterparty has elected to deliver only Shares to satisfy the Conversion Obligation (as defined in the Supplemental Indenture) in connection with the conversion of the Relevant Convertible Notes.       Low Cash Combination Settlement:   Means that (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the Relevant Convertible Notes and (ii) the Specified Cash Amount with respect to such conversion is equal to or less than USD 1,000.       High Cash Combination Settlement:   Means that (i) Counterparty has elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation in connection with the conversion of the Relevant Convertible Notes and (ii) the Specified Cash Amount with respect to such conversion is greater than USD 1,000.       Cash Settlement:   Notwithstanding anything to the contrary in the Equity Definitions, means that Counterparty has elected to deliver only cash to satisfy the Conversion Obligation in connection with the conversion of the Relevant Convertible Notes.       Notice of Settlement Method:   Counterparty initially elects Low Cash Combination Settlement to settle its Conversion Obligation (as defined in the Supplemental Indenture). If Counterparty chooses to elect a different method of settlement, Counterparty must notify Bank of the newly chosen settlement method no later than the earlier of (i) 5:00 p.m. (New York City time) on the second Scheduled Trading Day immediately following the Conversion Date for the Relevant Convertible Notes to which the newly chosen settlement method is going to apply and (ii) 5:00 p.m. (New York City time) on the Scheduled Trading Day immediately preceding the Final Conversion Period; provided that it shall be a condition to Counterparty’s election of any such newly chosen settlement method that at the time of such election each   4 --------------------------------------------------------------------------------       of Counterparty and its affiliates is not, and Counterparty hereby represents and covenants that at such time neither of them will be, in possession of any material non-public information with respect to Counterparty or the Shares.       Settlement Date:   Subject to the delivery of a Notice of Exercise and, to the extent applicable, a Notice of Settlement Method, to Bank, the date Shares and/or cash are required to be delivered with respect to the Relevant Convertible Notes under the terms of the Indenture.       Delivery Obligation:   In lieu of the obligations set forth in Sections 5.1 and 6.1 of the Equity Definitions, and subject to Notice of Exercise and Notice of Settlement Method above, in respect of an Exercise Date, Bank will deliver to Counterparty, on the related Settlement Date,           (a)  if Physical Settlement or Low Cash Combination Settlement applies, a number of Shares equal to the product of the Applicable Percentage and the aggregate number of Shares (and cash in lieu of fractional Shares, if any, resulting from rounding of such aggregate number of Shares based on the VWAP (as defined in the Supplemental Indenture) on the Conversion Date) that Counterparty would have been obligated to deliver to the holder(s) of the Relevant Convertible Notes had Counterparty elected to deliver a combination of Shares and cash to satisfy the Conversion Obligation pursuant to Section 9.02(b) of the Supplemental Indenture and with a Specified Cash Amount of USD 1,000, as determined by the Calculation Agent; provided that, in the case of Physical Settlement, the number of Shares delivered by Bank to Counterparty on the related Settlement Date shall not be greater than the product of (i) the Applicable Percentage and (ii) the excess of (x) the aggregate number of Shares that Counterparty is obligated to deliver to the holder(s) of the Relevant Convertible Notes pursuant to Section 9.02(b)(1) of the Supplemental Indenture over (y) the number of Shares equal to (a) the aggregate principal amount of the Relevant Convertible Notes divided by (b) the Last Reported Sale Price (as defined in the Supplemental Indenture) on the final Settlement Period Trading Day (as defined in the Supplemental Indenture) of the applicable Settlement Period as if Counterparty elected Low Cash Combination Settlement;           (b)  if High Cash Combination Settlement applies, (i) a number of Shares equal to the product of the Applicable Percentage and the aggregate number of Shares that Counterparty is obligated to deliver to the holder(s) of the Relevant Convertible Notes pursuant to Section 9.02(b)(3) of the Supplemental Indenture and (ii) an amount of cash equal to the product of the Applicable Percentage and the excess, if any, of (A) the amount of cash (including cash in lieu of fractional Shares, if any, resulting from rounding of such aggregate number of Shares based on the VWAP (as defined in the Supplemental Indenture and subject to the third immediately   5 --------------------------------------------------------------------------------       following paragraph) on the last day of the relevant Settlement Period) that Counterparty is obligated to deliver to the holder(s) of the Relevant Convertible Notes pursuant to Section 9.02(b)(3) of the Supplemental Indenture over (B) the principal amount of the Relevant Convertible Notes being converted on such Conversion Date; and           (c)  if Cash Settlement Applies, an amount equal to the product of the Applicable Percentage and the excess, if any, of (i) the cash that Counterparty is obligated to deliver to the holder(s) of the Relevant Convertible Notes pursuant to Section 9.02(b)(2) of the Supplemental Indenture over (ii) the principal amount of the Relevant Convertible Notes being converted on such Conversion Date (in each case, such Shares and/or cash collectively, the “Convertible Obligation”);           provided that, in all cases, the Delivery Obligation shall be determined excluding any Shares or cash (including cash in lieu of fractional Shares) that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Notes as a direct or indirect result of any adjustments to the Conversion Rate pursuant to Section 9.03 or Section 9.04(g) or (h) of the Supplemental Indenture and any interest payment that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Notes. For the avoidance of doubt, in connection with each Exercise Date, if the Daily Conversion Value (as defined in the Supplemental Indenture) for each of the Settlement Period Trading Days (as defined in the Supplemental Indenture) occurring in the relevant Settlement Period that would be applicable if cash settlement applied, is less than or equal to 1/45th of USD 1,000, Bank will have no delivery obligation hereunder in respect of such Exercise Date.           Counterparty agrees that if, with respect to any Settlement Period Trading Day during any relevant Settlement Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page TXT.N <equity> AQR is unavailable, Counterparty and the nationally recognized independent investment banking firm retained by Counterparty pursuant to the definition of VWAP in the Indenture shall consult with the Calculation Agent to determine the VWAP on such Settlement Period Trading Day.       Notice of Delivery Obligation:   As applicable and no later than the later of (a) the relevant Exercise Date and (b) the Exchange Business Day immediately following the last day of the Settlement Period, Counterparty shall give Bank notice of the final number of Shares and/or the amount of cash comprising the relevant Convertible Obligation; provided that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Bank with a single notice of the aggregate number of Shares and/or the amount of cash comprising the Convertible Obligations for all such Exercise Dates (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit   6 --------------------------------------------------------------------------------       Counterparty’s obligations with respect to Notice of Exercise, as set forth above, in any way).       Settlement Currency:   USD       Other Applicable Provisions:   The provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-Settled” shall be read as references to “Low Cash Combination Settled” or “High Cash Combination Settled” to the extent Low Cash Combination Settlement or High Cash Combination Settlement is applicable. “Low Cash Combination Settled” or “High Cash Combination Settled” in relation to any Option means that Low Cash Combination Settlement or High Cash Combination Settlement is applicable to that Option.       Failure to Deliver:   Applicable       3.   ADDITIONAL TERMS APPLICABLE TO THE TRANSACTION:       Adjustments applicable to the Transaction:           Potential Adjustment Events:   Notwithstanding Section 9.1(e) of the Equity Definitions, a “Potential Adjustment Event” means any occurrence of any event or condition, as set forth in Section 9.04 of the Supplemental Indenture that would result in an adjustment to the Conversion Rate of the Convertible Notes; provided that in no event shall there be any adjustment hereunder as a result of an adjustment to the Conversion Rate pursuant to Section 9.03 or Section 9.04(g) or (h) of the Supplemental Indenture.       Method of Adjustment:   Calculation Agent Adjustment, and means that, notwithstanding Section 9.1(c) of the Equity Definitions, upon any adjustment to the Conversion Rate of the Convertible Notes pursuant to the Indenture (other than Section 9.03 and Sections 9.04(g) and (h) of the Supplemental Indenture), the Calculation Agent will make a corresponding adjustment to any one or more of the Strike Price, Number of Options, the Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction.       Extraordinary Events applicable to the Transaction:           Merger Events:   Notwithstanding Section 9.2(a) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in Section 9.05 of the Supplemental Indenture.       Consequence of Merger Events:   Notwithstanding Section 9.3 of the Equity Definitions, upon the occurrence of a Merger Event, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares, Strike Price, Number of Options, the Option   7 --------------------------------------------------------------------------------       Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction; provided however that such adjustment shall be made without regard to any adjustment to the Conversion Rate for the issuance of additional shares as set forth in Section 9.03 of the Supplemental Indenture.       Nationalization and Insolvency:   Cancellation and Payment       4.   Calculation Agent:   Bank; provided that all determinations made by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. Following any calculation by the Calculation Agent hereunder and a prior written request by Counterparty, the Calculation Agent will provide to Counterparty by e-mail to the e-mail address provided by Counterparty in such prior written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such calculation. For the avoidance of doubt, nothing in this provision will require Bank to provide its proprietary models to Counterparty.   5.               ACCOUNT DETAILS   (A)                                  ACCOUNT FOR PAYMENTS TO COUNTERPARTY:   JPMorgan Chase New York, NY Fed Wire:  021000021 Swift / BIC:  CHASUS33 CHIP No:  0002 CHIP UID:  280099 Account name:  Textron Inc. Account No:  9101013655   ACCOUNT FOR DELIVERY OF SHARES TO COUNTERPARTY:   TO BE PROVIDED BY COUNTERPARTY   (B)                                 ACCOUNT FOR PAYMENTS TO BANK:   Chase Manhattan Bank New York For A/C Goldman, Sachs & Co. A/C #930-1-011483 ABA:  021-000021   ACCOUNT FOR DELIVERY OF SHARES FROM BANK:   TO BE PROVIDED BY BANK   6.               OFFICES:   The Office of Counterparty for the Transaction is:  Inapplicable, Counterparty is not a Multibranch Party.   8 --------------------------------------------------------------------------------   The Office of Bank for the Transaction is:  New York   Goldman, Sachs & Co. One New York Plaza New York, New York 10004   7.     NOTICES:  FOR PURPOSES OF THIS CONFIRMATION:   (A)           ADDRESS FOR NOTICES OR COMMUNICATIONS TO COUNTERPARTY:   Textron Inc. 40 Westminster Street Providence, RI 02903 Attention: Chief Financial Officer Telephone No.: (401) 421-2800 Facsimile No.: (401) 457-3533   (B)           ADDRESS FOR NOTICES OR COMMUNICATIONS TO BANK:   To: Goldman, Sachs & Co.   One New York Plaza   New York, NY 10004 Attn: Serge Marquié,   Equity Capital Markets Telephone: (212) 902-9779 Facsimile: (917) 977-4253 Email: marqse@am.ibd.gs.com   With a copy to:   Attn: Vijay Culas   Equity Capital Markets Telephone: (212) 902-6247 Facsimile: (212) 428-1898 Email: vijay.culas@gs.com   And email notification to the following address: Eq-derivs-notifications@am.ibd.gs.com   8.     REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY   The representations and warranties made by Counterparty pursuant to the Underwriting Agreement (the “Underwriting Agreement”), dated as of April 29, 2009, between Counterparty and J.P. Morgan Securities Inc. and Goldman, Sachs & Co., as representatives of the underwriters party thereto (the “Underwriters”) on the “Option Closing Date” (as defined in the Underwriting Agreement), are true and correct and are hereby deemed to be repeated to Bank as if set forth herein. Counterparty hereby further represents and warrants to Bank that:   (A)           COUNTERPARTY HAS ALL NECESSARY CORPORATE POWER AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS IN RESPECT OF THE TRANSACTION; SUCH EXECUTION, DELIVERY AND PERFORMANCE HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON COUNTERPARTY’S PART; AND THIS CONFIRMATION HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY COUNTERPARTY AND CONSTITUTES ITS VALID AND BINDING OBLIGATION, ENFORCEABLE AGAINST COUNTERPARTY IN ACCORDANCE WITH ITS TERMS, SUBJECT TO APPLICABLE BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION, MORATORIUM AND SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS AND REMEDIES GENERALLY AND TO GENERAL PRINCIPLES OF EQUITY,   9 --------------------------------------------------------------------------------   INCLUDING PRINCIPLES OF COMMERCIAL REASONABLENESS, GOOD FAITH AND FAIR DEALING (WHETHER CONSIDERED IN A PROCEEDING AT LAW OR IN EQUITY) AND EXCEPT THAT RIGHTS TO INDEMNIFICATION AND CONTRIBUTION HEREUNDER MAY BE LIMITED BY FEDERAL OR STATE SECURITIES LAWS OR PUBLIC POLICY RELATING THERETO.   (B)           NEITHER THE EXECUTION AND DELIVERY OF THIS CONFIRMATION NOR THE INCURRENCE OR PERFORMANCE OF OBLIGATIONS OF COUNTERPARTY HEREUNDER WILL CONFLICT WITH OR RESULT IN A BREACH OF THE CERTIFICATE OF INCORPORATION OR BY-LAWS (OR ANY EQUIVALENT DOCUMENTS) OF COUNTERPARTY, OR ANY APPLICABLE LAW OR REGULATION, OR ANY ORDER, WRIT, INJUNCTION OR DECREE OF ANY COURT OR GOVERNMENTAL AUTHORITY OR AGENCY, OR ANY AGREEMENT OR INSTRUMENT TO WHICH COUNTERPARTY OR (TO THE EXTENT SUCH AGREEMENT IS MATERIAL TO COUNTERPARTY AND ITS SUBSIDIARIES TAKEN AS A WHOLE) ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH COUNTERPARTY OR (TO SUCH EXTENT) ANY OF ITS SUBSIDIARIES IS BOUND OR TO WHICH COUNTERPARTY OR (TO SUCH EXTENT) ANY OF ITS SUBSIDIARIES IS SUBJECT, OR CONSTITUTE A DEFAULT UNDER, OR RESULT IN THE CREATION OF ANY LIEN UNDER, ANY SUCH AGREEMENT OR INSTRUMENT.   (C)           NO CONSENT, APPROVAL, AUTHORIZATION, OR ORDER OF, OR FILING WITH, ANY GOVERNMENTAL AGENCY OR BODY OR ANY COURT IS REQUIRED IN CONNECTION WITH THE EXECUTION, DELIVERY OR PERFORMANCE BY COUNTERPARTY OF THIS CONFIRMATION, EXCEPT SUCH AS HAVE BEEN OBTAINED OR MADE AND SUCH AS MAY BE REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR STATE SECURITIES LAWS.   (D)           IT IS AN “ELIGIBLE CONTRACT PARTICIPANT” (AS SUCH TERM IS DEFINED IN SECTION 1(A)(12) OF THE COMMODITY EXCHANGE ACT, AS AMENDED.   (E)           IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT, OR AN “ACCREDITED INVESTOR” AS DEFINED UNDER THE SECURITIES ACT.   (F)            EACH OF IT AND ITS AFFILIATES IS NOT, ON THE DATE HEREOF, IN POSSESSION OF ANY MATERIAL NON-PUBLIC INFORMATION WITH RESPECT TO COUNTERPARTY.   (G)           COUNTERPARTY REPRESENTS THAT IT IS NOT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), AND THE ASSETS USED IN THE TRANSACTION (1) ARE NOT ASSETS OF ANY “PLAN” (AS SUCH TERM IS DEFINED IN SECTION 4975 OF THE INTERNAL REVENUE CODE (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR ANY “EMPLOYEE BENEFIT PLAN” (AS SUCH TERM IS DEFINED IN SECTION 3(3) OF ERISA) SUBJECT TO TITLE I OF ERISA, AND (2) DO NOT CONSTITUTE “PLAN ASSETS” WITHIN THE MEANING OF DEPARTMENT OF LABOR REGULATION 2510.3-101, 29 CFR SECTION 2510-3-101.   (H)           THERE IS NO LAW, RULE, REGULATION OR REGULATORY ORDER (COLLECTIVELY, “ADVERSE LAWS”) THAT, AS A RESULT OF THE OWNERSHIP OR CONTROL (WHETHER DIRECT, BENEFICIAL, CONSTRUCTIVE OR OTHERWISE) OF SHARES BY  THE GOLDMAN SACHS GROUP, INC. (“BANK PARENT”) OR ANY PERSON CONTROLLED DIRECTLY OR INDIRECTLY BY BANK PARENT, WOULD GIVE RISE TO REPORTING OR REGISTRATION OBLIGATIONS OR A REQUIREMENT TO OBTAIN PRIOR APPROVAL FROM ANY PERSON OR ENTITY ON  BANK PARENT OR ANY SUCH CONTROLLED PERSON OR WOULD RESULT IN A NOT INSIGNIFICANT ADVERSE EFFECT ON BANK PARENT OR ANY SUCH CONTROLLED PERSON, OTHER THAN ANY ADVERSE LAW THAT APPLIES TO THE OWNERSHIP OF EQUITY POSITIONS GENERALLY WITHOUT REGARD TO THE NATURE OF THE ISSUER’S BUSINESS (SUCH AS SECTIONS 13 AND 16 OF THE EXCHANGE ACT) OR ANY ADVERSE LAW THAT APPLIES SOLELY AS A RESULT OF THE BUSINESS, IDENTITY, PLACE OF BUSINESS OR JURISDICTION OF ORGANIZATION OF THE HOLDER OF THE COMMON STOCK (SUCH AS THE BANK HOLDING COMPANY ACT OF 1956, AS AMENDED).   (I)            OTHER THAN TEXTRON BUSINESS CREDIT, INC., WHICH IS A “RHODE ISLAND FINANCIAL INSTITUTION,” AND TEXTRON FINANCIAL CORPORATION, WHICH IS A “RHODE ISLAND BANK HOLDING COMPANY” BUT IS NOT A BANK HOLDING COMPANY UNDER THE BANK HOLDING COMPANY ACT OF 1956, AS AMENDED, COUNTERPARTY IS NOT AND DOES NOT CONTROL, DIRECTLY OR INDIRECTLY, A BANK OR BANK HOLDING COMPANY OR OTHER FINANCIAL INSTITUTION REGULATED UNDER FEDERAL OR STATE BANKING LAW.   10 --------------------------------------------------------------------------------   (J)            IT HAS RECEIVED, READ AND UNDERSTANDS THE OTC OPTIONS RISK DISCLOSURE STATEMENT AND A COPY OF THE MOST RECENT DISCLOSURE PAMPHLET PREPARED BY THE OPTIONS CLEARING CORPORATION ENTITLED “CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS”.  EACH PARTY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE CONDUCT RULES OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. APPLICABLE TO TRANSACTIONS IN OPTIONS, AND FURTHER AGREES NOT TO VIOLATE THE POSITION AND EXERCISE LIMITS SET FORTH THEREIN.   9.     OTHER PROVISIONS:   (A)           OPINIONS. COUNTERPARTY SHALL DELIVER TO BANK AN OPINION OF COUNSEL (INCLUDING AN IN-HOUSE LAWYER OF COUNTERPARTY), DATED AS OF THE TRADE DATE, WITH RESPECT TO THE MATTERS SET FORTH IN SECTIONS 8(A) THROUGH (C) OF THIS CONFIRMATION.   (B)           NO RELIANCE, ETC. EACH PARTY REPRESENTS THAT (I) IT IS ENTERING INTO THE TRANSACTION EVIDENCED HEREBY AS PRINCIPAL (AND NOT AS AGENT OR IN ANY OTHER CAPACITY); (II) NEITHER THE OTHER PARTY NOR ANY OF ITS AGENTS ARE ACTING AS A FIDUCIARY FOR IT; (III) IT IS NOT RELYING UPON ANY REPRESENTATIONS EXCEPT THOSE EXPRESSLY SET FORTH IN THE AGREEMENT OR THIS CONFIRMATION; (IV) IT HAS NOT RELIED ON THE OTHER PARTY FOR ANY LEGAL, REGULATORY, TAX, BUSINESS, INVESTMENT, FINANCIAL, AND ACCOUNTING ADVICE, AND IT HAS MADE ITS OWN INVESTMENT, HEDGING, AND TRADING DECISIONS BASED UPON ITS OWN JUDGMENT AND UPON ANY VIEW EXPRESSED BY THE OTHER PARTY OR ANY OF ITS AGENTS; AND (V) IT IS ENTERING INTO THE TRANSACTION WITH A FULL UNDERSTANDING OF THE TERMS, CONDITIONS AND RISKS THEREOF AND IT IS CAPABLE OF AND WILLING TO ASSUME THOSE RISKS.   (C)           REPURCHASE NOTICES. COUNTERPARTY SHALL, ON ANY DAY ON WHICH COUNTERPARTY EFFECTS ANY REPURCHASE OF SHARES, PROMPTLY GIVE BANK A WRITTEN NOTICE OF SUCH REPURCHASE (A “REPURCHASE NOTICE”) ON SUCH DAY IF FOLLOWING SUCH REPURCHASE, THE QUOTIENT OF (I) THE SUM OF (A) THE NUMBER OF SHARES FOR THE TRANSACTION AND (B) THE AGGREGATE NUMBER OF SHARES UNDERLYING ANY OTHER CONVERTIBLE BOND HEDGE TRANSACTIONS BETWEEN BANK AND COUNTERPARTY, IF ANY, DIVIDED BY (II) THE NUMBER OF COUNTERPARTY’S OUTSTANDING SHARES (SUCH QUOTIENT EXPRESSED AS A PERCENTAGE, THE “OPTION EQUITY PERCENTAGE”) WOULD BE (X) GREATER THAN 9.0% OR (Y) 0.5% GREATER THAN THE OPTION EQUITY PERCENTAGE INCLUDED IN THE IMMEDIATELY PRECEDING REPURCHASE NOTICE. COUNTERPARTY AGREES TO INDEMNIFY AND HOLD HARMLESS BANK AND ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES, ADVISORS, AGENTS AND CONTROLLING PERSONS (EACH, AN “INDEMNIFIED PERSON”) FROM AND AGAINST ANY AND ALL LOSSES (INCLUDING LOSSES RELATING TO BANK’S HEDGING ACTIVITIES AS A CONSEQUENCE OF BECOMING, OR OF THE RISK OF BECOMING, A SECTION 16 “INSIDER”, INCLUDING WITHOUT LIMITATION, ANY FORBEARANCE FROM HEDGING ACTIVITIES OR CESSATION OF HEDGING ACTIVITIES AND ANY LOSSES IN CONNECTION THEREWITH WITH RESPECT TO THE TRANSACTION), CLAIMS, DAMAGES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING REASONABLE ATTORNEY’S FEES), JOINT OR SEVERAL, WHICH AN INDEMNIFIED PERSON MAY BECOME SUBJECT TO, AS A RESULT OF COUNTERPARTY’S FAILURE TO PROVIDE BANK WITH A REPURCHASE NOTICE ON THE DAY AND IN THE MANNER SPECIFIED IN THIS PARAGRAPH, AND TO REIMBURSE, WITHIN 30 DAYS, UPON WRITTEN REQUEST, EACH OF SUCH INDEMNIFIED PERSONS FOR ANY REASONABLE LEGAL OR OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, PREPARING FOR, PROVIDING TESTIMONY OR OTHER EVIDENCE IN CONNECTION WITH OR DEFENDING ANY OF THE FOREGOING. IF ANY SUIT, ACTION, PROCEEDING (INCLUDING ANY GOVERNMENTAL OR REGULATORY INVESTIGATION), CLAIM OR DEMAND SHALL BE BROUGHT OR ASSERTED AGAINST THE INDEMNIFIED PERSON AS A RESULT OF COUNTERPARTY’S FAILURE TO PROVIDE BANK WITH A REPURCHASE NOTICE IN ACCORDANCE WITH THIS PARAGRAPH, SUCH INDEMNIFIED PERSON SHALL PROMPTLY NOTIFY COUNTERPARTY IN WRITING, AND COUNTERPARTY, UPON REQUEST OF THE INDEMNIFIED PERSON, SHALL RETAIN COUNSEL REASONABLY SATISFACTORY TO THE INDEMNIFIED PERSON TO REPRESENT THE INDEMNIFIED PERSON AND ANY OTHERS COUNTERPARTY MAY DESIGNATE IN SUCH PROCEEDING AND SHALL PAY THE FEES AND EXPENSES OF SUCH COUNSEL RELATED TO SUCH PROCEEDING. COUNTERPARTY SHALL NOT BE LIABLE FOR ANY SETTLEMENT OF ANY PROCEEDING EFFECTED WITHOUT ITS WRITTEN CONSENT, BUT IF SETTLED WITH SUCH CONSENT OR IF THERE BE A FINAL JUDGMENT FOR THE PLAINTIFF, COUNTERPARTY AGREES TO INDEMNIFY ANY INDEMNIFIED PERSON FROM AND AGAINST ANY LOSS OR LIABILITY BY REASON OF SUCH SETTLEMENT OR JUDGMENT. COUNTERPARTY SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFIED PERSON, EFFECT ANY SETTLEMENT OF ANY PENDING OR THREATENED PROCEEDING IN RESPECT OF   11 --------------------------------------------------------------------------------   WHICH ANY INDEMNIFIED PERSON IS OR COULD HAVE BEEN A PARTY AND INDEMNITY COULD HAVE BEEN SOUGHT HEREUNDER BY SUCH INDEMNIFIED PERSON, UNLESS SUCH SETTLEMENT INCLUDES AN UNCONDITIONAL RELEASE OF SUCH INDEMNIFIED PERSON FROM ALL LIABILITY ON CLAIMS THAT ARE THE SUBJECT MATTER OF SUCH PROCEEDING ON TERMS REASONABLY SATISFACTORY TO SUCH INDEMNIFIED PERSON. IF THE INDEMNIFICATION PROVIDED FOR IN THIS PARAGRAPH IS UNAVAILABLE TO AN INDEMNIFIED PERSON OR INSUFFICIENT IN RESPECT OF ANY LOSSES, CLAIMS, DAMAGES OR LIABILITIES REFERRED TO THEREIN, THEN COUNTERPARTY UNDER SUCH PARAGRAPH, IN LIEU OF INDEMNIFYING SUCH INDEMNIFIED PERSON THEREUNDER, SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNIFIED PERSON AS A RESULT OF SUCH LOSSES, CLAIMS, DAMAGES OR LIABILITIES. THE REMEDIES PROVIDED FOR IN THIS PARAGRAPH ARE NOT EXCLUSIVE AND SHALL NOT LIMIT ANY RIGHTS OR REMEDIES WHICH MAY OTHERWISE BE AVAILABLE TO ANY INDEMNIFIED PARTY AT LAW OR IN EQUITY. THE INDEMNITY AND CONTRIBUTION AGREEMENTS CONTAINED IN THIS PARAGRAPH SHALL REMAIN OPERATIVE AND IN FULL FORCE AND EFFECT REGARDLESS OF THE TERMINATION OF THE TRANSACTION.   (D)           REGULATION M. COUNTERPARTY IS NOT ON THE TRADE DATE ENGAGED IN A DISTRIBUTION, AS SUCH TERM IS USED IN REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), OF ANY SECURITIES OF COUNTERPARTY.  COUNTERPARTY SHALL NOT, UNTIL THE SECOND EXCHANGE BUSINESS DAY IMMEDIATELY FOLLOWING THE TRADE DATE, ENGAGE IN ANY SUCH DISTRIBUTION.   (E)           NO MANIPULATION. COUNTERPARTY IS NOT ENTERING INTO THE TRANSACTION TO CREATE ACTUAL OR APPARENT TRADING ACTIVITY IN THE SHARES (OR ANY SECURITY CONVERTIBLE INTO OR EXCHANGEABLE FOR THE SHARES) OR TO RAISE OR DEPRESS OR OTHERWISE MANIPULATE THE PRICE OF THE SHARES (OR ANY SECURITY CONVERTIBLE INTO OR EXCHANGEABLE FOR THE SHARES).   (F)            NUMBER OF REPURCHASED SHARES. COUNTERPARTY REPRESENTS THAT IT COULD HAVE PURCHASED SHARES, IN AN AMOUNT EQUAL TO THE PRODUCT OF THE NUMBER OF OPTIONS AND THE OPTION ENTITLEMENT, ON THE EXCHANGE OR OTHERWISE, IN COMPLIANCE WITH APPLICABLE LAW, ITS ORGANIZATIONAL DOCUMENTS AND ANY ORDERS, DECREES AND CONTRACTUAL AGREEMENTS BINDING UPON COUNTERPARTY, ON THE TRADE DATE AND THE PREMIUM PAYMENT DATE.   (G)           BOARD AUTHORIZATION. EACH OF THE TRANSACTION AND THE ISSUANCE OF THE CONVERTIBLE NOTES WAS APPROVED BY ITS BOARD OF DIRECTORS AND PUBLICLY ANNOUNCED, SOLELY FOR THE PURPOSES STATED IN SUCH BOARD RESOLUTION AND PUBLIC DISCLOSURE AND, PRIOR TO ANY EXERCISE OF OPTIONS HEREUNDER, COUNTERPARTY’S BOARD OF DIRECTORS WILL HAVE DULY AUTHORIZED ANY REPURCHASE OF SHARES PURSUANT TO THE TRANSACTION. COUNTERPARTY FURTHER REPRESENTS THAT THERE IS NO INTERNAL POLICY, WHETHER WRITTEN OR ORAL, OF COUNTERPARTY THAT WOULD PROHIBIT COUNTERPARTY FROM ENTERING INTO ANY ASPECT OF THE TRANSACTION, INCLUDING, BUT NOT LIMITED TO, THE PURCHASES OF SHARES TO BE MADE PURSUANT HERETO.   (H)           TRANSFER OR ASSIGNMENT. (I) COUNTERPARTY SHALL HAVE THE RIGHT TO TRANSFER OR ASSIGN ITS RIGHTS AND OBLIGATIONS HEREUNDER WITH RESPECT TO ALL, BUT NOT LESS THAN ALL, OF THE OPTIONS HEREUNDER (SUCH OPTIONS, THE “TRANSFER OPTIONS”); PROVIDED THAT SUCH TRANSFER OR ASSIGNMENT SHALL BE SUBJECT TO REASONABLE CONDITIONS THAT BANK MAY IMPOSE, INCLUDING BUT NOT LIMITED, TO THE FOLLOWING CONDITIONS:   (A)          WITH RESPECT TO ANY TRANSFER OPTIONS, COUNTERPARTY SHALL NOT BE RELEASED FROM ITS NOTICE AND INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 9(C) OR ANY OBLIGATIONS UNDER SECTION 9(R) OR 9(V) OF THIS CONFIRMATION;   (B)           ANY TRANSFER OPTIONS SHALL ONLY BE TRANSFERRED OR ASSIGNED TO A THIRD PARTY THAT IS A U.S. PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF 1986, AS AMENDED);   (C)           SUCH TRANSFER OR ASSIGNMENT SHALL BE EFFECTED ON TERMS, INCLUDING ANY REASONABLE UNDERTAKINGS BY SUCH THIRD PARTY (INCLUDING, BUT NOT LIMITED TO, AN UNDERTAKING WITH RESPECT TO COMPLIANCE WITH APPLICABLE SECURITIES LAWS IN A MANNER THAT, IN THE REASONABLE JUDGMENT OF BANK, WILL NOT EXPOSE BANK TO MATERIAL RISKS UNDER APPLICABLE SECURITIES LAWS) AND EXECUTION OF ANY DOCUMENTATION AND DELIVERY OF   12 --------------------------------------------------------------------------------   LEGAL OPINIONS WITH RESPECT TO SECURITIES LAWS AND OTHER MATTERS BY SUCH THIRD PARTY AND COUNTERPARTY, AS ARE REQUESTED AND REASONABLY SATISFACTORY TO BANK;   (D)          BANK WILL NOT, AS A RESULT OF SUCH TRANSFER AND ASSIGNMENT, BE REQUIRED TO PAY THE TRANSFEREE ON ANY PAYMENT DATE AN AMOUNT UNDER SECTION 2(D)(I)(4) OF THE AGREEMENT GREATER THAN AN AMOUNT THAT BANK WOULD HAVE BEEN REQUIRED TO PAY TO COUNTERPARTY IN THE ABSENCE OF SUCH TRANSFER AND ASSIGNMENT;   (E)           AN EVENT OF DEFAULT, POTENTIAL EVENT OF DEFAULT OR TERMINATION EVENT WILL NOT OCCUR AS A RESULT OF SUCH TRANSFER AND ASSIGNMENT;   (F)           WITHOUT LIMITING THE GENERALITY OF CLAUSE (B), COUNTERPARTY SHALL CAUSE THE TRANSFEREE TO MAKE SUCH PAYEE TAX REPRESENTATIONS AND TO PROVIDE SUCH TAX DOCUMENTATION AS MAY BE REASONABLY REQUESTED BY BANK TO PERMIT BANK TO DETERMINE THAT RESULTS DESCRIBED IN CLAUSES (D) AND (E) WILL NOT OCCUR UPON OR AFTER SUCH TRANSFER AND ASSIGNMENT; AND   (G)           COUNTERPARTY SHALL BE RESPONSIBLE FOR ALL REASONABLE COSTS AND EXPENSES, INCLUDING REASONABLE COUNSEL FEES, INCURRED BY BANK IN CONNECTION WITH SUCH TRANSFER OR ASSIGNMENT.   (II)           BANK MAY TRANSFER OR ASSIGN WITHOUT ANY CONSENT OF COUNTERPARTY ITS RIGHTS AND OBLIGATIONS HEREUNDER, IN WHOLE OR IN PART, TO ANY OF ITS AFFILIATES WHOSE OBLIGATIONS HEREUNDER WOULD BE GUARANTEED BY THE GOLDMAN SACHS GROUP, INC.; PROVIDED FURTHER THAT BANK MAY TRANSFER OR ASSIGN ALL OR ANY PORTION OF ITS RIGHTS OR OBLIGATIONS UNDER THE TRANSACTION WITHOUT CONSENT OF COUNTERPARTY TO ANY THIRD PARTY WITH A RATING FOR ITS LONG TERM, UNSECURED AND UNSUBORDINATED INDEBTEDNESS EQUAL TO OR BETTER THAN THE LESSER OF (1) THE CREDIT RATING OF BANK AT THE TIME OF THE TRANSFER AND (2) A- BY STANDARD AND POOR’S RATING GROUP, INC. OR ITS SUCCESSOR (“S&P”), OR A3 BY MOODY’S INVESTOR SERVICE, INC. (“MOODY’S”) OR, IF EITHER S&P OR MOODY’S CEASES TO RATE SUCH DEBT, AT LEAST AN EQUIVALENT RATING OR BETTER BY A SUBSTITUTE AGENCY RATING MUTUALLY AGREED BY COUNTERPARTY AND BANK. IF AFTER BANK’S COMMERCIALLY REASONABLE EFFORTS, BANK IS UNABLE TO EFFECT A TRANSFER OR ASSIGNMENT ON PRICING TERMS REASONABLY ACCEPTABLE TO BANK AND WITHIN A TIME PERIOD REASONABLY ACCEPTABLE TO BANK OF A SUFFICIENT NUMBER OF OPTIONS TO REDUCE (1) BANK GROUP’S “BENEFICIAL OWNERSHIP” (WITHIN THE MEANING OF SECTION 13 OR SECTION 16 OF THE EXCHANGE ACT AND RULES PROMULGATED THEREUNDER) TO 7.5% OF COUNTERPARTY’S OUTSTANDING SHARES OR LESS, (2) THE OPTION EQUITY PERCENTAGE TO 14.5% OR LESS, AND (3) THE SHARE AMOUNT TO THE POST-EFFECTIVE LIMIT (IF ANY APPLIES) OR LESS, BANK MAY DESIGNATE ANY EXCHANGE BUSINESS DAY AS AN EARLY TERMINATION DATE WITH RESPECT TO A PORTION (THE “TERMINATED PORTION”) OF THE TRANSACTION, SUCH THAT (1) BANK GROUP’S “BENEFICIAL OWNERSHIP” FOLLOWING SUCH PARTIAL TERMINATION WILL BE EQUAL TO OR LESS THAN 7.5%, (2) THE OPTION EQUITY PERCENTAGE FOLLOWING SUCH PARTIAL TERMINATION WILL BE EQUAL TO OR LESS THAN 14.5%, AND (3) THE SHARE AMOUNT FOLLOWING SUCH PARTIAL TERMINATION WILL BE EQUAL TO OR LESS THAN SUCH POST-EFFECTIVE LIMIT. IN THE EVENT THAT BANK SO DESIGNATES AN EARLY TERMINATION DATE WITH RESPECT TO A PORTION OF THE TRANSACTION, A PAYMENT SHALL BE MADE PURSUANT TO SECTION 6 OF THE AGREEMENT AS IF (1) AN EARLY TERMINATION DATE HAD BEEN DESIGNATED IN RESPECT OF A TRANSACTION HAVING TERMS IDENTICAL TO THE TRANSACTION AND A NUMBER OF OPTIONS EQUAL TO THE TERMINATED PORTION, (2) COUNTERPARTY SHALL BE THE SOLE AFFECTED PARTY WITH RESPECT TO SUCH PARTIAL TERMINATION AND (3) SUCH TRANSACTION SHALL BE THE ONLY TERMINATED TRANSACTION (AND, FOR THE AVOIDANCE OF DOUBT, THE PROVISIONS OF PARAGRAPH 9(O) SHALL APPLY TO ANY AMOUNT THAT IS PAYABLE BY BANK TO COUNTERPARTY PURSUANT TO THIS SENTENCE).  “BANK GROUP” MEANS BANK AND EACH BUSINESS UNIT OF ITS AFFILIATES SUBJECT TO AGGREGATION WITH BANK UNDER SECTION 13 OR SECTION 16 OF THE EXCHANGE ACT AND RULES PROMULGATED THEREUNDER.  THE “SHARE AMOUNT” AS OF ANY DAY IS THE NUMBER OF SHARES THAT BANK AND ANY PERSON WHOSE OWNERSHIP POSITION WOULD BE   13 --------------------------------------------------------------------------------   AGGREGATED WITH THAT OF BANK (BANK OR ANY SUCH PERSON, A “BANK PERSON”) UNDER ANY LAW, RULE, REGULATION OR REGULATORY ORDER THAT FOR ANY REASON BECOMES APPLICABLE TO OWNERSHIP OF SHARES AFTER THE TRADE DATE (“APPLICABLE LAWS”), OWNS, BENEFICIALLY OWNS, CONSTRUCTIVELY OWNS, CONTROLS, HOLDS THE POWER TO VOTE OR OTHERWISE MEETS A RELEVANT DEFINITION OF OWNERSHIP OF UNDER THE APPLICABLE LAWS, AS DETERMINED BY BANK IN ITS REASONABLE DISCRETION. THE “POST-EFFECTIVE LIMIT” MEANS (X) THE MINIMUM NUMBER OF SHARES THAT WOULD GIVE RISE TO REPORTING OR REGISTRATION OBLIGATIONS OR OTHER REQUIREMENTS (INCLUDING OBTAINING PRIOR APPROVAL FROM ANY PERSON OR ENTITY) OF A BANK PERSON, OR WOULD RESULT IN AN ADVERSE EFFECT ON A BANK PERSON, UNDER THE APPLICABLE LAWS, AS DETERMINED BY BANK IN ITS REASONABLE DISCRETION, MINUS (Y) 1% OF THE NUMBER OF SHARES OUTSTANDING.  IF AT ANY TIME BANK DETERMINES, IN ITS REASONABLE OPINION BASED UPON ADVICE OF COUNSEL, THAT AS A RESULT OF COUNTERPARTY’S DIRECT OR INDIRECT INTEREST IN, OR DIRECT OR INDIRECT CONTROL OF, EITHER TEXTRON BUSINESS CREDIT, INC. OR TEXTRON FINANCIAL CORPORATION, ANY STATE OR FEDERAL LAWS ARE OR HAVE BECOME APPLICABLE TO BANK’S OWNERSHIP OF SHARES, THEN THE POST-EFFECTIVE LIMIT AND THE SHARE AMOUNT SHALL BE DETERMINED AS SET FORTH ABOVE IN THE DEFINITIONS OF THOSE TERMS, IRRESPECTIVE OF WHETHER OR NOT SUCH LAWS HAVE BEEN APPLICABLE TO OWNERSHIP OF SHARES ON OR PRIOR TO THE TRADE DATE.   (I)            STAGGERED SETTLEMENT. IF UPON ADVICE OF COUNSEL WITH RESPECT TO APPLICABLE LEGAL AND REGULATORY REQUIREMENTS, INCLUDING ANY REQUIREMENTS RELATING TO BANK’S HEDGING ACTIVITIES HEREUNDER, OR DUE TO INABILITY TO BORROW SHARES TO DELIVER TO COUNTERPARTY AT A RATE OF BORROWING LESS THAN 35 BASIS POINTS, BANK REASONABLY DETERMINES THAT IT WOULD NOT BE PRACTICABLE OR ADVISABLE TO DELIVER, OR TO ACQUIRE SHARES TO DELIVER, ANY OR ALL OF THE SHARES TO BE DELIVERED BY BANK ON THE SETTLEMENT DATE FOR THE TRANSACTION, BANK MAY, BY NOTICE TO COUNTERPARTY ON OR PRIOR TO ANY SETTLEMENT DATE (A “NOMINAL SETTLEMENT DATE”), ELECT TO DELIVER THE SHARES ON TWO OR MORE DATES (EACH, A “STAGGERED SETTLEMENT DATE”) AS FOLLOWS:   (A)           IN SUCH NOTICE, BANK WILL SPECIFY TO COUNTERPARTY THE RELATED STAGGERED SETTLEMENT DATES, WHICH BANK SHALL CHOOSE IN A COMMERCIALLY REASONABLE MANNER, (THE FIRST OF WHICH WILL BE SUCH NOMINAL SETTLEMENT DATE AND THE LAST OF WHICH WILL BE NO LATER THAN THE TWENTIETH (20TH) EXCHANGE BUSINESS DAY FOLLOWING SUCH NOMINAL SETTLEMENT DATE) AND THE NUMBER OF SHARES THAT IT WILL DELIVER ON EACH STAGGERED SETTLEMENT DATE ON A PAYMENT VERSUS DELIVERY BASIS;   (B)           THE AGGREGATE NUMBER OF SHARES THAT BANK WILL DELIVER TO COUNTERPARTY HEREUNDER ON ALL SUCH STAGGERED SETTLEMENT DATES WILL EQUAL THE NUMBER OF SHARES THAT BANK WOULD OTHERWISE BE REQUIRED TO DELIVER ON SUCH NOMINAL SETTLEMENT DATE; AND   (C)           IF THE PHYSICAL SETTLEMENT TERMS, THE LOW CASH COMBINATION SETTLEMENT TERMS OR THE HIGH CASH COMBINATION SETTLEMENT TERMS SET FORTH ABOVE WERE TO APPLY ON THE NOMINAL SETTLEMENT DATE, THEN THE PHYSICAL SETTLEMENT TERMS, THE LOW CASH COMBINATION SETTLEMENT TERMS OR THE HIGH CASH COMBINATION SETTLEMENT TERMS, AS THE CASE MAY BE, WILL APPLY ON EACH STAGGERED SETTLEMENT DATE, EXCEPT THAT THE SHARES WILL BE ALLOCATED AMONG SUCH STAGGERED SETTLEMENT DATES AS SPECIFIED BY BANK IN THE NOTICE REFERRED TO IN CLAUSE (A) ABOVE.   (J)            DAMAGES. NEITHER PARTY SHALL BE LIABLE UNDER SECTION 6.10 OF THE EQUITY DEFINITIONS FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY THEREOF, EXCEPT AS SPECIFICALLY SET FORTH OTHERWISE HEREIN.   (K)           EARLY UNWIND. IN THE EVENT THE SALE OF “OPTION SECURITIES” (AS DEFINED IN THE UNDERWRITING AGREEMENT) IS NOT CONSUMMATED WITH THE UNDERWRITERS FOR ANY REASON OR COUNTERPARTY FAILS TO DELIVER TO BANK OPINIONS OF COUNSEL TO COUNTERPARTY AS REQUIRED PURSUANT TO SECTION 9(A) BY THE CLOSE OF BUSINESS IN NEW YORK ON MAY 5, 2009 OR SUCH LATER DATE AS AGREED UPON BY THE PARTIES (MAY 5, 2009 OR SUCH LATER DATE THE “EARLY UNWIND DATE”), THE TRANSACTION SHALL AUTOMATICALLY   14 --------------------------------------------------------------------------------   TERMINATE (THE “EARLY UNWIND”), ON THE EARLY UNWIND DATE AND (I) THE TRANSACTION AND ALL OF THE RESPECTIVE RIGHTS AND OBLIGATIONS OF BANK AND COUNTERPARTY UNDER THE TRANSACTION SHALL BE CANCELLED AND TERMINATED AND (II) EACH PARTY SHALL BE RELEASED AND DISCHARGED BY THE OTHER PARTY FROM AND AGREES NOT TO MAKE ANY CLAIM AGAINST THE OTHER PARTY WITH RESPECT TO ANY OBLIGATIONS OR LIABILITIES OF THE OTHER PARTY ARISING OUT OF AND TO BE PERFORMED IN CONNECTION WITH THE TRANSACTION EITHER PRIOR TO OR AFTER THE EARLY UNWIND DATE; PROVIDED THAT, OTHER THAN TO THE EXTENT THE EARLY UNWIND DATE OCCURRED AS A RESULT OF THE BREACH OF THE UNDERWRITING AGREEMENT BY THE UNDERWRITERS, COUNTERPARTY SHALL REIMBURSE BANK, IN CASH OR SHARES, FOR ANY COSTS OR EXPENSES (INCLUDING MARKET LOSSES) RELATING TO THE UNWINDING OF ITS OR ITS AFFILIATE’S HEDGING ACTIVITIES IN CONNECTION WITH THE TRANSACTION (INCLUDING ANY LOSS OR COST INCURRED AS A RESULT OF ITS TERMINATING, LIQUIDATING, OBTAINING OR REESTABLISHING ANY HEDGE OR RELATED TRADING POSITION). BANK SHALL NOTIFY COUNTERPARTY OF SUCH AMOUNT AND COUNTERPARTY SHALL PAY SUCH AMOUNT IN IMMEDIATELY AVAILABLE FUNDS OR DELIVER SHARES ON THE EARLY UNWIND DATE. BANK AND COUNTERPARTY REPRESENT AND ACKNOWLEDGE TO THE OTHER THAT, SUBJECT TO THE PROVISO INCLUDED IN THIS PARAGRAPH, UPON AN EARLY UNWIND, ALL OBLIGATIONS WITH RESPECT TO THE TRANSACTION SHALL BE DEEMED FULLY AND FINALLY DISCHARGED.   (L)            RESERVED.   (M)          ADDITIONAL PROVISIONS.   (I)            SECTION 9.6(A)(II) OF THE EQUITY DEFINITIONS IS HEREBY AMENDED BY (1) DELETING FROM THE THIRD LINE THEREOF THE WORD “OR” AFTER THE WORD “OFFICIAL” AND INSERTING A COMMA THEREFOR, AND (2) DELETING THE PERIOD AT THE END OF SUBSECTION (II) THEREOF AND INSERTING THE FOLLOWING WORDS THEREFOR “ OR (C) AT BANK’S OPTION, THE OCCURRENCE OF ANY OF THE EVENTS SPECIFIED IN SECTION 5(A)(VII) (1) THROUGH (9) OF THE AGREEMENT WITH RESPECT TO THAT ISSUER.”   (II)           NOTWITHSTANDING SECTION 9.7 OF THE EQUITY DEFINITIONS, EVERYTHING IN THE FIRST PARAGRAPH OF SECTION 9.7(B) OF THE EQUITY DEFINITIONS AFTER THE WORDS “CALCULATION AGENT” IN THE THIRD LINE THROUGH THE REMAINDER OF SUCH SECTION 9.7 SHALL BE DELETED AND REPLACED WITH THE FOLLOWING:   “based on an amount representing the Calculation Agent’s determination of the fair value to Counterparty of an option with terms that would preserve for Counterparty the economic equivalent of any payment or delivery (assuming satisfaction of each applicable condition precedent) by the parties in respect of the relevant Transaction that would have been required after that date but for the occurrence of the Option Value Event.”   (III)          NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS CONFIRMATION, IF ANY OF THE FOLLOWING EVENTS OCCURS, (1) BANK SHALL HAVE THE RIGHT TO DESIGNATE SUCH AN EVENT AN ADDITIONAL TERMINATION EVENT AND DESIGNATE AN EARLY TERMINATION DATE PURSUANT TO SECTION 6(B) OF THE AGREEMENT, AND (2) COUNTERPARTY SHALL BE DEEMED THE SOLE AFFECTED PARTY AND THE TRANSACTION SHALL BE DEEMED THE SOLE AFFECTED TRANSACTION:   (A)           AT ANY TIME DURING THE PERIOD FROM AND INCLUDING THE TRADE DATE, TO AND INCLUDING THE EXPIRATION DATE, THE SHARES CEASE TO BE LISTED OR QUOTED ON THE EXCHANGE FOR ANY REASON (OTHER THAN A MERGER EVENT AS A RESULT OF WHICH THE SHARES OF COMMON STOCK UNDERLYING THE OPTIONS ARE LISTED OR QUOTED ON THE NEW YORK STOCK EXCHANGE, THE NASDAQ GLOBAL MARKET OR THE NASDAQ GLOBAL SELECT MARKET (OR THEIR RESPECTIVE SUCCESSORS) (EACH, A “SUCCESSOR EXCHANGE”)) AND ARE NOT IMMEDIATELY RE-LISTED OR QUOTED AS OF THE DATE OF SUCH DE-LISTING ON A SUCCESSOR EXCHANGE.   15 --------------------------------------------------------------------------------   (B)           COUNTERPARTY AMENDS, MODIFIES, SUPPLEMENTS OR WAIVES ANY TERM OF THE INDENTURE OR THE CONVERTIBLE NOTES GOVERNING THE PRINCIPAL AMOUNT, COUPON, MATURITY, REPURCHASE OBLIGATION OF COUNTERPARTY, REDEMPTION RIGHT OF COUNTERPARTY, ANY TERM RELATING TO CONVERSION OF THE CONVERTIBLE NOTES (INCLUDING CHANGES TO THE CONVERSION PRICE, CONVERSION SETTLEMENT DATES OR CONVERSION CONDITIONS), OR ANY TERM THAT WOULD REQUIRE CONSENT OF THE HOLDERS OF NOT LESS THAN 100% OF THE PRINCIPAL AMOUNT OF THE CONVERTIBLE NOTES TO AMEND, IN EACH CASE WITHOUT THE PRIOR CONSENT OF BANK.   (C)           ON OR AFTER THE TRADE DATE, A CHANGE IN LAW (AS DEFINED IN THE 2002 EQUITY DERIVATIVES DEFINITIONS AS PUBLISHED BY ISDA (THE “2002 DEFINITIONS”), WITH ANY REFERENCE IN SUCH DEFINITION TO “SHARES” BEING REPLACED WITH REFERENCES TO “HEDGE POSITION(S)” AND WITHOUT REGARD TO CLAUSE (Y) OF SUCH DEFINITION) SHALL HAVE OCCURRED.   (IV)          NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS CONFIRMATION, THE GIVING OF ANY NOTICE OF EXERCISE SHALL CONSTITUTE AN ADDITIONAL TERMINATION EVENT HEREUNDER WITH RESPECT TO THE NUMBER, IF ANY, OF EXERCISABLE OPTIONS SPECIFIED IN SUCH NOTICE OF EXERCISE AS CORRESPONDING TO A CONVERSION OF RELEVANT CONVERTIBLE NOTES IN COMPLIANCE WITH SECTION 9.03 OF THE SUPPLEMENTAL INDENTURE. UPON RECEIPT OF ANY SUCH NOTICE, BANK SHALL DESIGNATE AN EXCHANGE BUSINESS DAY AS AN EARLY TERMINATION DATE (SUCH DAY TO OCCUR AS CLOSE AS PRACTICABLE, IN BANK’S COMMERCIALLY REASONABLE JUDGMENT, TO THE SETTLEMENT DATE OF THE RELEVANT CONVERTIBLE NOTES), WITH RESPECT TO THE PORTION OF THE TRANSACTION CORRESPONDING TO NUMBER OF SUCH EXERCISABLE OPTIONS SO SPECIFIED. IN LIEU OF THE PROVISIONS OF “DELIVERY OBLIGATION”, ANY PAYMENT AND/OR DELIVERY HEREUNDER WITH RESPECT TO SUCH CONVERSION SHALL BE CALCULATED PURSUANT TO SECTION 6 OF THE AGREEMENT; WHERE, FOR THE PURPOSES OF SUCH CALCULATION, (A) COUNTERPARTY SHALL BE THE SOLE AFFECTED PARTY WITH RESPECT TO SUCH ADDITIONAL TERMINATION EVENT, (B) BANK SHALL BE THE PARTY ENTITLED TO DESIGNATE AN EARLY TERMINATION DATE PURSUANT TO SECTION 6(B) OF THE AGREEMENT; AND (C) FOR THE AVOIDANCE OF DOUBT, IN DETERMINING THE AMOUNT PAYABLE PURSUANT TO SECTION 6 OF THE AGREEMENT, THE CALCULATION AGENT (I) SHALL TAKE INTO ACCOUNT THE TIME VALUE OF THE TRANSACTION WITH RESPECT TO THE EXPIRATION DATE AND (II) SHALL NOT TAKE INTO ACCOUNT ANY ADJUSTMENTS TO THE OPTION ENTITLEMENT THAT RESULT FROM CORRESPONDING ADJUSTMENTS TO THE CONVERSION RATE PURSUANT TO SECTION 9.03 OF THE SUPPLEMENTAL INDENTURE; PROVIDED FURTHER THAT (A) IN CASE OF A PARTIAL TERMINATION, AN EARLY TERMINATION DATE SHALL BE DESIGNATED IN RESPECT OF A TRANSACTION HAVING TERMS IDENTICAL TO THE TRANSACTION AND A NUMBER OF OPTIONS EQUAL TO THE TERMINATED PORTION AND SUCH TRANSACTION SHALL BE THE ONLY TERMINATED TRANSACTION; (B) ANY AMOUNT PAYABLE BY BANK TO COUNTERPARTY SHALL BE SATISFIED SOLELY BY DELIVERY BY BANK TO COUNTERPARTY OF A NUMBER OF SHARES AND CASH IN LIEU OF A FRACTIONAL SHARE EQUAL TO SUCH AMOUNT CALCULATED PURSUANT TO SECTION 6 DIVIDED BY A PRICE PER SHARE DETERMINED BY THE CALCULATION AGENT; AND (C) THE NUMBER OF SHARES DELIVERABLE IN RESPECT OF SUCH EARLY TERMINATION BY BANK TO COUNTERPARTY SHALL NOT BE GREATER THAN THE PRODUCT OF (X) THE APPLICABLE PERCENTAGE AND (Y) THE EXCESS OF (A) THE TOTAL NUMBER OF SHARES UNDERLYING THE CORRESPONDING RELEVANT CONVERTIBLE NOTES (INCLUDING THE NUMBER OF ADDITIONAL SHARES (AS DEFINED IN THE SUPPLEMENTAL INDENTURE) RESULTING FROM ANY ADJUSTMENT SET FORTH IN SECTION 9.03 OF THE SUPPLEMENTAL INDENTURE) OVER (B) THE NUMBER OF SHARES EQUAL IN VALUE TO THE AGGREGATE PRINCIPAL AMOUNT OF THE CORRESPONDING RELEVANT CONVERTIBLE NOTES, AS DETERMINED BY THE CALCULATION AGENT IN ITS SOLE REASONABLE DISCRETION.   (vi)          For the avoidance of doubt, in determining the Close-out Amount pursuant to Section 6(e) of the Agreement, the Determining Party shall act in good faith and a commercially reasonable manner, and, upon request, the Determining Party shall provide to the other party a statement showing in reasonable detail, such calculations (including any quotations, market data or information from internal sources used in making such   16 --------------------------------------------------------------------------------   calculation); provided that the Determining Party shall not be obligated to disclose any proprietary model used for such calculation.   (N)           NO COLLATERAL OR SETOFF.  NOTWITHSTANDING ANY PROVISION OF THE AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES TO THE CONTRARY, THE OBLIGATIONS OF THE COUNTERPARTY HEREUNDER ARE NOT SECURED BY ANY COLLATERAL. EACH PARTY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO SET-OFF DELIVERY OR PAYMENT OBLIGATIONS IT OWES TO THE OTHER PARTY UNDER THE TRANSACTION AGAINST ANY DELIVERY OR PAYMENT OBLIGATIONS OWED TO IT BY THE OTHER PARTY, WHETHER ARISING UNDER THE AGREEMENT, UNDER ANY OTHER AGREEMENT BETWEEN PARTIES HERETO, BY OPERATION OF LAW OR OTHERWISE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE EQUITY DEFINITIONS, COUNTERPARTY SHALL HAVE NO OBLIGATION TO MAKE ANY DELIVERY OR PAYMENT TO BANK (I) PURSUANT TO SECTION 9.7 OF THE EQUITY DEFINITIONS OR (II) PURSUANT TO SECTION 6(D)(II) OF THE AGREEMENT.   (O)           ALTERNATIVE CALCULATIONS AND PAYMENT ON EARLY TERMINATION AND ON CERTAIN EXTRAORDINARY EVENTS. IF IN RESPECT OF THE TRANSACTION, AN AMOUNT IS PAYABLE BY BANK TO COUNTERPARTY (I) PURSUANT TO SECTION 9.7 OF THE EQUITY DEFINITIONS OR (II) PURSUANT TO SECTIONS 6(D) AND 6(E) OF THE AGREEMENT (A “PAYMENT OBLIGATION”), COUNTERPARTY MAY REQUEST BANK TO SATISFY ANY SUCH PAYMENT OBLIGATION BY THE SHARE TERMINATION ALTERNATIVE (AS DEFINED BELOW) (EXCEPT THAT COUNTERPARTY SHALL NOT MAKE SUCH AN ELECTION IN A MERGER EVENT, IN WHICH THE CONSIDERATION TO BE PAID TO HOLDERS OF SHARES CONSISTS SOLELY OF CASH, OR AN EVENT OF DEFAULT IN WHICH COUNTERPARTY IS THE DEFAULTING PARTY OR A TERMINATION EVENT IN WHICH COUNTERPARTY IS THE AFFECTED PARTY, OTHER THAN AN EVENT OF DEFAULT OF THE TYPE DESCRIBED IN SECTION 5(A)(III), (V), (VI), (VII) OR (VIII) OF THE AGREEMENT OR A TERMINATION EVENT OF THE TYPE DESCRIBED IN SECTION 5(B) OF THE AGREEMENT IN EACH CASE THAT RESULTED FROM AN EVENT OR EVENTS OUTSIDE COUNTERPARTY’S CONTROL) AND SHALL GIVE IRREVOCABLE TELEPHONIC NOTICE TO BANK, CONFIRMED IN WRITING WITHIN ONE CURRENCY BUSINESS DAY, NO LATER THAN 12:00 P.M. NEW YORK LOCAL TIME ON THE MERGER DATE OR THE EARLY TERMINATION DATE, AS APPLICABLE; PROVIDED THAT IF COUNTERPARTY DOES NOT VALIDLY REQUEST BANK TO SATISFY ITS PAYMENT OBLIGATION BY THE SHARE TERMINATION ALTERNATIVE, BANK SHALL HAVE THE RIGHT, IN ITS SOLE DISCRETION, TO SATISFY ITS PAYMENT OBLIGATION BY THE SHARE TERMINATION ALTERNATIVE, NOTWITHSTANDING COUNTERPARTY’S ELECTION TO THE CONTRARY.   Share Termination Alternative:   Applicable and means that Bank shall deliver to Counterparty the Share Termination Delivery Property on the date when the Payment Obligation would otherwise be due pursuant to Section 9.7 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable (the “Share Termination Payment Date”), in satisfaction of the Payment Obligation in the manner reasonably requested by Counterparty free of payment.       Share Termination Delivery Property:   A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.       Share Termination Unit Price:   The value to Bank of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Bank at the time of notification of   17 --------------------------------------------------------------------------------       the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of Share Termination Delivery Property.       Share Termination Delivery Unit:   One Share or, if a Merger Event has occurred and a corresponding adjustment to the Transaction has been made, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Merger Event, as determined by the Calculation Agent.       Failure to Deliver:   Applicable       Other applicable provisions:   If Share Termination Alternative is applicable, the provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-Settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that Share Termination Alternative is applicable to the Transaction.   (P)           GOVERNING LAW; EXCLUSIVE JURISDICTION. FOR THE AGREEMENT AND THIS CONFIRMATION, NEW YORK LAW (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE TO THE EXTENT INCONSISTENT WITH CHOICE OF NEW YORK LAW).  SECTION 13(B) OF THE AGREEMENT IS HEREBY AMENDED BY (I) DELETING THE WORDS “NON-EXCLUSIVE” IN SECTION 13(B)(I)(2) AND REPLACING THEM WITH THE WORD “EXCLUSIVE”, AND (II)  INSERTING AFTER THE WORD “LAW” IN SECTION 13(B)(III) THE WORDS “AND SUBJECT TO SECTION 13(B)(I)(2)”.   (Q)           WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF EITHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED HEREIN.   (R)            REGISTRATION. COUNTERPARTY HEREBY AGREES THAT IF, IN THE GOOD FAITH REASONABLE JUDGMENT OF BANK, THE SHARES (“HEDGE SHARES”) ACQUIRED BY BANK FOR THE PURPOSE OF HEDGING ITS OBLIGATIONS PURSUANT TO THE TRANSACTION CANNOT BE SOLD IN THE PUBLIC MARKET BY BANK WITHOUT REGISTRATION UNDER THE SECURITIES ACT, COUNTERPARTY SHALL, AT ITS ELECTION, EITHER (I) IN ORDER TO ALLOW BANK TO SELL THE HEDGE SHARES IN A REGISTERED OFFERING, MAKE AVAILABLE TO BANK AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ENTER INTO AN AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO BANK, SUBSTANTIALLY IN THE FORM OF AN UNDERWRITING AGREEMENT FOR A REGISTERED SECONDARY OFFERING; PROVIDED HOWEVER, THAT IF BANK, IN ITS SOLE REASONABLE DISCRETION, IS NOT SATISFIED WITH ACCESS TO DUE DILIGENCE MATERIALS, THE RESULTS OF ITS DUE DILIGENCE INVESTIGATION, OR THE PROCEDURES AND DOCUMENTATION FOR THE REGISTERED OFFERING REFERRED TO ABOVE, THEN CLAUSE (II) OR CLAUSE (III) OF THIS PARAGRAPH SHALL APPLY AT THE ELECTION OF COUNTERPARTY, (II) IN ORDER TO ALLOW BANK TO SELL THE HEDGE SHARES IN A PRIVATE PLACEMENT, ENTER INTO A PRIVATE PLACEMENT AGREEMENT SUBSTANTIALLY SIMILAR TO PRIVATE PLACEMENT PURCHASE AGREEMENTS CUSTOMARY FOR PRIVATE PLACEMENTS OF EQUITY SECURITIES OF SIMILAR SIZE, IN FORM AND SUBSTANCE SATISFACTORY TO BANK (IN WHICH CASE, THE CALCULATION AGENT SHALL MAKE ANY ADJUSTMENTS TO THE TERMS OF THE TRANSACTION WHICH ARE NECESSARY, IN ITS REASONABLE   18 --------------------------------------------------------------------------------   JUDGMENT, TO COMPENSATE BANK FOR ANY DISCOUNT FROM THE PUBLIC MARKET PRICE OF THE SHARES INCURRED ON THE SALE OF HEDGE SHARES IN A PRIVATE PLACEMENT), OR (III) PURCHASE THE HEDGE SHARES FROM BANK AT THE LAST REPORTED SALE PRICE ON SUCH TRADING DAYS, AND IN THE AMOUNTS, REQUESTED BY BANK.   (S)           TAX DISCLOSURE. EFFECTIVE FROM THE DATE OF COMMENCEMENT OF DISCUSSIONS CONCERNING THE TRANSACTION, COUNTERPARTY AND EACH OF ITS EMPLOYEES, REPRESENTATIVES, OR OTHER AGENTS MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTION AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT ARE PROVIDED TO COUNTERPARTY RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE.   (T)            STATUS OF CLAIMS IN BANKRUPTCY. BANK ACKNOWLEDGES AND AGREES THAT THIS CONFIRMATION IS NOT INTENDED TO CONVEY TO BANK RIGHTS WITH RESPECT TO THE TRANSACTION THAT ARE SENIOR TO THE CLAIMS OF COMMON STOCKHOLDERS OF COUNTERPARTY IN ANY U.S. BANKRUPTCY PROCEEDINGS OF COUNTERPARTY; PROVIDED THAT NOTHING HEREIN SHALL LIMIT OR SHALL BE DEEMED TO LIMIT BANK’S RIGHT TO PURSUE REMEDIES IN THE EVENT OF A BREACH BY COUNTERPARTY OF ITS OBLIGATIONS AND AGREEMENTS WITH RESPECT TO THE TRANSACTION; PROVIDED, FURTHER, THAT NOTHING HEREIN SHALL LIMIT OR SHALL BE DEEMED TO LIMIT BANK’S RIGHTS IN RESPECT OF ANY TRANSACTIONS OTHER THAN THE TRANSACTION.   (U)           SECURITIES CONTRACT; SWAP AGREEMENT. THE PARTIES HERETO INTEND FOR:  (A) THE TRANSACTION TO BE A “SECURITIES CONTRACT” AND A “SWAP AGREEMENT” AND THE AGREEMENT TO BE A “MASTER NETTING AGREEMENT”, IN EACH CASE AS DEFINED IN THE BANKRUPTCY CODE (TITLE 11 OF THE UNITED STATES CODE) (THE “BANKRUPTCY CODE”), AND THE PARTIES HERETO TO BE ENTITLED TO THE PROTECTIONS AFFORDED BY, AMONG OTHER SECTIONS, SECTIONS 362(B)(6), 362(B)(7), 362(B)(27), 362(O), 546(E), 546(G), 546(J), 548(D)(2), 555, 560 AND 561 OF THE BANKRUPTCY CODE; (B) A PARTY’S RIGHT TO LIQUIDATE THE TRANSACTION AND TO EXERCISE ANY OTHER REMEDIES UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT OR TERMINATION EVENT UNDER THE AGREEMENT WITH RESPECT TO THE OTHER PARTY OR ANY EXTRAORDINARY EVENT THAT RESULTS IN THE TERMINATION OR CANCELLATION OF ANY TRANSACTION TO CONSTITUTE A “CONTRACTUAL RIGHT” AS DESCRIBED IN THE BANKRUPTCY CODE; AND (C) EACH PAYMENT AND DELIVERY OF CASH, SECURITIES OR OTHER PROPERTY HEREUNDER TO CONSTITUTE A “MARGIN PAYMENT” OR “SETTLEMENT PAYMENT” AND A “TRANSFER” AS DEFINED IN THE BANKRUPTCY CODE.   (V)           ADDITIONAL PROVISIONS. COUNTERPARTY COVENANTS AND AGREES THAT, AS PROMPTLY AS PRACTICABLE FOLLOWING THE PUBLIC ANNOUNCEMENT OF ANY CONSOLIDATION, MERGER AND BINDING SHARE EXCHANGE TO WHICH COUNTERPARTY IS A PARTY, OR ANY SALE OF ALL OR SUBSTANTIALLY ALL OF COUNTERPARTY’S ASSETS, IN EACH CASE PURSUANT TO WHICH THE SHARES WILL BE CONVERTED INTO CASH, SECURITIES OR OTHER PROPERTY, COUNTERPARTY SHALL NOTIFY BANK IN WRITING OF THE TYPES AND AMOUNTS OF CONSIDERATION THAT HOLDERS OF SHARES HAVE ELECTED TO RECEIVE UPON CONSUMMATION OF SUCH TRANSACTION OR EVENT (THE DATE OF SUCH NOTIFICATION, THE “CONSIDERATION NOTIFICATION DATE”); PROVIDED THAT IN NO EVENT SHALL THE CONSIDERATION NOTIFICATION DATE BE LATER THAN THE DATE ON WHICH SUCH TRANSACTION OR EVENT IS CONSUMMATED.   (W)          PRIVATE PLACEMENT PROCEDURES. IF, IN THE REASONABLE OPINION OF BANK BASED UPON ADVICE OF COUNSEL, FOLLOWING ANY DELIVERY OF SHARES TO BANK PURSUANT TO SECTION 9(K) “ EARLY UNWIND”, SUCH SHARES WOULD BE IN THE HANDS OF BANK SUBJECT TO ANY APPLICABLE RESTRICTIONS WITH RESPECT TO ANY REGISTRATION OR QUALIFICATION REQUIREMENT OR PROSPECTUS DELIVERY REQUIREMENT FOR SUCH SHARES PURSUANT TO ANY APPLICABLE FEDERAL OR STATE SECURITIES LAW (INCLUDING, WITHOUT LIMITATION, ANY SUCH REQUIREMENT ARISING UNDER SECTION 5 OF THE SECURITIES ACT AS A RESULT OF SUCH SHARES BEING “RESTRICTED SECURITIES”, AS SUCH TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT, OR AS A RESULT OF THE SALE OF SUCH SHARES OR SHARE TERMINATION DELIVERY PROPERTY BEING SUBJECT TO PARAGRAPH (C) OF RULE 145 UNDER THE SECURITIES ACT) (SUCH SHARES, “RESTRICTED SHARES”), THEN DELIVERY OF SUCH RESTRICTED SHARES SHALL BE EFFECTED PURSUANT TO CLAUSE (I) BELOW.   (I)            DELIVERY OF RESTRICTED SHARES BY COUNTERPARTY SHALL BE EFFECTED IN CUSTOMARY PRIVATE PLACEMENT PROCEDURES WITH RESPECT TO SUCH RESTRICTED SHARES OF SIMILAR SIZE IN FORM AND   19 --------------------------------------------------------------------------------   SUBSTANCE REASONABLY ACCEPTABLE TO BANK (A “PRIVATE PLACEMENT SETTLEMENT”). THE PRIVATE PLACEMENT SETTLEMENT OF SUCH RESTRICTED SHARES SHALL INCLUDE CUSTOMARY REPRESENTATIONS, COVENANTS, BLUE SKY AND OTHER GOVERNMENTAL FILINGS AND/OR REGISTRATIONS, INDEMNITIES TO BANK, DUE DILIGENCE RIGHTS (FOR BANK OR ANY DESIGNATED BUYER OF THE RESTRICTED SHARES BY BANK), OPINIONS AND CERTIFICATES, AND SUCH OTHER DOCUMENTATION AS IS CUSTOMARY FOR PRIVATE PLACEMENT AGREEMENTS, ALL REASONABLY ACCEPTABLE TO BANK. BANK SHALL DETERMINE THE APPROPRIATE DISCOUNT APPLICABLE TO SUCH RESTRICTED SHARES IN A COMMERCIALLY REASONABLE MANNER AND APPROPRIATELY ADJUST THE AMOUNT OF SUCH RESTRICTED SHARES TO BE DELIVERED TO BANK HEREUNDER; PROVIDED THAT IN NO EVENT SUCH NUMBER SHALL BE GREATER THAN 0.9 TIMES THE NUMBER OF SHARES (THE “MAXIMUM AMOUNT”). NOTWITHSTANDING THE AGREEMENT OR THIS CONFIRMATION, THE DATE OF DELIVERY OF SUCH RESTRICTED SHARES SHALL BE THE EXCHANGE BUSINESS DAY FOLLOWING NOTICE BY BANK TO COUNTERPARTY, OF SUCH APPLICABLE DISCOUNT AND THE NUMBER OF RESTRICTED SHARES TO BE DELIVERED PURSUANT TO THIS CLAUSE (I).   (II)           IN THE EVENT COUNTERPARTY SHALL NOT HAVE DELIVERED THE FULL NUMBER OF RESTRICTED SHARES OTHERWISE APPLICABLE AS A RESULT OF THE PROVISO ABOVE RELATING TO THE MAXIMUM AMOUNT (SUCH DEFICIT, THE “DEFICIT RESTRICTED SHARES”), COUNTERPARTY SHALL BE CONTINUALLY OBLIGATED TO DELIVER, FROM TIME TO TIME UNTIL THE FULL NUMBER OF DEFICIT RESTRICTED SHARES HAVE BEEN DELIVERED PURSUANT TO THIS PARAGRAPH, RESTRICTED SHARES WHEN, AND TO THE EXTENT, THAT (I) SHARES ARE REPURCHASED, ACQUIRED OR OTHERWISE RECEIVED BY COUNTERPARTY OR ANY OF ITS SUBSIDIARIES AFTER THE TRADE DATE (WHETHER OR NOT IN EXCHANGE FOR CASH, FAIR VALUE OR ANY OTHER CONSIDERATION), (II) AUTHORIZED AND UNISSUED SHARES RESERVED FOR ISSUANCE IN RESPECT OF OTHER TRANSACTIONS PRIOR TO THE TRADE DATE WHICH PRIOR TO SUCH DATE BECOME NO LONGER SO RESERVED AND (III) COUNTERPARTY ADDITIONALLY AUTHORIZES ANY UNISSUED SHARES THAT ARE NOT RESERVED FOR OTHER TRANSACTIONS. COUNTERPARTY SHALL IMMEDIATELY NOTIFY BANK OF THE OCCURRENCE OF ANY OF THE FOREGOING EVENTS (INCLUDING THE NUMBER OF SHARES SUBJECT TO CLAUSE (I), (II) OR (III) AND THE CORRESPONDING NUMBER OF RESTRICTED SHARES TO BE DELIVERED) AND PROMPTLY DELIVER THE APPLICABLE PERCENTAGE OF THE AGGREGATE NUMBER OF SUCH RESTRICTED SHARES THEREAFTER.   (III)          WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, COUNTERPARTY AGREES THAT ANY RESTRICTED SHARES DELIVERED TO BANK, AS PURCHASER OF SUCH RESTRICTED SHARES, (I) MAY BE TRANSFERRED BY AND AMONG BANK AND ITS AFFILIATES AND COUNTERPARTY SHALL EFFECT SUCH TRANSFER WITHOUT ANY FURTHER ACTION BY BANK AND (II) AFTER THE PERIOD OF 6 MONTHS FROM THE TRADE DATE (OR 1 YEAR FROM THE TRADE DATE IF, AT SUCH TIME, INFORMATIONAL REQUIREMENTS OF RULE 144(C) ARE NOT SATISFIED WITH RESPECT TO COUNTERPARTY) HAS ELAPSED AFTER ANY SETTLEMENT DATE FOR SUCH RESTRICTED SHARES, COUNTERPARTY SHALL PROMPTLY REMOVE, OR CAUSE THE TRANSFER AGENT FOR SUCH RESTRICTED SHARES TO REMOVE, ANY LEGENDS REFERRING TO ANY SUCH RESTRICTIONS OR REQUIREMENTS FROM SUCH RESTRICTED SHARES UPON REQUEST BY BANK (OR SUCH AFFILIATE OF BANK) TO COUNTERPARTY OR SUCH TRANSFER AGENT, WITHOUT ANY REQUIREMENT FOR THE DELIVERY OF ANY CERTIFICATE, CONSENT, AGREEMENT, OPINION OF COUNSEL, NOTICE OR ANY OTHER DOCUMENT, ANY TRANSFER TAX STAMPS OR PAYMENT OF ANY OTHER AMOUNT OR ANY OTHER ACTION BY BANK (OR SUCH AFFILIATE OF BANK).   If Counterparty shall fail to effectuate the Private Placement Settlement as set forth in clause (i), then such failure shall constitute an Event of Default with respect to which Counterparty shall be the Defaulting Party.   (X)            RIGHT TO EXTEND.  BANK MAY POSTPONE ANY EXERCISE DATE OR SETTLEMENT DATE OR ANY OTHER DATE OF VALUATION OR DELIVERY BY BANK, WITH RESPECT TO SOME OR ALL OF THE RELEVANT OPTIONS (IN WHICH EVENT THE CALCULATION AGENT SHALL MAKE APPROPRIATE ADJUSTMENTS TO THE DELIVERY OBLIGATION), IF BANK DETERMINES, IN ITS REASONABLE DISCRETION BASED ON ADVICE OF COUNSEL, THAT SUCH EXTENSION IS REASONABLY NECESSARY TO PRESERVE BANK’S HEDGING OR HEDGE UNWIND ACTIVITY HEREUNDER IN LIGHT OF EXISTING LIQUIDITY CONDITIONS OR TO ENABLE BANK TO EFFECT PURCHASES OF SHARES OR SHARE TERMINATION   20 --------------------------------------------------------------------------------   DELIVERY UNITS IN CONNECTION WITH ITS HEDGING, HEDGE UNWIND OR SETTLEMENT ACTIVITY HEREUNDER IN A MANNER THAT WOULD, IF BANK WERE COUNTERPARTY OR AN AFFILIATED PURCHASER OF COUNTERPARTY, BE IN COMPLIANCE WITH APPLICABLE LEGAL, REGULATORY OR SELF-REGULATORY REQUIREMENTS.   (Y)           DIVIDENDS.  IF AT ANY TIME DURING THE PERIOD FROM AND INCLUDING THE TRADE DATE, TO BUT EXCLUDING THE EXPIRATION DATE, (I) AN EX-DIVIDEND DATE FOR A REGULAR QUARTERLY CASH DIVIDEND OCCURS WITH RESPECT TO THE SHARES (AN “EX-DIVIDEND DATE”), AND THAT DIVIDEND IS LESS THAN THE REGULAR DIVIDEND ON A PER SHARE BASIS OR (II) IF NO EX-DIVIDEND DATE FOR A REGULAR QUARTERLY CASH DIVIDEND OCCURS WITH RESPECT TO THE SHARES IN ANY QUARTERLY DIVIDEND PERIOD OF COUNTERPARTY, THEN THE CALCULATION AGENT WILL MAKE A CORRESPONDING ADJUSTMENT TO ANY ONE OR MORE OF THE STRIKE PRICE, NUMBER OF OPTIONS, OPTION ENTITLEMENT AND/OR ANY OTHER VARIABLE RELEVANT TO THE EXERCISE, SETTLEMENT OR PAYMENT FOR THE TRANSACTION TO PRESERVE THE FAIR VALUE OF THE OPTIONS TO BANK AFTER TAKING INTO ACCOUNT SUCH DIVIDEND OR LACK THEREOF.  “REGULAR DIVIDEND” SHALL MEAN USD 0.02 PER SHARE PER QUARTER.   21 --------------------------------------------------------------------------------   COUNTERPARTY HEREBY AGREES (A) TO CHECK THIS CONFIRMATION CAREFULLY AND IMMEDIATELY UPON RECEIPT SO THAT ERRORS OR DISCREPANCIES CAN BE PROMPTLY IDENTIFIED AND RECTIFIED AND (B) TO CONFIRM THAT THE FOREGOING (IN THE EXACT FORM PROVIDED BY BANK) CORRECTLY SETS FORTH THE TERMS OF THE AGREEMENT BETWEEN BANK AND COUNTERPARTY WITH RESPECT TO THE TRANSACTION, BY MANUALLY SIGNING THIS CONFIRMATION OR THIS PAGE HEREOF AS EVIDENCE OF AGREEMENT TO SUCH TERMS AND PROVIDING THE OTHER INFORMATION REQUESTED HEREIN AND IMMEDIATELY RETURNING AN EXECUTED COPY TO EQUITY DERIVATIVES DOCUMENTATION DEPARTMENT, FACSIMILE NO. (212) 428-1980/83.               Very truly yours,               GOLDMAN, SACHS & CO.                       By: /s/ Daniel W. Kopper       Authorized Signatory       Name:                 Accepted and confirmed       as of the Trade Date:               TEXTRON INC.                       By: /s/ Mary F. Lovejoy       Authorized Signatory       Name: Mary F. Lovejoy         --------------------------------------------------------------------------------
Exhibit 10.1   Execution Version   AMENDMENT NO. 5   AMENDMENT NO. 5, dated as of November 20, 2019 (this “Amendment”), to the Credit Agreement, dated as of October 18, 2013 (as amended, supplemented, amended and restated or otherwise modified from time to time, including without limitation, by that certain Amendment No. 1, dated as of October 1, 2014, by that certain Amendment No. 2, dated as of February 14, 2017, by that certain Amendment No. 3, dated as of August 14, 2017, and by that certain Amendment No. 4, dated as of February 14, 2018, the “Credit Agreement”), among Scientific Games International, INC., a Delaware corporation (“Borrower”), Scientific Games Corporation, a Nevada corporation (“Holdings”), the several banks and other financial institutions or entities from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”) and Bank of America, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), Collateral Agent, Issuing Lender and Swingline Lender. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement or the Amended Credit Agreement (as defined below), as applicable.   WHEREAS, Section 10.1(d) of the Credit Agreement permits the Borrower to establish Refinancing Revolving Commitments, which refinance all or any portion of the Revolving Commitments under the Credit Agreement, by entering into an amendment to the Credit Agreement with the Administrative Agent and the Lenders willing to provide such Refinancing Revolving Commitments;   WHEREAS, the Borrower has requested, pursuant to Section 10.1(d) of the Credit Agreement, to create a new tranche of (x) 2019 Dollar Revolving Commitments (as defined in the Amended Credit Agreement) and (y) 2019 Multi-Currency Revolving Commitments (as defined in the Amended Credit Agreement), which shall replace the Original Dollar Revolving Commitments and Original Multi-Currency Revolving Commitments (each as defined in the Amended Credit Agreement), respectively, and having the terms, rights and obligations as set forth in the Credit Agreement and Loan Documents, as amended by this Amendment;   WHEREAS, each Person that executes and delivers a counterpart to this Amendment as a “Revolving Lender” (each a “2019 Revolving Lender”) shall have a 2019 Dollar Revolving Commitment and/or 2019 Multi-Currency Revolving Commitment in the amount set forth opposite such 2019 Revolving Lender’s name on Schedule 1 hereto;   WHEREAS, after the establishment of the 2019 Dollar Revolving Commitments and 2019 Multi-Currency Revolving Commitments, pursuant to Section 2.25 of the Credit Agreement, (i) the Borrower has requested that certain Revolving Lenders (any such Revolving Lender in such capacity, an “Additional Revolving Lender”) provide Supplemental Revolving Commitment Increases (as defined in the Credit Agreement) in an aggregate principal amount of $29,319,642.87 (the “Additional Revolving Commitments”) and (ii) subject to the terms and conditions set forth in the Increase Supplement (as defined in the Credit Agreement), dated as of the date hereof (the “Revolving Increase Supplement”), by the Borrower and the Additional Revolving Lenders, the Additional Revolving Lenders agreed to provide such Additional Revolving Commitments;   WHEREAS, each Person that executes and delivers a counterpart to this Amendment as an Additional Revolving Lender shall have a 2019 Dollar Revolving Commitment and/or 2019 Multi-Currency Revolving Commitment as set forth in the Revolving Increase Supplement;   WHEREAS, Section 10.1(a) of the Credit Agreement permits the Borrower to amend or otherwise modify Section 7.1 (or for the purposes of determining compliance with Section 7.1, any defined terms used therein) with the written consent of the Required Revolving Lenders;         WHEREAS, the Borrower and the parties hereto constituting the Required Revolving Lenders wish to make the Other RCF Amendments (as defined below) pursuant to Section 10.1(a) of the Credit Agreement;   WHEREAS, the Borrower agrees to pay all fees and expenses incurred in connection with the foregoing; and   WHEREAS, for purposes of this Amendment, the transactions described above, including this Amendment and the Revolving Increase Supplement and the transactions contemplated herein and therein, are collectively referred to herein as the “Transactions”;   NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:   Section 1.                  Amendments.   (a)                The Credit Agreement is, effective as of the Amendment No. 5 Effective Date, hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto) (the “Amended Credit Agreement”); provided that (i) the amendments necessary to give effect to the 2019 Dollar Revolving Commitments, 2019 Multi-Currency Revolving Commitments and Additional Revolving Commitments (the “2019 RCF Refinancing Amendments”) are made pursuant to Section 10.1(d) or Section 2.25, as applicable, of the Credit Agreement and (ii) the Other RCF Amendments (as defined below) are made pursuant to Section 10.1(a) of the Credit Agreement and (A) consist of the amendment to the definition of Consolidated Net First Lien Leverage (and related addition of the defined term “Debt Redemption Cash”) (the “Other RCF Amendments” and, together with the 2019 RCF Refinancing Amendments, the “2019 RCF Amendments”) and (B) shall be deemed effective immediately after the effectiveness of the 2019 RCF Refinancing Amendments. Each Revolving Lender party hereto, including each 2019 Revolving Lender and Additional Revolving Lender hereby consents to the 2019 RCF Amendments.   (b)                The 2019 Dollar Revolving Commitments and 2019 Multi-Currency Revolving Commitments, after giving effect to the Additional Revolving Commitments, are set forth on Schedule 2 hereto.   Section 2.                  Refinancing Revolving Commitments.   (a)                Pursuant to Section 10.1(d) of the Credit Agreement, each of the 2019 Revolving Lenders shall have a 2019 Dollar Revolving Commitment and/or 2019 Multi-Currency Revolving Commitment in the amount set forth opposite such 2019 Revolving Lender’s name on Schedule 1 hereto and agrees, severally and not jointly, to make Revolving Loans to the Borrower as described in Section 2.4 of the Amended Credit Agreement, with such 2019 Dollar Revolving Commitments and 2019 Multi-Currency Revolving Commitments having the terms set forth in the Amended Credit Agreement. On the Amendment No. 5 Effective Date, the 2019 Dollar Revolving Commitments will replace the Original Dollar Revolving Commitments and the 2019 Multi-Currency Revolving Commitments will replace the Original Multi-Currency Revolving Commitments. The Borrower shall prepay in full the outstanding principal amount of any Revolving Loans outstanding immediately prior to the Amendment No. 5 Effective Date. Any Letters of Credit outstanding immediately prior to the Amendment No. 5 Effective Date shall be deemed to be issued under the 2019 Dollar Revolving Commitments or the 2019 Multi-Currency Revolving Commitments, as applicable.   -2-     (b)                Each 2019 Revolving Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Lead Arrangers, any other 2019 Revolving Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Amended Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Amended Credit Agreement are required to be performed by it as a Lender.   (c)                Upon (i) the execution of a counterpart of this Amendment by each 2019 Revolving Lender, the Administrative Agent and the Borrower and (ii) the delivery to the Administrative Agent of a fully executed counterpart (including by way of telecopy or other electronic transmission) hereof, each of the 2019 Revolving Lenders party to this Amendment shall become Lenders under the Amended Credit Agreement and shall have the respective 2019 Dollar Revolving Commitment and/or 2019 Multi-Currency Revolving Commitment set forth on Schedule 1 hereto, effective as of the Amendment No. 5 Effective Date.   Section 3.                  Conditions to Effectiveness of Amendment.   The effectiveness of the terms of this Amendment shall be subject to satisfaction of the following conditions precedent (the date upon which this Amendment becomes effective, the “Amendment No. 5 Effective Date”) (it being understood that the Other RCF Amendments shall be deemed effective immediately after effectiveness of the 2019 RCF Refinancing Amendments):   (a)          Counterparts. The Administrative Agent having received the executed counterparts of (i) this Amendment executed by the Borrower, Holdings, the Administrative Agent, the Additional Revolving Lenders, the 2019 Revolving Lenders, the Required Revolving Lenders, the Swingline Lender and each Issuing Lender, (ii) the Affirmation Agreement, substantially in the form of Exhibit E hereto, dated as of the Amendment No. 5 Effective Date, executed by Holdings, the Borrower, the Guarantors and the Administrative Agent, and (iii) the executed Revolving Increase Supplement.   (b)         Representations and Warranties. Each of the representations and warranties made in Section 5 of this Amendment shall be true and correct as of the Amendment No. 5 Effective Date.   (c)       Termination of Commitments. The Administrative Agent shall have received from the Borrower (i) an executed notice of termination with respect to the Original Dollar Revolving Commitments and Original Multi-Currency Revolving Commitment pursuant to Section 2.10 of the Credit Agreement, and (ii) on the Amendment No. 5 Effective Date, payment of all accrued and unpaid fees in connection with the Original Dollar Revolving Commitments, Original Multi-Currency Revolving Commitments and Letters of Credit outstanding immediately prior to the Amendment No. 5 Effective Date.   (d)        Fees. The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Amendment No. 5 Effective Date, including (i) a fee for the account of each 2019 Revolving Lender (including each Additional Revolving Lender) that delivers a counterpart to this Amendment equal to 0.25% of such 2019 Revolving Lender’s Revolving Commitment (including any Additional Revolving Commitments) and (ii) to the extent invoiced at least three Business Days prior to the Amendment No. 5 Effective Date, reimbursement or payment of all reasonable and documented out-of-pocket expenses (including the reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP, counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.   -3-     (e)          Legal Opinions. The Administrative Agent shall have received executed legal opinions of (i) Latham & Watkins LLP, special New York counsel to the Loan Parties, and (ii) Brownstein Hyatt Farber Schreck, LLP, special Nevada counsel to the Loan Parties, in each case in form and substance reasonably satisfactory to the Administrative Agent.   (f)          Closing Certificate. The Administrative Agent shall have received a certificate of the Borrower and each of the other Loan Parties, dated as of the Amendment No. 5 Effective Date, each substantially in the form of Exhibit C to the Credit Agreement, with appropriate insertions and attachments.   (g)         USA Patriot Act; Beneficial Ownership Certification.   (i)           The 2019 Revolving Lenders (including the Additional Revolving Lenders) shall have received from the Borrower and each of the Loan Parties (to the extent reasonably requested in writing at least 5 days prior to the Amendment No. 5 Effective Date), at least three Business Days prior to the Amendment No. 5 Effective Date, documentation and other information requested by any 2019 Revolving Lender (including each Additional Revolving Lender) that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act.   (ii)          At least five (5) days prior to the Amendment No. 5 Effective Date, if the Borrower qualifies as a “legal entity customer” under 31 C.F.R. § 1010.230, it shall have delivered, to each 2019 Revolving Lender (including each Additional Revolving Lender) that so requests to the extent requested at least ten (10) days prior to the Amendment No. 5 Effective Date, a certification regarding beneficial ownership required by 31 C.F.R. § 1010.230 in relation to the Borrower (the “Beneficial Ownership Certifications”).   (h)        Solvency Certificate. The Administrative Agent shall have received a solvency certificate signed by the chief financial officer on behalf of Holdings, substantially in the form of Exhibit G to the Credit Agreement, after giving effect to the Transactions.   (i)         Flood Searches. The Administrative Agent shall have received a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to the Mortgaged Property (together with a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and the applicable Loan Party relating thereto) and, if any such Mortgaged Property is located in a special flood hazard area, evidence of flood insurance to the extent required pursuant to the Credit Agreement.   -4-     Section 4.                  Post-Closing Conditions.   Within sixty (60) days after the Amendment No. 5 Effective Date, unless waived or extended by the Collateral Agent in its sole discretion, the Collateral Agent shall have received either the items listed in paragraph (a) or the items listed in paragraph (b) as follows:   (a)                an opinion or email confirmation from local counsel in each jurisdiction where a Mortgaged Property is located, in form and substance reasonably satisfactory to the Collateral Agent, to the effect that:   (i)               the recording of the existing Mortgage is the only filing or recording necessary to give constructive notice to third parties of the lien created by such Mortgage as security for the Obligations (as defined in each Mortgage), including the Obligations evidenced by the Credit Agreement as amended by this Amendment and the other documents executed in connection therewith, for the benefit of the Secured Parties; and   (ii)               no other documents, instruments, filings, recordings, re-recordings, re-filings or other actions, including, without limitation, the payment of any mortgage recording taxes or similar taxes, are necessary or appropriate under applicable law in order to maintain the continued enforceability, validity or priority of the lien created by such Mortgage as security for the Obligations, including the Obligations evidenced by the Credit Agreement as amended by this Amendment and the other documents executed in connection therewith, for the benefit of the Secured Parties.   (b)                with respect to the existing Mortgages, the following, in each case in form and substance reasonably acceptable to the Collateral Agent:   (i)                 with respect to each Mortgage encumbering a Mortgaged Property, an amendment thereof (each a “Mortgage Amendment”) duly executed and acknowledged by the applicable Loan Party, and in form for recording in the recording office where each Mortgage was recorded, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof under applicable law, in each case in form and substance reasonably satisfactory to the Collateral Agent;   (ii)                with respect to each Mortgage Amendment, a date down endorsement (each, a “Title Endorsement,” collectively, the “Title Endorsements”) to the existing mortgage title insurance policies relating to the Mortgage encumbering the Mortgaged Property subject to such Mortgage assuring the Collateral Agent that such Mortgage, as amended by such Mortgage Amendment is a valid and enforceable first priority lien on such Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties free and clear of all defects, encumbrances and liens except for Permitted Liens (as defined in each Mortgage), and such Title Endorsement shall otherwise be in form and substance reasonably satisfactory to the Collateral Agent;   (iii)               with respect to each Mortgage Amendment, opinions of local counsel to the Loan Parties, which opinions (x) shall be addressed to the Collateral Agent and the Secured Parties, (y) shall cover the enforceability of the respective Mortgage as amended by such Mortgage Amendment, the due authorization, execution and delivery of the Mortgage Amendment and such other matters incident to the transactions contemplated herein as the Collateral Agent may reasonably request and (z) shall be in form and substance reasonably satisfactory to the Collateral Agent;   -5-     (iv)               with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including without limitation, a so-called “gap” indemnification) as shall be required to induce the title company to issue the Title Endorsements; and   (v)                evidence acceptable to the Collateral Agent of payment by the Borrower of all applicable title insurance premiums, search and examination charges, survey costs and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the Title Endorsements.   Section 5.                  Representations and Warranties.   On and as of the Amendment No. 5 Effective Date, after giving effect to the Transactions, each of Holdings and the Borrower hereby represents and warrants to the Administrative Agent and each 2019 Revolving Lender (including the Additional Revolving Lenders) as follows:   (a)        each of this Amendment and the Revolving Increase Supplement has been duly authorized, executed and delivered by Holdings and the Borrower and constitutes the legal, valid and binding obligations of Holdings and the Borrower enforceable against such Loan Party in accordance with its terms and the Amended Credit Agreement and constitutes the legal, valid and binding obligation of Holdings and the Borrower enforceable against such Loan Party in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general applicability relating to or limiting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law;   (b)        each of the representations and warranties contained in Section 5 of the Credit Agreement and each other Loan Document is true and correct in all material respects (and in all respects if qualified by materiality) on and as of the Amendment No. 5 Effective Date, as if made on and as of such date and except to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be true and correct in all material respects (and in all respects if qualified by materiality) as of such specific date;   (c)         no Default or Event of Default has occurred, is continuing or existed immediately prior to giving effect to the Transactions; and   (d)        the information included in the Beneficial Ownership Certifications provided on or prior to the Amendment No. 5 Effective Date is true and correct in all respects.   Section 6.                  Counterparts.   This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.   Section 7.                  Governing Law and Waiver of Right to Trial by Jury.   THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. The jurisdiction and waiver of right to trial by jury provisions in Section 10.12 and 10.17 of the Credit Agreement are incorporated herein by reference mutatis mutandis.   -6-     Section 8.                  Headings.   The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.   Section 9.                  Reaffirmation.   Holdings and the Borrower hereby expressly acknowledge the terms of this Amendment and the Revolving Increase Supplement and the other Transactions and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to the Transactions, (ii) its guarantee of the Obligations (including, without limitation, in respect of the Additional Revolving Commitments) under the Guaranty, as applicable, and its grant of Liens on the Collateral to secure the Obligations (including, without limitation, in respect of the Additional Revolving Commitments) pursuant to the Collateral Documents and (iii) that such guarantee and grant continues in full force and effect in respect of, and to secure, the Obligations under the Amended Credit Agreement and the other Loan Documents.   Section 10.              Effect of Amendment.   Except as expressly set forth herein, neither this Amendment nor the Revolving Increase Supplement shall by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Agents under the Credit Agreement or any other Loan Document, and neither this Amendment nor the Revolving Increase Supplement shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Neither this Amendment nor the Revolving Increase Supplement shall constitute a novation of the Credit Agreement or any of the Loan Documents. For the avoidance of doubt, on and after the Amendment No. 5 Effective Date, each of this Amendment and the Revolving Increase Supplement shall for all purposes constitute a Loan Document. Each of the parties hereto agree that this Amendment constitutes the notice required by Section 10.1(d) of the Credit Agreement.   [Signature pages follow]   -7-     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.     SCIENTIFIC GAMES INTERNATIONAL, INC., as Borrower           By: /s/ Michael A. Quartieri     Name: Michael A. Quartieri     Title: Executive Vice President, Chief Financial Officer, Secretary and Treasurer               SCIENTIFIC GAMES CORPORATION, as Holdings           By: /s/ Michael A. Quartieri     Name: Michael A. Quartieri     Title: Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary   [Scientific Games – Signature Page to Amendment No. 5]           BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent           By: /s/ Ronaldo Naval     Name: Ronaldo Naval     Title: Vice President   [Scientific Games – Signature Page to Amendment No. 5]           BANK OF AMERICA, N.A., as Issuing Lender and Swingline Lender           By: /s/ Brandon Bolio     Name: Brandon Bolio     Title: Director   [Scientific Games – Signature Page to Amendment No. 5]           BANK OF AMERICA, N.A., as a Revolving Lender           By: /s/ Brandon Bolio     Name: Brandon Bolio     Title: Director   [Scientific Games – Signature Page to Amendment No. 5]           JPMORGAN CHASE BANK, N.A., as Issuing Lender           By: /s/ Jeffrey Miller     Name: Jeffrey Miller     Title: Executive Director   [Scientific Games – Signature Page to Amendment No. 5]           JPMORGAN CHASE BANK, N.A., as a Revolving Lender           By: /s/ Jeffrey Miller     Name: Jeffrey Miller     Title: Executive Director   [Scientific Games – Signature Page to Amendment No. 5]           DEUTSCHE BANK AG NEW YORK BRANCH, as a Revolving Lender           By: /s/ Yumi Okabe     Name: Yumi Okabe     Title: Vice President           If a second signature is necessary:           By: /s/ Michael Strobel     Name: Michael Strobel     Title: Vice President   [Scientific Games – Signature Page to Amendment No. 5]           BNP PARIBAS, as a Revolving Lender           By: /s/ Aadil Zuberi     Name: Aadil Zuberi     Title: Vice President           By: /s/ Julie Gauduffe     Name: Julie Gauduffe     Title: Vice President   [Scientific Games – Signature Page to Amendment No. 5]           FIFTH THIRD BANK, as a Revolving Lender           By: /s/ Richard Arendale     Name: Richard Arendale     Title: Managing Director   [Scientific Games – Signature Page to Amendment No. 5]           ROYAL BANK OF CANADA, as a Revolving Lender           By: /s/ J. Christian Gutiérrez     Name: J. Christian Gutiérrez     Title: Authorized Signatory   [Scientific Games – Signature Page to Amendment No. 5]           SunTrust Bank as a Revolving Lender           By: /s/ John L. Saylor     Name: John L. Saylor     Title: Senior Vice President   [Scientific Games – Signature Page to Amendment No. 5]           CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH as a Revolving Lender           By: /s/ William O’Daly     Name: William O’Daly     Title: Authorized Signatory           By: /s/ Komal Shah     Name: Komal Shah     Title: Authorized Signatory   [Scientific Games – Signature Page to Amendment No. 5]           CITIZENS BANK, N.A. as a Revolving Lender           By: /s/ Sean McWhinnie     Name: Sean McWhinnie     Title: Director   [Scientific Games – Signature Page to Amendment No. 5]           MIHI LLC, as a Revolving Lender           By: /s/ Lisa Grushkin     Name: Lisa Grushkin     Title: Authorized Signatory           If a second signature is necessary:           By: /s/ Mimi Shih     Name: Mimi Shih     Title: Authorized Signatory   [Scientific Games – Signature Page to Amendment No. 5]           BARCLAYS BANK PLC, as a Revolving Lender           By: /s/ Regina Tarone     Name: Regina Tarone     Title: Managing Director   [Scientific Games – Signature Page to Amendment No. 5]           GOLDMAN SACHS BANK USA, as a Revolving Lender           By: /s/ Annie Carr     Name: Annie Carr     Title: Authorized Signatory   [Scientific Games – Signature Page to Amendment No. 5]         Exhibit A   EXHIBIT A TO AMENDMENT NO. 45     CREDIT AGREEMENT   among   SCIENTIFIC GAMES INTERNATIONAL, INC., as the Borrower,   SCIENTIFIC GAMES CORPORATION, as Holdings,   The Several Lenders from Time to Time Parties Hereto,   BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender,   JPMORGAN CHASE BANK, N.A., as Issuing Lender,   BANK OF AMERICA, N.A.,BOFA SECURITIES, INC., JPMORGAN CHASE BANK, N.A., DEUTSCHE BANK SECURITIES INC., BNP PARIBAS SECURITIES CORP., FIFTH THIRD BANK, BARCLAYS BANK PLC, RBC CAPITAL MARKETS, SUNTRUST ROBINSON HUMPHREY, INC., CREDIT SUISSE SECURITIES (USA)LOAN FUNDING LLC, CITIZENS BANK, N.A., PNC CAPITAL MARKETS LLC, MACQUARIE CAPITAL (USA) INC., and GOLDMAN SACHS BANK USA, as Joint Lead Arrangers and Joint Bookrunners,   Dated as of October 18, 2013, As amended by Amendment No. 1, Amendment No. 2, Amendment No. 33, Amendment No. 4 and Amendment No. 45           TABLE OF CONTENTS       Page       SECTION 1. DEFINITIONS 1       1.1 Defined Terms 1 1.2 Other Definitional Provisions 63 1.3 Pro Forma Calculations 65 1.4 Exchange Rates; Currency Equivalents 66 1.5 Letter of Credit Amounts 6567 1.6 Covenants 67       SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 67       2.1 Term Commitments 67 2.2 Procedure for Initial Term Loan Borrowing 68 2.3 Repayment of Term Loans 68 2.4 Revolving Commitments 6769 2.5 Procedure for Revolving Loan Borrowing 70 2.6 Swingline Loans 70 2.7 Defaulting Lenders 73 2.8 Repayment of Loans 74 2.9 Commitment Fees, etc. 75 2.10 Termination or Reduction of Commitments 7475 2.11 Optional Prepayments 76 2.12 Mandatory Prepayments 76 2.13 Conversion and Continuation Options 7879 2.14 Minimum Amounts and Maximum Number of Eurocurrency Tranches 80 2.15 Interest Rates and Payment Dates 7980 2.16 Computation of Interest and Fees 81 2.17 Inability to Determine Interest Rate 8081 2.18 Pro Rata Treatment and Payments 82 2.19 Requirements of Law 83 2.20 Taxes 85 2.21 Indemnity 8687 2.22 Illegality 87 2.23 Change of Lending Office 88 2.24 Replacement of Lenders 88 2.25 Incremental Loans 89 2.26 Extension of Term Loans and Revolving Commitments 91 2.27 Successor LIBOR 9394       SECTION 3. LETTERS OF CREDIT 9495       3.1 L/C Commitment 9495 3.2 Procedure for Issuance of Letter of Credit 9596 3.3 Fees and Other Charges 97 3.4 L/C Participations 9697 3.5 Reimbursement Obligation of the Borrower 99 3.6 Obligations Absolute 100    -i-         Page       3.7 Role of the Issuing Lender 101 3.8 Letter of Credit Payments 101 3.9 Applications 101 3.10 Applicability of ISP and UCP 102       SECTION 4. REPRESENTATIONS AND WARRANTIES 102       4.1 Financial Condition 101102 4.2 No Change 102 4.3 Existence; Compliance with Law 102 4.4 Corporate Power; Authorization; Enforceable Obligations 103 4.5 No Legal Bar 103 4.6 No Material Litigation 104 4.7 No Default 104 4.8 Ownership of Property; Liens 104 4.9 Intellectual Property 103104 4.10 Taxes 103104 4.11 Federal Regulations 104 4.12 ERISA 105 4.13 Investment Company Act 104105 4.14 Subsidiaries 104105 4.15 Environmental Matters 104105 4.16 Accuracy of Information, etc. 105 4.17 Security Documents 106 4.18 Solvency 107 4.19 Anti-Terrorism 107 4.20 Use of Proceeds 107 4.21 Labor Matters 107 4.22 Senior Indebtedness 106107 4.23 OFAC 106107 4.24 FCPA 106107       SECTION 5. CONDITIONS PRECEDENT 107       5.1 Conditions to Initial Extension of Credit on the Closing Date 107 5.2 Conditions to Each Revolving Loan Extension of Credit After Closing Date 109110       SECTION 6. AFFIRMATIVE COVENANTS 110111       6.1 Financial Statements 111 6.2 Certificates; Other Information 111112 6.3 Payment of Taxes 113 6.4 Conduct of Business and Maintenance of Existence, etc.; Compliance 114 6.5 Maintenance of Property; Insurance 114 6.6 Inspection of Property; Books and Records; Discussions 115 6.7 Notices 115 6.8 Additional Collateral, etc. 115 6.9 Use of Proceeds 118 6.10 Post Closing 118 6.11 Credit Ratings 118 6.12 Line of Business 118    -ii-         Page       6.13 Changes in Jurisdictions of Organization; Name 118       SECTION 7. NEGATIVE COVENANTS 119       7.1 Financial Covenant 119 7.2 Indebtedness 120 7.3 Liens 122124 7.4 Fundamental Changes 127 7.5 Dispositions of Property 128 7.6 Restricted Payments 131 7.7 Investments 134 7.8 Prepayments, Etc. of Indebtedness; Amendments 138 7.9 Transactions with Affiliates 137139 7.10 Sales and Leasebacks 139 7.11 Changes in Fiscal Periods 138140 7.12 Negative Pledge Clauses 140 7.13 Clauses Restricting Subsidiary Distributions 141 7.14 Limitation on Hedge Agreements 142       SECTION 8. EVENTS OF DEFAULT 142       8.1 Events of Default 142 8.2 Right to Cure 144146       SECTION 9. THE AGENTS 145147       9.1 Appointment 145147 9.2 Delegation of Duties 147 9.3 Exculpatory Provisions 147 9.4 Reliance by the Agents 148 9.5 Notice of Default 148 9.6 Non-Reliance on Agents and Other Lenders 148 9.7 Indemnification 147149 9.8 Agent in Its Individual Capacity 149 9.9 Successor Agents 149 9.10 Authorization to Release Liens and Guarantees 150 9.11 Agents May File Proofs of Claim 150 9.12 Specified Hedge Agreements and Cash Management Obligations 149150 9.13 Joint Bookrunners and Co-Documentation Agents 151 9.14 Certain ERISA Matters 151       SECTION 10. MISCELLANEOUS 154       10.1 Amendments and Waivers 154 10.2 Notices; Electronic Communications 156 10.3 No Waiver; Cumulative Remedies 159 10.4 Survival of Representations and Warranties 159 10.5 Payment of Expenses; Indemnification 160 10.6 Successors and Assigns; Participations and Assignments 161 10.7 Adjustments; Set off 165 10.8 Counterparts 166    -iii-         Page       10.9 Severability 166 10.10 Integration 166 10.11 GOVERNING LAW 166 10.12 Submission to Jurisdiction; Waivers 167 10.13 Acknowledgments 167 10.14 Confidentiality 169 10.15 Release of Collateral and Guarantee Obligations; Subordination of Liens 170 10.16 Accounting Changes 170 10.17 WAIVERS OF JURY TRIAL 171 10.18 USA PATRIOT ACT 171 10.19 Effect of Certain Inaccuracies 171 10.20 Interest Rate Limitation 171 10.21 Payments Set Aside 172 10.22 Electronic Execution of Assignments and Certain Other Documents 172 10.23 Acknowledgement and Consent to Bail-In of EEA Financial Institutions 172 10.24 Flood Matters 173    -iv-     SCHEDULES:   1.1APro Forma Adjustments 1.1BSpecified Hedge Agreements 1.1CExisting Letters of Credit 1.1DSpecified Real Properties 2.1Commitments 4.3Existence; Compliance with Law 4.4Consents, Authorizations, Filings and Notices 4.6Litigation 4.8AExcepted Property 4.8BOwned Real Property 4.14Subsidiaries 4.17UCC Filing Jurisdictions 6.10Post Closing Matters 7.2(d)Existing Indebtedness 7.3(f)Existing Liens 7.7Existing Investments 7.9Transactions with Affiliates 7.12Existing Negative Pledge Clauses 7.13Clauses Restricting Subsidiary Distributions   EXHIBITS:   AForm of Guarantee and Collateral Agreement BForm of Compliance Certificate CForm of Closing Certificate DForm of Assignment and Assumption EForm of Affiliate Lender Assignment and Assumption FForm of Exemption Certificate GForm of Solvency Certificate HForm of Joinder Agreement IForm of Prepayment Option Notice J-1Form of Term Loan Note J-2Form of Dollar Revolving Note J-3Form of Multi-Currency Revolving Note KForm of Intercreditor Agreement L-1Form of Increase Supplement L-2Form of Lender Joinder Agreement    -v-     CREDIT AGREEMENT, dated as of October 18, 2013, among SCIENTIFIC GAMES INTERNATIONAL, INC., a Delaware corporation (the “Company” or the “Borrower”), SCIENTIFIC GAMES CORPORATION, a Nevada corporation (“Holdings”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender, JPMORGAN CHASE BANK, N.A., as Issuing Lender, and BANK OF AMERICA, N.ABOFA SECURITIES, INC., JPMORGAN CHASE BANK, N.A., DEUTSCHE BANK SECURITIES INC., BNP PARIBAS SECURITIES CORP., FIFTH THIRD BANK, BARCLAYS BANK PLC, RBC CAPITAL MARKETS1, SUNTRUST ROBINSON HUMPHREY, INC. CREDIT SUISSE SECURITIES (USA)LOAN FUNDING LLC, CITIZENS BANK, N.A., PNC CAPITAL MARKETS LLC, MACQUARIE CAPITAL (USA) INC., and GOLDMAN SACHS BANK USA, as joint lead arrangers and joint bookrunners.   The parties hereto hereby agree as follows:   SECTION 1.            DEFINITIONS   1.1            Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.   “2018 Notes”: Holdings’ 8.125% senior subordinated notes due 2018.   “2019 Dollar Revolving Commitment”: as to any Dollar Revolving Lender, the obligation of such Lender, if any, to make Dollar Revolving Loans and participate in Dollar Letters of Credit and Swingline Loans in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “2019 Dollar Revolving Commitment” opposite such Lender’s name on Schedule 2 to Amendment No. 5, or, as the case may be, in the Assignment and Assumption, Joinder Agreement or Lender Joinder Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to an Extension Amendment, an Increase Supplement or otherwise pursuant to the terms hereof. The aggregate amount of the 2019 Dollar Revolving Commitments as of the Amendment No. 5 Effective Date (after giving effect to the Supplemental Revolving Commitment Increases incurred on or prior to such date) is $199,481,590.46.   “2019 Multi-Currency Revolving Commitments”: as to any Multi-Currency Revolving Lender, the obligation of such Lender, if any, to make Multi-Currency Revolving Loans and participate in Multi-Currency Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “2019 Multi-Currency Revolving Commitment” opposite such Lender’s name on Schedule 2 to Amendment No. 5, or, as the case may be, in the Assignment and Assumption, Joinder Agreement or Lender Joinder Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to an Extension Amendment, an Increase Supplement or otherwise pursuant to the terms hereof. The aggregate amount of the 2019 Multi-Currency Revolving Commitments, as of the Amendment No. 5 Effective Date (after giving effect to the Supplemental Revolving Commitment Increases incurred on or prior to such date), is $450,518,409.54.     1RBC Capital Markets is a brand name for the capital markets businesses of Royal Bank of Canada and its affiliates.           “2020 Notes”: the Borrower’s 6.250% senior subordinated notes due 2020.   “2021 Notes”: the Borrower’s 6.625% senior subordinated notes due 2021.   “2022 Notes”: the Borrower’s 10.000% senior unsecured notes due 2022.   “2022 Secured Notes”: the Borrower’s 7.000% senior secured notes due 2022.   “2025 Secured Notes”: the Borrower’s 5.000% senior secured notes due 2025.   “2026 Notes”: the Borrower’s 5.500% senior unsecured notes due 2026.   “2026 Secured Notes”: the Borrower’s 3.375% senior secured notes due 2026.   “ABR”: for any day, a rate per annum equal to the highest of (a) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurocurrency Rate for a one-month interest period beginning on such day (or if such day is not a Business Day, on the immediately preceding Business Day) plus 1%; provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be based on the rate appearing on the Screen two Business Days prior to such day at approximately 11 A.M., London time, as the Eurocurrency Rate for deposits denominated with a one-month interest period. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.   “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.   “Accelerated Maturity Date”: Revolving Maturity Date”: the date that is 91 days prior to the stated maturity date of (a) the Term B-5 Loans, if, on such date, any Term B-5 Loans remain outstanding, (b) the 2020 Notes if, on such date, any 2020 Notes remain outstanding, (c) the 2021 Notes if, on such date, any 2021 Notes remain outstanding or (d) the 2022 Notes if, on such date, any 2022 Notes remain outstanding; provided that, in each case, if such date is not a Business Day, the Accelerated Revolving Maturity Date shall be the immediately preceding Business Day; provided further that, solely with respect to the foregoing clauses (b), (c) and (d), the Accelerated Revolving Maturity Date shall not apply for any purpose under this Agreement if, on the applicable date, Holdings and its Restricted Subsidiaries have Liquidity (as defined below) of at least the sum of (x) the outstanding principal amount of the notes referred to above next maturing (and triggering such Accelerated Revolving Maturity Date) plus (y) $50,000,000. For purposes hereof, “Liquidity” shall mean, at any time, the sum of (i) all Unrestricted Cash of Holdings and its Restricted Subsidiaries and (ii) the aggregate Available Revolving Commitments of all Revolving Lenders at such time, provided that, with respect to this clause (ii), the conditions set forth in Sections 5.2(a) and 5.2(b) shall be satisfied at such time.   “Accelerated Term Loan Maturity Date”: the date that is 91 days prior to the stated maturity date of (a) the 2020 Notes if, on such date, any 2020 Notes remain outstanding, (b) the 2021 Notes if, on such date, any 2021 Notes remain outstanding or (c) the 2022 Notes if, on such date, any 2022 Notes remain outstanding; provided that the Accelerated Term Loan Maturity Date shall not apply for any purpose under this Agreement if, on the applicable date, Holdings and its Restricted Subsidiaries have Liquidity (as defined below) of at least the sum of (x) the outstanding principal amount of the notes referred to above next maturing (and triggering such Accelerated Term Loan Maturity Date) plus (y) $50,000,000. For purposes hereof, “Liquidity” shall mean, at any time, the sum of (i) all Unrestricted Cash of Holdings and its Restricted Subsidiaries and (ii) the aggregate Available Revolving Commitments of all Revolving Lenders at such time, provided that, with respect to this clause (ii), the conditions set forth in Sections 5.2(a) and 5.2(b) shall be satisfied at such time.   -2-      “Accounting Changes”: as defined in Section 10.16.   “Administrative Agent”: Bank of America, N.A., as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors and permitted assigns in such capacity in accordance with Section 9.9.   “Additional 2022 Secured Notes”: the Borrower’s 7.000% senior secured notes due 2022 issued on the Amendment No. 2 Effective Date.   “Additional Term B-3 Commitment”: as to any Additional Term B-3 Lender, the obligation of such Additional Term B-3 Lender to make an Additional Term B-3 Loan to the Borrower in the principal amount to be set forth opposite such Term B-3 Lender’s name on its signature page to Amendment No. 2. The aggregate principal amount of the Additional Term B-3 Commitments (i) as of the Amendment No. 2 Effective Date is $543,416,606.97 and (ii) as of the Amendment No. 4 Effective Date is $0.   “Additional Term B-3 Lenders”: as defined in Amendment No. 2.   “Additional Term B-3 Loans”: the term loans made by the Lenders to the Borrower on the Amendment No. 2 Effective Date pursuant to the Additional Term B-3 Commitment.   “Additional Term B-5 Commitment”: as to any Additional Term B-5 Lender, the obligation of such Additional Term B-5 Lender to make an Additional Term B-5 Loan to the Borrower in the principal amount to be set forth opposite such Additional Term B-5 Lender’s name on its signature page to Amendment No. 4. The aggregate principal amount of the Additional Term B-5 Commitments as of the Amendment No. 4 Effective Date is $1,053,925,516.26.   “Additional Term B-5 Lender”: as defined in Amendment No. 4.   “Additional Term B-5 Loans”: the term loans made by the Lenders to the Borrower pursuant to Section 2.1(c) on the Amendment No. 4 Effective Date pursuant to the Additional Term B-5 Commitment.   “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, in either case whether by contract or otherwise.   “Affiliate Lender Assignment and Assumption”: an Affiliate Lender Assignment and Assumption, substantially in the form of Exhibit E.   “Agents”: the collective reference to the Collateral Agent and the Administrative Agent, and solely for purposes of Sections 9.14, 10.5, 10.10, 10.13 and 10.14 and the definitions of Cash Management Obligations, Obligations and Specified Hedge Agreement, the Lead Arrangers, Joint Bookrunners, Co-Syndication Agents and Co-Documentation Agents.   -3-      “Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans and (ii) the aggregate amount of such Lender’s Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.   “Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the total Aggregate Exposures of all Lenders at such time.   “Agreed Purposes”: as defined in Section 10.14.   “Agreement”: this Credit Agreement, as amended, supplemented, waived or otherwise modified from time to time.   “Amendment No. 1”: Amendment No. 1 to this Agreement, dated as of October 1, 2014.   “Amendment No. 2”: Amendment No. 2 to this Agreement, dated as of the Amendment No. 2 Effective Date.   “Amendment No. 2 Effective Date”: February 14, 2017.   “Amendment No. 2 Extending Revolving Termination Date”: the earlier of (x) October 18, 2020 and (y) the Accelerated Maturity Date (excluding clause (c) and subject to the proviso, in each case, contained in the definition thereof).   “Amendment No. 2 Transactions”: the transactions described in Amendment No. 2, including (a) the Borrower obtaining the Initial Term B-3 Loans to refinance the Term B-1 Loans and Term B-2 Loans outstanding on the Amendment No. 2 Effective Date, (b) the Borrower obtaining Additional 2022 Secured Notes in an aggregate principal amount of $1,150,000,000 on the Amendment No. 2 Effective Date, (c) the repayment of certain Revolving Loans on the Amendment No. 2 Effective Date, (d) the redemption of the 2018 Notes (for the avoidance of doubt, the redemption of the 2018 Notes with the proceeds of the Additional 2022 Secured Notes will not occur on the Amendment No. 2 Effective Date), and (e) the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition (the “Amendment No. 2 Transaction Costs”).   “Amendment No. 2 Transaction Costs”: as defined in the definition of “Amendment No. 2 Transactions.”   “Amendment No. 3”: Amendment No. 3 to this Agreement, dated as of the Amendment No. 3 Effective Date.   “Amendment No. 3 Effective Date”: August 14, 2017.   “Amendment No. 3 Transactions”: the transactions described in Amendment No. 3, including (a) the Borrower obtaining the Initial Term B-4 Loans to refinance the Term B-3 Loans outstanding on the Amendment No. 3 Effective Date and (b) the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provision of this definition (the “Amendment No. 3 Transaction Costs”).   -4-      “Amendment No. 3 Transaction Costs”: as defined in the definition of “Amendment No. 3 Transactions.”   “Amendment No. 4”: Amendment No. 4 to this Agreement, dated as of the Amendment No. 4 Effective Date.   “Amendment No. 4 Effective Date”: February 14, 2018.   “Amendment No. 4 Secured Notes”: the Borrower’s senior secured notes incurred concurrently with the Amendment No. 4 Effective Date, comprised of (i) 2025 Secured Notes in an aggregate principal amount of $900,000,000 and (ii) 2026 Secured Notes in an aggregate principal amount of €325,000,000.   “Amendment No. 4 Transactions”: the transactions described in Amendment No. 4, including (a) the Borrower obtaining the Initial Term B-5 Loans, including additional Initial Term B-5 Loans in an aggregate principal amount of $900,000,000, to, among others, refinance the Term B-4 Loans and a portion of the 2022 Secured Notes, in each case, outstanding immediately prior to the Amendment No. 4 Effective Date, (b) the Borrower obtaining a Supplemental Revolving Commitment Increase in an aggregate principal amount of $23,999,999.99, (c) the Borrower obtaining on the Amendment No. 4 Effective Date (i) additional 2025 Secured Notes in an aggregate principal amount of $900,000,000, (ii) 2026 Secured Notes in an aggregate principal amount of €325,000,000, and (iv) 2026 Notes in an aggregate principal amount of €250,000,000, (d) the repayment of certain Revolving Loans on the Amendment No. 4 Effective Date, (e) the redemption of the 2022 Secured Notes (for the avoidance of doubt, the redemption of the 2022 Secured Notes will not occur on the Amendment No. 4 Effective Date, but will occur on or prior to March 2, 2018) and (f) the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provision of this definition (the “Amendment No. 4 Transaction Costs”).   “Amendment No. 4 Transaction Costs”: as defined in the definition of “Amendment No. 4 Transactions.”   “Amendment No. 5”: Amendment No. 5 to this Agreement, dated as of the Amendment No. 5 Effective Date.   “Amendment No. 5 Effective Date”: November 20, 2019.   “Annual Operating Budget”: as defined in Section 6.2(c).   “Anticipated Cure Deadline”: as defined in Section 8.2(a).   “Applicable Margin” or “Applicable Commitment Fee Rate”: for any day, with respect to (i) the Loans under the Revolving Facilities and the commitment fee payable hereunder, the applicable rate per annum determined pursuant to the Pricing Grid and (ii) the Loans under the Term Loan Facility, in the case of the Applicable Margin, 1.75% with respect to Initial Term B-5 Loans that are ABR Loans and 2.75% with respect to Initial Term B-5 Loans that are Eurocurrency Loans; provided that from the Closing Date until the delivery of the financial statements for the first full fiscal quarter ending after the Closing Date, (a) the Applicable Margin shall be 2.00% with respect to Loans under the Revolving Facilities that are ABR Loans and 3.00% with respect to Loans under the Revolving Facilities that are Eurocurrency Loans and (b) the Applicable Commitment Fee Rate shall be 0.50%.   “Applicable Period”: as defined in Section 10.19.   -5-      “Application”: an application, in such form as the relevant Issuing Lender may specify from time to time, requesting such Issuing Lender to issue a Letter of Credit.   “Approved Fund”: as defined in Section 10.6(b).   “Asset Sale”: any Disposition of Property or series of related Dispositions of Property by Holdings or any of its Restricted Subsidiaries not in the ordinary course of business (a) under Section 7.5(e), (p), (v) or (w) or (b) not otherwise permitted under Section 7.5, in each case, which yields Net Cash Proceeds in excess of $7,500,000.   “Assignee”: as defined in Section 10.6(b).   “Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit D.   “Available Amount”: as at any date, the sum of, without duplication:   (a)       the aggregate cumulative amount, not less than zero, of 100% of Excess Cash Flow minus the Excess Cash Flow Application Amount for each fiscal year beginning with the fiscal year ending December 31, 2014;   (b)       the Net Cash Proceeds received after the Closing Date and on or prior to such date from any Equity Issuance by, or capital contribution to, the Borrower (which is not Disqualified Capital Stock), other than Cure Amounts and other than any issuance in connection with an Investment pursuant to Section 7.7(aa);   (c)       the aggregate amount of proceeds received after the Closing Date and on or prior to such date that (i) would have constituted Net Cash Proceeds pursuant to clause (a) of the definition of “Net Cash Proceeds” except for the operation of any of (A) the Dollar threshold set forth in the definition of “Asset Sale” and (B) the Dollar threshold set forth in the definition of “Recovery Event” or (ii) constitutes Declined Proceeds;   (d)       the aggregate principal amount of any Indebtedness or Disqualified Capital Stock of Holdings or any Restricted Subsidiary issued after the Closing Date (other than Indebtedness or Disqualified Capital Stock issued to a Restricted Subsidiary), which has been extinguished after being converted into or exchanged for Capital Stock (other than Disqualified Capital Stock) of Holdings or any Parent Company;   (e)       the amount received by Holdings or any Restricted Subsidiary in cash (and the Fair Market Value of Property other than cash received by Holdings or any Restricted Subsidiary) after the Closing Date from any dividend, other distribution or return of capital by an Unrestricted Subsidiary;   (f)        in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, Holdings or any Restricted Subsidiary, the Fair Market Value of the Investments of Holdings or any Restricted Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable);   -6-      (g)       an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received in cash or Cash Equivalents by Holdings or any Restricted Subsidiary in respect of any Investments made pursuant to Section 7.7(h)(C), Section 7.7(h)(D), Section 7.7(v)(ii), Section 7.7(v)(iii), Section 7.7(z)(ii)(C) or Section 7.7(z)(ii)(D); and   (h)       the aggregate amount actually received in cash and Cash Equivalents by Holdings or any Restricted Subsidiary in connection with the sale, transfer or other disposition of its ownership interest in any joint venture that is not a Subsidiary or in any Unrestricted Subsidiary, in each case, to the extent of the Investment in such joint venture or Unrestricted Subsidiary;   minus, the sum of:   (a)       the amount of Restricted Payments made after the Closing Date pursuant to Section 7.6(b)(ii);   (b)       the amount of any Investments made after the Closing Date pursuant to Section 7.7(h)(D), Section 7.7(v)(iii) or Section 7.7(z)(ii)(D); and   (c)       the amount of prepayments of Junior Financing or Existing Notes Financing made after the Closing Date pursuant to Section 7.8(i)(B).   “Available Dollar Revolving Commitment”: as to any Dollar Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Dollar Revolving Commitment then in effect (including any New Loan Commitments which are Dollar Revolving Commitments) over (b) such Lender’s Dollar Revolving Extensions of Credit then outstanding.   “Available Multi-Currency Revolving Commitment”: as to any Multi-Currency Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Multi-Currency Revolving Commitment then in effect (including any New Loan Commitments which are Multi-Currency Revolving Commitments) over (b) such Lender’s Multi-Currency Revolving Extensions of Credit then outstanding.   “Available Revolving Commitment”: the collective reference to the Available Dollar Revolving Commitment and the Available Multi-Currency Revolving Commitment.   “Bail-In Action”: the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.   “Bail-In Legislation”: with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.   “Bally Acquisition and Amendment Effectiveness Date”: as defined in Amendment No. 1.   “Bally Acquisition Date”: the date of consummation of the Bally Merger.   “Bally Commitment Letter”: the commitment letter, dated as of August 1, 2014, among Holdings, the Borrower and the Lead Arrangers (as amended, restated or otherwise supplemented from time to time).   -7-      “Bally Material Adverse Effect”: any change, effect, development or circumstance which, individually or in the aggregate, has resulted in or would reasonably be expected to result in a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that changes, effects, developments or circumstances to the extent resulting from, directly or indirectly, the following shall be excluded from the determination of Bally Material Adverse Effect: (i) any change, effect, development or circumstance in any of the industries or markets in which the Company or its Subsidiaries operate; (ii) any change in any Law or GAAP (or changes in interpretations or enforcement of any Law or GAAP) applicable to the Company or any of its Subsidiaries or any of their respective properties or assets; (iii) changes in general economic, regulatory or political conditions or the financial, credit or securities markets in general (including changes in interest or exchange rates, stock, bond and/or debt prices); (iv) any acts of God, natural disasters, earthquakes, hurricanes, terrorism, armed hostilities, war or any escalation or worsening thereof; (v) the negotiation, execution, announcement or consummation of the Bally Merger Agreement or the transactions contemplated thereby (including the impact of any of the foregoing on relationships with customers (including order volumes), suppliers, licensors, employees (including employee attrition) or regulators (including any Gaming Authority)), and any Proceeding arising therefrom or in connection therewith (provided that the provisions of this clause (v) shall not apply to the representations and warranties set forth in Section 4.4 of the Bally Merger Agreement); (vi) any action taken as expressly permitted or required by the Bally Merger Agreement (it being understood and agreed that actions taken by the Company or its Subsidiaries pursuant to its obligations under Section 6.1 of the Bally Merger Agreement to conduct its business shall not be excluded in determining whether a Bally Material Adverse Effect has occurred) or any action taken at the written direction of Parent or Merger Sub; (vii) any changes in the market price or trading volume of the Company Common Stock, any changes in credit ratings or any failure (in and of itself) by the Company or its Subsidiaries to meet internal, analysts’ or other earnings estimates, budgets, plans, forecasts or financial projections of its revenues, earnings or other financial performance or results of operations (but not excluding any change, effect, development or circumstance giving rise to any such change or failure to the extent such change, effect, development or circumstance is not otherwise excluded pursuant to this definition); (viii) changes, effects, developments or circumstances to the extent arising from or relating to the identity of Parent or Merger Sub or Parent’s ability to obtain the Gaming Approvals; or (ix) any matter disclosed in the Company Disclosure Letter to the extent reasonably foreseeable from the face of such disclosure; but only to the extent, in the case of clauses (i), (ii), (iii) or (iv), such change, effect, development or circumstance does not disproportionately impact the Company and its Subsidiaries, taken as a whole, relative to other companies in the industries in which the Company or its Subsidiaries operate. Capitalized terms used in this definition (other than “Bally Merger Agreement” and “Bally Material Adverse Effect”) shall have the meanings set forth in the Bally Merger Agreement.   “Bally Merger”: the merger of Scientific Games Nevada, Inc. with and into Bally Target pursuant to, and as contemplated by, the Bally Merger Agreement.   “Bally Merger Agreement”: the Agreement and Plan of Merger, dated as of August 1, 2014, by and among, Holdings, Scientific Games Nevada, Inc., the Borrower and Bally Target.   “Bally Refinancing”: the repayment of Indebtedness under and termination of the Existing Bally Credit Agreement on the Bally Acquisition Date.   “Bally Target”: Bally Technologies, Inc., a Nevada corporation.   “Bally Transaction Costs”: as defined in the definition of “Bally Transactions.”   -8-      “Bally Transactions”: the consummation of the Bally Merger in accordance with the terms of the Bally Merger Agreement and the other transactions described therein, together with each of the following transactions consummated or to be consummated in connection therewith:   (a)       the borrowing by the Borrower of the Initial Term B-2 Loans and, if applicable, Revolving Loans to consummate the Bally Transactions;   (b)       the issuance by the New Notes Issuer of senior secured (or, at the option of the New Notes Issuer, unsecured) notes pursuant to a private placement under Rule 144A or other private placement (the “New Secured Notes” and, together with the New Unsecured Notes, the “New Notes”) yielding up to $750 million in gross cash proceeds; provided that (x) to the extent the aggregate principal amount of Term B-2 Loans made to consummate the Bally Transactions is greater than $1,735 million, the total aggregate amount of New Secured Notes shall be reduced by such difference and (y) to the extent the aggregate principal amount of Term B-2 Loans made to consummate the Bally Transactions is less than $1,735 million, the total aggregate amount of New Secured Notes shall be increased by such difference; provided, further, that the maturity of the New Secured Notes shall not be shorter than the maturity of the Term B-2 Loans, and the amount of any variation in principal amounts referred to in the above proviso shall be agreed to between the Borrower and the Lead Arrangers;   (c)       the issuance by the New Notes Issuer of senior unsecured notes pursuant to a private placement under Rule 144A or other private placement yielding up to $2,700 million in gross cash proceeds from the issuance of unsecured notes in one or more tranches so long as such notes do not have a maturity shorter than the maturity of the Term B-2 Loans (the “New Unsecured Notes”);   (d)       the occurrence of the Bally Refinancing; and   (e)       the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition (the “Bally Transaction Costs”).   “Base Available Amount”: $50,000,000 minus, the sum of:   (a)       the amount of Restricted Payments made after the Closing Date pursuant to Section 7.6(b)(i);   (b)       the amount of any Investments made after the Closing Date pursuant to Section 7.7(h)(C), Section 7.7(v)(ii) or Section 7.7(z)(ii)(C); and   (c)       the amount of prepayments of Junior Financing or Existing Notes Financing made after the Closing Date pursuant to Section 7.8(i)(A).   “Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.   “Benefited Lender”: as defined in Section 10.7(a).   -9-      “Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).   “Board of Directors”: (a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (b) with respect to a partnership, the board of directors of the general partner of the partnership, or any committee thereof duly authorized to act on behalf of such board or the board or committee of any Person serving a similar function; (c) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof or any Person or Persons serving a similar function; and (d) with respect to any other Person, the board or committee of such Person serving a similar function.   “Borrower”: as defined in the preamble hereto.   “Borrower Materials”: as defined in Section 10.2(c).   “Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.   “Borrowing Minimum”: (a) in the case of a Revolving Loan denominated in Dollars, $1,000,000, (b) in the case of a Revolving Loan denominated in Euro, €1,000,000, (c) in the case of a Revolving Loan denominated in Pounds, £500,000 and (d) in the case of a Revolving Loan denominated in any other Permitted Foreign Currency, such roughly equivalent amount in such Permitted Foreign Currency as may be reasonably specified by the Administrative Agent.   “Borrowing Multiple”: (a) in the case of a Revolving Loan denominated in Dollars, $500,000, (b) in the case of a Revolving Loan denominated in Euro, €500,000, (c) in the case of a Revolving Loan denominated in Pounds, £250,000 and (d) in the case of a Revolving Loan denominated in any other Permitted Foreign Currency, such roughly equivalent amount in such Permitted Foreign Currency as may be reasonably specified by the Administrative Agent.   “Business”: the business activities and operations of Holdings and/or its Subsidiaries on the Closing Date, after giving effect to the Transactions and, the business activities and operations of Holdings and/or its Subsidiaries on the Bally Acquisition Date, after giving effect to the Bally Transactions.   “Business Day”: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the Administrative Agent’s office with respect to Obligations denominated in Dollars is located and:   (a)       if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan, means any such day that is also a London Banking Day;   (b)       if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan, means a TARGET Day;   -10-      (c)       if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in a currency other than Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and   (d)       if such day relates to any fundings, disbursements, settlements and payments in a currency other than Dollars or Euro in respect of a Eurocurrency Loan denominated in a currency other than Dollars or Euro, or any other dealings in any currency other than Dollars or Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.   “Calculation Date”: as defined in Section 1.3(a).   “Capital Expenditures”: for any period, with respect to any Person, the aggregate of all cash expenditures by such Person for the acquisition or leasing (pursuant to a lease under which obligations are Capital Lease Obligations but excluding any amount representing capitalized interest) of fixed or capital assets, computer software or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a balance sheet of such Person, and deferred installation costs, and including wagering systems expenditures and other intangible assets and intellectual property and software development expenditures; provided that in any event the term “Capital Expenditures” shall exclude: (i) any Permitted Acquisition and any other Investment permitted hereunder; (ii) any expenditures to the extent financed with any Reinvestment Deferred Amount or the proceeds of any Disposition or Recovery Event that are not required to be applied to prepay Term Loans; (iii) expenditures for leasehold improvements for which such Person is reimbursed in cash or receives a credit; (iv) capital expenditures to the extent they are made with the proceeds of equity contributions (other than in respect of Disqualified Capital Stock) made to the Borrower after the Closing Date; (v) capitalized interest in respect of operating or capital leases; (vi) the book value of any asset owned to the extent such book value is included as a capital expenditure as a result of reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; and (vii) any non-cash amounts reflected as additions to property, plant or equipment on such Person’s consolidated balance sheet.   “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal Property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP, provided that for the purposes of this definition, “GAAP” shall mean generally accepted accounting principles in the United States as in effect on the Closing Date.   “Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation).   “Cash Equivalents”:   (a)       direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within 18 months from the date of acquisition thereof;   -11-      (b)       certificates of deposit, time deposits and eurodollar time deposits with maturities of 18 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 18 months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $250,000,000;   (c)       repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above;   (d)       commercial paper having a rating of at least A-1 from S&P or P-1 from Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another rating agency) and maturing within 18 months after the date of acquisition and Indebtedness and preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 18 months or less from the date of acquisition;   (e)       readily marketable direct obligations issued by or directly and fully guaranteed or insured by any state of the United States or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P with maturities of 18 months or less from the date of acquisition;   (f)        marketable short-term money market and similar securities having a rating of at least P-1 or A-1 from Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another rating agency) and in each case maturing within 18 months after the date of creation or acquisition thereof;   (g)       Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s;   (h)       (x) such local currencies in those countries in which Holdings and its Restricted Subsidiaries transact business from time to time in the ordinary course of business and (y) investments of comparable tenor and credit quality to those described in the foregoing clauses (a) through (g) or otherwise customarily utilized in countries in which Holdings and its Restricted Subsidiaries operate for short term cash management purposes; and   (i)        Investments in funds which invest substantially all of their assets in Cash Equivalents of the kinds described in clauses (a) through (h) of this definition.   “Cash Management Obligations”: obligations owed by any Loan Party to a Person who, as of the time of incurrence of such obligations (or, in the case of any such obligations in existence on the Closing Date or the Bally Acquisition Date, within 30 days after such date), is the Administrative Agent, any other Agent, any Lender or any Affiliate of the Administrative Agent, any other Agent or a Lender, in respect of any overdraft and related liabilities arising from treasury, depository and cash management services, credit or debit card, or any automated clearing house transfers of funds.   “Certificated Security”: as defined in the Guarantee and Collateral Agreement.   “Change of Control”: as defined in Section 8.1(j).   “Charges”: as defined in Section 10.20.   -12-      “Chattel Paper”: as defined in the Guarantee and Collateral Agreement.   “Closing Date”: October 18, 2013.   “Code”: the Internal Revenue Code of 1986, as amended from time to time (unless otherwise indicated).   “Co-Documentation Agents”: Fifth Third Bank, HSBC Securities (USA) Inc. and PNC Capital Markets LLC, each in its capacity as co-documentation agent.   “Collateral”: as defined in the Guarantee and Collateral Agreement.   “Collateral Agent”: Bank of America, N.A., in its capacity as collateral agent for the Secured Parties under the Security Documents and any of its successors and permitted assigns in such capacity in accordance with Section 9.9.   “Colombia Matter”: the proceedings pending in Colombia between, among others, the Borrower, Empresa Colombiana de Recoursos para la Salud, S.A., a Colombian governmental agency and/or any successor Person, as further disclosed in Holdings’ Form 10-K filed with the SEC for the fiscal year ended December 31, 2015 (or other proceedings to the extent arising out of or relating to the events or circumstances giving rise to such pending proceedings).   “Commitment”: as to any Lender, the sum of the Revolving Commitments, the Extended Revolving Commitments and the New Loan Commitments (in each case, if any) of such Lender.   “Committed Reinvestment Amount”: as defined in the definition of “Reinvestment Prepayment Amount.”   “Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.   “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.   “Commonly Controlled Plan”: as defined in Section 4.12(b).   “Company”: as defined in the preamble hereto.   “Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.   “Confidential Information”: as defined in Section 10.14.   “Consolidated Current Assets”: at any date, all amounts (other than (a) cash and Cash Equivalents, (b) deferred financing fees and (c) deferred taxes, so long as such items described in clauses (b) and (c) are not cash items) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date.   -13-      “Consolidated Current Liabilities”: at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date, but excluding (a) the current portion of any Indebtedness of Holdings and its Restricted Subsidiaries, (b) without duplication, all Indebtedness consisting of Loans or L/C Obligations, to the extent otherwise included therein, (c) amounts for deferred taxes and non-cash tax reserves accounted for pursuant to FASB Interpretation No. 48, and (d) any equity compensation related liability.   “Consolidated EBITDA”: of any Person for any period, Consolidated Net Income of such Person and its Restricted Subsidiaries for such period plus, without duplication and, if applicable, except with respect to clauses (i), (j), (p) and (s) of this definition, to the extent deducted in calculating such Consolidated Net Income for such period, the sum of:   (a)       provisions for taxes based on income (or similar taxes in lieu of income taxes), profits, capital (or equivalents), including federal, foreign, state, local, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period;   (b)       Consolidated Net Interest Expense and, to the extent not reflected in such Consolidated Net Interest Expense, any net losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, amortization or write-off of debt discount and debt issuance costs and commissions, premiums, discounts and other fees and charges associated with Indebtedness (including commitment, letter of credit and administrative fees and charges with respect to the Facilities);   (c)       depreciation and amortization expense and impairment charges (including deferred financing fees, capitalized software expenditures, intangibles (including goodwill), organization costs and amortization of unrecognized prior service costs, and actuarial gains and losses related to pensions, and other post-employment benefits);   (d)       any extraordinary, unusual or non-recurring charges, expenses or losses (including (x) losses on sales of assets outside of the ordinary course of business and restructuring and integration costs or reserves, including any severance costs, costs associated with office and facility openings, closings and consolidations, relocation costs and other non-recurring business optimization expenses and legal and settlement costs, and (y) any expenses in connection with the Transactions and the Bally Transactions);   (e)       any other non-cash charges, expenses or losses, including write-offs and write-downs and any non-cash cost related to the termination of any employee pension benefit plan (including, without limitation, defined benefit pension plans or deferred compensation agreements) (except to the extent such charges, expenses or losses represent an accrual of or reserve for cash expenses in any future period or an amortization of a prepaid cash expense paid in a prior period);   (f)        non-cash stock-based and other equity-based compensation expenses;   (g)       transaction costs, fees, losses and expenses (in each case whether or not any transaction is actually consummated) (including Transaction Costs, Bally Transaction Costs, Amendment No. 2 Transaction Costs, Amendment No. 3 Transaction Costs, Amendment No. 4 Transaction Costs and including those with respect to any amendments or waivers of the Loan Documents, and those payable in connection with the sale of Capital Stock, recapitalization, the incurrence of Indebtedness permitted by Section 7.2, transactions permitted by Section 7.4, Dispositions permitted by Section 7.5, or any Permitted Acquisition or other Investment permitted by Section 7.7);   -14-      (h)       all management, monitoring, consulting and advisory fees, and due diligence expense and other transaction fees and expenses and related expenses paid (or any accruals related to such fees or related expenses) (including by means of a dividend) during such period;   (i)        proceeds from any business interruption insurance (to the extent not reflected as revenue or income in such statement of such Consolidated Net Income);   (j)        the amount of expected cost savings and other operating improvements and synergies reasonably identifiable and reasonably supportable (as determined by Holdings or any Restricted Subsidiary in good faith) to be realized as a result of the Transactions, the Bally Transactions, any acquisition or Disposition (including the termination or discontinuance of activities constituting such business), any Investment, operating improvements, restructurings, cost savings initiatives, operational change or similar initiatives or transactions taken or committed to be taken during such period (in each case calculated on a pro forma basis as though such cost savings and other operating improvements and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions to the extent already included in the Consolidated Net Income for such period, provided that (i) (A) such cost savings, operating improvements and synergies are reasonably anticipated to result from such actions, (B) such actions have been taken, or have been committed to be taken and the benefits resulting therefrom are anticipated by the Borrower to be realized within 12 months and (C) amounts added to Consolidated EBITDA pursuant to this clause (j), shall not in the aggregate exceed 25% of Consolidated EBITDA (determined prior to giving effect to such amounts) in any four consecutive fiscal quarter period and (ii) no cost savings shall be added pursuant to this clause (j) to the extent already included in clause (d) above with respect to such period;   (k)       earn-out, contingent compensation and similar obligations incurred in connection with any acquisition or other investment and paid (if not previously accrued) or accrued;   (l)        charges, losses, lost profits, expenses or write-offs to the extent indemnified or insured by a third party, including expenses covered by indemnification provisions in any Qualified Contract or any agreement in connection with the Transactions, the Bally Transactions, a Permitted Acquisition or any other acquisition or Investment permitted by Section 7.7, in each case, to the extent that coverage has not been denied (other than any such denial that is being contested by Holdings and/or its Restricted Subsidiaries in good faith) and so long as such amounts are actually reimbursed to such Person and its Restricted Subsidiaries in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (l) (and to the extent not so reimbursed within one year, such amount not reimbursed shall be deducted from Consolidated EBITDA during the next measurement period); it being understood that such amount may subsequently be included in Consolidated EBITDA in a measurement period to the extent of amounts actually reimbursed);   (m)       net realized losses relating to amounts denominated in foreign currencies resulting from the application of FASB ASC 830 (including net realized losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains from related Hedge Agreements);   -15-        (n)       costs of surety bonds of such Person and its Restricted Subsidiaries in connection with financing activities,   (o)       costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith;   (p)       the pro forma adjustments described on Schedule 1.1A (as updated pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date);   (q)        costs, charges, accruals, reserves or expenses attributable to cost savings initiatives, operating expense reductions, transition, opening and pre-opening expenses, business optimization, management changes, restructurings and integrations (including inventory optimization programs, software and other intellectual property development costs, costs related to the closure or consolidation of facilities and curtailments, costs related to entry into new markets, consulting fees, signing costs, retention or completion bonuses, relocation expenses, severance payments, and modifications to pension and post-retirement employee benefit plans, new systems design and implementation costs and project startup costs) or other fees relating to any of the foregoing;   (r)       (i) any net loss resulting in such period from Hedge Agreements and the application of FASB ASC Topic 815, (ii) any net loss resulting in such period from currency translation losses related to currency remeasurements of Indebtedness and (iii) the amount of loss resulting in such period from a sale of receivables, payment intangibles and related assets in connection with a receivables financing;   (s)       cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to the below for any previous period and not added back;   (t)        to the extent treated as an expense in the period paid or incurred, any Specified Concession Obligations paid or incurred in such period; and   (u)       charges not to exceed $8,000,000 in respect of liabilities of Northstar Lottery Group, LLC, as disclosed in Holdings’ quarterly report for the fiscal quarter ending June 30, 2014;   minus, to the extent reflected as income or a gain in the statement of such Consolidated Net Income for such period, the sum, without duplication, of:   (a)       any extraordinary, unusual or non-recurring income or gains (including gains on the sales of assets outside of the ordinary course of business);   (b)       any other non-cash income or gains (other than the accrual of revenue in the ordinary course), but excluding any such items (i) in respect of which cash was received in a prior period or will be received in a future period or (ii) which represent the reversal in such period of any accrual of, or reserve for, anticipated cash charges in any prior period where such accrual or reserve is no longer required, all as determined on a consolidated basis;   -16-     (c)       gains realized and income accrued in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items;   (d)       the amount of cash received in such period in respect of any non-cash income or gain in a prior period (to the extent such non-cash income or gain previously increased Consolidated Net Income in a prior period);   (e)        net realized gains relating to amounts denominated in foreign currencies resulting from the application of FASB ASC 830 (including net realized gains from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized losses from related Hedge Agreements); and   (f)       (i) any net gain resulting in such period from Hedge Agreements and the application of FASB ASC Topic 815, (ii) any net gain resulting in such period from currency translation gains related to currency remeasurements of Indebtedness and (iii) the amount of gain resulting in such period from a sale of receivables, payment intangibles and related assets in connection with a receivables financing;   provided that for purposes of calculating Consolidated EBITDA of Holdings and its Restricted Subsidiaries for any period, (A) the Consolidated EBITDA of any Person or Properties constituting a division or line of business of any business entity, division or line of business, in each case, acquired by Holdings, the Borrower or any of the Restricted Subsidiaries during such period and assuming any synergies, cost savings and other operating improvements to the extent determined by the Borrower in good faith to be reasonably anticipated to be realizable within 12 months following such acquisition, or of any Subsidiary designated as a Restricted Subsidiary during such period, shall be included on a pro forma basis for such period (but assuming the consummation of such acquisition or such designation, as the case may be, occurred on the first day of such period) and (B) the Consolidated EBITDA of any Person or Properties constituting a division or line of business of any business entity, division or line of business, in each case, Disposed of by Holdings, the Borrower or any of the Restricted Subsidiaries during such period, or of any Subsidiary designated as an Unrestricted Subsidiary during such period, shall be excluded for such period (assuming the consummation of such Disposition or such designation, as the case may be, occurred on the first day of such period). With respect to each joint venture or minority investee of Holdings or any of its Restricted Subsidiaries, for purposes of calculating Consolidated EBITDA, the amount of EBITDA (calculated in accordance with this definition) attributable to such joint venture or minority investee, as applicable, that shall be counted for such purposes (without duplication of amounts already included in Consolidated Net Income) shall equal the product of (x) Holdings’ or such Restricted Subsidiary’s direct and/or indirect percentage ownership of such joint venture or minority investee and (y) the EBITDA (calculated in accordance with this definition) of such joint venture or minority investee. Unless otherwise qualified, all references to “Consolidated EBITDA” in this Agreement shall refer to Consolidated EBITDA of Holdings. Consolidated EBITDA shall be deemed to be $144,911,000 for the fiscal quarter ended December 31, 2012, $140,883,000 for the fiscal quarter ended March 31, 2013, and $165,203,000 for the fiscal quarter ended June 30, 2013.   “Consolidated Group”: as defined in Section 7.6(c).   “Consolidated Net First Lien Leverage”: at any date, (a) the aggregate principal amount of all senior first-lien secured Funded Debt of Holdings and its Restricted Subsidiaries on such date, minus (b) Unrestricted Cash on such date (not to exceed $250,000,000); provided, however, that solely for purposes of testing actual compliance with the financial covenant contained in Section 7.1, clause (b) above shall instead be (i) Unrestricted Cash on such date (not to exceed $150,000,000) plus (ii) Debt Redemption Cash on such date in excess of amounts included in clause (b)(i) (if any) (provided that, for the avoidance of doubt, the senior first-lien secured Funded Debt to be repaid, redeemed or otherwise satisfied and discharged with such Debt Redemption Cash shall be deemed outstanding for purposes of clause (a) above).   -17-     “Consolidated Net First Lien Leverage Ratio”: as of any date of determination, the ratio of (a) Consolidated Net First Lien Leverage on such date to (b) Consolidated EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended Test Period.   “Consolidated Net Income”: of any Person for any period, the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net Income of Holdings and its consolidated Restricted Subsidiaries for any period, there shall be excluded (a) the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with Holdings or any of its Restricted Subsidiaries, (b) the income (or loss) of any Person (other than a Restricted Subsidiary) in which Holdings or any of its Restricted Subsidiaries has an ownership interest (including any joint venture), except to the extent of dividends, return of capital or similar distributions actually received by Holdings or such Restricted Subsidiary (which dividends, return of capital and distributions shall be included in the calculation of Consolidated Net Income) (c)(x) any net unrealized gains and losses resulting from fair value accounting required by FASB ASC 815 (including as a result of the mark-to-market of obligations of Hedge Agreements and other derivative instruments) and (y) any net unrealized gains and losses relating to mark-to-market of amounts denominated in foreign currencies resulting from the application of FASB ASC 830 (including net unrealized gain and losses from exchange rate fluctuations on intercompany balances and balance sheet items), and (d) any income (loss) for such period attributable to the early extinguishment of Indebtedness. Unless otherwise qualified, all references to “Consolidated Net Income” in this Agreement shall refer to Consolidated Net Income of Holdings. Notwithstanding the foregoing, for purposes of calculating Excess Cash Flow, Consolidated Net Income shall not include (i) extraordinary items for such period and (ii) the cumulative effect of a change in accounting principles during such period.   “Consolidated Net Interest Expense”: of any Person for any period, (a) the sum of (i) total cash interest expense (including that attributable to Capital Lease Obligations) of such Person and its Restricted Subsidiaries for such period with respect to all outstanding Indebtedness of such Person and its Restricted Subsidiaries plus (ii) all cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Capital Stock of such Person made during such period, minus (b) the sum of (i) total cash interest income of such Person and its Restricted Subsidiaries for such period (excluding any interest income earned on receivables due from customers), in each case determined in accordance with GAAP plus (ii) any one time financing fees (to the extent included in such Person’s consolidated interest expense for such period), including, with respect to the Borrower, those paid in connection with the Loan Documents or in connection with any amendment thereof. Unless otherwise qualified, all references to “Consolidated Net Interest Expense” in this Agreement shall refer to Consolidated Net Interest Expense of Holdings.   “Consolidated Net Total Leverage”: at any date, (a) the aggregate principal amount of all Funded Debt of Holdings and its Restricted Subsidiaries on such date, minus (b) Unrestricted Cash on such date (not to exceed $250,000,000), in each case determined on a consolidated basis in accordance with GAAP.   “Consolidated Net Total Leverage Ratio”: as of any date of determination, the ratio of (a) Consolidated Net Total Leverage on such day to (b) Consolidated EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended Test Period.   -18-     “Consolidated Total Assets”: the total assets of Holdings and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the most recently delivered consolidated balance sheet of Holdings and its Restricted Subsidiaries, determined on a pro forma basis.   “Consolidated Working Capital”: at any date, the difference of (a) Consolidated Current Assets on such date minus (b) Consolidated Current Liabilities on such date, provided that, for purposes of calculating Excess Cash Flow, increases or decreases in Consolidated Working Capital shall be calculated without regard to changes in the working capital balance as a result of non-cash increases or decreases thereof that will not result in future cash payments or receipts or cash payments or receipts in any previous period, in each case, including any changes in Consolidated Current Assets or Consolidated Current Liabilities as a result of (i) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent, (ii) the effects of purchase accounting and (iii) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under Hedge Agreements.   “Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any written or recorded agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.   “Converted Term B-4 Loans”: as defined in Amendment No. 4.   “Converted Term B-5 Lender”: each Term B-4 Lender that has consented to exchange its Term B-4 Loans into a Term B-5 Loan, and that has been allocated a Term B-5 Loan by the Administrative Agent.   “Co-Syndication Agents”: JPMorgan Chase Bank, N.A. and Deutsche Bank Securities Inc. each in its capacity as co-syndication agent.   “Cure Amount”: as defined in Section 8.2(a).   “Cure Right”: as defined in Section 8.2(a).   “Debt Fund Affiliate”: any Affiliate of the Sponsor (other than Holdings and its Subsidiaries) that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the Sponsor does not, directly or indirectly, possess the power to direct or cause the direction of the investment policies of such Affiliate.   “Debt Redemption Cash”: any Unrestricted Cash that is to be applied to repay, redeem or otherwise satisfy and discharge senior first-lien secured Funded Debt of Holdings or its Restricted Subsidiaries, pending solely the expiration of certain notice periods or similar occurrences.   “Debtor Relief Laws”: the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.   “Declined Amount”: as defined in Section 2.12(e).   “Declined Proceeds”: the amount of any prepayment declined by the Required Prepayment Lenders plus any Declined Amounts.   -19-     “Default”: any of the events specified in Section 8.1, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.   “Defaulting Lender”: subject to Section 2.7(a), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder, or (ii) pay to the Administrative Agent, any Issuing Lender, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, any Issuing Lender or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect with respect to its funding obligations hereunder or, solely with respect to a Revolving Lender, under other agreements generally in which it commits to extend credit, (c) has failed, within seven Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.   “Derivatives Counterparty”: as defined in Section 7.6.   “Designated Jurisdiction”: any country or territory to the extent that such country or territory itself is the subject of any Sanction.   “Designated Non-cash Consideration”: the Fair Market Value of non-cash consideration received by Holdings or one of its Restricted Subsidiaries in connection with a Disposition that is so designated as Designated Non-cash Consideration pursuant to an officers’ certificate, setting forth the basis of such valuation, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration within 180 days of receipt thereof.   “Designation Date”: as defined in Section 2.26(f).   “Disinterested Director”: as defined in Section 7.9.   “Disposition”: with respect to any Property, any sale, sale and leaseback, assignment, conveyance, transfer or other disposition thereof, in each case, to the extent the same constitutes a complete sale, sale and leaseback, assignment, conveyance, transfer or other disposition, as applicable. The terms “Dispose” and “Disposed of” shall have correlative meanings.   -20-     “Disqualified Capital Stock”: Capital Stock that (a) requires the payment of any dividends (other than dividends payable solely in shares of Qualified Capital Stock), (b) matures or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof (other than solely for Qualified Capital Stock), in each case in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation on a fixed date or otherwise (including as the result of a failure to maintain or achieve any financial performance standards) or (c) are convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness, Capital Stock or other assets other than Qualified Capital Stock, in the case of each of clauses (a), (b) and (c), prior to the date that is 91 days after the Latest Maturity Date (other than (i) upon payment in full of the Obligations (other than (x) indemnification and other contingent obligations not yet due and owing and (y) Obligations in respect of Specified Hedge Agreements or Cash Management Obligations) or (ii) upon a “change in control”; provided that any payment required pursuant to this clause (ii) is subject to the prior repayment in full of the Obligations (other than (x) indemnification and other contingent obligations not yet due and owing and (y) Obligations in respect of Specified Hedge Agreements or Cash Management Obligations) that are then accrued and payable and the termination of the Commitments); provided further, however, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of Holdings, the Borrower or the Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by Holdings, the Borrower or a Subsidiary in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.   “Disqualified Institution”: (i) those institutions identified by the Borrower in writing to the Administrative Agent on or prior to August 5, 2014, (ii) any other Person who (A) is not registered or licensed with, or approved, qualified or found suitable by, a Gaming Authority, or (B) has been disapproved, disqualified, denied a license, qualification or approval or found unsuitable by a Gaming Authority, or who has failed to timely submit a required application and other required documentation pursuant to applicable Gaming Laws or (C) has withdrawn such application or other documentation (except where requested or permitted, without prejudice, by the applicable Gaming Authority) (in the case of each of clauses (A) and (B), to the extent required under applicable Gaming Laws or requested by a Gaming Authority) and (iii) business competitors of Holdings and its Subsidiaries identified by Borrower in writing to the Administrative Agent from time to time, and, in the case of clauses (i) and (iii) any known Affiliates readily identifiable by name. A list of the Disqualified Institutions will be posted by the Administrative Agent on the Platform and available for inspection by all Lenders.   “Do not have Unreasonably Small Capital”: Holdings and its Subsidiaries taken as a whole after consummation of the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions, as applicable, is a going concern and has sufficient capital to reasonably ensure that it will continue to be a going concern for the period from the date hereof through the Latest Maturity Date.   “Dollar Equivalent”: at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Permitted Foreign Currency, the equivalent amount thereof in Dollars at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Permitted Foreign Currency.   “Dollar Issuing Lenders”: (a) Bank of America, N.A. (including with respect to Existing Letters of Credit under clause (b) of the definition of “Existing Letters of Credit” that are Dollar Letters of Credit), (b) with respect to Existing Letters of Credit under clause (a) of the definition of “Existing Letters of Credit” that are Dollar Letters of Credit, JPMorgan Chase Bank, N.A. and (c) any other Dollar Revolving Lender from time to time designated by the Borrower, in its sole discretion, as a Dollar Issuing Lender with the consent of such other Dollar Revolving Lender.   “Dollar L/C Disbursements”: as defined in Section 3.4(a)(i).   “Dollar L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired face amount of the then outstanding Dollar Letters of Credit and (b) the amount of drawings under Dollar Letters of Credit that have not then been reimbursed. The Dollar L/C Obligations of any Lender at any time shall be its Dollar Revolving Percentage of the total Dollar L/C Obligations at such time. For purposes of computing the amount available to be drawn under any Dollar Letter of Credit, the amount of such Dollar Letter of Credit shall be determined in accordance with Section 1.5. For all purposes of this Agreement, if on any date of determination a Dollar Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, upon notice from the Administrative Agent to the Borrower such Dollar Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.   -21-     “Dollar L/C Participants”: the collective reference to all the Dollar Revolving Lenders other than the applicable Dollar Issuing Lender and, for purposes of Section 3.4(d), the collective reference to all Dollar Revolving Lenders.   “Dollar Letter of Credit”: a Letter of Credit denominated in Dollars and issued by any Dollar Issuing Lender under the Dollar Revolving Commitments.   “Dollar Revolving Commitments”: as to any Dollar Revolving Lender, the obligation of such Lender, if any, to make Dollar Revolving Loans and participate in Dollar Letters of Credit and Swingline Loans in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Dollar Revolving Commitment” opposite such Lender’s name on Schedule 2.1, or, as the case may be, in the Assignment and Assumption, Joinder Agreement or Lender Joinder Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to an Extension Amendment, an Increase Supplement or otherwise pursuant to the terms hereof. The aggregate amount of the Dollar Revolving Commitments (a) as of the Closing Date is $100,000,000, (b) as of the Bally Acquisition Date is the aggregate Revolving Commitments less the Multi-Currency Revolving Commitments, (c) as of Amendment No. 2 Effective Date, for the Extending Revolving Commitment and the Non-Extending Revolving Commitment of each such Lender, is set forth in Schedule A to Amendment No. 2, and (d) as of the Amendment No. 4 Effective Date (after giving effect to the Supplemental Revolving Commitment Increases incurred on or prior to such date) is $208,947,067.11.(i) prior to the Amendment No. 5 Effective Date, the Original Dollar Revolving Commitments, and (ii) on or after the Amendment No. 5 Effective Date, the 2019 Dollar Revolving Commitments.   “Dollar Revolving Extensions of Credit”: as to any Dollar Revolving Lender at any time, an amount equal to the sum of, without duplication (a) the aggregate principal amount of all Dollar Revolving Loans held by such Lender then outstanding, (b) such Lender’s Dollar Revolving Percentage of the Dollar L/C Obligations then outstanding and (c) such Lender’s Swingline Exposure.   “Dollar Revolving Facility”: as defined in the definition of “Facility.”   “Dollar Revolving Lender”: each Lender that has a Dollar Revolving Commitment or that holds Dollar Revolving Loans.   “Dollar Revolving Loans”: as defined in Section 2.4(a).   “Dollar Revolving Percentage”: as to any Dollar Revolving Lender at any time, the percentage which such Lender’s Dollar Revolving Commitment then constitutes of the aggregate Dollar Revolving Commitments or, at any time after the Dollar Revolving Commitments shall have expired or terminated, the percentage which such Dollar Revolving Lender’s Dollar Revolving Extensions of Credit then outstanding constitutes of the aggregate Dollar Revolving Extensions of Credit then outstanding.   “Dollars” and “$”: dollars in lawful currency of the United States.   -22-     “Domestic Subsidiary”: any direct or indirect Restricted Subsidiary that (i) is organized under the laws of any jurisdiction within the United States and (ii) is not a direct or indirect Subsidiary of a Foreign Subsidiary.   “Dutch Auction”: an auction (an “Auction”) conducted by Holdings or one of its Subsidiaries in order to purchase any Term Loans under a given Tranche (the “Purchase”) in accordance with the following procedures or such other procedures as may be agreed to between the Administrative Agent and the Borrower:   (a)       Notice Procedures. In connection with any Auction, the Borrower shall provide notification to the Administrative Agent (for distribution to the appropriate Lenders) of the Term Loans under such Tranche that will be the subject of the Auction (an “Auction Notice”). Each Auction Notice shall be in a form reasonably acceptable to the Administrative Agent and shall specify (i) the total cash value of the bid, in a minimum amount of $10,000,000 with minimum increments of $2,000,000 in excess thereof (the “Auction Amount”) and (ii) the discounts to par, which shall be expressed as a range of percentages of the par principal amount of the Term Loans under such Tranche at issue (the “Discount Range”), representing the range of purchase prices that could be paid in the Auction.   (b)       Reply Procedures. In connection with any Auction, each applicable Lender may, in its sole discretion, participate in such Auction by providing the Administrative Agent with a notice of participation (the “Return Bid”) which shall be in a form reasonably acceptable to the Administrative Agent and shall specify (i) a discount to par that must be expressed as a price (the “Reply Discount”), which must be within the Discount Range, and (ii) a principal amount of the applicable Loans such Lender is willing to sell, which must be in increments of $2,000,000 or in an amount equal to such Lender’s entire remaining amount of the applicable Loans (the “Reply Amount”). Lenders may only submit one Return Bid per Auction. In addition to the Return Bid, each Lender wishing to participate in such Auction must execute and deliver, to be held in escrow by the Administrative Agent, an assignment and acceptance agreement in a form reasonably acceptable to the Administrative Agent.   (c)        Acceptance Procedures. Based on the Reply Discounts and Reply Amounts received by the Administrative Agent, the Administrative Agent, in consultation with the Borrower, will determine the applicable discount (the “Applicable Discount”) for the Auction, which shall be the lowest Reply Discount; provided that, in the event that the Reply Amounts are insufficient to allow Holdings or its Subsidiary, as applicable, to complete a purchase of the entire Auction Amount (any such Auction, a “Failed Auction”), Holdings or such Subsidiary shall either, at its election, (i) withdraw the Auction or (ii) complete the Auction at an Applicable Discount which is the next lowest Reply Discount for which Holdings or its Subsidiary, as applicable, can complete the Auction at the Auction Amount. Holdings or its Subsidiary, as applicable, shall purchase the applicable Loans (or the respective portions thereof) from each applicable Lender with a Reply Discount that is equal to or greater than the Applicable Discount (“Qualifying Bids”) at the Applicable Discount; provided that if the aggregate proceeds required to purchase all applicable Loans subject to Qualifying Bids would exceed the Auction Amount for such Auction, Holdings or its Subsidiary, as applicable, shall purchase such Loans at the Applicable Discount ratably based on the principal amounts of such Qualifying Bids (subject to adjustment for rounding as specified by the Administrative Agent). Each participating Lender will receive notice of a Qualifying Bid as soon as reasonably practicable but in no case later than five Business Days from the date the Return Bid was due.   -23-     (d)       Additional Procedures. Once initiated by an Auction Notice, Holdings or its Subsidiary, as applicable, may not withdraw an Auction other than a Failed Auction. Furthermore, in connection with any Auction, upon submission by a Lender of a Qualifying Bid, such Lender will be obligated to sell the entirety or its allocable portion of the Reply Amount, as the case may be, at the Applicable Discount. The Purchase shall be consummated pursuant to and in accordance with Section 10.6 and, to the extent not otherwise provided herein, shall otherwise be consummated pursuant to procedures (including as to timing, rounding and minimum amounts, Interest Periods, and other notices by Holdings or such Subsidiary, as applicable) reasonably acceptable to the Administrative Agent and the Borrower.   “EEA Financial Institution”: (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.   “EEA Member Country”: any of the member states of the European Union, Iceland, Liechtenstein, and Norway.   “EEA Resolution Authority”: any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.   “Eligible Assignee”: any Person that meets the requirements to be an assignee under Section 10.6(b) (subject to receipt of such consents, if any, as may be required for the assignment of the applicable Loan or Commitment to such Person under Section 10.6(b)(i)).   “Environmental Laws”: any and all applicable laws, rules, orders, regulations, statutes, ordinances, codes or decrees (including common law) of any international authority, foreign government, the United States, or any state, provincial, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment, natural resources or human health and safety as it relates to Releases of Materials of Environmental Concern, as has been, is now, or at any time hereafter is, in effect.   “Environmental Liability”: any liability, claim, action, suit, judgment or order under or relating to any Environmental Law for any damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, to the extent arising from or relating to: (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the Release of any Materials of Environmental Concern or (e) any contract, agreement or other consensual arrangement pursuant to which any Environmental Liability under clause (a) through (d) above is assumed or imposed.   “Equity Issuance”: any issuance by Holdings or any Restricted Subsidiary of its Capital Stock in a public or private offering.   “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.   -24-     “Escrow Entity”: any direct or indirect Subsidiary of Holdings (including an Unrestricted Subsidiary) formed solely for the purposes of issuing the New Debt.   “EU Bail-In Legislation Schedule”: the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.   “Eurocurrency Base Rate”:   (a)        for any Interest Period with respect to a Eurocurrency Loan denominated in Dollars, Euros or Pounds Sterling, the rate per annum equal to (i) the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate, which is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or other commercially available source providing quotations of LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Business Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or, (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in the relevant currency for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurocurrency Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch (or other Bank of America branch or Affiliate) to major banks in the London or other offshore interbank market for such currency at their request at approximately 11:00 a.m. (London time) two London Business Days prior to the commencement of such Interest Period; provided that, if LIBOR shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement; and   (b)       for any Interest Period with respect to a Eurocurrency Loan denominated in Canadian Dollars, the rate per annum equal to the Canadian Dealer Offered Rate, or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 10:00 a.m. (Toronto, Ontario time) on the Rate Determination Date with a term equivalent to such Interest Period;   (c)       for any Interest Period with respect to a Eurocurrency Loan denominated in Australian Dollars, the rate per annum equal to the Bank Bill Swap Reference Bid Rate or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 10:30 a.m. (Melbourne, Australia time) on the Rate Determination Date with a term equivalent to such Interest Period;   (d)       for any interest calculation with respect to an ABR Loan on any date, the rate per annum equal to (i) LIBOR, at approximately 11:00 a.m., London time determined two London Banking Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the ABR Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank Eurodollar market at their request at the date and time of determination.   -25-     “Eurocurrency Loans”: Loans the rate of interest applicable to which is based upon the Eurocurrency Rate.   “Eurocurrency Rate”: with respect to each day during each Interest Period pertaining to a Eurocurrency Loan, a rate per annum determined for such day in accordance with the following formula:     Eurocurrency Base Rate     1.00 - Eurocurrency Reserve Requirements     “Eurocurrency Reserve Requirements”: for any day as applied to a Eurocurrency Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.   “Eurocurrency Tranche”: the collective reference to Eurocurrency Loans under a particular Facility the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).   “Event of Default”: any of the events specified in Section 8.1; provided that any requirement set forth therein for the giving of notice, the lapse of time, or both, has been satisfied.   “Excess Cash Flow”: for any Excess Cash Flow Period of Holdings, an amount (not less than zero) equal to the amount by which, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income of Holdings for such Excess Cash Flow Period, (ii) the amount of all non-cash charges (including depreciation, amortization, deferred tax expense and equity compensation expenses) deducted in arriving at such Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital for such Excess Cash Flow Period (excluding any decrease in Consolidated Working Capital relating to leasehold improvements for which Holdings, the Borrower or any of its Subsidiaries is reimbursed in cash or receives a credit), (iv) the aggregate net amount of non-cash loss on the Disposition of Property by Holdings and its Restricted Subsidiaries during such Excess Cash Flow Period (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income and (v) to the extent not otherwise included in determining Consolidated Net Income, the aggregate amount of cash receipts for such period attributable to Hedge Agreements or other derivative instruments; exceeds (b) the sum, without duplication (including, in the case of clauses (ii) and (viii) below, duplication across periods (provided that all or any portion of the amounts referred to in clauses (ii) and (viii) below with respect to a period may be applied in the determination of Excess Cash Flow for any subsequent period to the extent such amounts did not previously result in a reduction of Excess Cash Flow in any prior period)) of:   (i)         the amount of all non-cash gains or credits to the extent included in arriving at such Consolidated Net Income (including credits included in the calculation of deferred tax assets and liabilities) and cash charges to the extent excluded from Consolidated Net Income pursuant to the last sentence thereof;   (ii)        the aggregate amount (A) actually paid by Holdings and its Restricted Subsidiaries in cash during such Excess Cash Flow Period (or, at the Borrower’s election, after such Excess Cash Flow Period but prior to the time of determination of Excess Cash Flow for such Excess Cash Flow Period, and excluding any amounts paid during such Excess Cash Flow Period which the Borrower elected to apply to the calculation in a prior Excess Cash Flow Period) on account of Capital Expenditures and Permitted Acquisitions and (B) committed during such Excess Cash Flow Period to be used to make Capital Expenditures or Permitted Acquisitions which in either case have been actually made or consummated or for which a binding agreement exists as of the time of determination of Excess Cash Flow for such Excess Cash Flow Period (in each case under this clause (ii) other than to the extent any such Capital Expenditure or Permitted Acquisition is made (or, in the case of the preceding clause (B), is expected at the time of determination to be made) with the proceeds of new long-term Indebtedness or an Equity Issuance or with the proceeds of any Reinvestment Deferred Amount), in each case to the extent not already deducted from Consolidated Net Income;   -26-     (iii)       the aggregate amount of all regularly scheduled principal payments and all prepayments of Indebtedness (including the Term Loans) of Holdings and its Restricted Subsidiaries made during such Excess Cash Flow Period and, at the option of the Borrower, all prepayments of Indebtedness made (or committed to be made by irrevocable written notice) after such Excess Cash Flow Period but prior to the time of determination of Excess Cash Flow for the applicable Excess Cash Flow Period, and excluding any amounts paid during such Excess Cash Flow Period which the Borrower elected to apply to the calculation in a prior Excess Cash Flow Period (other than, in each case, (x) in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder; provided that Excess Cash Flow may be reduced pursuant to this clause (iii) by the amount of any voluntary prepayments during such Excess Cash Flow Period of Revolving Loans borrowed on the Bally Acquisition Date (such reduction not to exceed $200,000,000), (y) to the extent any such prepayments are the result of the incurrence of additional indebtedness and (z) optional prepayments of the Term Loans and optional prepayments of Revolving Loans to the extent accompanied by permanent optional reductions of the Revolving Commitments);   (iv)      the amount of the increase, if any, in Consolidated Working Capital for such Excess Cash Flow Period (excluding any increase in Consolidated Working Capital relating to leasehold improvements for which Holdings or any of its Subsidiaries is reimbursed in cash or receives a credit);   (v)       the aggregate net amount of non-cash gain on the Disposition of Property by Holdings and its Restricted Subsidiaries during such Excess Cash Flow Period (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income;   (vi)      Transaction Costs and other fees and expenses incurred in connection with the integration of the Target (and/or its Subsidiaries) and Holdings (and/or its Subsidiaries) as a result of the Transactions, Bally Transaction Costs, Amendment No. 2 Transaction Costs, Amendment No. 3 Transaction Costs, Amendment No. 4 Transaction Costs and other fees and expenses incurred in connection with the integration of the Bally Target (and/or its Subsidiaries) and Holdings (and/or its Subsidiaries) as a result of the Bally Transactions, and fees and expenses incurred in connection with any Permitted Acquisition or Investment permitted by Section 7.7, any Equity Issuance, any incurrence of Indebtedness permitted by Section 7.2, any Restricted Payment permitted by Section 7.6 and any Disposition permitted by Section 7.5 (in each case, whether or not consummated), in each case to the extent not already deducted from Consolidated Net Income;   (vii)     purchase price adjustments and earnouts paid, in each case to the extent not already deducted from Consolidated Net Income, or received, in each case to the extent not already included in arriving at Consolidated Net Income, in connection with any acquisition or Investment consummated prior to the Closing Date, any Permitted Acquisition or any other acquisition or Investment permitted under Section 7.7;   -27-     (viii)    (A) the net amount of Permitted Acquisitions and Investments made in cash during such period pursuant to paragraphs (a)(ii), (a)(iii), (d), (f), (h), (k), (l), (v) and (x) of Section 7.7 (to the extent, in the case of clause (x), such Investment relates to Restricted Payments permitted under Section 7.6(c), (e), (f)(iii), (h), (i), (m) or (o)) or, at the option of the Borrower, committed during such period to be used to make Permitted Acquisitions and Investments pursuant to such paragraphs of Section 7.7 which have been actually made or for which a binding agreement exists as of the time of determination of Excess Cash Flow for such period (but excluding Investments among Holdings and its Restricted Subsidiaries) and (B) permitted Restricted Payments made in cash or subject to a binding agreement, in each case by Holdings during such period and permitted Restricted Payments made by any Restricted Subsidiary to any Person other than Holdings or any of the Restricted Subsidiaries during such period, in each case, to the extent permitted by Section 7.6(c), (e), (f)(iii), (h), (i), (m), or (o), in each case to the extent not already deducted from Consolidated Net Income; provided that the amount of Restricted Payments made pursuant to Section 7.6(e) and deducted pursuant to this clause (viii) shall not exceed $10,000,000 in any Excess Cash Flow Period;   (ix)       the amount (determined by the Borrower) of such Consolidated Net Income which is mandatorily prepaid or reinvested pursuant to Section 2.12(b) (or as to which a waiver of the requirements of such Section applicable thereto has been granted under Section 10.1) prior to the date of determination of Excess Cash Flow for such Excess Cash Flow Period as a result of any Asset Sale or Recovery Event, in each case to the extent not already deducted from Consolidated Net Income;   (x)        (A) the aggregate amount of any premium or penalty actually paid in cash that is required to be made in connection with any prepayment of Indebtedness made (or committed to be made by irrevocable written notice) during the applicable Excess Cash Flow Period or, at the option of the Borrower, after the end of such Excess Cash Flow Period but prior to the time of calculation of Excess Cash Flow, in each case to the extent not already deducted from Consolidated Net Income and (B) to the extent included in determining Consolidated Net Income, the aggregate amount of any income (or loss) for such period attributable to the early extinguishment of Indebtedness, Hedge Agreements or other derivative instruments;   (xi)       cash payments by Holdings and its Restricted Subsidiaries during such period relating to prize or jackpot-related liabilities or in respect of long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness, in each case to the extent not already deducted from Consolidated Net Income;   (xii)      the aggregate amount of (I) expenditures actually made by Holdings and its Restricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees), in each case, to the extent not deducted during a prior period and (II) expenditures committed during such Excess Cash Flow Period to be made for which a binding agreement exists as of the time of determination of Excess Cash Flow for such Excess Cash Flow Period, in each such case, to the extent that such expenditures are not expensed during such period and are not deducted in calculating Consolidated Net Income;   -28-     (xiii)     cash expenditures in respect of Hedge Agreements or other derivative instruments during such period to the extent not deducted in arriving at such Consolidated Net Income;   (xiv)     the amount of taxes (including penalties and interest) paid in cash in such period or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period;   (xv)      the amount of cash payments made in respect of pensions and other post-employment benefits in such period, in each case to the extent not deducted in determining Consolidated Net Income;   (xvi)     payments made in respect of the minority equity interests of third parties in any non-wholly owned Restricted Subsidiary in such period, including pursuant to dividends declared or paid on Capital Stock held by third parties (or other distributions or return of capital) in respect of such non-wholly-owned Restricted Subsidiary, in each case to the extent not deducted in determining Consolidated Net Income; and   (xvii)    the amount representing accrued expenses for cash payments (including with respect to retirement plan obligations) that are not paid in cash in such Excess Cash Flow Period, in each case to the extent not deducted in determining Consolidated Net Income, provided that such amounts will be added to Excess Cash Flow for the following fiscal year to the extent not paid in cash and deducted from Consolidated Net Income during such following fiscal year.   Notwithstanding anything to the contrary herein, the proceeds from the issuance of the Additional 2022 Secured Notes shall not be included in the calculation of Excess Cash Flow for the purpose of determining the amount to be prepaid in accordance with Section 2.12(c).   “Excess Cash Flow Application Amount”: with respect to any Excess Cash Flow Period, the product of the Excess Cash Flow Percentage applicable to such Excess Cash Flow Period times the Excess Cash Flow for such Excess Cash Flow Period.   “Excess Cash Flow Application Date”: as defined in Section 2.12(c).   “Excess Cash Flow Percentage”: with respect to an Excess Cash Flow Period, 75%; provided that if the Consolidated Net First Lien Leverage Ratio at the end of any Excess Cash Flow Period is (i) less than or equal to 4.50 to 1.00 but greater than 3.00 to 1.00, the Excess Cash Flow Percentage shall be 50%, (ii) less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the Excess Cash Flow Percentage shall be 25% or (iii) less than or equal to 2.50 to 1.00, the Excess Cash Flow Percentage shall be 0%.   “Excess Cash Flow Period”: each fiscal year of Holdings beginning with the fiscal year ending December 31, 2014.   “Exchange Act”: the Securities Exchange Act of 1934, as amended.   “Excluded Collateral”: as defined in Section 4.17(a).   -29-     “Excluded Real Property”: (a) any Real Property that is subject to a Lien expressly permitted by Section 7.3(g) or 7.3(y), (b) any Real Property with respect to which, in the reasonable judgment of the Borrower and the Administrative Agent, the cost of providing a mortgage on such Real Property in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Lenders therefrom and (c) any Real Property to the extent providing a mortgage on such Real Property would (i) result in adverse tax consequences to Holdings, the Borrower or any of Holdings’ Subsidiaries as reasonably determined by the Borrower (provided that any such designation of Real Property as Excluded Real Property shall be subject to the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed)), (ii) violate any applicable Requirement of Law, (iii) be prohibited by any applicable Contractual Obligations (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code) or (iv) give any other party (other than a Loan Party or a wholly-owned Subsidiary) to any contract, agreement, instrument or indenture governing such Real Property the right to terminate its obligations thereunder (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code or other applicable law).   “Excluded Subsidiary”: any Subsidiary that is (a) an Unrestricted Subsidiary, (b) not wholly owned directly by Holdings or one or more of its wholly owned Restricted Subsidiaries, (c) an Immaterial Subsidiary, (d) a Foreign Subsidiary Holding Company, (e) established or created pursuant to Section 7.7(p) and meeting the requirements of the proviso thereto; provided that such Subsidiary shall only be an Excluded Subsidiary for the period, as contemplated by Section 7.7(p), (f) a Subsidiary that is prohibited by applicable Requirement of Law from guaranteeing or granting a Lien on its assets to secure obligations in respect of the Facilities, or which would require governmental (including regulatory) consent, approval, license or authorization to provide a guarantee or grant any Lien unless, such consent, approval, license or authorization has been received, (g) a Subsidiary that is prohibited from guaranteeing or granting a Lien on its assets to secure obligations in respect of the Facilities by any Contractual Obligation in existence on the Closing Date (or, in the case of any newly-acquired Subsidiary, in existence at the time of acquisition thereof but not entered into in contemplation thereof), provided that this clause (g) shall not be applicable if (1) such other party is a Loan Party or a wholly-owned Restricted Subsidiary of Holdings or (2) consent has been obtained to provide such guarantee or such prohibition is otherwise no longer in effect, (h) a Subsidiary with respect to which a guarantee by it of, or granting a Lien on its assets to secure obligations in respect of, the Facilities would result in material adverse tax consequences (including as a result of Section 956 of the Code or any related provision) to Holdings, the Borrower or one or more Restricted Subsidiaries, as reasonably determined by the Borrower, (i) not-for-profit subsidiaries, (j) any Foreign Subsidiary or any Domestic Subsidiary of a Foreign Subsidiary, (k) Subsidiaries that are special purpose entities, or (l) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Borrower), the cost or other consequences of guaranteeing or granting a Lien on its assets to secure obligations in respect of the Facilities shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom; provided that if a Subsidiary executes the Guarantee and Collateral Agreement as a “Guarantor,” then it shall not constitute an “Excluded Subsidiary” (unless released from its obligations under the Guarantee and Collateral Agreement as a “Guarantor” in accordance with the terms hereof and thereof).   “Excluded Swap Obligation”: 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 by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any 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 2.8 of the Guarantee and Collateral Agreement and any other “keepwell, support or other agreement” for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or a 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, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes excluded in accordance with the first sentence of this definition.   -30-     “Excluded Taxes”: any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to any Recipient, (i) net income Taxes (however denominated), net profits Taxes, franchise Taxes, and branch profits Taxes (and net worth Taxes and capital Taxes imposed in lieu of net income Taxes), in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, if such Recipient is a Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) as a result of a present or former connection between such Recipient and the jurisdiction of the Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof or therein, (ii) any withholding Taxes (including backup withholding) imposed on amounts payable to or for the account of such Recipient with respect to an applicable interest in a Loan or Commitment or this Agreement pursuant to a law in effect on the date on which (A) such Recipient becomes a party to this Agreement (other than pursuant to an assignment request by the Borrower under Section 2.24) or (B) if such Recipient is a Lender, such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.20, amounts with respect to such Taxes were payable either to such Recipient’s assignor immediately before such Recipient became a party hereto or, if such Recipient is a Lender, to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with paragraphs (d), (e) or (g), as applicable, of Section 2.20 and (iv) any Taxes imposed under FATCA.   “Existing Bally Credit Agreement”: the Second Amended and Restated Credit Agreement, dated as of April 19, 2013 (as amended, supplemented, restated or otherwise modified from time to time), by and among Bally Target, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent.   “Existing Borrower Credit Agreement”: the Second Amended and Restated Credit Agreement, dated as of August 25, 2011, among Holdings, the Borrower, the lenders and other financial institutions party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.   “Existing Credit Agreements”: the Existing Borrower Credit Agreement and the Existing Target Credit Agreement.   “Existing Letters of Credit”: (a) Letters of Credit issued prior to, and outstanding on, the Closing Date pursuant to an Existing Credit Agreement and disclosed on Schedule 1.1C, and (b) Letters of Credit issued prior to, and outstanding on, the Bally Acquisition Date pursuant to the Existing Bally Credit Agreement and disclosed in writing to the Administrative Agent on or prior to the Bally Acquisition Date, including on Schedule 1.1C (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date).   “Existing Loans”: as defined in Section 2.26(a).   “Existing Notes Financing”: collectively, the 2018 Notes, the 2020 Notes and the 2021 Notes, together with any Permitted Refinancing thereof.   “Existing Revolving Loans”: as defined in Section 2.26(a).   “Existing Revolving Tranche”: as defined in Section 2.26(a).   -31-     “Existing Target Credit Agreement”: the Second Amended and Restated Credit Agreement, dated as of October 18, 2011, among the Target, the lenders and other financial institutions party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.   “Existing Term Loans”: as defined in Section 2.26(a).   “Existing Term Tranche”: as defined in Section 2.26(a).   “Existing Tranche”: as defined in Section 2.26(a).   “Extended Loans”: as defined in Section 2.26(a).   “Extended Revolving Commitments”: as defined in Section 2.26(a).   “Extended Revolving Tranche”: as defined in Section 2.26(a).   “Extended Term Loans”: as defined in Section 2.26(a).   “Extended Term Tranche”: as defined in Section 2.26(a).   “Extended Tranche”: as defined in Section 2.26(a).   “Extending Lender”: as defined in Section 2.26(b).   “Extension”: as defined in Section 2.26(b).   “Extension Amendment”: as defined in Section 2.26(c).   “Extension Date”: as defined in Section 2.26(d).   “Extension Election”: as defined in Section 2.26(b).   “Extension Request”: as defined in Section 2.26(a).   “Extension Series”: all Extended Loans or Extended Revolving Commitments, as applicable, that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Loans or Extended Revolving Commitments, as applicable, provided for therein are intended to be part of any previously established Extension Series) and that provide for the same interest margins and amortization schedule.   “Facility”: each of (a) the Initial Term B-1 Loans (the “Term B-1 Facility”), (b) the Initial Term B-2 Loans (the “Term B-2 Facility”), (c) the Initial Term B-3 Loans (the “Term B-3 Facility”), (d) the Initial Term B-4 Loans (the “Term B-4 Facility”), (e) the Initial Term B-5 Loans (the “Term B-5 Facility”), (f) any New Loan Commitments and the New Loans made thereunder (a “New Facility”), (g) the Dollar Revolving Commitments and the extensions of credit (including Swingline Loans and Dollar Letters of Credit) made thereunder (the “Dollar Revolving Facility”), (h) the Multi-Currency Revolving Commitments and the extensions of credit (including Multi-Currency Letters of Credit) made thereunder (the “Multi-Currency Revolving Facility”), (i) any Extended Loans (of the same Extension Series) (an “Extended Term Facility”), (j) any Extended Revolving Commitments (of the same Extension Series) (an “Extended Revolving Facility”), (k) any Refinancing Term Loans of the same Tranche (a “Refinancing Term Facility”) and (l) any Refinancing Revolving Commitments of the same Tranche (a “Refinancing Revolving Facility”).   -32-     “Fair Market Value”: with respect to any assets, Property (including Capital Stock) or Investment, the fair market value thereof as determined in good faith by the Borrower.   “Fair Value”: the amount at which the assets (both tangible and intangible), in their entirety, of Holdings and its Subsidiaries taken as a whole and after giving effect to the consummation of the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions, as applicable, would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.   “FATCA”: Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements (together with any law implementing such agreements).   “Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.   “Fee Payment Date”: commencing on March 31, 2014, (a) the last Business Day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.   “Fixed Charge Coverage Ratio”: as of any date of determination, the ratio of (a) Consolidated EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended Test Period to (b) Fixed Charges of Holdings and its Restricted Subsidiaries for such Test Period. In the event that Holdings or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness or issues or redeems Disqualified Capital Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is being calculated, then the Fixed Charge Coverage Ratio will be calculated on a pro forma basis as if such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness or issuance or redemption of Disqualified Capital Stock, and the use of the proceeds therefrom, had occurred at the beginning of the Test Period.   “Fixed Charges”: for any Test Period, the sum of (a) Consolidated Net Interest Expense and (b) the product of (x) all dividend payments on any series of Disqualified Capital Stock of Holdings paid, accrued or scheduled to be paid or accrued during the applicable Test Period, times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of Holdings expressed as a decimal.   “Flood Insurance Laws”: collectively, (i) National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.   -33-     “Foreign Currency Equivalent”: at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Permitted Foreign Currency at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Permitted Foreign Currency with Dollars.   “Foreign Subsidiary”: any Restricted Subsidiary of Holdings that is not a Domestic Subsidiary.   “Foreign Subsidiary Holding Company”: any Restricted Subsidiary of Holdings which is a Domestic Subsidiary substantially all of the assets of which consist of the Capital Stock or Indebtedness of one or more Foreign Subsidiaries (or Restricted Subsidiaries thereof) and other assets relating to an ownership interest in such Capital Stock or Indebtedness, or Restricted Subsidiaries.   “Fronting Exposure”: as defined in Section 2.6(f).   “Funded Debt”: with respect to any Person, all Indebtedness of such Person of the types described in clauses (a), (b)(i), (e), (g)(ii), (h) or, to the extent related to Indebtedness of the types described in the preceding clauses, (d) of the definition of “Indebtedness,” in each case, to the extent reflected as indebtedness on such Person’s balance sheet.   “Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.   “GAAP”: generally accepted accounting principles in the United States as in effect from time to time, as included within the Accounting Standards Codification as maintained by the Financial Accounting Standards Board. If at any time the SEC permits or requires U.S.-domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes and the Borrower notifies the Administrative Agent that it will effect such change, without limiting Section 10.16, effective from and after the date on which such transition from GAAP to IFRS is completed by the Borrower or Holdings, references herein to GAAP shall thereafter be construed to mean (a) for periods beginning on and after the required transition date or the date specified in such notice, as the case may be, IFRS as in effect from time to time and (b) for prior periods, GAAP as defined in the first sentence of this definition.   “Gaming Approval”: any and all approvals, authorizations, permits, consents, rulings, orders or directives of any Governmental Authority (i) necessary to enable Holdings and its Subsidiaries to engage in the lottery, gambling, casino, horse racing or gaming business or otherwise continue to conduct their business as it is conducted on the Closing Date or any Permitted Business (directly or indirectly through a joint venture or other Person) conducted after the Closing Date, (ii) that regulates gaming in any jurisdiction in which Holdings and its Subsidiaries conduct gaming activities and has jurisdiction over such persons (including any successors to any of them) or (iii) necessary to accomplish the transactions contemplated hereby.   “Gaming Authority”: as to any Person, any governmental agency, authority, board, bureau, commission, department, office or instrumentality with regulatory, licensing or permitting authority or jurisdiction over any gaming business or enterprise or any Gaming Facility, or with regulatory, licensing or permitting authority or jurisdiction over any gaming operation (or proposed gaming operation) owned, managed or operated by Holdings or any of its Subsidiaries.   -34-     “Gaming Facility”: as to any Person, any lottery operation, gaming establishment and other property or assets directly ancillary thereto or used in connection therewith, including any casinos, hotels, resorts, race tracks, off-track wagering sites and other recreation and entertainment facilities.   “Gaming Laws”: as to any Person, (a) constitutions, treaties, statutes or laws governing Gaming Facilities (including pari-mutuel race tracks) and rules, regulations, codes and ordinances of any Gaming Authority, and all administrative or judicial orders or decrees or other laws pursuant to which any Gaming Authority possesses regulatory, licensing or permit authority over gambling, gaming or Gaming Facility activities conducted by Holdings or any of its Subsidiaries within its jurisdiction, (b) Gaming Approvals and (c) orders, decisions, determinations, judgments, awards and decrees of any Gaming Authority.   “Governmental Authority”: any nation or government, any state, province or other political subdivision thereof and any governmental entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and, as to any Lender, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).   “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement, dated as of the Closing Date, among Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may be amended, supplemented, waived or otherwise modified from time to time.   “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) pursuant to which the guaranteeing person has issued a guarantee, reimbursement, counterindemnity or similar obligation, in either case guaranteeing or by which such Person becomes contingently liable for any Indebtedness (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets or any Investment permitted under this Agreement. The amount of any Guarantee Obligation of any guaranteeing Person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such Person in good faith.   “Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.   “Guaranty”: collectively, the guaranty made by the Guarantors under the Guarantee and Collateral Agreement in favor of the Secured Parties, together with each other guaranty delivered pursuant to Section 6.8.   -35-       “Hedge Agreements”: all agreements with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions, in each case, entered into by Holdings or any Restricted Subsidiary.   “Holdings”: as defined in the introductory paragraph of this Agreement, including any successor thereto pursuant to a merger permitted by Section 7.4(j).   “IFRS”: International Financial Reporting Standards and applicable accounting requirements set by the International Accounting Standards Board or any successor thereto (or the Financial Accounting Standards Board, the Accounting Principles Board of the American Institute of Certified Public Accountants, or any successor to either such Board, or the SEC, as the case may be), as in effect from time to time.   “Immaterial Subsidiary”: on any date, any Restricted Subsidiary of Holdings designated as such by the Borrower, but only to the extent that such Restricted Subsidiary has less than 3.5% of Consolidated Total Assets and 3.5% of annual consolidated revenues of Holdings and its Restricted Subsidiaries on a pro forma basis based on the most recent financial statements delivered pursuant to Section 6.1 prior to such date; provided that at no time shall all Immaterial Subsidiaries have in the aggregate Consolidated Total Assets or annual consolidated revenues (as reflected on the most recent financial statements delivered pursuant to Section 6.1 prior to such time) in excess of 7.0% of Consolidated Total Assets or annual consolidated revenues, respectively, of Holdings and its Restricted Subsidiaries.   “Increase Supplement”: as defined in Section 2.25(e).   “Increased Amount Date”: as defined in Section 2.25(a).   “Incremental Revolving Amount”: an amount equal to the difference of (a) $650,000,000 less (b) the aggregate Revolving Commitments.   “Indebtedness” of any Person: without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by (i) bonds (excluding surety bonds), debentures, notes or similar instruments, and (ii) surety bonds, (c) all obligations of such Person for the deferred purchase price of Property or services already received, (d) all Guarantee Obligations by such Person of Indebtedness of others, (e) all Capital Lease Obligations of such Person, (f) all payments that such Person would have to make in the event of an early termination, on the date Indebtedness of such Person is being determined, in respect of outstanding Hedge Agreements (such payments in respect of any Hedge Agreement with a counterparty being calculated subject to and in accordance with any netting provisions in such Hedge Agreement), (g) the principal component of all obligations, contingent or otherwise, of such Person (i) as an account party in respect of letters of credit (other than any letters of credit, bank guarantees or similar instrument in respect of which a back-to-back letter of credit has been issued under or permitted by this Agreement) and (ii) in respect of bankers’ acceptances and (h) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Capital Stock of such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; provided that Indebtedness shall not include (A) trade and other payables, accrued expenses and liabilities and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy unperformed obligations of the seller of such asset, (D) payment and custodial obligations in respect of prize, jackpot, deposit, payment processing and player account management operations or (E) earn-out and other contingent obligations until such obligations become a liability on the balance sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such Person in respect thereof (or provides for reimbursement to such Person).   -36-     “Indebtedness for Borrowed Money”: (a) to the extent the following would be reflected on a consolidated balance sheet of Holdings and its Restricted Subsidiaries prepared in accordance with GAAP, the principal amount of all Indebtedness of Holdings and its Restricted Subsidiaries with respect to (i) borrowed money, evidenced by debt securities, debentures, acceptances, notes or other similar instruments and (ii) Capital Lease Obligations, (b) reimbursement obligations for letters of credit and financial guarantees (without duplication) (other than ordinary course of business contingent reimbursement obligations) and (c) Hedge Agreements; provided that the Obligations shall not constitute Indebtedness for Borrowed Money.   “Indemnified Liabilities”: as defined in Section 10.5.   “Indemnified Taxes”: (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any Obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes.   “Indemnitee”: as defined in Section 10.5.   “Initial Term B-1 Loans”: as defined in Section 2.1(a).   “Initial Term B-2 Loans”: as defined in Section 2.1(b).   “Initial Term B-3 Loans”: the Additional Term B-3 Loans and the term loans deemed made by the Lenders to the Borrower on the Amendment No. 2 Effective Date pursuant to Amendment No. 2.   “Initial Term B-4 Loans”: the term loans made by the Lenders to the Borrower pursuant to Section 2.1(c) (as in effect on the Amendment No. 3 Effective Date) on the Amendment No. 3 Effective Date pursuant to Amendment No. 3.   “Initial Term B-5 Loans”: the Additional Term B-5 Loans and the term loans deemed made by the Lenders to the Borrower on the Amendment No. 4 Effective Date pursuant to Amendment No. 4.   “Initial Term Loans”: the Initial Term B-1 Loans, the Initial Term B-2 Loans, the Initial Term B-3 Loans, the Initial Term B-4 Loans and the Initial Term B-5 Loans.   “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.   “Insolvent”: pertaining to a condition of Insolvency.   “Instrument”: as defined in the Guarantee and Collateral Agreement.   “Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, domain names, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.   -37-     “Interest Payment Date”: (a) commencing on December 31, 2013, as to any ABR Loan, the last Business Day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan), the date of any repayment or prepayment made in respect thereof.   “Interest Period”: as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six or (except as otherwise provided in clause (iv) of this definition, if available from all Lenders under the relevant Facility) twelve months (or such other period acceptable to all such Lenders or, in the case of the borrowings on the Bally Acquisition Date, such other period acceptable to the Administrative Agent) thereafter, as selected by the Borrower in its notice of borrowing or notice of continuation or conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six or (if available from all Lenders under the relevant Facility) twelve months (or such other period acceptable to all such Lenders) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:   (i)             if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;   (ii)           any Interest Period that would otherwise extend beyond the scheduled Revolving Termination Date or beyond the date final payment is due on the Term Loans shall end on the Revolving Termination Date or such due date, as applicable;   (iii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and   (iv)          the Borrower may elect an Interest Period of one week at any time between the Closing Date and January 31, 2014.   “Investments”: as defined in Section 7.7.   “ISP”: with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).   “Issuing Lenders”: the collective reference to the Dollar Issuing Lenders and the Multi-Currency Issuing Lenders.   -38-     “Joinder Agreement”: an agreement substantially in the form of Exhibit H.   “Joint Bookrunners”: (a) in connection with Amendment No. 4, Bank of America, N.A., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., Fifth Third Bank, Credit Suisse Securities (USA) LLC, Citizens Bank, N.A., PNC Capital Markets LLC, Macquarie Capital (USA) Inc. and Goldman Sachs Bank USA, in their capacity as joint bookrunners, and (b) otherwise, Bank of America, N.ABofA Securities, Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., BNP Paribas Securities Corp., Fifth Third Bank, HSBC Securities (USA) Inc. and PNC Capital Markets LLCBarclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc., Credit Suisse Loan Funding LLC, Citizens Bank, N.A., Macquarie Capital (USA) Inc., and Goldman Sachs Bank USA, in their capacity as joint bookrunners.   “Junior Financing”: as defined in Section 7.8.   “Junior Financing Documentation”: any documentation governing any Junior Financing.   “Latest Maturing Term Loans”: at any date of determination, the Tranche (or Tranches) of Term Loans maturing later than all other Term Loans outstanding on such date.   “Latest Maturity Date”: at any date of determination, the latest maturity date or termination date applicable to any Loan or Commitment hereunder at such time.   “L/C Commitment”: (a) as of the Closing Date, $200,000,000, (b) as of the Bally Acquisition Date, $350,000,000, and (c) as of the Amendment No. 4 Effective Date, $350,000,000.   “L/C Disbursements”: the collective reference to the Dollar L/C Disbursements and the Multi-Currency L/C Disbursements.   “L/C Obligations”: the collective reference to the Dollar L/C Obligations and the Multi-Currency L/C Obligations.   “L/C Participants”: the collective reference to all the Dollar L/C Participants and Multi-Currency L/C Participants.   “L/C Shortfall”: as defined in Section 3.4(d).   “LCA Election”: as defined in Section 1.2(h).   “LCA Test Date”: as defined in Section 1.2(h).   “Lead Arrangers”: (a) in connection with Amendment No. 4, Bank of America, N.A., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Citizens Bank, N.A., Fifth Third Bank, PNC Capital Markets LLC, Macquarie Capital (USA) Inc. and Goldman Sachs Bank USA, in their capacity as joint lead arrangers, and (b) otherwise, Bank of America, N.ABofA Securities, Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., BNP Paribas Securities Corp., Fifth Third Bank, HSBC Securities (USA) Inc. and PNC Capital Markets LLCBarclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc., Credit Suisse Loan Funding LLC, Citizens Bank, N.A., Macquarie Capital (USA) Inc., and Goldman Sachs Bank USA, in their capacity as joint lead arrangers.   “Lender Joinder Agreement”: as defined in Section 2.25(e).   -39-     “Lenders”: as defined in the preamble hereto. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.   “Letters of Credit”: any letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder and shall include the Existing Letters of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. Letters of Credit may be issued in Dollars or in a Permitted Foreign Currency.   “Liabilities”: the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of Holdings and its Subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions, as applicable, determined in accordance with GAAP consistently applied.   “LIBOR Screen Rate” means the LIBOR quote on the applicable screen page the Administrative Agent designates to determine LIBOR (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).   “LIBOR Successor Rate”: as defined in Section 2.27.   “LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of ABR, Interest Period, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines in consultation with the Borrower).   “Lien”: any mortgage, pledge, hypothecation, collateral assignment, encumbrance, lien (statutory or other), charge or other security interest or any other security agreement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).   “Limited Condition Acquisition”: any acquisition, including by way of merger, amalgamation or consolidation, by one or more of Holdings, the Borrower and its Restricted Subsidiaries of any assets, business or Person permitted by this Agreement whose consummation is not conditioned on the availability of, or on obtaining, third party acquisition financing and which is designated as a Limited Condition Acquisition by Holdings, the Borrower or such Restricted Subsidiary in writing to the Administrative Agent and Lenders.   “Limited Condition Acquisition Provision”: as defined in Section 1.2(h).   “Loan”: any loan made by any Lender pursuant to this Agreement.   “Loan Documents”: the collective reference to this Agreement, the Security Documents and the Notes (if any), together with any amendment, supplement, waiver, or other modification to any of the foregoing.   “Loan Parties”: Holdings, the Borrower and each Subsidiary Guarantor.   -40-     “London Banking Day”: any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.   “Mafco”: MacAndrews & Forbes Holdings, Inc.   “Majority Facility Lenders”: with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or (i) in the case of any Revolving Facility, prior to any termination of the Revolving Commitments under such Facility, the holders of more than 50% of the Revolving Commitments under such Facility, (ii) in the case of any New Facility that is a revolving credit facility, prior to any termination of the New Loan Commitments under such Facility, the holders of more than 50% of the New Loan Commitments under such Facility or (iii) in the case of any Extended Revolving Facility, prior to any termination of the Extended Revolving Commitments under such Facility, the holders of more than 50% of the Extended Revolving Commitments under such Facility); provided, however, that determinations of the “Majority Facility Lenders” shall exclude any Commitments or Loans held by Defaulting Lenders.   “Mandatory Prepayment Date”: as defined in Section 2.12(e).   “Material Adverse Effect”: a material adverse effect on (a) the business, operations, assets, financial condition or results of operations of Holdings and its Restricted Subsidiaries, taken as a whole, or (b) the material rights and remedies available to the Administrative Agent and the Lenders, taken as a whole, or on the ability of the Loan Parties, taken as a whole, to perform their payment obligations to the Lenders, in each case, under the Loan Documents.   “Material Real Property”: any Real Property located in the United States and owned in fee by a Loan Party on the Closing Date having an estimated Fair Market Value exceeding $7,500,000 and any after-acquired Real Property located in the United States owned by a Loan Party having a gross purchase price exceeding $7,500,000 at the time of acquisition; provided that (i) no Specified Real Property shall constitute a Material Real Property unless otherwise satisfying the terms of this definition on or after the one year anniversary of (x) with respect to any Material Real Property owned prior to the Bally Acquisition and Amendment Effectiveness Date, the Amendment No. 1 Effective Date (as defined in Amendment No. 1) and (y) with respect to any Material Real Property acquired in connection with the Bally Transactions, the Bally Acquisition and Amendment Effectiveness Date and (ii) at no time shall the aggregate estimated Fair Market Value of all Real Property located in the United States and owned in fee by the Loan Parties that is not considered “Material Real Property” exceed $50,000,000.   “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity and any other substances that are defined as hazardous or toxic under any Environmental Law, that are regulated pursuant to any Environmental Law.   “Maximum Incremental Facilities Amount”: at any date of determination, the sum of (a) $350,000,000 and (b) an additional unlimited amount if, after giving pro forma effect to the incurrence of such additional amount (and in the case of any Supplemental Revolving Commitment Increase being initially provided on any date of determination, as if loans thereunder were drawn in full on such date) and after giving effect to any acquisition consummated substantially concurrently therewith and all other appropriate pro forma adjustment events, the Consolidated Net First Lien Leverage Ratio is equal to or less than 3.25:1.00 (it being understood that (A) the unlimited amount in clause (b) above shall be deemed to be used prior to the amount in clause (a) above to the extent the Consolidated Net First Lien Leverage Ratio requirement is satisfied, (B) if pro forma effect is given to the entire committed amount of any such amount, such committed amount may thereafter be borrowed and reborrowed, in whole or in part, from time to time, without further compliance with this clause and (C) for purposes of calculating the Consolidated Net First Lien Leverage Ratio only on the applicable date of incurrence, (I) any such amount incurred shall be treated as if such amount is first lien Funded Debt, regardless of whether such amount is actually secured on a first lien basis and (II) any cash proceeds from such incurrence shall be excluded from such calculation).   -41-     “Maximum Rate”: as defined in Section 10.20.   “Merger”: the merger of SG California Merger Sub, Inc. with and into Target pursuant to, and as contemplated by, the Merger Agreement.   “Merger Agreement”: the Agreement and Plan of Merger, dated as of January 30, 2013, by and among, Holdings, SG California Merger Sub, Inc., the Borrower and WMS Industries, Inc.   “Minimum Extension Condition”: as defined in Section 2.26(g).   “Moody’s”: Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.   “Mortgage”: any mortgage, deed of trust, hypothec, assignment of leases and rents or other similar document delivered on or after the Closing Date by any Loan Party in favor of, or for the benefit of, the Collateral Agent for the benefit of the Secured Parties, with respect to Mortgaged Properties, each substantially in form and substance reasonably acceptable to the Administrative Agent and the Borrower (taking into account the law of the jurisdiction in which such mortgage, deed of trust, hypothec or similar document is to be recorded), as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.   “Mortgaged Properties”: all Real Property owned by a Loan Party that is, or is required to be, subject to a Mortgage pursuant to the terms of this Agreement.   “Multi-Currency Issuing Lenders”: (a) Bank of America, N.A. (including with respect to Existing Letters of Credit under clause (b) of the definition of “Existing Letters of Credit” that are Multi-Currency Letters of Credit), (b) with respect to Existing Letters of Credit under clause (a) of the definition of “Existing Letters of Credit” that are Multi-Currency Letters of Credit, JPMorgan Chase Bank, N.A. and (c) any other Multi-Currency Revolving Lender from time to time designated by the Borrower, in its sole discretion, as a Multi-Currency Issuing Lender with the consent of such other Multi-Currency Revolving Lender.   “Multi-Currency L/C Disbursements”: as defined in Section 3.4(a)(ii).   “Multi-Currency L/C Obligations”: at any time, an amount equal to the sum of (a) the Dollar Equivalent of the aggregate then undrawn and unexpired face amount of the then outstanding Multi-Currency Letters of Credit and (b) the Dollar Equivalent of the aggregate amount of drawings under Multi-Currency Letters of Credit that have not then been reimbursed. The Multi-Currency L/C Obligations of any Lender at any time shall be its Multi-Currency Revolving Percentage of the total Multi-Currency L/C Obligations at such time. For purposes of computing the amount available to be drawn under any Multi-Currency Letter of Credit, the amount of such Multi-Currency Letter of Credit shall be determined in accordance with Section 1.5. For all purposes of this Agreement, if on any date of determination a Multi-Currency Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, upon notice from the Administrative Agent to the Borrower such Multi-Currency Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.   -42-     “Multi-Currency L/C Participants”: the collective reference to all the Multi-Currency Revolving Lenders other than the applicable Multi-Currency Issuing Lender and, for purposes of Section 3.4(d), the collective reference to all Multi-Currency Revolving Lenders.   “Multi-Currency Letter of Credit”: a Letter of Credit denominated in Dollars or in a Permitted Foreign Currency and issued by any Multi-Currency Issuing Lender under the Multi-Currency Revolving Commitments.   “Multi-Currency Revolving Commitments”: as to any(i) prior to the Amendment No. 5 Effective Date, the Original Multi-Currency Revolving Commitments, and (ii) on or after the Amendment No. 5 Effective Date, the 2019 Multi-Currency Revolving Lender, the obligation of such Lender, if any, to make Multi-Currency Revolving Loans and participate in Multi-Currency Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Multi-Currency Revolving Commitment” opposite such Lender’s name on Schedule 2.1, or, as the case may be, in the Assignment and Assumption, Joinder Agreement or Lender Joinder Agreement pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to an Extension Amendment, an Increase Supplement or otherwise pursuant to the terms hereof. The aggregate amount of the Multi-Currency Revolving Commitments, as of the Amendment No. 4 Effective Date (after giving effect to the Supplemental Revolving Commitment Increases incurred on or prior to such date), is $411,233,290.02.Commitments.   “Multi-Currency Revolving Extensions of Credit”: as to any Multi-Currency Revolving Lender at any time, an amount equal to the Dollar Equivalent of the sum of, without duplication (a) the aggregate principal amount of all Multi-Currency Revolving Loans held by such Lender then outstanding and (b) such Lender’s Multi-Currency Revolving Percentage of the Multi-Currency L/C Obligations then outstanding.   “Multi-Currency Revolving Facility”: as defined in the definition of “Facility.”   “Multi-Currency Revolving Lender”: each Lender that has a Multi-Currency Revolving Commitment or that holds Multi-Currency Revolving Loans.   “Multi-Currency Revolving Loans”: as defined in Section 2.4(a).   “Multi-Currency Revolving Percentage”: as to any Multi-Currency Revolving Lender at any time, the percentage which such Lender’s Multi-Currency Revolving Commitment then constitutes of the aggregate Multi-Currency Revolving Commitments or, at any time after the Multi-Currency Revolving Commitments shall have expired or terminated, the percentage which such Multi-Currency Revolving Lender’s Multi-Currency Revolving Extensions of Credit then outstanding constitutes of the aggregate Multi-Currency Revolving Extensions of Credit then outstanding.   “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.   -43-     “Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds 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) received by any Loan Party, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, brokers’ fees, consulting fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) or the repayment of any other Indebtedness of an Unrestricted Subsidiary that is sold pursuant to an Asset Sale and other customary fees and expenses actually incurred by any Loan Party in connection therewith; (ii) taxes paid or reasonably estimated to be payable by any Loan Party as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and, in the case of any Asset Sale of the Social Gaming Business, such taxes to be determined for the applicable Unrestricted Subsidiaries on a stand-alone basis; (iii) the amount of any liability paid or to be paid or reasonable reserve established in accordance with GAAP against any liabilities (other than any taxes deducted pursuant to clause (ii) above) (A) associated with the assets that are the subject of such event and (B) retained by Holdings or any of its Restricted Subsidiaries, provided that the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such event occurring on the date of such reduction and (iv) the pro rata portion of the Net Cash Proceeds thereof (calculated without regard to this clause (iv)) attributable to minority interests and not available for distribution to or for the account of the Borrower or any Domestic Subsidiary as a result thereof and (b) in connection with any Equity Issuance or issuance or sale of debt securities or instruments or the incurrence of Funded Debt, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, consulting fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.   “New Debt”: any New Notes and/or new loans issued or incurred, as applicable, in connection with the Bally Transactions.   “New Facility”: as defined in the definition of “Facility.”   “New Incremental Notes”: one or more series of senior secured, senior unsecured, senior subordinated or subordinated notes (which notes, if secured by the Collateral, are secured on a first lien pari passu basis with the Liens securing the Obligations or secured on a “junior” basis with the Liens securing the Obligations) and guaranteed only by the Guarantors in an aggregate amount for all such New Incremental Notes (when taken together with any New Loan Commitments that have become effective or will become effective simultaneously with the issue of any such New Incremental Notes) not in excess of, at the time the respective New Incremental Notes are issued, the Maximum Incremental Facilities Amount; provided that no Event of Default would exist after giving pro forma effect thereto subject to the Permitted Acquisition Provisions (if applicable). The issuance of any New Incremental Notes is subject to the following conditions: (i) the delivery to the Administrative Agent of a certificate of the Borrower certifying and attaching the resolutions adopted by the Borrower approving or consenting to the issuance of such New Incremental Notes, and certifying that the conditions precedent set forth in the following subclauses (ii) through (v) have been satisfied (which certificate shall include supporting calculations demonstrating compliance, if applicable, with the Maximum Incremental Facilities Amount), (ii) such New Incremental Notes shall not be guaranteed by any Person that is not a Guarantor, (iii) to the extent secured, such New Incremental Notes shall be subject to an Other Intercreditor Agreement, (iv) such New Incremental Notes shall have a final maturity no earlier than 91 days after the then Latest Maturity Date, (v) (A) if such New Incremental Notes are secured, the weighted average life to maturity of such New Incremental Notes shall not be shorter than that of any then-existing Term Loan Tranche, and (B) if such New Incremental Notes are unsecured, such New Incremental Notes shall not be subject to any amortization prior to the final maturity thereof, or be subject to any mandatory redemption or prepayment provisions (except customary assets sale, recovery event and change of control provisions), (vi) if such New Incremental Notes are secured, such New Incremental Notes shall not be subject to any mandatory redemption or prepayment provisions (except to the extent any such mandatory redemption or prepayment is required to be applied pro rata to the Term Loans and other Indebtedness that is secured on a pari passu basis with the Obligations) and (vii) the covenants, events of default, guarantees, collateral and other terms of such New Incremental Notes are customary for similar debt securities in light of then-prevailing market conditions at the time of issuance (it being understood that (x) no New Incremental Notes shall include any financial maintenance covenants (including indirectly by way of a cross-default to this Agreement), but that customary cross-acceleration provisions may be included and (y) any negative covenants with respect to indebtedness, investments, liens or restricted payments shall be incurrence-based) and in any event are not more restrictive to Holdings and its Restricted Subsidiaries than those set forth in this Agreement (other than with respect to interest rate and redemption provisions), except for covenants or other provisions applicable only to periods after the then Latest Maturity Date. The Lenders hereby authorize the Administrative Agent to enter into amendments to this Agreement and the other Loan Documents with the Borrower as may be necessary or appropriate in order to secure any New Incremental Notes with the Collateral and/or to make such amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the issuance of such New Incremental Notes, in each case on terms consistent with this definition.   -44-     “New Lender”: as defined in Section 2.25(c).   “New Loan Commitments”: as defined in Section 2.25(a).   “New Loans”: any loan made by any New Lender pursuant to this Agreement.   “New Notes”: as defined in the definition of Bally Transactions.   “New Notes Issuer”: the Borrower, in its own capacity or as successor to any Escrow Entity.   “New Secured Notes”: as defined in the definition of Bally Transactions.   “New Subsidiary”: as defined in Section 7.2(t).   “New Term Lender”: a Lender that has a New Term Loan.   “New Term Loan Commitment”: as defined in Section 2.25(a).   “New Term Loans”: as defined in Section 2.25(a).   “New Unsecured Notes”: as defined in the definition of Bally Transactions.   “No Undisclosed Information Representation”: with respect to any Person, a representation that such Person is not in possession of any material non-public information with respect to Holdings or any of its Subsidiaries that has not been disclosed to the Lenders generally (other than those Lenders who have elected to not receive any non-public information with respect to Holdings or any of its Subsidiaries), and if so disclosed could reasonably be expected to have a material effect upon, or otherwise be material to, the market price of the applicable Loan, or the decision of an assigning Lender to sell, or of an assignee to purchase, such Loan.   “Non-Defaulting Lender”: any Lender other than a Defaulting Lender.   “Non-Excluded Subsidiary”: any Subsidiary of Holdings or the Borrower which is not an Excluded Subsidiary.   -45-     “Non-Extending Lender”: as defined in Section 2.26(e).   “Non-Extending Revolving Commitment”: any Revolving Commitment that was outstanding immediately prior to the Amendment No. 2 Effective Date and that was not extended pursuant to Amendment No. 2. The aggregate amount of the Non-Extending Revolving Commitments as of the Amendment No. 4 Effective Date is $174,500,000.   “Non-Extending Revolving Lender”: each Revolving Lender with a Non-Extending Revolving Commitment.   “Non-Extending Revolving Termination Date”: the earlier of (x) October 18, 2018 and (y) the Accelerated Maturity Date (excluding clause (c) and subject to the proviso, in each case, contained in the definition thereof).   “Non-Guarantor Subsidiary”: any Subsidiary of Holdings or the Borrower which is not a Subsidiary Guarantor.   “Non-Recourse Debt”: Indebtedness (a) with respect to which no default would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings or any of its Restricted Subsidiaries the outstanding principal amount of which individually exceeds $25,000,000 to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity and (b) as to which the lenders or holders thereof will not have any recourse to the capital stock or assets of Holdings or any of its Restricted Subsidiaries.   “Non-US Lender”: as defined in Section 2.20(d).   “Not Otherwise Applied”: with reference to any proceeds of any transaction or event or of Excess Cash Flow or the Available Amount that is proposed to be applied to a particular use or transaction, that such amount (a) was not required to prepay Loans pursuant to Section 2.12 and (b) has not previously been (and is not simultaneously being) applied to anything other than such particular use or transaction (including any application thereof as a Cure Right pursuant to Section 8.2).   “Note”: any promissory note evidencing any Loan, which promissory note shall be in the form of Exhibit J-1, Exhibit J-2 or Exhibit J-3, as applicable, or such other form as agreed upon by the Administrative Agent and the Borrower.   “Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed or allowable in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent, the Collateral Agent or to any Lender (or, in the case of Specified Hedge Agreements or Cash Management Obligations of any Loan Party to the Administrative Agent, the Collateral Agent, any other Agent, any Lender or any Affiliate of any of the foregoing), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, in each case, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement, any Cash Management Obligations or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided that (a) obligations of any Loan Party under any Specified Hedge Agreement, any Cash Management Obligations shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed, (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements or Cash Management Obligations and (c) the “Obligations” shall exclude any Excluded Swap Obligations.   -46-     “OFAC”: the Office of Foreign Assets Control of the United States Department of the Treasury.   “Open Market Purchase”: the purchase by Holdings or any of its Subsidiaries by way of open market purchases of Term Loans in an aggregate principal amount of Term Loans not to exceed of 20% of the principal amount of all Term Loans then outstanding (calculated as of the date of such purchase).   “Original Dollar Revolving Commitments”: as to any Lender, the obligation of such Lender to make Dollar Revolving Loans and to participate in Dollar Letters of Credit as set forth in this Agreement immediately prior to the Amendment No. 5 Effective Date.   “Original Multi-Currency Revolving Commitments”: as to any Lender, the obligation of such Lender to make Multi-Currency Revolving Loans and to participate in Multi-Currency Letters of Credit as set forth in this Agreement immediately prior to the Amendment No. 5 Effective Date.   “Other Affiliate”: the Sponsor and any Affiliate of the Sponsor, other than Holdings, any Subsidiary of Holdings and any natural person.   “Other Intercreditor Agreement”: an intercreditor agreement, (a) to the extent in respect of Indebtedness secured by some or all of the Collateral on a pari passu basis or a second priority basis with the Obligations, substantially in the form of Exhibit K hereto and (b) to the extent in respect of Indebtedness secured by some or all of the Collateral on a third (or more junior) priority basis with the Obligations, in a form reasonably acceptable to the Administrative Agent and the Borrower, in each case with such modifications thereto as the Administrative Agent and the Borrower may mutually agree.   “Other Taxes”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, except any such Taxes that are imposed as a result of a present or former connection between the Recipient and the jurisdiction or Governmental Authority imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document) with respect to an assignment (other than an assignment made pursuant to Sections 2.23 or 2.24).   “Parent Company”: any direct or indirect parent of Holdings.   “Pari Passu Debt”: Indebtedness that is secured by a Lien on the Collateral ranking equal with the Lien on such Collateral securing the Obligations pursuant to one or more Other Intercreditor Agreements.   “Participant”: as defined in Section 10.6(c)(i).   “Participant Register”: as defined in Section 10.6(c)(iii).   -47-     “Payment Amount”: as defined in Section 3.5.   “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).   “Permitted Acquisition”: (a) any acquisition or other Investment approved by the Required Lenders, (b) any acquisition or other Investment made solely with the Net Cash Proceeds of any substantially concurrent Equity Issuance or capital contribution (other than Disqualified Capital Stock or Cure Amounts) or (c) any acquisition, in a single transaction or a series of related transactions, of a majority controlling interest in the Capital Stock, or all or substantially all of the assets, of any Person, or of all or substantially all of the assets constituting a division, product line or business line of any Person, in each case to the extent the applicable acquired company or assets engage in or constitute a Permitted Business or Related Business Assets, so long as in the case of any acquisition described in this clause (c), no Event of Default shall be continuing immediately after giving pro forma effect to such acquisition.   “Permitted Acquisition Provisions”: as defined in Section 2.25(b).   “Permitted Business”: the Business and any other services, activities or businesses incidental or related, similar or complementary to any line of business engaged in by Holdings and/or its Subsidiaries as of the Closing Date (after giving effect to the Transactions) or as of the Bally Acquisition Date (after giving effect to the Bally Transactions) or any business activity that is a reasonable extension, development or expansion thereof or ancillary thereto.   “Permitted Foreign Currency”: with respect to any Multi-Currency Revolving Loan or Multi-Currency Letter of Credit, Euros, Pounds Sterling, Canadian Dollars, Australian Dollars and any other foreign currency reasonably requested by the Borrower from time to time and in which the Multi-Currency Revolving Lenders or a Multi-Currency Issuing Lender, as applicable, may, in accordance with its policies and procedures in effect at such time, lend Multi-Currency Revolving Loans or issue Multi-Currency Letters of Credit, as applicable.   “Permitted Investors”: the collective reference to the Sponsor and its Affiliates (but excluding any operating portfolio companies of the foregoing), the members of management of any Parent Company, Holdings or any of its Subsidiaries that have ownership interests in any Parent Company or Holdings as of the Closing Date, and the directors of Holdings or any of its Subsidiaries or any Parent Company as of the Closing Date.   “Permitted Refinancing”: with respect to any Person, refinancings, replacements, modifications, refundings, renewals or extensions of Indebtedness provided that (a) there is no increase in the principal amount (or accreted value) thereof (excluding accrued interest, fees, discounts, redemption and tender premiums, penalties and expenses), (b) the weighted average life to maturity of such Indebtedness is greater than or equal to the shorter of (i) the weighted average life to maturity of the Indebtedness being refinanced and (ii) the remaining weighted average life to maturity of the Latest Maturing Term Loans (other than a shorter weighted average life to maturity for customary bridge financings, which, subject to customary conditions, would either be automatically converted into or required to be exchanged for permanent financing which does not provide for a shorter weighted average life to maturity than the shorter of (i) the weighted average life to maturity of the Indebtedness being refinanced and (ii) the remaining weighted average life to maturity of the Latest Maturing Term Loans), (c) immediately after giving effect to such refinancing, replacement, refunding, renewal or extension, no Event of Default shall be continuing and (d) neither Holdings nor any Restricted Subsidiary shall be an obligor or guarantor of any such refinancings, replacements, modifications, refundings, renewals or extensions except to the extent that such Person was (or, when initially incurred could have been) such an obligor or guarantor in respect of the applicable Indebtedness being modified, refinanced, replaced, refunded, renewed or extended.   -48-     “Permitted Refinancing Obligations”: any senior or subordinated Indebtedness (which Indebtedness may be (x) secured by the Collateral on a junior basis, (y) unsecured or (z) in the case of Indebtedness incurred under this Agreement, loan agreements, customary bridge financings or debt securities, secured by the Collateral on a pari passu basis), including customary bridge financings, in each case issued or incurred by the Borrower or a Guarantor to refinance Indebtedness and/or Revolving Commitments incurred under this Agreement and the Loan Documents and to pay fees, discounts, premiums and expenses in connection therewith; provided that (a) the terms of such Indebtedness, other than a revolving credit facility that does not include scheduled commitment reductions prior to maturity, shall not provide for a maturity date or weighted average life to maturity earlier than the maturity date or shorter than the weighted average life to maturity (or, in the case of any such Indebtedness comprised of debt securities, 91 days after the maturity date or the weighted average life to maturity) of the Indebtedness being refinanced, as applicable (other than an earlier maturity date and/or shorter weighted average life to maturity for customary bridge financings, which, subject to customary conditions, would either be automatically converted into or required to be exchanged for permanent financing which does not provide for an earlier maturity date or a shorter weighted average life to maturity than the maturity date or the weighted average life to maturity of the Indebtedness being refinanced, as applicable), (b) any such Indebtedness that is a revolving credit facility shall not mature prior to the maturity date of the revolving commitments being replaced, (c) such Indebtedness shall not be secured by any Lien on any asset of any Loan Party that does not also secure the Obligations, or be guaranteed by any Person other than the Guarantors and (d) if secured by Collateral, such Indebtedness (and all related Obligations) either shall be incurred under this Agreement on a senior secured pari passu basis with the other Obligations or shall be subject to the terms of an Other Intercreditor Agreement.   “Permitted Transferees”: with respect to any Person that is a natural person (and any Permitted Transferee of such Person), (a) such Person’s immediate family, including his or her spouse, ex-spouse, children, step-children and their respective lineal descendants, (b) the estate of Ronald O. Perelman and (c) any other trust or legal entity the primary beneficiary of which is such Person’s immediate family, including his or her spouse, ex-spouse, children, stepchildren or their respective lineal descendants and which is controlled by such Person.   “Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.   “Plan”: at a particular time, any employee benefit plan as defined in Section 3(3) of ERISA and in respect of which Holdings or any of its Restricted Subsidiaries is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA, including a Multiemployer Plan.   “Platform”: as defined in Section 10.2(c).   “Pledged Securities”: as defined in the Guarantee and Collateral Agreement.   “Pledged Stock”: as defined in the Guarantee and Collateral Agreement.   “Prepayment Option Notice”: as defined in Section 2.12(e).   -49-     “Present Fair Salable Value”: the amount that could be obtained by an independent willing seller from an independent willing buyer if the assets of Holdings and its Subsidiaries taken as a whole and after giving effect to the consummation of the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions, as applicable, are sold with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.   “Pricing Grid”: the table set forth below:   Consolidated Net First Lien Leverage Ratio Applicable Margin for Revolving Loans that are Eurocurrency Loans Applicable Margin for Revolving Loans that are ABR Loans Applicable Commitment Fee Rate > 3.00:1.00 3.00% 2.00% 0.50% ≤ 3.00:1.00 but > 2.00:1.00 2.75% 1.75% 0.375% ≤ 2.00:1.00 2.50% 1.50% 0.375%   Changes in the Applicable Margin with respect to Revolving Loans or the Applicable Commitment Fee Rate resulting from changes in the Consolidated Net First Lien Leverage Ratio shall become effective on the date on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 6.1, then, at the option of (and upon the delivery of notice (telephonic or otherwise) by) the Administrative Agent or the Required Lenders, until such financial statements are delivered, the Consolidated Net First Lien Leverage Ratio as at the end of the fiscal period that would have been covered thereby shall for the purposes of this definition be deemed to be greater than 3.00 to 1.00. In addition, at all times while an Event of Default set forth in Section 8.1(a) or 8.1(f) shall have occurred and be continuing, the Consolidated Net First Lien Leverage Ratio shall for the purposes of the Pricing Grid be deemed to be greater than 3.00 to 1.00.   “Prime Rate”: as defined in the definition of “ABR.”   “Property”: any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Capital Stock.   “PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.   “Public Information”: as defined in Section 10.2(c).   “Public Lender”: as defined in Section 10.2(c).   “Qualified Capital Stock”: any Capital Stock that is not Disqualified Capital Stock.   “Qualified Contract”: any new contract relating to the establishment, provision or operation of new lottery, gaming or other services or products by Holdings or any of its Restricted Subsidiaries so long as an officer of the Borrower has certified to the Administrative Agent that the revenues generated by such contract in the next succeeding 12 months would reasonably be expected to exceed $50,000,000.   -50-     “Rate Determination Date”: two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such other day as otherwise reasonably determined by the Administrative Agent).   “Rate Determination Notice”: as defined in Section 2.22.   “Real Property”: collectively, all right, title and interest of Holdings or any of its Restricted Subsidiaries in and to any and all parcels of real property owned or operated by Holdings or any such Restricted Subsidiary together with all improvements and appurtenant fixtures, easements and other property and rights incidental to the ownership, lease or operation thereof.   “Recipient”: (a) any Lender, (b) the Administrative Agent and (c) any other Agent, as applicable.   “Recovery Event”: any settlement of or payment in respect of any Property or casualty insurance claim or any condemnation proceeding relating to any asset of Holdings or any Restricted Subsidiary, in an amount for each such event exceeding $7,500,000.   “Refinanced Revolving Commitments”: as defined in Section 10.1(d).   “Refinanced Term Loans”: as defined in Section 10.1(c).   “Refinancing”: the repayment of Indebtedness under and termination of the Existing Credit Agreements on the Closing Date.   “Refinancing Revolving Commitments”: as defined in Section 10.1(d).   “Refinancing Term Loans”: as defined in Section 10.1(c).   “Register”: as defined in Section 10.6(b)(iv).   “Regulation U”: Regulation U of the Board as in effect from time to time.   “Reimbursement Obligation”: the obligation of the Borrower to reimburse an Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing Lender.   “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Loan Party or any Restricted Subsidiary thereof for its own account in connection therewith that are not applied to prepay the Term Loans pursuant to Section 2.12 as a result of the delivery of a Reinvestment Notice.   “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which a Loan Party has delivered a Reinvestment Notice.   “Reinvestment Notice”: a written notice signed on behalf of any Loan Party by a Responsible Officer stating that such Loan Party (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire property or make investments used or useful in the Business or to fund Specified Concession Obligations.   -51-     “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount (or the relevant portion thereof, as contemplated by clause (ii) of the definition of “Reinvestment Prepayment Date”) relating thereto less any amount contractually committed by the applicable Loan Party (directly or indirectly through a Subsidiary) prior to the relevant Reinvestment Prepayment Date to be expended prior to the relevant Trigger Date (a “Committed Reinvestment Amount”), or actually expended prior to such date, in each case to acquire assets or make investments useful in the Business or to fund Specified Concession Obligations.   “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier of (i) the date occurring 12 months after such Reinvestment Event and (ii) with respect to any portion of a Reinvestment Deferred Amount, the date that is five Business Days following the date on which any Loan Party or any Restricted Subsidiary thereof shall have determined not to acquire assets or make investments useful in the Business or to fund Specified Concession Obligations with such portion of such Reinvestment Deferred Amount.   “Related Business Assets”: assets (other than cash and Cash Equivalents) used or useful in a Permitted Business; provided that any assets received by Holdings or a Restricted Subsidiary in exchange for assets transferred by Holdings or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.   “Related Parties”: with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.   “Release”: any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure or facility.   “Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.   “Replaced Lender”: as defined in Section 2.24.   “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived by the PBGC in accordance with the regulations thereunder.   “Representatives”: as defined in Section 10.14.   “Repricing Transaction”: other than in connection with a transaction involving a Change of Control, any prepayment of the applicable Initial Term Loans using proceeds of Indebtedness incurred by the Borrower or one or more Subsidiaries from a substantially concurrent issuance or incurrence of secured, syndicated term loans provided by one or more banks, financial institutions or other Persons for which the Yield payable thereon (disregarding any performance or ratings based pricing grid that could result in a lower interest rate based on future performance to the extent such pricing grid is not applicable during the period specified in 2.11(b)) is lower than the Yield with respect to such Initial Term Loans on the date of such prepayment or any amendment, amendment and restatement or any other modification of this Agreement that reduces the Yield with respect to any applicable Initial Term Loans.   -52-     “Required Lenders”: at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding, (ii) the Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Revolving Extensions of Credit then outstanding, and (iii) the Extended Revolving Commitments then in effect in respect of any Extended Revolving Facility or, if such Extended Revolving Commitments have been terminated, the Extended Loans in respect thereof then outstanding; provided, however, that determinations of the “Required Lenders” shall exclude any Commitments or Loans held by Defaulting Lenders.   “Required Prepayment Lenders”: the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans; provided, however, that determinations of the “Required Prepayment Lenders” shall exclude any Term Loans held by Defaulting Lenders.   “Required Revolving Lenders”: at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Revolving Extensions of Credit then outstanding, and (ii) the Extended Revolving Commitments then in effect in respect of any Extended Revolving Facility or, if such Extended Revolving Commitments have been terminated, the Extended Loans in respect thereof then outstanding; provided, however, that determinations of the “Required Revolving Lenders” shall exclude any Revolving Commitments or Revolving Loans held by Defaulting Lenders.   “Requirement of Law”: as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.   “Responsible Officer”: the chief executive officer, president, chief financial officer (or similar title), chief accounting officer, controller or treasurer (or similar title), and, with respect to financial matters, the chief financial officer (or similar title), controller or treasurer (or similar title), and, solely for purposes of notices given pursuant to Section 2, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent; any reference herein or in any other Loan Document to a Responsible Officer shall be deemed to refer to a Responsible Officer of the Borrower, unless otherwise specified.   “Restricted Payments”: as defined in Section 7.6.   “Restricted Subsidiary”: any Subsidiary of Holdings which is not an Unrestricted Subsidiary.   “Revaluation Date”: (a) the first Business Day of each calendar month, (b) each date of a borrowing of Multi-Currency Loans or issuance of a Multi-Currency Letter of Credit, (c) each date of an amendment of any such Multi-Currency Letter of Credit having the effect of increasing the amount thereof and (d) each date of any payment by an Issuing Lender under any Multi-Currency Letter of Credit.   “Revolving Commitment Period”: the period from and including the Closing Date to the Revolving Termination Date.   “Revolving Commitments”: the collective reference to the Dollar Revolving Commitment and the Multi-Currency Revolving Commitment. The aggregate amount of the Revolving Commitments (a) as of the Closing Date is $300,000,000, (b) as of the Bally Acquisition Date is the actual aggregate amount of Revolving Commitments as of such date, and (c) as of the Amendment No. 45 Effective Date (after giving effect to the Supplemental Revolving Commitment Increases incurred on or prior to such date) is $620,180,357.13.650,000,000.00.   -53-     “Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount equal to the Dollar Equivalent of the sum of, without duplication (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding and (c) such Lender’s Swingline Exposure.   “Revolving Facilities”: the collective reference to the Dollar Revolving Facility and the Multi-Currency Revolving Facility.   “Revolving Lender”: the collective reference to the Dollar Revolving Lenders and the Multi-Currency Revolving Lenders.   “Revolving Loans”: the collective reference to the Dollar Revolving Loans and the Multi-Currency Revolving Loans.   “Revolving Percentage”: as to any Revolving Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the aggregate Revolving Commitments or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which such Revolving Lender’s Revolving Extensions of Credit then outstanding constitutes of the aggregate Revolving Extensions of Credit then outstanding.   “Revolving Termination Date”: with respect to (a) Non-Extending Revolving Commitments, the Non-Extending Revolving Termination Date and (b) Revolving Commitments other than Non-Extending Revolving Commitments, the Amendment No. 2 Extending Revolving Termination Datethe earlier of (x) November 20, 2024 and (y) the Accelerated Revolving Maturity Date (subject to the proviso contained in the definition thereof).   “S&P”: Standard & Poor’s Ratings Group, Inc., or any successor to the rating agency business thereof.   “Sanction(s)”: any international economic sanction administered or enforced by OFAC, the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.   “Screen”: the relevant display page for the Eurocurrency Base Rate (as reasonably determined by the Administrative Agent) on the Bloomberg Information Service or any successor thereto; provided that if the Administrative Agent determines that there is no such relevant display page or otherwise in Bloomberg for the Eurocurrency Base Rate, “Screen” means such other comparable publicly available service for displaying the Eurocurrency Base Rate (as reasonably determined by the Administrative Agent).   “SEC”: the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).   “Section 2.26 Additional Amendment”: as defined in Section 2.26(c).   “Secured Parties”: collectively, the Lenders, the Administrative Agent, the Collateral Agent, each Issuing Lender, the Swingline Lender, any other holder from time to time of any of the Obligations and, in each case, their respective successors and permitted assigns.   -54-     “Securities Act”: the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.   “Security”: as defined in the Guarantee and Collateral Agreement.   “Security Documents”: the collective reference to the Guarantee and Collateral Agreement and all other security documents (including any Mortgages) hereafter delivered to the Administrative Agent or the Collateral Agent purporting to grant a Lien on any Property of any Loan Party to secure the Obligations.   “Single Employer Plan”: any 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 Holdings or any of its Restricted Subsidiaries is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.   “Social Gaming Business”: for so long as SG Nevada Holding Company II, LLC and its direct and indirect Subsidiaries are designated as “Unrestricted Subsidiaries” hereunder (including any other Unrestricted Subsidiary who may acquire the assets of such Subsidiaries), the business conducted by SG Nevada Holding Company II, LLC and its direct and indirect Subsidiaries as of the Amendment No. 2 Effective Date, as well as the assets and liabilities of such Subsidiaries.   “Solvent”: with respect to Holdings and its Subsidiaries, as of any date of determination, (i) the Fair Value of the assets of Holdings and its Subsidiaries taken as a whole exceeds their Liabilities, (ii) the Present Fair Salable Value of the assets of Holdings and its Subsidiaries taken as a whole exceeds their Liabilities; (iii) Holdings and its Subsidiaries taken as a whole Do not have Unreasonably Small Capital; and (iv) Holdings and its Subsidiaries taken as a whole Will be able to pay their Liabilities as they mature.   “Specified Acquisition”: the proposed acquisition disclosed to the Administrative Agent prior to the Closing Date.   “Specified Bally Merger Agreement Representations”: the representations in the Bally Merger Agreement that are material to the interests of the Lenders, but only to the extent that Holdings, the Borrower or any Affiliate thereof has the right to terminate its obligations under the Bally Merger Agreement or to decline to consummate the Bally Merger as a result of a breach of such representations in the Bally Merger Agreement.   “Specified Concession”: any concession, license or other authorization granted or awarded to, or agreement entered into by, the Borrower, Holdings, any Subsidiary of Holdings or any Specified Concession Vehicle by or with an applicable Governmental Authority, whether such concession, license, authorization or agreement is now existing or hereafter arising and any renewals or extensions of, or any succession to, such concession, license, authorization or agreement, with respect to gaming, gaming machines (including video lottery terminals), wagering, lotteries or any goods or services relating thereto in any jurisdiction, together with any procedures, activities, functions or requirements in connection therewith (or any amendment or supplement to any such concession, license, authorization, agreement, procedures, activities, functions or requirements).   -55-     “Specified Concession Obligations”: any payments, costs, contributions, obligations or commitments made or incurred by any of the Borrower, Holdings or any Subsidiary of Holdings (whether directly or indirectly to or through any Specified Concession Vehicle or any of its equity holders or members) in the form of (and including any costs to obtain, or credits or discounts associated with) (a) tender fees, up-front fees, bid or performance bonds, guarantees, reimbursement obligations or similar arrangements, capital requirements or contributions or similar payments or obligations in connection with any Specified Concession or the formation of or entry into or capitalization, or capital commitment or contribution to, of any Specified Concession Vehicle, or (b) other payments, costs, contributions or obligations (including any credits or discounts) in connection with any Specified Concession, or the formation of or entry into or capitalization of any Specified Concession Vehicle, that are (and are certified by the Borrower to be) incurred or agreed to in lieu of payments, costs, contributions or obligations described in clause (a) above.   “Specified Concession Vehicle”: any consortium, joint venture or other Person entered into by the Borrower, Holdings and/or any Subsidiary of Holdings or in or with which the Borrower, Holdings and/or any Subsidiary of Holdings directly or indirectly participates or has an interest or a contractual relationship, which consortium, joint venture or other Person holds or is party to a Specified Concession (or is otherwise formed, or directly or indirectly participates or has an interest in or a contractual relationship with such joint venture or other Person, in connection with a Specified Concession).   “Specified Disposition”: the Disposition by the Borrower and/or any Subsidiary of one or more lines of Business (and/or any assets relating thereto) disclosed in a schedule to be provided to the Administrative Agent prior to the Closing Date.   “Specified Existing Tranche”: as defined in Section 2.26(a).   “Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) Holdings, the Borrower or any Subsidiary Guarantor and (ii) any Person that was the Administrative Agent, any other Agent, a Lender or any Affiliate thereof at the time such Hedge Agreement was entered into (or, if in effect on the Closing Date, Bally Acquisition Date, Amendment No. 2 Effective Date, Amendment No. 3 Effective Date or Amendment No. 4 Effective Date, any Person that becomes a Lender or an Affiliate thereof within 30 days after such date), as counterparty and (b) that has been designated by the Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement; provided that Specified Hedge Agreement shall exclude any Excluded Swap Obligations. The designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the Administrative Agent, any other Agent, the Lender or Affiliate thereof that is a party thereto (or their successors or assigns) any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral Agreement. For the avoidance of doubt, all Hedge Agreements in existence on the Closing Date or the Bally Acquisition Date between Holdings, the Borrower or any Subsidiary Guarantor, on the one hand, and the Administrative Agent, any other Agent, any Lender or Affiliate thereof (or any Person that becomes a Lender or an Affiliate thereof within 30 days after the Closing Date or the Bally Acquisition Date, as applicable), on the other hand, as listed on Schedule 1.1B (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date), shall constitute Specified Hedge Agreements.   “Specified Letters of Credit”: any Letter of Credit other than (i) Existing Letters of Credit, including any renewals, extensions or replacements thereof, and (ii) Letters of Credit issued to support performance obligations and other operational contract or policy guarantees (but in any event, other than in respect of Indebtedness for Borrowed Money).   “Specified Merger Agreement Representations”: the representations in the Merger Agreement that are material to the interests of the Lenders, but only to the extent that Holdings, the Borrower or any Affiliate thereof has the right to terminate its obligations under the Merger Agreement or to decline to consummate the Merger as a result of a breach of such representations in the Merger Agreement.   -56-       “Specified Real Property”: the owned Real Properties set forth on Schedule 1.1D (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date).   “Specified Representations”: the representations and warranties made solely with respect to the Loan Parties in Sections 4.3(a), 4.4(a), 4.4(c), 4.5(a), 4.5(c) (solely with respect to the condition precedent set forth in Section 3(a) of Amendment No. 1 as it relates to the Existing Notes Financing), 4.11, 4.13, 4.17(a) (subject to the conditionality limitations set forth in the last paragraph of Section 5.1 and Section 3 of Amendment No. 1, as applicable), 4.18, 4.19, 4.22, 4.23 and (solely with respect to the condition precedent set forth in Section 3(a) of Amendment No. 1) 4.24 (in each case, after giving effect to the Transactions or the Bally Transactions, as applicable).   “Sponsor”: (a) Mafco, (b) each of Mafco’s direct and indirect subsidiaries and Affiliates, (c) Ronald O. Perelman, (d) any of the directors or executive officers of Mafco or (e) any of their respective Permitted Transferees.   “Spot Rate”: with respect to any currency, the rate determined by the Administrative Agent to be the rate quoted by the Administrative Agent as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by it if it does not have as of the date of determination a spot buying rate for any such currency; provided, further that the Administrative Agent may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Revolving Loan or Letter of Credit denominated in a Permitted Foreign Currency.   “Stated Maturity”: with respect to any Indebtedness, the date specified in such Indebtedness as the fixed date on which the payment of principal of such Indebtedness is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the re-purchase or repayment of such Indebtedness at the option of the holder thereof upon the happening of any contingency).   “Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person; provided that any joint venture that is not required to be consolidated with the Borrower and its consolidated Subsidiaries in accordance with GAAP shall not be deemed to be a “Subsidiary” for purposes hereof. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of Holdings.   “Subsidiary Guarantors”: (a) each Domestic Subsidiary other than any Excluded Subsidiary and (b) any other Subsidiary of Holdings (other than the Borrower) that is a party to the Guarantee and Collateral Agreement.   “Supplemental Revolving Commitment Increase”: as defined in Section 2.25(a).   “Supplemental Term Loan Commitments”: as defined in Section 2.25(a).    -57-      “Swap Obligations”: with respect to any Guarantor, any 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.   “Swingline Commitment”: the commitment of the Swingline Lender to make loans pursuant to Section 2.6, as the same may be reduced from time to time pursuant to Section 2.10 or Section 2.6.   “Swingline Exposure”: at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Dollar Revolving Lender at any time shall equal its Dollar Revolving Percentage of the aggregate Swingline Exposure at such time.   “Swingline Lender”: Bank of America, N.A.   “Swingline Loan”: any Loan made by the Swingline Lender pursuant to Section 2.6.   “Target”: WMS Industries Inc., a Delaware corporation.   “TARGET2”: the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.   “TARGET Day”: any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.   “Target Material Adverse Effect”: any change, effect, development or circumstance which, individually or in the aggregate, has resulted or would reasonably be expected to result in a material adverse effect on the business, assets, liabilities, condition (financial or other) or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that changes, effects, developments or circumstances to the extent resulting from, directly or indirectly, the following shall be excluded from the determination of Target Material Adverse Effect: (i) any change, effect, development or circumstance in any of the industries or markets in which the Company or its Subsidiaries operates; (ii) any change in any Law or GAAP (or changes in interpretations or enforcement of any Law or GAAP) applicable to the Company or any of its Subsidiaries or any of their respective properties or assets; (iii) changes in general economic, regulatory or political conditions or the financial, credit or securities markets in general (including changes in interest or exchange rates, stock, bond and/or debt prices); (iv) any acts of God, natural disasters, earthquakes, hurricanes, terrorism, armed hostilities, war or any escalation or worsening thereof; (v) the negotiation, execution or announcement of the Merger Agreement or the transactions contemplated thereby (including the impact of any of the foregoing on relationships with customers, suppliers, licensors, employees or regulators (including any Gaming Authority)), and any Proceeding arising therefrom or in connection therewith; (vi) any action taken as expressly permitted or required by the Merger Agreement (it being understood and agreed that actions taken by the Company or its Subsidiaries pursuant to its obligations under Section 6.1 of the Merger Agreement to conduct its business shall not be excluded in determining whether a Company Material Adverse Effect has occurred) or any action taken at the written direction of Parent or Merger Sub; (vii) any changes in the market price or trading volume of the Company Common Stock, any changes in credit ratings or any failure (in and of itself) by the Company or its Subsidiaries to meet internal, analysts’ or other earnings estimates, budgets, plans, forecasts or financial projections of its revenues, earnings or other financial performance or results of operations (but not excluding any change, effect, development or circumstance giving rise to any such change or failure to the extent such change, effect, development or circumstance is not otherwise excluded pursuant to this definition); (viii) changes, effects, developments or circumstances to the extent arising from or relating to the identity of Parent or Merger Sub or Parent’s ability to obtain the Gaming Approvals; or (ix) any matter disclosed in the Company Disclosure Letter to the extent reasonably foreseeable from the face of such disclosure; but only to the extent, in the case of clauses (i), (ii), (iii) or (iv), such change, effect, development or circumstance does not disproportionately impact the Company and its Subsidiaries, taken as a whole, relative to other companies in the industries in which the Company or its Subsidiaries operate. Capitalized terms in the preceding definition are used as defined in the Merger Agreement as in effect on January 30, 2013.    -58-      “Tax Planning Transaction”: those certain transactions undertaken from time to time for tax planning and reorganization purposes of Holdings or its Subsidiaries as set forth in that certain step plan delivered to the Administrative Agent prior to the Closing Date.   “Taxes”: all present and future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.   “Term B-1 Commitment”: as to any Term B-1 Lender, the obligation of such Term B-1 Lender to make an Initial Term B-1 Loan to the Borrower in the principal amount set forth under the heading “Term B-1 Commitment” opposite such Term B-1 Lender’s name on Schedule 2.1 to this Agreement. The aggregate principal amount of the Term B-1 Commitments as of the Closing Date is $2,300,000,000; provided, that as of the Amendment No. 4 Effective Date, for the avoidance of doubt, the Term B-1 Commitment shall be $0.   “Term B-1 Facility”: as defined in the definition of “Facility.”   “Term B-1 Lenders”: each Lender that holds a Term B-1 Loan or a Term B-1 Commitment.   “Term B-1 Loans”: the Initial Term B-1 Loans; provided, that as of the Amendment No. 4 Effective Date, after giving effect to the Amendment No. 4 Transactions, for the avoidance of doubt, there is $0 of outstanding Term B-1 Loans.   “Term B-2 Commitment”: as to any Term B-2 Lender, the obligation of such Term B-2 Lender to make an Initial Term B-2 Loan to the Borrower in the principal amount to be set forth opposite such Term B-2 Lender’s name on Schedule A to the Term B-2 Joinder Agreement. The aggregate principal amount of the Term B-2 Commitments as of the Bally Acquisition and Amendment Effectiveness Date shall be no more than $2,485,000,000; provided that (x) to the extent the Term B-2 Commitment is greater than $1,735,000,000, the total aggregate principal amount of the New Secured Notes shall be reduced by such difference and (y) to the extent the Term B-2 Commitment is less than $1,735,000,00, the total aggregate principal amount of the New Secured Notes shall be increased by such difference; provided, further, that the amount of any variation in principal amounts referred to in the above proviso shall be agreed to between the Borrower and the Lead Arrangers; provided, further, that as of the Amendment No. 4 Effective Date, for the avoidance of doubt, the Term B-2 Commitment shall be $0.   “Term B-2 Facility”: as defined in the definition of “Facility.”   “Term B-2 Joinder Agreement”: a Joinder Agreement, dated October 1, 2014, entered into and delivered in connection with the Initial Term B-2 Loans.   “Term B-2 Lenders”: each Lender that holds a Term B-2 Loan or a Term B-2 Commitment.    -59-      “Term B-2 Loans”: the Initial Term B-2 Loans; provided, that as of the Amendment No. 4 Effective Date, after giving effect to the Amendment No. 4 Transactions, for the avoidance of doubt, there is $0 of outstanding Term B-2 Loans.   “Term B-3 Commitment”: each Additional Term B-3 Commitment and, as to any Term B-3 Lender, the agreement of such Term B-3 Lender to exchange the entire principal amount of its Term B-1 Loans and/or Term B-2 Loans (or such lesser amount as allocated by the Administrative Agent) for an equal principal amount of Term B-3 Loans on the Amendment No. 2 Effective Date. The aggregate principal amount of the Term B-3 Commitments as of (i) the Amendment No. 2 Effective Date is $3,291,000,000 and (ii) the Amendment No. 4 Effective Date is $0.   “Term B-3 Facility”: as defined in the definition of “Facility.”   “Term B-3 Lenders”: each Lender that holds a Term B-3 Loan or a Term B-3 Commitment.   “Term B-3 Loans”: the Initial Term B-3 Loans; provided, that as of the Amendment No. 4 Effective Date, after giving effect to the Amendment No. 4 Transactions, for the avoidance of doubt, there is $0 of outstanding Term B-3 Loans.   “Term B-4 Commitment”: as to any Term B-4 Lender, the obligation of such Term B-4 Lender to make an Initial Term B-4 Loan to the Borrower in the principal amount to be set forth opposite such Term B-4 Lender’s name on its signature page to Amendment No. 3. The aggregate principal amount of the Term B-4 Commitments as of (i) the Amendment No. 3 Effective Date is $3,282,772,500 and (ii) the Amendment No. 4 Effective Date is $0.   “Term B-4 Facility”: as defined in the definition of “Facility.”   “Term B-4 Lenders”: each Lender that holds a Term B-4 Loan or a Term B-4 Commitment.   “Term B-4 Loans”: the Initial Term B-4 Loans; provided, that as of the Amendment No. 4 Effective Date, after giving effect to the Amendment No. 4 Transactions, for the avoidance of doubt, there is $0 of outstanding Term B-4 Loans.   “Term B-5 Commitment”: each Additional Term B-5 Commitment and, as to any Term B-5 Lender, the agreement of such Term B-5 Lender to exchange the entire principal amount of its Term B-4 Loans (or such lesser amount as allocated by the Administrative Agent) for an equal principal amount of Term B-5 Loans on the Amendment No. 4 Effective Date. The aggregate principal amount of the Term B-5 Commitments as of the Amendment No. 4 Effective Date is $4,174,565,568.75.   “Term B-5 Facility”: as defined in the definition of “Facility.”   “Term B-5 Lenders”: each Lender that holds a Term B-5 Loan or a Term B-5 Commitment.   “Term B-5 Loans”: the Initial Term B-5 Loans.   “Term Commitment”: the Term B-1 Commitment, the Term B-2 Commitment, the Term B-3 Commitment, the Term B-4 Commitment and the Term B-5 Commitment, as applicable.   “Term Facility”: the Term B-1 Facility, the Term B-2 Facility, the Term B-3 Facility, the Term B-4 Facility and the Term B-5 Facility.    -60-      “Term Lenders”: the Term B-1 Lenders, the Term B-2 Lenders, the Term B-3 Lenders, the Term B-4 Lenders and the Term B-5 Lenders.   “Term Loans”: the Term B-1 Loans, the Term B-2 Loans, the Term B-3 Loans, the Term B-4 Loans, the Term B-5 Loans and New Term Loans, Extended Term Loans and/or Refinancing Term Loans in respect of either of the foregoing, as the context may require.   “Term Maturity Date”: the earlier of (x) with respect to Initial Term B-5 Loans, August 14, 2024 and (y) the Accelerated Term Loan Maturity Date (subject to the proviso contained in the definition thereof).   “Term Prepayment Amount”: as defined in Section 2.12(e).   “Test Period”: on any date of determination, the period of four consecutive fiscal quarters of the Borrower (in each case taken as one accounting period) most recently ended on or prior to such date for which financial statements have been or are required to be delivered pursuant to Section 6.1.   “Tranche”: (a) with respect to Term Loans or commitments, refers to whether such Term Loans or commitments are (1) Initial Term B-1 Loans, (2) Initial Term B-2 Loans, (3) Initial Term B-3 Loans, (4) Initial Term B-4 Loans, (5) Initial Term B-5 Loans, (6) New Term Loans with the same terms and conditions made on the same day, (7) Extended Term Loans (of the same Extension Series) or (8) Refinancing Term Loans with the same terms and conditions made on the same day and (b) with respect to Revolving Loans or commitments, refers to whether such Revolving Loans are (A)(1) Dollar Revolving Loans or Dollar Revolving Commitments or (2) Multi-Currency Revolving Loans or Multi-Currency Revolving Commitments and (B)(1) Revolving Commitments or Revolving Loans, (2) Extended Revolving Commitments (of the same Extension Series) or (3) Refinancing Revolving Commitments with the same terms and conditions made on the same day or Revolving Loans in respect thereof.   “Transactions”: the consummation of the Merger in accordance with the terms of the Merger Agreement and the other transactions described therein, together with each of the following transactions consummated or to be consummated in connection therewith:   (a)       the Borrower obtaining the Facilities;   (b)       the occurrence of the Refinancing; and   (c)       the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition (the “Transaction Costs”).   “Transaction Costs”: as defined in the definition of “Transactions.”   “Transferee”: any Assignee or Participant.   “Trigger Date”: as defined in Section 2.12(b).   “Type”: as to any Loan, its nature as an ABR Loan or Eurocurrency Loan.   “UCP”: with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).    -61-      “Unconverted Term B-4 Loans”: as defined in Amendment No. 4.   “United States”: the United States of America.   “Unrestricted Cash”: as at any date of determination, the aggregate amount of cash and Cash Equivalents included in the cash accounts that would be listed on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as at such date, to the extent such cash and Cash Equivalents are not (a) subject to a Lien securing any Indebtedness or other obligations, other than (i) the Obligations or (ii) any such other Indebtedness that is subject to any Other Intercreditor Agreement or (b) classified as “restricted” (unless so classified solely because of any provision under the Loan Documents or any other agreement or instrument governing other Indebtedness that is subject to any Other Intercreditor Agreement governing the application thereof or because they are subject to a Lien securing the Obligations or other Indebtedness that is subject to any Other Intercreditor Agreement).   “Unrestricted Subsidiary”: (i) any Escrow Entity, (ii) any Subsidiary of Holdings designated as such and listed on Schedule 4.14 on the Closing Date, (iii) any Subsidiary of Holdings (other than the Borrower) that is designated by a resolution of the Board of Directors of Holdings as an Unrestricted Subsidiary, but only to the extent that, in the case of each of clauses (ii) and (iii), such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt (other than such Indebtedness to the extent any related obligations of Holdings or its Restricted Subsidiaries would otherwise be permitted under Section 7.7); (b) is not party to any agreement, contract, arrangement or understanding with Holdings or any Restricted Subsidiary unless (x) the terms of any such agreement, contract, arrangement or understanding, taken as a whole, are no less favorable to Holdings or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower or (y) Holdings or any Restricted Subsidiary would be permitted to enter into such agreement, contract, arrangement or understanding with an Unrestricted Subsidiary pursuant to Section 7.9; (c) is a Person with respect to which neither Holdings nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other rights to acquire Capital Stock or (y) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results, unless, in each case, Holdings or any Restricted Subsidiary would be permitted to incur any such obligation with respect to an Unrestricted Subsidiary pursuant to Section 7.7; and (d) does not guarantee or otherwise provide credit support after the time of such designation for any Indebtedness of Holdings or any of its Restricted Subsidiaries unless it also guarantees or provides credit support in respect of the Obligations, in the case of clauses (a), (b) and (c), except to the extent not otherwise prohibited by Section 7.7; provided that, with respect to clauses (ii) and (iii), after giving effect to any such designation of a Domestic Subsidiary but tested only at the time of such designation, the combined Consolidated EBITDA of Domestic Subsidiaries that are Unrestricted Subsidiaries for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1 does not exceed 7.0% of the Consolidated EBITDA of the Borrower and its Subsidiaries for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, and (iv) any Subsidiary that is subsequently formed or acquired by an Unrestricted Subsidiary that has been previously designated as such pursuant to clause (iii) above. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof. Subject to the foregoing, Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary or any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) such designation shall only be permitted if no Event of Default would be in existence following such designation and after giving effect to such designation Holdings shall be in pro forma compliance with the financial covenant (whether or not then subject to testing) set forth in Section 7.1 as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, (ii) any designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and (iii) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary under clause (ii) or (iii) above shall be deemed to be an Investment in an Unrestricted Subsidiary and shall reduce amounts available for Investments in Unrestricted Subsidiaries permitted by Section 7.7 in an amount equal to the Fair Market Value of the Subsidiary so designated; provided that the Borrower may subsequently redesignate any such Unrestricted Subsidiary as a Restricted Subsidiary so long as the Borrower does not subsequently re-designate such Restricted Subsidiary as an Unrestricted Subsidiary for a period of the succeeding four fiscal quarters.    -62-      “US Lender”: as defined in Section 2.20(e).   “USA Patriot Act”: as defined in Section 10.18.   “Will be able to pay their Liabilities as they mature”: for the period from the date hereof through the Latest Maturity Date, Holdings and its Subsidiaries taken as a whole and after giving effect to the consummation of the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions, as applicable, will have sufficient assets, credit capacity and cash flow to pay their Liabilities as those Liabilities mature or (in the case of contingent Liabilities) otherwise become payable, in light of business conducted or anticipated to be conducted by Holdings and its Subsidiaries as reflected in the projected financial statements and in light of the anticipated credit capacity.   “Write-Down and Conversion Powers”: with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule   “Yield”: on any date on which “Yield” is required to be calculated hereunder will be the internal rate of return on any Tranche of Initial Term Loans or any new syndicated loans, as applicable, determined by the Administrative Agent in consultation with the Borrower and consistent with generally accepted financial practices utilizing (a) the greater of (i) if applicable, any “LIBOR floor” applicable to such Tranche of Initial Term Loans or any new syndicated loans, as applicable, on such date and (ii) the price of a LIBOR swap-equivalent maturing on the earlier of (x) the date that is four years following such date and (y) the final maturity date of such Tranche of Initial Term Loans or any new syndicated loans, as applicable; (b) the Applicable Margin for such Tranche of Initial Term Loans or the applicable interest rate margin for any new syndicated loans, as applicable, on such date; and (c) the issue price of such Tranche of Initial Term Loans or any new syndicated loans, as applicable (after giving effect to any original issue discount or upfront fees paid to the market (but excluding commitment, arrangement, structuring or other fees in respect of such Tranche of Initial Term Loans or any new syndicated loans, as applicable, that are not generally shared with the relevant Lenders) in respect of such Tranche of Initial Term Loans or any new syndicated loans, as applicable, calculated based on an assumed four year average life to maturity).   1.2           Other Definitional Provisions.   (a)           Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.   (b)           As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to Holdings and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” and (iii) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.    -63-    (c)           The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Annex, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.   (d)           The term “license” shall include sub-license. The term “documents” includes any and all documents whether in physical or electronic form.   (e)           The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.   (f)            Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value,” as defined therein, and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.   (g)           In connection with any action being taken in connection with a Limited Condition Acquisition, for purposes of determining compliance with any provision of this Agreement which requires that no Default, Event of Default or specified Event of Default, as applicable, has occurred, is continuing or would result from any such action, as applicable, at the option of the Borrower pursuant to an LCA Election such condition shall be deemed satisfied so long as no Default, Event of Default or specified Event of Default, as applicable, exists on the date the definitive agreements for such Limited Condition Acquisition are entered into after giving pro forma effect to such Limited Condition Acquisition and the actions to be taken in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such Limited Condition Acquisition and other actions had occurred on such date. For the avoidance of doubt, if the Borrower has exercised its option under the first sentence of this clause (g), and any Default or Event of Default occurs following the date the definitive agreements for the applicable Limited Condition Acquisition were entered into and prior to the consummation of such Limited Condition Acquisition, any such Default or Event of Default shall be deemed to not have occurred or be continuing solely for purposes of determining whether any action being taken in connection with such Limited Condition Acquisition is permitted hereunder.   (h)          In connection with any action being taken solely in connection with a Limited Condition Acquisition, for purposes of:   (i)        determining compliance with any provision of this Agreement which requires the calculation of the Consolidated Net First Lien Leverage Ratio, Consolidated Net Total Leverage Ratio or Fixed Charge Coverage Ratio; or    -64-      (ii)       testing availability under baskets set forth in this Agreement (including baskets measured as a percentage of Consolidated Total Assets);   in each case, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Acquisition, an “LCA Election”), the date of determination of whether any such action is permitted hereunder shall be deemed to be the date the definitive agreements for such Limited Condition Acquisition are entered into (the “LCA Test Date”), and if, after giving pro forma effect to the Limited Condition Acquisition and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they had occurred at the beginning of the most recent four consecutive fiscal quarters ending prior to the LCA Test Date for which consolidated financial statements of Holdings are available, the Borrower could have taken such action on the relevant LCA Test Date in compliance with such ratio or basket, such ratio or basket shall be deemed to have been complied with. For the avoidance of doubt, if the Borrower has made an LCA Election and any of the ratios or baskets for which compliance was determined or tested as of the LCA Test Date are exceeded as a result of fluctuations in any such ratio or basket, including due to fluctuations in Consolidated Total Assets of the Borrower or the Person subject to such Limited Condition Acquisition, at or prior to the consummation of the relevant transaction or action, such baskets or ratios will not be deemed to have been exceeded as a result of such fluctuations. If the Borrower has made an LCA Election for any Limited Condition Acquisition, then in connection with any subsequent calculation of any ratio or basket availability with respect to the incurrence of Indebtedness or Liens, or the making of Restricted Payments, mergers, the conveyance, lease or other transfer of all or substantially all of the assets of the Borrower, the prepayment, redemption, purchase, defeasance or other satisfaction of Indebtedness, or the designation of an Unrestricted Subsidiary on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Acquisition is consummated or the definitive agreement for such Limited Condition Acquisition is terminated or expires without consummation of such Limited Condition Acquisition, any such ratio or basket shall be calculated on a pro forma basis assuming such Limited Condition Acquisition and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated; provided that the calculation of Consolidated Net Income (and any defined term a component of which is Consolidated Net Income) shall not include the Consolidated Net Income of the Person or assets to be acquired in any Limited Condition Acquisition for usages other than in connection with the applicable transaction pertaining to such Limited Condition Acquisition until such time as such Limited Condition Acquisition is actually consummated (clauses (g) and (h), collectively, the “Limited Condition Acquisition Provision”).   1.3           Pro Forma Calculations. (i) Any calculation to be determined on a “pro forma” basis, after giving “pro forma” effect to certain transactions or pursuant to words of similar import and (ii) the Consolidated Net First Lien Leverage Ratio, the Consolidated Net Total Leverage Ratio, and the Fixed Charge Coverage Ratio, in each case, shall be calculated as follows (subject to the provisions of Section 1.2):   (a)       for purposes of making the computation referred to above, in the event that Holdings or any of its Restricted Subsidiaries incurs, assumes, guarantees, redeems, retires, defeases or extinguishes any Indebtedness or enters into, terminates or cancels a Qualified Contract, other than the completion thereof in accordance with its terms, subsequent to the commencement of the period for which such ratio is being calculated but on or prior to or substantially concurrently with or for the purpose of the event for which the calculation is made (a “Calculation Date”), then except as otherwise set forth in clauses (d) and (e) below, such calculation shall be made giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement, defeasance or extinguishment of Indebtedness or entry into, termination or cancellation of such Qualified Contract (other than the completion thereof in accordance with its terms) as if the same had occurred at the beginning of the applicable Test Period; provided that for purposes of making the computation of Consolidated Net First Lien Leverage, Consolidated Net Total Leverage or Fixed Charges for the computation of the Consolidated Net First Lien Leverage Ratio, Consolidated Net Total Leverage Ratio or Fixed Charge Coverage Ratio, as applicable, Consolidated Net First Lien Leverage, Consolidated Net Total Leverage or Fixed Charges, as applicable, shall be Consolidated Net First Lien Leverage, Consolidated Net Total Leverage or Fixed Charges as of the date the relevant action is being taken giving pro forma effect to any redemption, retirement or extinguishment of Indebtedness in connection with such event; and    -65-      (b)      for purposes of making the computation referred to above, if any Investments, Dispositions or designations of Unrestricted Subsidiaries or Restricted Subsidiaries are made (or committed to be made pursuant to a definitive agreement) subsequent to the commencement of the period for which such calculation is being made but on or prior to or simultaneously with the relevant Calculation Date, then such calculation shall be made giving pro forma effect to such Investments, Dispositions and designations as if the same had occurred at the beginning of the applicable Test Period in a manner consistent, where applicable, with the pro forma adjustments set forth in clause (j) of and the last proviso of the first sentence of the definition of “Consolidated EBITDA.” If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into Holdings or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment or Disposition that would have required adjustment pursuant to this provision, then such calculation shall be made giving pro forma effect thereto for such Test Period as if such Investment or Disposition had occurred at the beginning of the applicable Test Period;   provided that notwithstanding the foregoing, when calculating the Consolidated Net First Lien Leverage Ratio for purposes of (i) determining the Applicable Margin, (ii) determining the Applicable Commitment Fee Rate and (iii) determining actual compliance (and not pro forma compliance or compliance on a pro forma basis) with the covenants pursuant to Section 7.1, any pro forma event of the type set forth in clauses (a) or (b) of this Section 1.3 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect.   1.4           Exchange Rates; Currency Equivalents. The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of the face amount of Multi-Currency Revolving Loans and/or Multi-Currency Letters of Credit denominated in Permitted Foreign Currencies and of Multi-Currency L/C Disbursements in respect of such Multi-Currency Letters of Credit. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. The Administrative Agent shall notify the applicable Issuing Lender and the Borrower on each Revaluation Date of the Spot Rates determined by it and the related Dollar Equivalent of Multi-Currency Revolving Loans and Multi-Currency L/C Obligations then outstanding. Solely for purposes of Sections 2 and 3 and related definitional provisions to the extent used in such Sections, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent and notified to the Borrower and the applicable Issuing Lender in accordance with this Section 1.4. If any basket is exceeded solely as a result of fluctuations in applicable currency exchange rates after the last time such basket was utilized, such basket will not be deemed to have been exceeded solely as a result of such fluctuations in currency exchange rates. For purposes of determining the Consolidated Net First Lien Leverage Ratio, the Consolidated Net Total Leverage Ratio and the Fixed Charge Coverage Ratio, amounts denominated in a currency other than Dollars will be converted to Dollars for the purposes of (A) testing the financial covenant under Section 7.1, at the Spot Rate as of the last day of the fiscal quarter for which such measurement is being made, and (B) calculating any Consolidated Net Total Leverage Ratio, the Consolidated Net First Lien Leverage Ratio and the Fixed Charge Coverage Ratio (other than for the purposes of determining compliance with Section 7.1), at the Spot Rate as of the date of calculation, and will, in the case of Indebtedness, reflect the currency translation effects, determined in accordance with GAAP, of Hedge Agreements permitted hereunder for currency exchange risks with respect to the applicable currency in effect on the date of determination of the Dollar Equivalent of such Indebtedness.    -66-      1.5           Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of the Application or any other document, agreement or instrument entered into by the applicable Issuing Lender and the Borrower with respect thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.   1.6           Covenants. For purposes of determining compliance with Section 7, in the event that an item or event meets the criteria of more than one of the categories described in a particular covenant contained in Section 7, the Borrower may, in its sole discretion, classify and reclassify or later divide, classify or reclassify such item or event (or any portion thereof) and may include the amount and type of such item or event in one or more of the relevant clauses or subclauses, in each case, within such covenant. Furthermore, (A) for purposes of Section 7.2, the amount of any Indebtedness denominated in any currency other than Dollars shall be calculated based on the applicable Spot Rate, in the case of such Indebtedness incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness), on the date that such Indebtedness was incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness); provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a currency other than Dollars (or in a different currency from the Indebtedness being refinanced), and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the applicable Spot Rate on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (i) the outstanding or committed principal amount, as applicable, of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing and (B) for purposes of Sections 7.3, 7.5, 7.6 and 7.7, the amount of any Liens, Dispositions, Restricted Payments and Investments, as applicable, denominated in any currency other than Dollars shall be calculated based on the applicable Spot Rate.   SECTION 2.      AMOUNT AND TERMS OF COMMITMENTS   2.1           Term Commitments.   (a)           Subject to the terms and conditions hereof, each Term B-1 Lender severally agrees to make a term loan (an “Initial Term B-1 Loan”) in Dollars to the Borrower on the Closing Date in an amount which will not exceed the amount of the Term B-1 Commitment of such Lender. The aggregate outstanding principal amount of the Term B-1 Loans for all purposes of this Agreement and the other Loan Documents shall be the stated principal amount thereof outstanding from time to time. The Term B-1 Loans may from time to time be Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.   (b)           Subject to the terms and conditions hereof, each Term B-2 Lender severally agrees to make a term loan (an “Initial Term B-2 Loan”) in Dollars to the Borrower in connection with the Bally Transactions in an amount which will not exceed the amount of the Term B-2 Commitment of such Lender. The aggregate outstanding principal amount of the Term B-2 Loans for all purposes of this Agreement and the other Loan Documents shall be the stated principal amount thereof outstanding from time to time. The Term B-2 Loans may from time to time be Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.    -67-      (c)           Subject to the terms and conditions set forth herein and in Amendment No. 4, each Converted Term B-5 Lender agrees to exchange its Converted Term B-4 Loans for a like principal amount of Term B-5 Loans on the Amendment No. 4 Effective Date. Subject to the terms and conditions set forth herein and in Amendment No. 4, each Additional Term B-5 Lender agrees to make an Additional Term B-5 Loan to the Borrower on the Amendment No. 4 Effective Date in the principal amount equal to its Additional Term B-5 Commitment on the Amendment No. 4 Effective Date. The Borrower shall prepay Unconverted Term B-4 Loans with a like amount of the gross proceeds of the Additional Term B-5 Loans, concurrently with the receipt thereof. On the Amendment No. 4 Effective Date, the Borrower shall pay all accrued and unpaid interest up to but not including the Amendment No. 4 Effective Date on the Term B-4 Loans outstanding immediately prior to the Amendment No. 4 Effective Date with the proceeds of the Additional Term B-5 Loans, concurrently with the receipt thereof. The aggregate outstanding principal amount of the Term B-5 Loans for all purposes of this Agreement and the other Loan Documents shall be the stated principal amount thereof outstanding from time to time. The Term B-5 Loans may from time to time be Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.   2.2           Procedure for Initial Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable written notice (which notice must be received by the Administrative Agent at least one Business Day prior to the anticipated Closing Date, the Bally Acquisition Date, the Amendment No. 2 Effective Date, the Amendment No. 3 Effective Date or the Amendment No. 4 Effective Date, as applicable) requesting that the Term Lenders make the Initial Term Loans on the Closing Date, on or prior to the Bally Acquisition Date, on the Amendment No. 2 Effective Date, on the Amendment No. 3 Effective Date or on the Amendment No. 4 Effective Date, as applicable, and specifying the amount to be borrowed and the requested Interest Period, if applicable. Upon receipt of such notice the Administrative Agent shall promptly notify each Term Lender thereof. Not later than 11:00 A.M., New York City time, on the Closing Date, on or prior to the Bally Acquisition Date, on the Amendment No. 2 Effective Date, on the Amendment No. 3 Effective Date or on the Amendment No. 4 Effective Date, as applicable, each Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Initial Term Loan or Initial Term Loans to be made by such Lender. The Administrative Agent shall credit the account designated in writing by the Borrower to the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Term Lenders in immediately available funds.   2.3           Repayment of Term Loans. The Initial Term Loan of each Term Lender shall be payable in equal consecutive quarterly installments on the last Business Day of each March, June, September and December, commencing on (a) in the case of the Initial Term B-1 Loans, March 31, 2014, (b) in the case of the Initial Term B-2 Loans, the last Business Day of the first full fiscal quarter after the Bally Acquisition Date, (c) in the case of the Initial Term B-3 Loans, the last Business Day of the first full fiscal quarter after the Amendment No. 2 Effective Date, (d) in the case of the Initial Term B-4 Loans, the last Business Day of the first full fiscal quarter after the Amendment No. 3 Effective Date and (e) in the case of the Initial Term B-5 Loans, the last Business Day of the first full fiscal quarter after the Amendment No. 4 Effective Date, in an amount equal to one quarter of one percent (0.25%) of the stated principal amount of the applicable Initial Term Loans funded on the Closing Date, the Bally Acquisition Date, the Amendment No. 2 Effective Date, the Amendment No. 3 Effective Date or the Amendment No. 4 Effective Date, as applicable (which installments shall, to the extent applicable, be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.18(b), or be increased as a result of any increase in the amount of Initial Term Loans (excluding, for the avoidance of doubt, Initial Term B-2 Loans, Initial Term B-3 Loans, Initial Term B-4 Loans and Initial Term B-5 Loans) pursuant to Supplemental Term Loan Commitments, the Term B-3 Commitments, the Term B-4 Commitments or the Term B-5 Commitments (such increased amortization payments to be calculated in the same manner (and on the same basis) as set forth above for the Initial Term Loans made as of the Closing Date, Bally Acquisition Date, Amendment No. 2 Effective Date, Amendment No. 3 Effective Date or Amendment No. 4 Effective Date, as applicable)), with the remaining balance thereof payable on the Term Maturity Date.    -68-      2.4           Revolving Commitments.   (a)           Subject to the terms and conditions hereof, (i) each Dollar Revolving Lender severally agrees to make revolving credit loans in Dollars (“Dollar Revolving Loans”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Dollar Revolving Percentage of the Dollar L/C Obligations and such Dollar Revolving Lender’s Dollar Swingline Exposure then outstanding, does not exceed the amount of such Lender’s Dollar Revolving Commitment and (ii) each Multi-Currency Revolving Lender severally agrees to make revolving credit loans in Dollars or in any Permitted Foreign Currency (“Multi-Currency Revolving Loans”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Multi-Currency Revolving Percentage of the Multi-Currency L/C Obligations then outstanding, does not exceed the amount of such Lender’s Multi-Currency Revolving Commitment. During the Revolving Commitment Period, the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurocurrency Loans or, solely in the case of Revolving Loans denominated in Dollars, ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.13.   (b)           The Borrower shall repay all outstanding Revolving Loans of a Revolving Lender on the applicable Revolving Termination Date.   (c)           On the Non-Extending Revolving Termination Date (i) participating interests of Non-Extending Revolving Lenders in Swingline Loans (other than any then-existing obligations of such Non-Extending Revolving Lenders to purchase a participating interest in Swingline Loans pursuant to Section 2.6(d)) shall terminate and be reallocated among the Revolving Lenders in accordance with their respective Revolving Percentages (after giving effect to the termination of all Non-Extending Revolving Commitments) and (ii) participating interests of Non-Extending Revolving Lenders in then outstanding Letters of Credit (other than Letters of Credit in respect of which there are unpaid Reimbursement Obligations or in respect of which a drawing has been made which has not yet been honored in each case as of the date that is three Business Days prior to the Non-Extending Revolving Termination Date) shall terminate and participating interests in then outstanding Letters of Credit shall be reallocated among the Revolving Lenders in accordance with their respective Revolving Percentages (after giving effect to the termination of all Non-Extending Revolving Commitments). Notwithstanding the foregoing, if the reallocation described in this clause (c) cannot, or can only partially, be effected for whatever reason (including to the extent the total Revolving Extensions of Credit exceed the aggregate amount of Extending Revolving Commitments), the Borrower shall within three Business Days following notice by the Administrative Agent either (x) cash collateralize in an amount equal to 100% of such Non-Extending Revolving Lender’s participations in the outstanding Letters of Credit and Swingline Loans (after giving effect to any partial reallocation pursuant to this clause (c)) or (y) backstop such Non-Extending Revolving Lender’s participations in the Letters of Credit and Swingline Loans (after giving effect to any partial reallocation pursuant to this clause (c)) with a letter of credit reasonably satisfactory to the Issuing Lender, in each case, for so long as any Letters of Credit are outstanding.    -69-      2.5           Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day; provided that the Borrower shall give the Administrative Agent irrevocable written notice (which notice must be received by the Administrative Agent (i) in the case of Eurocurrency Loans denominated in Dollars, prior to 12:00 Noon, New York City time, three Business Days prior to the requested Borrowing Date, (ii) in the case of Eurocurrency Loans denominated in a Permitted Foreign Currency, prior to 12:00 Noon, New York City time, four Business Days prior to the requested Borrowing Date or (iii) in the case of ABR Loans, prior to 12:00 Noon, New York City time, on the proposed Borrowing Date), specifying (v) the amount and Type of Revolving Loans to be borrowed (which, in the case of any Revolving Loans denominated in a Permitted Foreign Currency, shall be Eurocurrency Loans), (w) the requested Borrowing Date, (x) whether the Borrower is requesting a Dollar Revolving Loan or a Multi-Currency Revolving Loan, (y) the currency in which such Revolving Loan is to be borrowed and (z) in the case of Eurocurrency Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor; provided, further, that if the Borrower wishes to request Eurocurrency Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the appropriate Lenders of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 11:00 a.m., three Business Days before the requested date of such borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Each borrowing by the Borrower under the Revolving Commitments shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then aggregate applicable Available Revolving Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurocurrency Loans, the Borrowing Minimum or a whole multiple of the Borrowing Multiple in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Dollar Revolving Lender or Multi-Currency Revolving Lender, as the case may be, thereof. Each Dollar Revolving Lender or Multi-Currency Revolving Lender, as the case may be, will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 11:00 A.M. (or, in the case of ABR Loans being made pursuant to a notice delivered on the proposed Borrowing Date, 3:00 P.M.), New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account designated in writing by the Borrower to the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by such Revolving Lenders and in like funds as received by the Administrative Agent. If no election as to the Type of a Revolving Loan is specified, other than with respect to Revolving Loans denominated in a Permitted Foreign Currency, then the requested Loan shall be an ABR Loan. If no Interest Period is specified with respect to any requested Eurocurrency Loan, the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If no currency is specified with respect to any requested Revolving Loan, the Borrower shall be deemed to have selected Dollars. If no Revolving Facility is specified, the Borrower shall be deemed to have selected the Multi-Currency Revolving Facility.   2.6           Swingline Loans.   (a)           Subject to the terms and conditions set forth herein, the Swingline Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.6, shall make Swingline Loans to the Borrower from time to time in Dollars during the Revolving Commitment Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $50,000,000 or (ii) the aggregate Dollar Revolving Extensions of Credit exceeding the Dollar Revolving Commitment then in effect; provided that the Swingline Lender shall not be required to make a Swingline Loan (i) to refinance an outstanding Swingline Loan or (ii) if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by making such Swingline Loan may have, Fronting Exposure. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow Swingline Loans. Each Swingline Loan shall be an ABR Loan.    -70-      (b)           To request a Swingline Loan, the Borrower shall notify the Administrative Agent and the Swingline Lender of such request by telephone (promptly confirmed by telecopy), not later than 1:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan, and proper wire instructions for the same. Promptly after receipt by the Swingline Lender of any telephonic Swingline Loan notice, the Swingline Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swingline Loan notice and, if not, the Swingline Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Dollar Revolving Lender) prior to 2:00 p.m. on the date of the proposed Swingline Loan (A) directing the Swingline Lender not to make such Swingline Loan as a result of the limitations set forth in Section 2.6(a), or (B) that one or more of the applicable conditions specified in Section 5.2 is not then satisfied, then, subject to the terms and conditions hereof, the Swingline Lender shall make each Swingline Loan available to the Borrower at its office by crediting the account of the Borrower on the books of the Swingline Lender in immediately available funds by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. Swingline Loans shall be made in an amount equal to $100,000 or a whole multiple of $100,000 in excess thereof.   (c)           The Borrower shall have the right at any time and from time to time to repay, without premium or penalty, any Swingline Loan, in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Swingline Lender and to the Administrative Agent before 4:00 p.m., New York City time on the date of repayment at the Swingline Lender’s address for notices specified in the Swingline Lender’s administrative questionnaire. All principal payments of Swingline Loans shall be accompanied by accrued interest on the principal amount being repaid to the date of payment.   (d)           The Swingline Lender may by written notice given to the Administrative Agent not later than 4:00 p.m., New York City time, on any Business Day require the Dollar Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Dollar Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Dollar Revolving Lender, specifying in such notice such Lender’s Dollar Revolving Percentage of such Swingline Loan or Loans. Each Dollar Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Dollar Revolving Percentage of such Swingline Loan or Loans. Each Dollar Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Dollar Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (provided that such payment shall not cause such Lender’s Dollar Revolving Extensions of Credit to exceed such Lender’s Dollar Revolving Commitment). Each Dollar Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 3.4 with respect to Loans made by such Lender (and Section 3.4 shall apply, mutatis mutandis, to the payment obligations of the Dollar Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Dollar Revolving Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Dollar Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.    -71-      (e)           If the Revolving Termination Date shall have occurred at a time when Extended Revolving Commitments under the Dollar Revolving Facility are in effect, then on the Revolving Termination Date all then outstanding Swingline Loans shall be repaid in full on such date (and there shall be no adjustment to the participations in such Swingline Loans as a result of the occurrence of such Revolving Termination Date); provided that, if on the occurrence of the Revolving Termination Date (after giving effect to any repayments of Dollar Revolving Loans and any reallocation as contemplated in Section 3.4(d)), (i) there shall exist sufficient unutilized Extended Revolving Commitments under the Dollar Revolving Facility and (ii) the conditions set forth in Sections 5.2(a) and 5.2(b) shall be satisfied at such time so that the respective outstanding Swingline Loans could be incurred pursuant to such Extended Revolving Commitments which will remain in effect after the occurrence of the Revolving Termination Date, then there shall be an automatic adjustment on such date of the participations in such Swingline Loans and the same shall be deemed to have been incurred solely pursuant to such Extended Revolving Commitments and such Swingline Loans shall not be so required to be repaid in full on the Revolving Termination Date.   (f)            Notwithstanding anything to the contrary contained in this Agreement, in the event a Dollar Revolving Lender becomes a Defaulting Lender, then such Defaulting Lender’s Dollar Revolving Percentage in all outstanding Swingline Loans will automatically be reallocated among the Dollar Revolving Lenders that are Non-Defaulting Lenders pro rata in accordance with each Non-Defaulting Lender’s Dollar Revolving Percentage (calculated without regard to the Dollar Revolving Commitment of the Defaulting Lender), but only to the extent that such reallocation does not cause the Dollar Revolving Extensions of Credit of any Non-Defaulting Lender to exceed the Dollar Revolving Commitment of such Non-Defaulting Lender. If such reallocation cannot, or can only partially, be effected, the Borrower shall, within five Business Days after written notice from the Administrative Agent, pay to the Administrative Agent an amount of cash equal to such Defaulting Lender’s Dollar Revolving Percentage (calculated as in effect immediately prior to it becoming a Defaulting Lender) of the outstanding Swingline Loans (after giving effect to any partial reallocation pursuant to the first sentence of this Section 2.6(f)) to be applied to the repayment of such Swingline Loans. So long as there is a Defaulting Lender, the Swingline Lender shall not be required to lend any Swingline Loans if the sum of, without duplication, the Non-Defaulting Lenders’ Dollar Revolving Percentages of the outstanding Dollar Revolving Loans and Dollar L/C Obligations and their participations in Swingline Loans after giving effect to any such requested Swingline Loans would exceed the aggregate Dollar Revolving Commitments of the Non-Defaulting Lenders (such excess, “Fronting Exposure”).    -72-      2.7           Defaulting Lenders.   (a)            Defaulting Lender Cure. If the Borrower, the Administrative Agent, each Issuing Lender and the Swingline Lender agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with the Commitments under the applicable Facility (without giving effect to Section 3.4(d)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.   (b)            Defaulting Lender Waterfall. Any payment of principal, interest or other amounts (other than the payment of (i) commitment fees under Section 2.9, (ii) default interest under Section 2.15(c) and (iii) Letter of Credit fees under Section 3.3, which in each case shall be applied pursuant to the provisions of those Sections) received by the Administrative Agent for the account of any Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise) shall be applied by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent pursuant to Section 9.7; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender (without duplication of the application of any cash collateral provided by the Borrower pursuant to Section 3.4(d)) to any Issuing Lender or Swingline Lender hereunder; third, to be held as security for any L/C Shortfall (without duplication of any cash collateral provided by the Borrower pursuant to Section 3.4(d)) in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent; fourth, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders, the Issuing Lenders or the Swingline Lender as a result of any final non-appealable judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Lenders or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any final non-appealable judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 5.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments under the applicable Facility without giving effect to Section 3.4(d). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to be held as security in a cash collateral account pursuant to this Section 2.7(b) shall be deemed paid to and redirected by such Defaulting Lender and shall satisfy the Borrower’s payment obligation in respect thereof in full, and each Lender irrevocably consents hereto.    -73-      2.8           Repayment of Loans.   (a)           The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Revolving Lender, Term Lender or Swingline Lender, as the case may be, (i) the then unpaid principal amount of each Revolving Loan of such Revolving Lender made to the Borrower outstanding on the Revolving Termination Date (or on such earlier date on which the Loans become due and payable pursuant to Section 8.1), (ii) the principal amount of each outstanding Term Loan of such Term Lender made to the Borrower in installments according to the applicable amortization schedule set forth in Section 2.3 (or on such earlier date on which the Loans become due and payable pursuant to Section 8.1) and (iii) the then unpaid principal amount of each Swingline Loan on the earlier of, (A) with respect to any Swingline Loan outstanding on the Non-Extending Revolving Termination Date, on the Non-Extending Revolving Termination Date, (B) with respect to any Swingline Loan outstanding on the Amendment No. 2 Extending Revolving Termination Date, on the Amendment No. 2 Extending Revolving Termination Date and (C) the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least three Business Days after such Swingline Loan is made; provided that on each date that a Revolving Loan is borrowed, the Borrower shall repay all Swingline Loans that were outstanding on the date such borrowing was requested. The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans and Swingline Loans made to the Borrower from time to time outstanding from the date made until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.15.   (b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.   (c)            The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 10.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of any principal, interest and fees, as applicable, due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.   (d)           The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.8(c) shall, to the extent permitted by applicable law, be presumptively correct absent demonstrable error of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.    -74-      2.9           Commitment Fees, etc.   (a)            The Borrower agrees to pay to the Administrative Agent for the account of each (i) Dollar Revolving Lender a commitment fee, in Dollars, for the period from and including the Closing Date to the last day of the Revolving Commitment Period (or, if earlier, the termination of all Dollar Revolving Commitments), computed at the Applicable Commitment Fee Rate on the actual daily amount of the Available Dollar Revolving Commitment (provided that, for purposes of this calculation, Swingline Exposure shall not constitute a Dollar Revolving Extension of Credit) of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date and (ii) Multi-Currency Revolving Lender a commitment fee, in Dollars, for the period from and including the Closing Date to the last day of the Revolving Commitment Period (or, if earlier, the termination of all Multi-Currency Revolving Commitments), computed at the Applicable Commitment Fee Rate on the actual daily amount of the Available Multi-Currency Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date; provided that (A) any commitment fee accrued with respect to any of the Revolving Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior to such time and (B) no commitment fee shall accrue on any of the Revolving Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.   (b)           The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent.   2.10         Termination or Reduction of Commitments.   (a)            The Borrower shall have the right, upon not less than two Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments of any Tranche or, from time to time, to reduce the amount of the Revolving Commitments of any Tranche; provided that no such termination or reduction of Revolving Commitments of any Tranche shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the total Revolving Extensions of Credit of such Tranche would exceed the total Revolving Commitments of such Tranche. Any such partial reduction shall be in an amount equal to $1,000,000, or a whole multiple of $500,000 in excess thereof, and shall reduce permanently the Revolving Commitments of the applicable Tranche then in effect. Notwithstanding anything to the contrary contained in this Agreement, the Borrower may rescind any notice of termination under this Section 2.10 if the notice of such termination stated that such notice was conditioned upon the occurrence or non-occurrence of a transaction or the receipt of a replacement of all, or a portion, of the Revolving Commitments outstanding at such time, in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified date) if such condition is not satisfied.   (b)           Upon the incurrence by Holdings or any of its Restricted Subsidiaries of any Permitted Refinancing Obligations in respect of Revolving Commitments or Revolving Loans, the Revolving Commitments designated by the Borrower to be terminated in connection therewith shall be automatically permanently reduced by an amount equal to 100% of the aggregate principal amount of commitments under such Permitted Refinancing Obligations and any outstanding Revolving Loans in respect of such terminated Revolving Commitments shall be repaid in full.   (c)           Notwithstanding anything to the contrary herein, the entry into of Amendment No. 1 shall in no event be deemed to reduce or terminate any commitments pursuant to the Bally Commitment Letter (other than in accordance with the Commitment Reduction (under and as defined in the Bally Commitment Letter)), and such commitments shall remain outstanding in accordance with the Bally Commitment Letter until such time as the Bally Transactions have been consummated (or such earlier time as expressly set forth in the Bally Commitment Letter).    -75-      2.11              Optional Prepayments.   (a)                The Borrower may at any time and from time to time prepay any Tranche of Revolving Loans, the Swingline Loans or any Tranche of Term Loans, in whole or in part, without premium or penalty except as specifically provided in Section 2.11(b), upon irrevocable written notice delivered to the Administrative Agent no later than 12:00 Noon, New York City time, (i) three Business Days prior thereto, in the case of Eurocurrency Loans that are Revolving Loans or Term Loans, (ii) one Business Day prior thereto, in the case of ABR Loans that are Term Loans and (iii) on the date of prepayment, in the case of ABR Loans that are Revolving Loans or Swingline Loans, which notice shall specify (x) the date and amount of prepayment, (y) whether the prepayment is of a Tranche of Revolving Loans or Swingline Loans or a Tranche of Term Loans and (z) whether the prepayment is of Eurocurrency Loans or ABR Loans; provided that if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein (provided that any such notice may state that such notice is conditioned upon the occurrence or non-occurrence of any transaction or the receipt of proceeds to be used for such payment, in each case specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied), together with (except in the case of Revolving Loans that are ABR Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans and of Revolving Loans shall be in an aggregate principal amount of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof (in the case of prepayments of ABR Loans) or (ii) the Borrowing Minimum or a whole multiple of the Borrowing Multiple in excess thereof (in the case of prepayments of Eurocurrency Loans), and in each case shall be subject to the provisions of Section 2.18.   (b)                Any prepayment made pursuant to this Section 2.11 or Section 2.12(a) of the Initial Term B-5 Loans as a result of a Repricing Transaction shall be accompanied by a prepayment fee, which shall initially be 1% of the aggregate principal amount prepaid and shall decline to 0% on and after the six-month anniversary of the Amendment No. 4 Effective Date.   (c)                In connection with any optional prepayments by the Borrower of the Term Loans pursuant to this Section 2.11, such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurocurrency Loans.   2.12             Mandatory Prepayments.   (a)                Unless the Required Prepayment Lenders shall otherwise agree, if any Indebtedness (excluding any Indebtedness permitted to be incurred in accordance with Section 7.2, other than Permitted Refinancing Obligations in respect of Term Loans or in accordance with Section 7.2(v)(A)(II)) shall be incurred by Holdings or any Restricted Subsidiary, an amount equal to 100% of the Net Cash Proceeds thereof shall be applied not later than one Business Day after the date of receipt of such Net Cash Proceeds toward the prepayment of the Term Loans as set forth in Section 2.12(d).   -76-     (b)                Unless the Required Prepayment Lenders shall otherwise agree, and subject to the proviso below, if on any date Holdings or any Restricted Subsidiary shall for its own account receive Net Cash Proceeds from any Asset Sale or Recovery Event, then, unless a Reinvestment Notice shall be delivered to the Administrative Agent in respect thereof, such Net Cash Proceeds shall be applied not later than 10 Business Days after such date toward the prepayment of the Term Loans as set forth in Section 2.12(d); provided that, notwithstanding the foregoing, (i) if a Reinvestment Notice has been delivered to the Administrative Agent, the Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event on the applicable Reinvestment Prepayment Date, (ii) on the date (the “Trigger Date”) that is six months after any such Reinvestment Prepayment Date, the Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the portion of any Committed Reinvestment Amount with respect to the relevant Reinvestment Event not actually expended by such Trigger Date and (iii) upon any Asset Sale pursuant to Section 7.5(w), if the Consolidated Net Total Leverage Ratio on a pro forma basis is greater than 6:00 to 1.00, at least 25% of the Net Cash Proceeds such of Asset Sale shall be used to prepay Term Loans within 90 days of the closing date of such Disposition (and no Reinvestment Notice shall be delivered with respect thereto).    (c)                Unless the Required Prepayment Lenders shall otherwise agree, if, for any Excess Cash Flow Period, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply an amount equal to (A) the Excess Cash Flow Percentage of such Excess Cash Flow minus (B) the aggregate amount of all prepayments of Revolving Loans during such Excess Cash Flow Period to the extent accompanied by permanent optional reductions of the Revolving Commitments, and all optional prepayments of Term Loans during such Excess Cash Flow Period (excluding any such optional prepayments during such Excess Cash Flow Period which the Borrower elected to apply to the calculation pursuant to this paragraph (c) in a prior Excess Cash Flow Period) and, at the option of the Borrower, optional prepayments of Term Loans after such Excess Cash Flow Period but prior to the time of the Excess Cash Flow Application Date, in each case other than to the extent any such prepayment is funded with the proceeds of long-term Indebtedness or Cure Amounts and other than Loans repurchased pursuant to Dutch Auctions or Open Market Purchases, toward the prepayment of Term Loans as set forth in Section 2.12(d). Each such prepayment shall be made on a date (an “Excess Cash Flow Application Date”) no later than ten days after the date on which the financial statements referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders.   (d)                Amounts to be applied in connection with prepayments pursuant to this Section 2.12 shall be applied to the prepayment of the Term Loans in accordance with Section 2.18(b) until paid in full. In connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to this Section 2.12, such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurocurrency Loans and with respect to prepayments pursuant to Section 2.12(b) such Net Cash Proceeds may be applied, along with such prepayment of Term Loans (to the extent the Borrower elects, or is required by the terms thereof), to purchase, redeem or repay any Pari Passu Debt, pursuant to the agreements governing such other Indebtedness, on not more than a pro rata basis with respect to such prepayments of Term Loans; provided that with respect to such mandatory prepayment, the amount of such mandatory prepayment shall be applied first to Term Loans that are ABR Loans to the full extent thereof before application to Term Loans that are Eurocurrency Loans in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant to Section 2.21. Each prepayment of the Term Loans under this Section 2.12 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.   -77-     (e)                Notwithstanding anything to the contrary in Section 2.12 or 2.18, with respect to the amount of any mandatory prepayment pursuant to Section 2.12(b) or (c) (such amount, the “Term Prepayment Amount”), the Borrower may, in its sole discretion, in lieu of applying such amount to the prepayment of Term Loans as provided in paragraph (d) above, on the date specified in this Section 2.12 for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Term Lender (which, for avoidance of doubt, includes each New Term Lender and Extending Lender holding Term Loans) a notice (each, a “Prepayment Option Notice”) as described below. As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Term Lender a Prepayment Option Notice, which shall be in the form of Exhibit I (or such other form approved by the Administrative Agent), and shall include an offer by the Borrower to prepay, on the date (each, a “Mandatory Prepayment Date”) that is ten Business Days after the date of the Prepayment Option Notice, the Term Loans of such Lender by an amount equal to the portion of the Term Prepayment Amount indicated in such Lender’s Prepayment Option Notice as being applicable to such Lender’s Term Loans. Each Term Lender may reject all or a portion of its Term Prepayment Amount by providing written notice to the Administrative Agent and the Borrower no later than 5:00 p.m. (New York City time) five Business Days after such Term Lender’s receipt of the Prepayment Option Notice (which notice shall specify the principal amount of the Term Prepayment Amount to be rejected by such Lender) (such rejected amounts collectively, the “Declined Amount”); provided that any Term Lender’s failure to so reject such Term Prepayment Amount shall be deemed an acceptance by such Term Lender of such Prepayment Option Notice and the amount to be prepaid in respect of Term Loans held by such Term Lender. On the Mandatory Prepayment Date, the Borrower shall pay to the relevant Term Lenders the aggregate amount necessary to prepay that portion of the outstanding Term Loans in respect of which such Lenders have (or are deemed to have) accepted prepayment as described above.   (f)                 If, on any date, the aggregate Dollar Revolving Extensions of Credit would exceed the aggregate Dollar Revolving Commitments, the Borrower shall promptly prepay Dollar Revolving Loans in an aggregate principal amount equal to such excess and/or pay to the Administrative Agent an amount of cash and/or Cash Equivalents equal to the aggregate principal amount equal to such excess to be held as security for all obligations of the Borrower to the Dollar Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent. If, on any date, the aggregate Multi-Currency Revolving Extensions of Credit would exceed the aggregate Multi-Currency Revolving Commitments (other than as a result of any revaluation of the Dollar Equivalent of Multi-Currency Revolving Loans or the Multi-Currency L/C Obligations on any Revaluation Date in accordance with Section 1.4, in which case, if the aggregate Multi-Currency Revolving Extensions of Credit would exceed 105% of the aggregate Multi-Currency Revolving Commitments), the Borrower shall promptly prepay Multi-Currency Revolving Loans in an aggregate principal amount equal to such excess and/or pay to the Administrative Agent an amount of cash and/or Cash Equivalents equal to the aggregate principal amount equal to such excess to be held as security for all obligations of the Borrower to the Multi-Currency Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent.   -78-     (g)                Notwithstanding any other provisions of this Section 2.12, (A) to the extent that any or all of the Net Cash Proceeds of any Asset Sale by a Foreign Subsidiary (a “Foreign Asset Sale”) or the Net Cash Proceeds of any Recovery Event with respect to a Foreign Subsidiary (a “Foreign Recovery Event”), in each case giving rise to a prepayment event pursuant to Section 2.12(b), or Excess Cash Flow derived from a Foreign Subsidiary giving rise to a prepayment event pursuant to Section 2.12(c), are or is prohibited, restricted or delayed by applicable local law from being repatriated to the United States, the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.12 but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit or restricts repatriation to the United States (the Borrower hereby agreeing to use commercially reasonable efforts to cause the applicable Foreign Subsidiary to promptly take all actions reasonably required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be immediately effected and such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly (and in any event not later than five Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans in accordance with this Section 2.12 and (B) to the extent that the Borrower has determined in good faith that repatriation of any or all of the Net Cash Proceeds of any Foreign Asset Sale or any Foreign Recovery Event or any Excess Cash Flow derived from a Foreign Subsidiary would have a material adverse tax consequence (taking into account any foreign tax credit or benefit, in the Borrower’s reasonable judgment, expected to be realized in connection with such repatriation) with respect to such Net Cash Proceeds or Excess Cash Flow, the Net Cash Proceeds or Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary, provided that, in the case of this clause (B), on or before the date on which any Net Cash Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to this Section 2.12 (or twelve months after the date such Excess Cash Flow would have been so required to be applied if it were Net Cash Proceeds), (x) the Borrower shall apply an amount equal to such Net Cash Proceeds or Excess Cash Flow to such reinvestments or prepayments as if such Net Cash Proceeds or Excess Cash Flow had been received by the Borrower rather than such Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds or Excess Cash Flow had been repatriated (or, if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds or Excess Cash Flow shall be applied to the repayment of Indebtedness of a Foreign Subsidiary, in each case, other than as mutually agreed by the Borrower and the Administrative Agent.   2.13              Conversion and Continuation Options.   (a)                The Borrower may elect from time to time to convert Eurocurrency Loans (other than Eurocurrency Loans denominated in a Permitted Foreign Currency) made to the Borrower to ABR Loans by giving the Administrative Agent prior irrevocable written notice of such election no later than 12:00 Noon, New York City time, on the Business Day preceding the proposed conversion date; provided that if any Eurocurrency Loan is so converted on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. The Borrower may elect from time to time to convert ABR Loans made to the Borrower to Eurocurrency Loans by giving the Administrative Agent prior irrevocable written notice of such election no later than 12:00 Noon, New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor); provided that no ABR Loan under a particular Facility may be converted into a Eurocurrency Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. This Section 2.13 shall not apply to Swingline Loans, which may not be converted or continued.   (b)                Any Eurocurrency Loan may be continued as such by the Borrower giving irrevocable written notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1 and no later than 12:00 Noon, New York City time, on the third Business Day preceding the proposed continuation date, of the length of the next Interest Period to be applicable to such Loans; provided that if any Eurocurrency Loan is so continued on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21; provided, further, that no Eurocurrency Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations; and provided, further, that (i) if the Borrower shall fail to give any required notice as described above in this paragraph such Eurocurrency Loans shall be automatically continued as Eurocurrency Loans having an Interest Period of one month’s duration on the last day of such then-expiring Interest Period and (ii) if such continuation is not permitted pursuant to the preceding proviso, such Eurocurrency Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period; provided, further, that if the Borrower wishes to request Eurocurrency Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the appropriate Lenders of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 11:00 a.m., three Business Days before the requested date of such borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.   -79-     2.14              Minimum Amounts and Maximum Number of Eurocurrency Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to the Borrowing Minimum or a whole multiple of the Borrowing Multiple in excess thereof and (b) no more than twelve Eurocurrency Tranches shall be outstanding at any one time.   2.15              Interest Rates and Payment Dates.   (a)                (i) Each Eurocurrency Loan other than a Eurocurrency Loan that is an Initial Term Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin, (ii) each Eurocurrency Loan that is an Initial Term Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to (A) the greater of (x) the Eurocurrency Rate determined for such day and (y) 0.00% plus (B) the Applicable Margin and (iii) each Eurocurrency Loan that is a Revolving Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to (A) the greater of (x) the Eurocurrency Rate determined for such day and (y) 0.00% plus (B) the Applicable Margin.   (b)                (i) Each ABR Loan, other than an ABR Loan that is an Initial Term Loan, and each Swingline Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin and (ii) each ABR Loan that is an Initial Term Loan shall bear interest at a rate per annum equal to (A) the greater of (x) the ABR and (y) 1.00% plus (B) the Applicable Margin.   (c)                (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.15 plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans under the Revolving Facilities plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans under the Revolving Facilities plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such nonpayment until such amount is paid in full (after as well as before judgment); provided that no amount shall be payable pursuant to this Section 2.15(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided further that no amounts shall accrue pursuant to this Section 2.15(c) on any overdue Loan, Reimbursement Obligation, commitment fee or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.   -80-     (d)                Interest shall be payable by the Borrower in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section 2.15 shall be payable from time to time on demand.   2.16              Computation of Interest and Fees.   (a)                Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that interest on ABR Loans (except for ABR computations in respect of clauses (b) and (c) of the definition thereof) shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate. Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.   (b)                Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be presumptively correct in the absence of demonstrable error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.15(a) and Section 2.15(b).   2.17              Inability to Determine Interest Rate. If prior to the first day of any Interest Period for any Eurocurrency Loan:         (a)       the Administrative Agent shall have determined (which determination shall be presumptively correct absent demonstrable error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for such Interest Period, or         (b)       the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that by reason of any changes arising after the Closing Date, the Eurocurrency Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,   the Administrative Agent shall give telecopy notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurocurrency Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as ABR Loans and (z) any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period with respect thereto, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent (which action the Administrative Agent will take promptly after the conditions giving rise to such notice no longer exist), no further Eurocurrency Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurocurrency Loans.   -81-     2.18              Pro Rata Treatment and Payments.   (a)                Except as expressly otherwise provided herein (including as expressly provided in Sections 2.7, 2.9, 2.10(b), 2.15(c), 2.19, 2.20, 2.21, 2.22, 2.24, 2.26, 10.5, 10.6 and 10.7), each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Revolving Commitments shall be made pro rata according to the Revolving Percentages of the relevant Lenders other than reductions of Revolving Commitments pursuant to Section 2.24 and payments in respect of any differences in the Applicable Commitment Fee Rate of Extending Lenders pursuant to an Extension Amendment. Except as expressly otherwise provided herein (including as expressly provided in Sections 2.7, 2.15(c), 2.19, 2.20, 2.21, 2.22, 2.24, 2.26, 10.5, 10.6 and 10.7), each payment (other than prepayments) in respect of principal or interest in respect of any Tranche of Term Loans and each payment in respect of fees payable hereunder shall be applied to the amounts of such obligations owing to the Term Lenders of such Tranche, pro rata according to the respective amounts then due and owing to such Term Lenders.   (b)                Each mandatory prepayment of the Term Loans shall be allocated among the Tranches of Term Loans then outstanding pro rata, in each case except as affected by the opt-out provision under Section 2.12(e); provided, that at the request of the Borrower, in lieu of such application to the Term Loans on a pro rata basis among all Tranches of Term Loans, such prepayment may be applied to any Tranche of Term Loans so long as the maturity date of such Tranche of Term Loans precedes the maturity date of each other Tranche of Term Loans then outstanding or, in the event more than one Tranche of Term Loans shall have an identical maturity date that precedes the maturity date of each other Tranche of Term Loans then outstanding, to such Tranches on a pro rata basis; provided further that in connection with a mandatory prepayment under Section 2.12(a) in connection with the incurrence of Permitted Refinancing Obligations, such prepayment shall be allocated to the Tranches as specified by the Borrower (but to the Loans within such Tranches on a pro rata basis). Each optional prepayment and mandatory prepayment of the Term Loans shall be applied to the remaining installments thereof as specified by the Borrower (and absent such specification, in direct order of maturity). Amounts repaid or prepaid on account of the Term Loans may not be reborrowed.   (c)                Except as expressly otherwise provided herein (including as expressly provided in Sections 2.7, 2.10(b), 2.15(c), 2.19, 2.20, 2.21, 2.22, 2.24, 2.26, 10.5, 10.6 and 10.7), each payment (including prepayments) to be made by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders other than payments in respect of any differences in the Applicable Margin of Extending Lenders pursuant to an Extension Amendment. Each payment in respect of Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender that issued such Letter of Credit. Each payment of principal in respect of Swingline Loans shall be made in accordance with Section 2.6.   (d)                All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff, deduction or counterclaim and shall be made prior to 3:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the relevant Lenders, at the Funding Office, in immediately available funds. Any payment received by the Administrative Agent after 3:00 P.M., New York City time may be considered received on the next Business Day in the Administrative Agent’s sole discretion. The Administrative Agent shall distribute such payments to the relevant Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurocurrency Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.   -82-     (e)                Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate reasonably determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be presumptively correct in the absence of demonstrable error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall give notice of such fact to the Borrower and the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans under the relevant Facility, on demand, from the Borrower. Nothing herein shall be deemed to limit the rights of the Administrative Agent or the Borrower against any Defaulting Lender.   (f)                 Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the relevant Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each relevant Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.   2.19              Requirements of Law.   (a)                Except with respect to Excluded Taxes, Indemnified Taxes and Other Taxes, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority first made, in each case, subsequent to the Closing Date:   (i)               shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurocurrency Rate hereunder;   -83-     (ii)               shall subject any Recipient to any Taxes on its loans, loan principal, letters of credit, commitments, or other obligations or its deposits, reserves, other liability or capital attributable thereto; or   (iii)               shall impose on such Lender any other condition not otherwise contemplated hereunder;   and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender reasonably deems to be material, of making, converting into, continuing or maintaining Eurocurrency Loans or issuing or participating in Letters of Credit (in each case hereunder), or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, in Dollars, within thirty Business Days after the Borrower’s receipt of a reasonably detailed invoice therefor (showing with reasonable detail the calculations thereof), any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.19, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.   (b)                If any Lender shall have reasonably determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or liquidity requirements or in the interpretation or application thereof or compliance by such Lender or any entity controlling such Lender with any request or directive regarding capital adequacy or liquidity requirements (whether or not having the force of law) from any Governmental Authority first made, in each case, subsequent to the Closing Date shall have the effect of reducing the rate of return on such Lender’s or such entity’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such entity could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such entity’s policies with respect to capital adequacy or liquidity requirements) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a reasonably detailed written request therefor (consistent with the detail provided by such Lender to similarly situated borrowers), the Borrower shall pay to such Lender, in Dollars, such additional amount or amounts as will compensate such Lender or such entity for such reduction.   (c)                A certificate prepared in good faith as to any additional amounts payable pursuant to this Section 2.19 submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be presumptively correct in the absence of demonstrable error. Notwithstanding anything to the contrary in this Section 2.19, the Borrower shall not be required to compensate a Lender pursuant to this Section 2.19 for any amounts incurred more than 180 days prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that if the circumstances giving rise to such claim have a retroactive effect, then such 180-day period shall be extended to include the period of such retroactive effect. The obligations of the Borrower pursuant to this Section 2.19 shall survive the termination of this Agreement and the payment of the Obligations. Notwithstanding the foregoing, the Borrower shall not be obligated to make payment to any Lender with respect to penalties, interest and expenses if written demand therefor was not made by such Lender within 180 days from the date on which such Lender makes payment for such penalties, interest and expenses.   (d)                Notwithstanding anything in this Section 2.19 to the contrary, solely for purposes of this Section 2.19, (i) the Dodd Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, regulations, guidelines and directives promulgated thereunder or issued in connection therewith and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to have been enacted, adopted or issued, as applicable, subsequent to the Closing Date.   -84-     (e)                 For purposes of this Section 2.19, the term “Lender” shall include any Issuing Lender and Swingline Lender.   2.20               Taxes.   (a)                 Except as otherwise provided in this Agreement or as required by law, all payments made by the Borrower or any Loan Party under this Agreement and the other Loan Documents to any Recipient under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes. If any Indemnified Taxes or Other Taxes are required to be deducted or withheld from any such payments, the amounts so payable to the applicable Recipient shall be increased to the extent necessary so that after deduction or withholding of such Indemnified Taxes and Other Taxes (including Indemnified Taxes attributable to amounts payable under this Section 2.20(a)) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.   (b)                 In addition, the Borrower or any Loan Party under this Agreement and the other Loan Documents shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.   (c)                 Whenever any Taxes are payable by the Borrower and any Loan Party under this Agreement and the other Loan Documents, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for the account of the Administrative Agent or Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof if such receipt is obtainable, or, if not, such other evidence of payment as may reasonably be required by the Administrative Agent or such Lender. If the Borrower or any Loan Party under this Agreement and the other Loan Documents fails to pay any Indemnified Taxes or Other Taxes that the Borrower or any Loan Party under this Agreement and the other Loan Documents is required to pay pursuant to this Section 2.20 (or in respect of which the Borrower or any Loan Party under this Agreement and the other Loan Documents would be required to pay increased amounts pursuant to Section 2.20(a) if such Indemnified Taxes or Other Taxes were withheld) when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower or any Loan Party under this Agreement and the other Loan Documents shall indemnify the applicable Recipient for any payments by them of such Indemnified Taxes or Other Taxes, including any amounts payable pursuant to Section 2.20(a), and for any incremental Taxes that become payable by such Recipient as a result of any such failure within thirty days after the Lender or the Administrative Agent delivers to the Borrower (with a copy to the Administrative Agent) either (a) a copy of the receipt issued by a Governmental Authority evidencing payment of such Taxes or (b) certificates as to the amount of such payment or liability prepared in good faith.   -85-     (d)                Each Lender (and, in the case of a pass-through entity, each of its beneficial owners) that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a “Non-US Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Borrower and to the Lender from which the related participation shall have been purchased) (i) two accurate and complete copies of IRS Form W-8ECI, W-8BEN, W-8BEN-E or W-8IMY, and appropriate attachments, as applicable, or, (ii) in the case of a Non-US Lender claiming exemption from United States federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” a statement substantially in the form of Exhibit F and two accurate and complete copies of IRS Form W-8BEN or W-8BEN-E or W-8IMY, and appropriate attachments, as applicable, or any subsequent versions or successors to such forms, in each case properly completed and duly executed by such Non-US Lender claiming complete exemption from, or a reduced rate of, United States federal withholding tax on all payments by the Borrower or any Loan Party under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-US Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-US Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-US Lender. Each Non-US Lender shall (i) promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the United States taxing authorities for such purpose) and (ii) take such steps as shall not be disadvantageous to it, in its reasonable judgment, and as may be reasonably necessary (including the re-designation of its lending office pursuant to Section 2.23) to avoid any requirement of applicable laws of any such jurisdiction that the Borrower or any Loan Party make any deduction or withholding for Taxes from amounts payable to such Lender. Notwithstanding any other provision of this paragraph, a Non-US Lender shall not be required to deliver any form pursuant to this paragraph that such Non-US Lender is not legally able to deliver.   (e)                Each Lender (and, in the case of a Lender that is a non-United States pass-through entity, each of its beneficial owners) that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a “US Lender”) shall deliver to the Borrower and the Administrative Agent two accurate and complete copies of IRS Form W-9, or any subsequent versions or successors to such form and certify that such Lender is not subject to backup withholding. Such forms shall be delivered by each US Lender on or before the date it becomes a party to this Agreement. In addition, each US Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such US Lender. Each US Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certifications to the Borrower (or any other form of certification adopted by the United States taxing authorities for such purpose).   (f)                 If any Recipient determines, in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified pursuant to this Section 2.20 (including by the payment of additional amounts pursuant to Section 2.20), it shall promptly pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid under this Section 2.20 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Recipient and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that such indemnifying party, upon the request of such Recipient, agrees to repay the amount paid over to the indemnifying party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority other than any such penalties, interest or other charges resulting from the gross negligence or willful misconduct of the relevant Recipient) to such Recipient in the event such Recipient is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. In no event will any Recipient be required to pay any amount to an indemnifying party the payment of which would place such Recipient in a less favorable net after-tax position than such Recipient would have been in if the additional amounts giving rise to such refund of any Indemnified Taxes or Other Taxes had never been paid. The agreements in this Section 2.20 shall survive the termination of this Agreement and the payment of the Obligations.   -86-     (g)                If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or Administrative Agent as may be necessary for the Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this subsection (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.   (h)                Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.6(c)(iii) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (h).   (i)                 For purposes of this Section 2.20, the term “Lender” shall include any Issuing Lender or Swingline Lender.   2.21              Indemnity. Other than with respect to Taxes, which shall be governed solely by Section 2.20, the Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense (other than lost profits, including the loss of Applicable Margin) that such Lender actually sustains or incurs as a consequence of (a) any failure by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given notice requesting the same in accordance with the provisions of this Agreement, (b) any failure by the Borrower in making any prepayment of or conversion from Eurocurrency Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment, conversion or continuation of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto. A reasonably detailed certificate as to (showing in reasonable detail the calculation of) any amounts payable pursuant to this Section 2.21 submitted to the Borrower by any Lender shall be presumptively correct in the absence of demonstrable error. This covenant shall survive the termination of this Agreement and the payment of the Obligations.   2.22              Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof, in each case, first made after the Closing Date, shall make it unlawful for any Lender to make or maintain Eurocurrency Loans as contemplated by this Agreement, such Lender shall promptly give notice thereof (a “Rate Determination Notice”) to the Administrative Agent and the Borrower, and (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert ABR Loans to Eurocurrency Loans shall be suspended during the period of such illegality and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.21.   -87-     2.23              Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.19, 2.20(a) or 2.22 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the good faith judgment of such Lender, cause such Lender and its lending office(s) to suffer no material economic, legal or regulatory disadvantage; provided, further, that nothing in this Section 2.23 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.19, 2.20(a) or 2.22.   2.24              Replacement of Lenders. The Borrower shall be permitted to (a) replace with a financial entity or financial entities, or (b) prepay or terminate, without premium or penalty (but subject to Section 2.21), the Loans or Commitments, as applicable, of any Lender, Issuing Lender or Swingline Lender (each such Lender, Issuing Lender or Swingline Lender, a “Replaced Lender”) that (i) requests reimbursement for amounts owing or otherwise results in increased costs imposed on the Borrower or on account of which the Borrower is required to pay additional amounts to any Governmental Authority pursuant to Section 2.19, 2.20 or 2.21 (to the extent a request made by a Lender pursuant to the operation of Section 2.21 is materially greater than requests made by other Lenders) or gives a notice of illegality pursuant to Section 2.22, (ii) is a Defaulting Lender, (iii) is, or the Borrower reasonably believes could constitute, a Disqualified Institution, or (iv) has refused to consent to any waiver or amendment with respect to any Loan Document that requires such Lender’s consent and has been consented to by the Required Lenders; provided that, in the case of a replacement pursuant to clause (a) above, (A) such replacement does not conflict with any Requirement of Law, (B) the replacement financial entity or financial entities shall purchase, at par, all Loans and other amounts owing to such Replaced Lender on or prior to the date of replacement (or, in the case of a replacement of an Issuing Lender or Swingline Lender, comply with the provisions of Section 9.9(c) (to the extent applicable as if such Lender was resigning as Administrative Agent)), (C) the Borrower shall be liable to such Replaced Lender under Section 2.21 (as though Section 2.21 were applicable) if any Eurocurrency Loan owing to such Replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (D) the replacement financial entity or financial entities, (x) if not already a Lender, shall be reasonably satisfactory to the Administrative Agent to the extent that an assignment to such replacement financial institution of the rights and obligations being acquired by it would otherwise require the consent of the Administrative Agent pursuant to Section 10.6(b)(i)(B) and (y) shall pay (unless otherwise paid by the Borrower) any processing and recordation fee required under Section 10.6(b)(ii)(B), (E) the Administrative Agent and any replacement financial entity or entities shall execute and deliver, and such Replaced Lender shall thereupon be deemed to have executed and delivered, an appropriately completed Assignment and Assumption to effect such substitution (or, in the case of a replacement of an Issuing Lender or Swingline Lender, customary assignment documentation), (F) the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.19 or 2.20, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, (G) in respect of a replacement pursuant to clause (iv) above, the replacement financial entity or financial entities shall consent to such amendment or waiver, (H) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the Replaced Lender and (I) if such replacement is in connection with a Repricing Transaction prior to the six-month anniversary of the Amendment No. 4 Effective Date, the Borrower or the replacement Lender shall pay the Replaced Lender a fee equal to 1% of the aggregate principal amount of its Initial Term Loans required to be assigned pursuant to this Section 2.24. Prepayments pursuant to clause (b) above (i) shall be accompanied by accrued and unpaid interest on the principal amount so prepaid up to the date of such prepayment and (ii) shall not be subject to the provisions of Section 2.18. The termination of the Revolving Commitments of any Lender pursuant to clause (b) above shall not be subject to the provisions of Section 2.18. In connection with any such replacement under this Section 2.24, if the Replaced Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption and/or any other documentation necessary to reflect such replacement by the later of (a) the date on which the replacement Lender executes and delivers such Assignment and Assumption and/or such other documentation and (b) the date as of which all obligations of the Borrower owing to the Replaced Lender relating to the Loans and participations so assigned shall be paid in full to such Replaced Lender, then such Replaced Lender shall be deemed to have executed and delivered such Assignment and Assumption and/or such other documentation as of such date and the Borrower shall be entitled (but not obligated) to execute and deliver such Assignment and Assumption and/or such other documentation on behalf of such Replaced Lender, and the Administrative Agent shall record such assignment in the Register.   -88-     2.25              Incremental Loans.   (a)                The Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more new term loans (each, a “New Term Loan Commitment”) or increases of existing Term Loans (each, a “Supplemental Term Loan Commitment”) or increases of existing Revolving Commitments (each, a “Supplemental Revolving Commitment Increase”; together with any New Term Loan Commitments and any Supplemental Term Loan Commitments, the “New Loan Commitments”) hereunder, in an aggregate amount for all such New Loan Commitments (when taken together with any New Incremental Notes issued prior to, or that will be issued concurrently with, the effectiveness of the respective New Loan Commitments) not in excess of, at the time the respective New Loan Commitments become effective, the Maximum Incremental Facilities Amount plus, solely with respect to Supplemental Revolving Commitment Increases, the Incremental Revolving Amount. Each such notice shall specify (i) the date (each, an “Increased Amount Date”) on which the Borrower proposes that the New Loan Commitments shall be effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent and (ii) in the case of a Supplemental Revolving Commitment Increase, the Tranche (or Tranches) of Revolving Commitments to be so increased (and, if more than one Tranche of Revolving Commitments will be increased, the amount of the aggregate Supplemental Revolving Commitment Increase to be allocated to each such Tranche); provided that (x) any Lender offered or approached to provide all or a portion of any New Loan Commitments may elect or decline, in its sole discretion, to provide such New Loan Commitments and (y) any Person that the Borrower proposes to become a New Lender, if such Person is not then a Lender, must be an Eligible Assignee and must be reasonably acceptable to the Administrative Agent and, in the case of any proposed Supplemental Revolving Commitment Increase, to each Issuing Lender and, in the case of a Supplemental Revolving Commitment Increase to the Dollar Revolving Facility, the Swingline Lender, in each case, to the extent its consent would be required to assign Loans to any such Eligible Assignee.   -89-     (b)                Such New Loan Commitments shall become effective as of such Increased Amount Date; provided that (i) no Event of Default shall exist on such Increased Amount Date immediately after giving effect to such New Loan Commitments and the making of any New Loans pursuant thereto and any transaction consummated in connection therewith subject to the Permitted Acquisition Provisions (as defined below) and the Limited Condition Acquisition Provision, in connection with any acquisition or investment being made with the proceeds thereof; (ii) the proceeds of any New Loans shall be used, at the discretion of the Borrower, for any purpose not prohibited by this Agreement; (iii) the New Loans shall be secured by the Collateral on a pari passu or, at the Borrower’s option, junior basis (so long as any such New Loan Commitments (and related Obligations) are subject to an Other Intercreditor Agreement) and shall benefit ratably from the guarantees under the Guarantee and Collateral Agreement; (iv) in the case of New Loans that are term loans (“New Term Loans”), the maturity date thereof shall not be earlier than the Latest Maturity Date and the weighted average life to maturity shall be equal to or greater than the weighted average life to maturity of the Latest Maturing Term Loans (other than an earlier maturity date and/or shorter weighted average life to maturity for customary bridge financings, which, subject to customary conditions, would either be automatically converted into or required to be exchanged for permanent financing which does not provide for an earlier maturity date or a shorter weighted average life to maturity than the Latest Maturity Date or the weighted average life to maturity of the Latest Maturing Term Loans, as applicable); (v) in the case of any Supplemental Revolving Commitment Increase, (A) the maturity date of such Supplemental Revolving Commitment Increase shall be the same as the Revolving Termination Date, (B) such Supplemental Revolving Commitment Increase shall require no scheduled amortization or mandatory commitment reduction prior to the Revolving Termination Date and (C) such Supplemental Revolving Commitment Increase shall be on the same terms (other than upfront fees payable in connection therewith) and pursuant to the same documentation applicable to the Revolving Facilities (and, if applicable, a Joinder Agreement); (vi) all terms and documentation with respect to any New Loans which differ from those with respect to the Loans under the applicable Facility shall be reasonably satisfactory to the Administrative Agent (except to the extent permitted by clauses (iii) and (iv) above and the second to last sentence of this paragraph); provided that the terms of any Supplemental Revolving Commitment Increase shall be identical to the terms of the applicable Tranche (or Tranches, as the case may be) of the Revolving Facilities; (vii) such New Loans or New Loan Commitments (other than Supplemental Term Loan Commitments and Supplemental Revolving Commitment Increases) shall be effected pursuant to one or more Joinder Agreements executed and delivered by the Borrower, the Administrative Agent and one or more New Lenders; (viii) to the extent reasonably requested by the Administrative Agent, the Borrower shall deliver or cause to be delivered (A) customary legal opinions with respect to the due authorization, execution and delivery by the Borrower and each other Loan Party to be party thereto and the enforceability of the applicable Joinder Agreement, Increase Supplement or Lender Joinder Agreement, as applicable, the non-conflict of the execution, delivery of and performance of payment obligations under such documentation with this Agreement and with the organizational documents of the Loan Parties and the effectiveness of the Guarantee and Collateral Agreement to create a valid security interest, and the effectiveness of specified other Security Documents to perfect such security interests, in specified Collateral to secure the Obligations, including the New Loan Commitments and the extensions of credit thereunder and (B) certified copies of the resolutions or other applicable corporate action of each applicable Loan Party approving its entry into such documents and the transactions contemplated thereby; and (ix) if the initial “spread” (for purposes of this Section 2.25, the “spread” with respect to any Term Loan shall be calculated as the sum of the Eurocurrency Loan margin on the relevant Term Loan plus any original issue discount or upfront fees in lieu of original issue discount (other than any arranging fees, underwriting fees and commitment fees) (based on an assumed four-year average life for the applicable Facilities (e.g., 100 basis points in original issue discount or upfront fees equals 25 basis points of interest rate margin))) relating to any New Term Loan exceeds the spread then in effect with respect to the Initial Term Loans by more than 0.50%, the Applicable Margin relating to the Initial Term Loans shall be adjusted so that the spread relating to such New Term Loans does not exceed the spread applicable to the Initial Term Loans by more than 0.50%; provided that if such New Term Loans include an interest rate floor greater than the interest rate floor applicable to the Initial Term Loans, such increased amount shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the Applicable Margin for the Initial Term Loans shall be required, to the extent an increase in the interest rate floor for the Initial Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case the interest rate floor (but not the Applicable Margin) applicable to the Initial Term Loans shall be increased by such amount. For the avoidance of doubt, the rate of interest and the amortization schedule (if applicable) of any New Loan Commitments shall be determined by the Borrower and the applicable New Lenders and shall be set forth in the applicable Joinder Agreement. Notwithstanding anything to the contrary above, in connection with the incurrence of any New Term Loans, if the proceeds of such New Term Loans are, substantially concurrently with the receipt thereof, to be used, in whole or in part, by the Borrower or any other Loan Party to finance, in whole or in part, a Permitted Acquisition, then (A) the only representations and warranties that will be required to be true and correct in all material respects as of the applicable Increase Amount Date shall be (x) the Specified Representations (conformed as necessary for such Permitted Acquisition) and (y) such of the representations and warranties made by or on behalf of the applicable acquired company or business in the applicable acquisition agreement as are material to the interests of the Lenders, but only to the extent that Holdings or the Borrower (or any Affiliate of Holdings or the Borrower) has the right to terminate the obligations of Holdings, the Borrower or such Affiliate under such acquisition agreement or not consummate such acquisition as a result of a breach of such representations or warranties in such acquisition agreement and (B) no Event of Default under Sections 8.1(a) or (f) would exist after giving effect to such incurrence (“Permitted Acquisition Provisions”).   -90-     (c)                On any Increased Amount Date on which any New Loan Commitment become effective, subject to the foregoing terms and conditions, each lender with a New Loan Commitment (each, a “New Lender”) shall become a Lender hereunder with respect to such New Loan Commitment.   (d)                For purposes of this Agreement, any New Loans or New Loan Commitments shall be deemed to be Term Loans, Revolving Loans or Revolving Commitments, as applicable. Each Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Borrower and the Administrative Agent, to effect the provisions of this Section 2.25.   (e)                Supplemental Term Loan Commitments and Supplemental Revolving Commitment Increases shall become commitments under this Agreement pursuant to a supplement specifying the Term Loan Tranche or Revolving Commitments Tranche to be increased, executed by the Borrower and each increasing Lender substantially in the form attached hereto as Exhibit L-1 (the “Increase Supplement”) or by each New Lender substantially in the form attached hereto as Exhibit L-2 (the “Lender Joinder Agreement”), as the case may be, which shall be delivered to the Administrative Agent for recording in the Register. Upon effectiveness of the Lender Joinder Agreement, each New Lender shall be a Lender for all intents and purposes of this Agreement and the term loan made pursuant to such Supplemental Term Loan Commitment shall be a Term Loan or the commitments made pursuant to such Supplemental Revolving Commitment Increase shall be Revolving Commitments, as applicable.   2.26              Extension of Term Loans and Revolving Commitments.   (a)                The Borrower may at any time and from time to time request that all or a portion of the (i) Term Loans of one or more Tranches existing at the time of such request (each, an “Existing Term Tranche,” and the Term Loans of such Tranche, the “Existing Term Loans”) or (ii) Revolving Commitments of one or more Tranches existing at the time of such request (each, an “Existing Revolving Tranche” and together with the Existing Term Tranches, each an “Existing Tranche,” and the Revolving Loans of such Existing Revolving Tranche, the “Existing Revolving Loans,” and together with the Existing Term Loans, the “Existing Loans”), in each case, be converted to extend the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of any Existing Tranche (any such Existing Tranche which has been so extended, an “Extended Term Tranche” or “Extended Revolving Tranche,” as applicable, and each an “Extended Tranche,” and the Term Loans or Revolving Commitments, as applicable, of such Extended Tranches, the “Extended Term Loans” or “Extended Revolving Commitments,” as applicable, and collectively, the “Extended Loans”) and to provide for other terms consistent with this Section 2.26; provided that (i) any such request shall be made by the Borrower to all Lenders with Term Loans or Revolving Commitments, as applicable, with a like maturity date (whether under one or more Tranches) on a pro rata basis (based on the aggregate outstanding principal amount of the applicable Term Loans or the applicable Revolving Commitments) and (ii) any applicable Minimum Extension Condition shall be satisfied unless waived by the Borrower in its sole discretion. In order to establish any Extended Tranche, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Existing Tranche) (an “Extension Request”) setting forth the proposed terms of the Extended Tranche to be established, which terms shall be substantially similar to those applicable to the Existing Tranche from which they are to be extended (the “Specified Existing Tranche”), except (x) all or any of the final maturity dates of such Extended Tranches may be delayed to later dates than the final maturity dates of the Specified Existing Tranche, (y) (A) the interest margins with respect to the Extended Tranche may be higher or lower than the interest margins for the Specified Existing Tranche and/or (B) additional fees may be payable to the Lenders providing such Extended Tranche in addition to or in lieu of any increased margins contemplated by the preceding clause (A) and (z) in the case of an Extended Term Tranche, so long as the weighted average life to maturity of such Extended Tranche would be no shorter than the remaining weighted average life to maturity of the Specified Existing Tranche, amortization rates with respect to the Extended Term Tranche may be higher or lower than the amortization rates for the Specified Existing Tranche, in each case to the extent provided in the applicable Extension Amendment; provided that, notwithstanding anything to the contrary in this Section 2.26 or otherwise, assignments and participations of Extended Tranches shall be governed by the same or, at the Borrower’s discretion, more restrictive assignment and participation provisions applicable to Term Loans or Revolving Commitments, as applicable, set forth in Section 10.6. No Lender shall have any obligation to agree to have any of its Existing Loans converted into an Extended Tranche pursuant to any Extension Request. Any Extended Tranche shall constitute a separate Tranche of Loans from the Specified Existing Tranches and from any other Existing Tranches (together with any other Extended Tranches so established on such date).   -91-     (b)                The Borrower shall provide the applicable Extension Request at least 10 Business Days (or such shorter period as the Administrative Agent may agree to) prior to the date on which Lenders under the applicable Existing Tranche or Existing Tranches are requested to respond. Any Lender (an “Extending Lender”) wishing to have all or a portion of its Specified Existing Tranche converted into an Extended Tranche shall notify the Administrative Agent (each, an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Specified Existing Tranche that it has elected to convert into an Extended Tranche. In the event that the aggregate amount of the Specified Existing Tranche subject to Extension Elections exceeds the amount of Extended Tranches requested pursuant to the Extension Request, the Specified Existing Tranches subject to Extension Elections shall be converted to Extended Tranches on a pro rata basis based on the amount of Specified Existing Tranches included in each such Extension Election. In connection with any extension of Loans pursuant to this Section 2.26 (each, an “Extension”), the Borrower shall agree to such procedures regarding timing, rounding and other administrative adjustments to ensure reasonable administrative management of the credit facilities hereunder after such Extension, as may be established by, or acceptable to, the Administrative Agent and the Borrower, in each case acting reasonably to accomplish the purposes of this Section 2.26.   (c)                Extended Tranches shall be established pursuant to an amendment (an “Extension Amendment”) to this Agreement (which may include amendments to provisions related to maturity, interest margins or fees referenced in clauses (x) and (y) of Section 2.26(a), or, in the case of Extended Term Tranches, amortization rates referenced in clause (z) of Section 2.26(a), and which, in each case, except to the extent expressly contemplated by the last sentence of this Section 2.26(c) and notwithstanding anything to the contrary set forth in Section 10.1, shall not require the consent of any Lender other than the Extending Lenders with respect to the Extended Tranches established thereby) executed by the Loan Parties, the Administrative Agent, and the Extending Lenders. Subject to the requirements of this Section 2.26 and without limiting the generality or applicability of Section 10.1 to any Section 2.26 Additional Amendments, any Extension Amendment may provide for additional terms and/or additional amendments other than those referred to or contemplated above (any such additional amendment, a “Section 2.26 Additional Amendment”) to this Agreement and the other Loan Documents; provided that such Section 2.26 Additional Amendments do not become effective prior to the time that such Section 2.26 Additional Amendments have been consented to (including pursuant to consents applicable to holders of any Extended Tranches provided for in any Extension Amendment) by such of the Lenders, Loan Parties and other parties (if any) as may be required in order for such Section 2.26 Additional Amendments to become effective in accordance with Section 10.1; provided, further, that no Extension Amendment may provide for (i) any Extended Tranche to be secured by any Collateral or other assets of any Loan Party that does not also secure the Existing Tranches or be guaranteed by any Person other than the Guarantors and (ii) so long as any Existing Term Tranches are outstanding, any mandatory or voluntary prepayment provisions that do not also apply to the Existing Term Tranches (other than Existing Term Tranches secured on a junior basis by the Collateral or ranking junior in right of payment, which shall be subject to junior prepayment provisions) on a pro rata basis (or otherwise provide for more favorable prepayment treatment for Extended Term Tranches than such Existing Term Tranches as contemplated by Section 2.12). Notwithstanding anything to the contrary in Section 10.1, any such Extension Amendment may, without the consent of any other Lenders, effect such amendments to any Loan Documents as may be necessary or appropriate, in the reasonable judgment of the Borrower and the Administrative Agent, to effect the provisions of this Section 2.26; provided that the foregoing shall not constitute a consent on behalf of any Lender to the terms of any Section 2.26 Additional Amendment.   -92-     (d)                Notwithstanding anything to the contrary contained in this Agreement, on any date on which any Existing Tranche is converted to extend the related scheduled maturity date(s) in accordance with Section 2.26(a) above (an “Extension Date”), in the case of the Specified Existing Tranche of each Extending Lender, the aggregate principal amount of such Specified Existing Tranche shall be deemed reduced by an amount equal to the aggregate principal amount of the Extended Tranche so converted by such Lender on such date, and such Extended Tranches shall be established as a separate Tranche from the Specified Existing Tranche and from any other Existing Tranches (together with any other Extended Tranches so established on such date).   (e)                If, in connection with any proposed Extension Amendment, any Lender declines to consent to the applicable extension on the terms and by the deadline set forth in the applicable Extension Request (each such other Lender, a “Non-Extending Lender”) then the Borrower may, on notice to the Administrative Agent and the Non-Extending Lender, replace such Non-Extending Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 10.6 (with the assignment fee and any other costs and expenses to be paid by the Borrower or the assignee in such instance) all of its rights and obligations under this Agreement to one or more assignees; provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that the applicable assignee shall have agreed to provide Extended Loans on the terms set forth in such Extension Amendment; provided, further, that all obligations of the Borrower owing to the Non-Extending Lender relating to the Existing Loans so assigned (including pursuant to Section 2.21 (as though Section 2.21 were applicable)) shall be paid in full by the assignee Lender to such Non-Extending Lender concurrently with such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable. In connection with any such replacement under this Section 2.26, if the Non-Extending Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, by the later of (A) the date on which the replacement Lender executes and delivers such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, and (B) the date as of which all obligations of the Borrower owing to the Non-Extending Lender relating to the Existing Loans so assigned shall be paid in full to such Non-Extending Lender, then such Non-Extending Lender shall be deemed to have executed and delivered such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, as of such date and the Borrower shall be entitled (but not obligated) to execute and deliver such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, on behalf of such Non-Extending Lender.   -93-     (f)                 Following any Extension Date, with the written consent of the Borrower, any Non-Extending Lender may elect to have all or a portion of its Existing Loans deemed to be an Extended Loan under the applicable Extended Tranche on any date (each date a “Designation Date”) prior to the maturity date of such Extended Tranche; provided that such Lender shall have provided written notice to the Borrower and the Administrative Agent at least 10 Business Days prior to such Designation Date (or such shorter period as the Administrative Agent may agree in its reasonable discretion); provided, further, that no greater amount shall be paid by or on behalf of the Borrower or any of its Affiliates to any such Non-Extending Lender as consideration for its extension into such Extended Tranche than was paid to any Extending Lender as consideration for its Extension into such Extended Tranche. Following a Designation Date, the Existing Loans held by such Lender so elected to be extended will be deemed to be Extended Loans of the applicable Extended Tranche, and any Existing Loans held by such Lender not elected to be extended, if any, shall continue to be “Existing Loans” of the applicable Tranche.   (g)                With respect to all Extensions consummated by the Borrower pursuant to this Section 2.26, (i) such Extensions shall not constitute optional or mandatory payments or prepayments for purposes of Sections 2.11 and 2.12 and (ii) no Extension Request is required to be in any minimum amount or any minimum increment, provided that the Borrower may at its election specify as a condition (a “Minimum Extension Condition”) to consummating any such Extension that a minimum amount (to be determined and specified in the relevant Extension Request in the Borrower’s sole discretion and which may be waived by the Borrower) of Existing Loans of any or all applicable Tranches be extended. The Administrative Agent and the Lenders hereby consent to the transactions contemplated by this Section 2.26 (including, for the avoidance of doubt, payment of any interest, fees or premium in respect of any Extended Loans on such terms as may be set forth in the relevant Extension Request) and hereby waive the requirements of any provision of this Agreement (including Sections 2.8, 2.11 and 2.12) or any other Loan Document that may otherwise prohibit any such Extension or any other transaction contemplated by this Section 2.26.   2.27              Successor LIBOR.          Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or the Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to Borrower) that the Borrower or the Required Lenders (as applicable) have determined, that:   (i)          adequate and reasonable means do not exist for ascertaining LIBOR for any requested Interest Period, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or   (ii)          the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”), or   (iii)          syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,   -94-     then, reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice , as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks (any such proposed rate, a “LIBOR Successor Rate”), together with any proposed LIBOR Successor Rate Conforming Changes and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Lenders do not accept such amendment. If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Loans shall be suspended, (to the extent of the affected LIBOR Rate Loans or Interest Periods), and (y) the Eurocurrency Rate component shall no longer be utilized in determining the ABR. Upon receipt of such notice, the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of Eurocurrency Loans (to the extent of the affected LIBOR Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a borrowing of ABR Loans (subject to the foregoing clause (y)) in the amount specified therein. Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement.   SECTION 3.            LETTERS OF CREDIT   3.1                L/C Commitment.   (a)                Subject to the terms and conditions hereof, each Dollar Issuing Lender, in reliance on the agreements of the other Dollar Revolving Lenders set forth in Section 3.4(a), agrees, in the case of JPMorgan Chase Bank, N.A., to continue under this Agreement for the account of the Borrower the Existing Letters of Credit issued by it until the expiration or earlier termination thereof and, in the case of each other Dollar Issuing Lender, to issue Dollar Letters of Credit under the Dollar Revolving Commitments for the account of the Borrower or any of its Restricted Subsidiaries on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by such Dollar Issuing Lender; provided that no Dollar Issuing Lender shall have any obligation to issue any Dollar Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Dollar Revolving Commitments would be less than zero. Each Dollar Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is three Business Days prior to the Amendment No. 2 Extending Revolving Termination Date (unless cash collateralized or backstopped or otherwise supported, in each case in a manner agreed to by the Borrower and the Dollar Issuing Lender); provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).   (b)                Subject to the terms and conditions hereof, each Multi-Currency Issuing Lender, in reliance on the agreements of the other Multi-Currency Revolving Lenders set forth in Section 3.4(a), agrees, in the case of JPMorgan Chase Bank, N.A., to continue under this Agreement for the account of the Borrower the Existing Letters of Credit issued by it until the expiration or earlier termination thereof and, in the case of each other Multi-Currency Issuing Lender, to issue Multi-Currency Letters of Credit under the Multi-Currency Revolving Commitments for the account of the Borrower or any of its Restricted Subsidiaries on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by such Multi-Currency Issuing Lender; provided that no Multi-Currency Issuing Lender shall have any obligation to issue any Multi-Currency Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Multi-Currency Revolving Commitments would be less than zero. Each Multi-Currency Letter of Credit shall (i) be denominated in Dollars or any Permitted Foreign Currency and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is three Business Days prior to the Revolving Termination Date (unless cash collateralized or backstopped or otherwise supported, in each case in a manner agreed to by the Borrower and the Multi-Currency Issuing Lender); provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).   -95-     (c)                Notwithstanding any prior specification of a Revolving Facility, the Borrower may request in writing that a Letter of Credit issued under either Revolving Facility be deemed to be issued under any other Revolving Facility (and such redesignation shall become effective on the date of receipt by the Administrative Agent of such written request which shall be a Business Day) so long as if at the time of the Administrative Agent’s receipt of such request the issuance of such a Letter of Credit would be permitted under such Facility pursuant to Section 3.1(a) or Section 3.1(b), as applicable.   (d)                No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such issuance would (i) conflict with, or cause such Issuing Lender to exceed any limits imposed by, any applicable Requirement of Law, or if such Requirement of Law would impose upon such Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and is not otherwise reimbursable to it by the Borrower hereunder and which such Issuing Lender in good faith deems material to it or (ii) violate one or more policies of such Issuing Lender applicable generally to the issuance of letters of credit for the account of similarly situated borrowers.   3.2                Procedure for Issuance of Letter of Credit. The Borrower may from time to time request that the relevant Issuing Lender issue a Letter of Credit (or amend, renew or extend an outstanding Letter of Credit) by delivering to such Issuing Lender at its address for notices specified to the Borrower by such Issuing Lender an Application therefor, with a copy to the Administrative Agent, completed to the reasonable satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may reasonably request. Such Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the relevant Issuing Lender, by personal delivery or by any other means acceptable to the relevant Issuing Lender. Upon receipt of any Application, the relevant Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue (or amend, renew or extend, as the case may be) the Letter of Credit requested thereby (but in no event without the consent of the applicable Issuing Lender shall any Issuing Lender be required to issue (or amend, renew or extend, as the case may be) any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit (or such amendment, renewal or extension, as the case may be) to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower. Such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance (or such amendment, renewal or extension, as the case may be) thereof. Each Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the relevant Revolving Lenders, notice of the issuance (or such amendment, renewal or extension, as the case may be) of each Letter of Credit issued by it (including the amount thereof).   -96-       3.3                Fees and Other Charges.   (a)                The Borrower will pay a fee, in Dollars, on each outstanding Letter of Credit requested by it, at a per annum rate equal to the Applicable Margin then in effect with respect to Eurocurrency Loans under the Revolving Facilities, or the Dollar Equivalent of the face amount of such Letter of Credit, which fee shall be shared ratably among the applicable Revolving Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance date; provided that, with respect to any Defaulting Lender, such Lender’s ratable share of any letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding Letters of Credit during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such Lender’s ratable share of any letter of credit fee shall otherwise have been due and payable by the Borrower prior to such time; provided further that any Defaulting Lender’s ratable share of any letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding Letters of Credit shall accrue (x) for the account of each Non-Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit which has been reallocated to such Non-Defaulting Lender pursuant to Section 3.4(d), (y) for the account of the Borrower with respect to any L/C Shortfall if the Borrower has paid to the Administrative Agent an amount of cash and/or Cash Equivalents equal to the amount of the L/C Shortfall to be held as security for all obligations of the Borrower to the applicable Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent, or (z) for the account of the applicable Issuing Lenders, in any other instance, in each case so long as such Lender shall be a Defaulting Lender. In addition, the Borrower shall pay to each Issuing Lender for its own account a fronting fee, in Dollars, on the Dollar Equivalent of the aggregate face amount of all outstanding Letters of Credit issued by it to the Borrower, equal to 0.125% per annum, payable quarterly in arrears on each Fee Payment Date after the issuance date.   (b)                In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for standard costs and expenses agreed by the Borrower and such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit requested by the Borrower.   3.4                  L/C Participations.   (a)                 (i) Each Dollar Issuing Lender irrevocably agrees to grant and hereby grants to each Dollar L/C Participant, and, to induce such Dollar Issuing Lender to issue Dollar Letters of Credit, each Dollar L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from such Dollar Issuing Lender, on the terms and conditions set forth below, for such Dollar L/C Participant’s own account and risk an undivided interest equal to such Dollar L/C Participant’s Dollar Revolving Percentage in such Dollar Issuing Lender’s obligations and rights under and in respect of each Dollar Letter of Credit issued by it and the amount of each draft paid by such Dollar Issuing Lender thereunder. Each Dollar L/C Participant agrees with each Dollar Issuing Lender that, if a draft is paid under any Dollar Letter of Credit issued by it for which such Dollar Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such Dollar L/C Participant shall pay, in Dollars, to the Administrative Agent for the account of such Dollar Issuing Lender upon demand an amount equal to such Dollar L/C Participant’s Dollar Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed (“Dollar L/C Disbursements”); provided that, nothing in this paragraph shall relieve the Dollar Issuing Lender of any liability resulting from the gross negligence or willful misconduct of the Dollar Issuing Lender. Each Dollar L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Dollar L/C Participant may have against any Dollar Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the financial condition of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Dollar L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.   -97-     (ii)               Each Multi-Currency Issuing Lender irrevocably agrees to grant and hereby grants to each Multi-Currency L/C Participant, and, to induce such Multi-Currency Issuing Lender to issue Multi-Currency Letters of Credit, each Multi-Currency L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from such Multi-Currency Issuing Lender, on the terms and conditions set forth below, for such Multi-Currency L/C Participant’s own account and risk an undivided interest equal to such Multi-Currency L/C Participant’s Multi-Currency Revolving Percentage in such Multi-Currency Issuing Lender’s obligations and rights under and in respect of each Multi-Currency Letter of Credit issued by it and the amount of each draft paid by such Multi-Currency Issuing Lender thereunder. Each Multi-Currency L/C Participant agrees with each Multi-Currency Issuing Lender that, if a draft is paid under any Multi-Currency Letter of Credit issued by it for which such Multi-Currency Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such Multi-Currency L/C Participant shall pay, in Dollars, to the Administrative Agent for the account of such Multi-Currency Issuing Lender upon demand an amount equal to such Multi-Currency L/C Participant’s Multi-Currency Revolving Percentage of the Dollar Equivalent of the amount of such draft, or any part thereof, that is not so reimbursed (“Multi-Currency L/C Disbursements”); provided that, nothing in this paragraph shall relieve the Multi-Currency Issuing Lender of any liability resulting from the gross negligence or willful misconduct of the Multi-Currency Issuing Lender. Each Multi-Currency L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Multi-Currency L/C Participant may have against any Multi-Currency Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the financial condition of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Multi-Currency L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.   (b)                If any amount required to be paid by any L/C Participant to the Administrative Agent for the account of any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to the Administrative Agent for the account of such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to the Administrative Agent for the account of the relevant Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans under the Revolving Facilities. A certificate of the relevant Issuing Lender submitted to any relevant L/C Participant with respect to any amounts owing under this Section 3.4 shall be presumptively correct in the absence of demonstrable error.   -98-     (c)                Whenever, at any time after any Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), if the Administrative Agent receives for the account of the Issuing Lender any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Administrative Agent), or any payment of interest on account thereof, the Administrative Agent will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment shall be required to be returned by such Issuing Lender, such L/C Participant shall return to the Administrative Agent for the account of such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.   (d)                Notwithstanding anything to the contrary contained in this Agreement, in the event an L/C Participant becomes a Defaulting Lender, then such Defaulting Lender’s applicable Revolving Percentage in all outstanding Letters of Credit under the relevant Facility will automatically be reallocated among the applicable L/C Participants that are Non-Defaulting Lenders pro rata in accordance with each Non-Defaulting Lender’s applicable Revolving Percentage (calculated without regard to the Revolving Commitments of the Defaulting Lender), but only to the extent that such reallocation does not cause the Revolving Extensions of Credit under the relevant Facility of any Non-Defaulting Lender to exceed the Revolving Commitments under the relevant Facility of such Non-Defaulting Lender. If such reallocation cannot, or can only partially, be effected the Borrower shall, within five Business Days after written notice from the Administrative Agent, pay to the Administrative Agent an amount of cash and/or Cash Equivalents equal to such Defaulting Lender’s applicable Revolving Percentage (calculated as in effect immediately prior to it becoming a Defaulting Lender) of the L/C Obligations under the relevant Facility (after giving effect to any partial reallocation pursuant to the first sentence of this Section 3.4(d)) to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent. So long as there is a Defaulting Lender, an Issuing Lender shall not be required to issue any Letter of Credit where the sum of the Non-Defaulting Lenders’ applicable Revolving Percentages of the outstanding Revolving Loans and their participations in Letters of Credit, in each case under the relevant Facility, after giving effect to any such requested Letter of Credit would exceed (each such excess, the “L/C Shortfall”) the aggregate applicable Revolving Commitments of the Non-Defaulting Lenders, unless the Borrower shall pay to the Administrative Agent an amount of cash and/or Cash Equivalents equal to the amount of the L/C Shortfall, such cash and/or Cash Equivalents to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent.   (e)                If, on any date, the L/C Obligations would exceed 105% of the L/C Commitment (including as a result of any revaluation of the Dollar Equivalent of the L/C Obligations on any Revaluation Date in accordance with Section 1.4), the Borrower shall promptly pay to the Administrative Agent an amount of cash and/or Cash Equivalents equal to the amount by which the L/C Obligations exceed the L/C Commitment, such cash and/or Cash Equivalents to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent.   3.5                Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse each Issuing Lender on the Business Day following the date on which such Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit issued or continued by such Issuing Lender at the Borrower’s request (including any Letters of Credit issued for the account of a Restricted Subsidiary and the Existing Letters of Credit) and paid by such Issuing Lender for the amount of (a) such draft so paid and (b) any reasonable fees, charges or other costs or expenses reasonably incurred by such Issuing Lender in connection with such payment and, without limiting the Borrower’s obligations in respect thereof under this Section 3.5, notified in reasonable detail to the Borrower on the date of the draft so paid (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the “Payment Amount”). Each such payment shall be made to such Issuing Lender at its address for notices specified to the Borrower in Dollars and in immediately available funds. Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full at a rate equal to (i) until the second Business Day next succeeding the date of the relevant notice (which notice shall be provided on the date the relevant draft is paid), the rate applicable to ABR Loans under the Revolving Facilities and (ii) thereafter, the rate set forth in Section 2.15(c). In the case of any such reimbursement in Dollars with respect to a Letter of Credit denominated in a Permitted Foreign Currency, the applicable Issuing Lender shall notify the Borrower of the Dollar Equivalent of the amount of the draft so paid promptly following the determination thereof.   -99-     3.6                Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact later prove to be invalid, fraudulent or forged; (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred; (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee; (iv) any other events or circumstances that, pursuant to applicable law or the applicable customs and practices promulgated by the ICC, are not within the responsibility of such Issuing Lender; (v) waiver by such Issuing Lender of any requirement that exists for such Issuing Lender’s protection and not the protection of the Borrower or any waiver by such Issuing Lender which does not in fact materially prejudice the Borrower; (vi) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft; (vii) any payment made by such Issuing Lender in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the Uniform Commercial Code, the ISP or the UCP, as applicable; (viii) any payment by such Issuing Lender under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by such Issuing Lender under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; (ix) any adverse change in the relevant exchange rates or in the availability of the relevant Permitted Foreign Currency to the Borrower or any Subsidiary or in the relevant currency markets generally; or (x) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary, except, in each case, for errors, omissions, interruptions or delays resulting from the gross negligence or willful misconduct of such Issuing Lender or its employees or agents. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors, omissions, interruptions or delays resulting from the gross negligence or willful misconduct of such Issuing Lender or its employees or agents. The Borrower agrees that any action taken or omitted by any Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.   -100-     3.7                Role of the Issuing Lender. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the Issuing Lenders shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by a Letter of Credit) or to ascertain or inquire as to the validity, authenticity or accuracy of any such document (provided that the Issuing Lenders will determine whether such documents appear on their face to be in order) or the authority of the Person executing or delivering any such document. None of the Issuing Lenders, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the Issuing Lenders shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Majority Facility Lenders or the Borrower, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or related Application, or any other document, agreement and instrument entered into by such Issuing Lender and the Borrower (or any Restricted Subsidiary) or in favor of such Issuing Lender and relating to such Letter of Credit. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Issuing Lenders, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the Issuing Lenders shall be liable or responsible for any of the matters described in clauses (i) through (ix) of Section 3.6; provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the relevant Issuing Lender, and such Issuing Lender may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such Issuing Lender’s willful misconduct or gross negligence or such Issuing Lender’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) and documents expressly required by and strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lenders may accept documents that appear on their face to be in order, without responsibility for further investigation, and provided that a Letter of Credit is issued permitting transfer then the Issuing Lenders shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The Issuing Lenders may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary, as agreed to with the Borrower.   3.8                Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of such Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit issued by such Issuing Lender shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.   3.9                Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Agreement or any other Loan Document, the provisions of this Agreement or such other Loan Document shall apply.   -101-     3.10              Applicability of ISP and UCP. Unless otherwise expressly agreed by the applicable Issuing Lender and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (a) the rules of the ISP shall apply to each standby Letter of Credit, and (b) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the Issuing Lender shall not be responsible to the Borrower for, and the Issuing Lender’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the Issuing Lender required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the Issuing Lender or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.   SECTION 4.            REPRESENTATIONS AND WARRANTIES   To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, each of Holdings and the Borrower hereby represents and warrants (as to itself and each of its Restricted Subsidiaries) to the Agents and each Lender, which representations and warranties shall be deemed made on the Closing Date (after giving effect to the Transactions) and on the date of each borrowing of Loans or issuance, extension or renewal of a Letter of Credit hereunder that:   4.1                Financial Condition.   (a)                The audited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at December 31, 2010, December 31, 2011 and December 31, 2012, and the related statements of income and of cash flows for the fiscal years ended on such date, reported on by and accompanied by an unqualified report from Deloitte & Touche LLP, present fairly in all material respects the financial condition of Holdings and its Subsidiaries as at such dates and the results of their operations, their cash flows and their changes in stockholders’ equity for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto and year-end adjustments, have been prepared in accordance with GAAP (except as otherwise noted therein).   (b)                The audited consolidated balance sheet of the Target and its Subsidiaries as at June 30, 2011, June 30, 2012 and June 30, 2013, and the related statements of income and of cash flows for the fiscal years ended on such date, reported on by and accompanied by an unqualified report from Ernst & Young LLP, present fairly in all material respects the financial condition of the Target and its Subsidiaries as at such dates and the results of their operations, their cash flows and their changes in stockholders’ equity for the respective fiscal years then ended. All such financial statements, including the related schedules and notes thereto and year-end adjustments, have been prepared in accordance with GAAP (except as otherwise noted therein).   4.2                No Change. Since the Closing Date, there has been no event, development or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.   4.3                Existence; Compliance with Law. Except as set forth in Schedule 4.3, each of Holdings and its Restricted Subsidiaries (other than any Immaterial Subsidiaries) (a) (i) is duly organized (or incorporated), validly existing and in good standing (or, only where applicable, the equivalent status in any foreign jurisdiction) under the laws of the jurisdiction of its organization or incorporation, except in each case (other than with respect to the Borrower) to the extent such failure to do so would not reasonably be expected to have a Material Adverse Effect, (ii) has the corporate or other organizational power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently engaged, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect and (iii) is duly qualified as a foreign corporation or other entity and in good standing (where such concept is relevant) under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification except, in each case, to the extent that the failure to be so qualified or in good standing (where such concept is relevant) would not have a Material Adverse Effect and (b) is in compliance with all Requirements of Law except to the extent that any such failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.   -102-     4.4                Corporate Power; Authorization; Enforceable Obligations.   (a)                Each Loan Party has the corporate or other organizational power and authority to execute and deliver, and perform its obligations under, the Loan Documents to which it is a party and, in the case of the Borrower, to borrow or have Letters of Credit issued hereunder, except in each case (other than with respect to the Borrower) to the extent such failure to do so would not reasonably be expected to have a Material Adverse Effect. Each Loan Party has taken all necessary corporate or other action to authorize the execution and delivery of, and the performance of its obligations under, the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement, except in each case (other than with respect to the Borrower) to the extent such failure to do so would not reasonably be expected to have a Material Adverse Effect.   (b)                No consent or authorization of, filing with, or notice to, any Governmental Authority is required to be obtained or made by any Loan Party for the extensions of credit hereunder or such Loan Party’s execution and delivery of, or performance of its obligations under, or validity or enforceability of, this Agreement or any of the other Loan Documents to which it is party, as against or with respect to such Loan Party, except (i) consents, authorizations, filings and notices described in Schedule 4.4, (ii) consents, authorizations, filings and notices which have been obtained or made and are in full force and effect, (iii) consents, authorizations, filings and notices the failure of which to obtain would not reasonably be expected to have a Material Adverse Effect and (iv) the filings referred to in Section 4.17.   (c)                Each Loan Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto. Assuming the due authorization of, and execution and delivery by, the parties thereto (other than the applicable Loan Parties), this Agreement constitutes, and each other Loan Document upon execution and delivery by each Loan Party that is a party thereto will constitute, a legal, valid and binding obligation of each such Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms (provided that, with respect to the creation and perfection of security interests with respect to the Capital Stock of Foreign Subsidiaries, only to the extent enforceability thereof is governed by the Uniform Commercial Code), except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and the implied covenants of good faith and fair dealing.   4.5                No Legal Bar. Assuming the consents, authorizations, filings and notices referred to in Section 4.4(b) are obtained or made and in full force and effect, the execution, delivery and performance of this Agreement and the other Loan Documents by the Loan Parties thereto, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not (a) violate the organizational or governing documents of (i) the Borrower or (ii) except as would not reasonably be expected to have a Material Adverse Effect, any other Loan Party, (b) except as would not reasonably be expected to have a Material Adverse Effect, violate any Requirement of Law binding on Holdings or any of its Restricted Subsidiaries, (c) except as would not reasonably be expected to have a Material Adverse Effect, violate any Contractual Obligation of Holdings or any of its Restricted Subsidiaries or (d) except as would not have a Material Adverse Effect, result in or require the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens permitted by Section 7.3).   -103-     4.6               No Material Litigation. Except as set forth in Schedule 4.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened against Holdings or any of its Restricted Subsidiaries or against any of their Properties which, taken as a whole, would reasonably be expected to have a Material Adverse Effect.   4.7               No Default. No Default or Event of Default has occurred and is continuing.   4.8                Ownership of Property; Liens. Except as set forth in Schedule 4.8A, each of Holdings and its Restricted Subsidiaries has good title in fee simple to, or a valid leasehold interest in, all its Real Property, and good title to, or a valid leasehold interest in, all of its other Property (other than Intellectual Property), in each case, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, and none of such Property is subject to any Lien except as permitted by the Loan Documents. Schedule 4.8B lists all Real Property owned in fee simple with a Fair Market Value in excess of $7,500,000 by any Loan Party as of the Closing Date.   4.9                Intellectual Property. Each of Holdings and its Restricted Subsidiaries owns, or has a valid license or right to use, all Intellectual Property necessary for the conduct of its business as currently conducted free and clear of all Liens except as permitted by the Loan Documents, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. To the Borrower’s knowledge, the use of such Intellectual Property by Holdings or its Restricted Subsidiaries does not infringe on the rights of any Person in a manner that would reasonably be expected to have a Material Adverse Effect. Holdings and its Restricted Subsidiaries take all reasonable actions that in the exercise of their reasonable business judgment should be taken to protect their Intellectual Property, including Intellectual Property that is confidential in nature, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.   4.10              Taxes. Each of Holdings and its Restricted Subsidiaries (a) has filed or caused to be filed all federal, state, provincial and other Tax returns that are required to be filed and (b) has paid or caused to be paid all taxes shown to be due and payable on said returns and all other taxes, fees or other charges imposed on it or on any of its Property by any Governmental Authority (other than (i) any returns or amounts that are not yet due or (ii) amounts the validity of which are currently being contested in good faith by appropriate proceedings and with respect to which any reserves required in conformity with GAAP have been provided on the books of Holdings or such Restricted Subsidiary, as the case may be), except in each case where the failure to do so would not reasonably be expected to have a Material Adverse Effect.   4.11              Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used for any purpose that violates the provisions of the regulations of the Board.   -104-     4.12              ERISA.   (a)                Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect: (i) neither a Reportable Event nor a failure to meet the minimum funding standards (within the meaning of Section 412(a) of the Code or Section 302(a)(2) of ERISA) has occurred during the five year period prior to the date on which this representation is made with respect to any Single Employer Plan, and each Single Employer Plan has complied with the applicable provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen on the assets of Holdings or any of its Restricted Subsidiaries, during such five-year period; the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Single Employer Plan allocable to such accrued benefits; (iii) none of Holdings or any of its Restricted Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or would reasonably be expected to result in a liability under ERISA; (iv) none of Holdings or any of its Restricted Subsidiaries would become subject to any liability under ERISA if Holdings or such Restricted Subsidiary were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made; and (v) no Multiemployer Plan is in Reorganization or Insolvent.   (b)                Holdings and its Restricted Subsidiaries have not incurred, and do not reasonably expect to incur, any liability under ERISA or the Code with respect to any plan within the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA that is maintained by a Commonly Controlled Entity (other than Holdings and its Restricted Subsidiaries) (a “Commonly Controlled Plan”) merely by virtue of being treated as a single employer under Title IV of ERISA with the sponsor of such plan that would reasonably be likely to have a Material Adverse Effect and result in a direct obligation of Holdings or any of its Restricted Subsidiaries to pay money.   (c)                The Borrower represents and warrants as of the Amendment No. 4 Effective Date that the Borrower is not a Benefit Plan.   4.13              Investment Company Act. No Loan Party is an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.   4.14              Subsidiaries. The Subsidiaries listed on Schedule 4.14 constitute all the Subsidiaries of Holdings at the Closing Date (after giving effect to the Merger). Schedule 4.14 sets forth as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and the designation of such Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary.   4.15              Environmental Matters. Other than exceptions to any of the following that would not reasonably be expected to have a Material Adverse Effect, none of Holdings or any of its Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law for the operation of the Business; or (ii) has become subject to any Environmental Liability.   4.16              Accuracy of Information, etc. As of the Closing Date, no statement or information (excluding the projections and pro forma financial information referred to below) contained in this Agreement, any other Loan Document or any certificate furnished to the Administrative Agent or the Lenders or any of them (in their capacities as such), by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, including the Transactions, when taken as a whole, contained as of the date such statement, information or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not materially misleading. As of the Closing Date, the projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of Holdings to be reasonable at the time made, in light of the circumstances under which they were made, it being recognized by the Agents and the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.   -105-     4.17              Security Documents.   (a)                The Guarantee and Collateral Agreement is effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein of a type in which a security interest can be created under Article 9 of the UCC (including any proceeds of any such item of Collateral); provided that for purposes of this Section 4.17(a), Collateral shall be deemed to exclude any Property expressly excluded from the definition of “Collateral” as set forth in the Guarantee and Collateral Agreement (the “Excluded Collateral”). In the case of (i) the Pledged Securities described in the Guarantee and Collateral Agreement (other than Excluded Collateral) when any stock certificates or notes, as applicable, representing such Pledged Securities are delivered to the Collateral Agent together with any proper endorsements executed in blank and such other actions have been taken with respect to the Pledged Securities of Foreign Subsidiaries as are required under the applicable Law of the jurisdiction of organization of the applicable Foreign Subsidiary (it being understood that no such actions under applicable Law of the jurisdiction of organization of the applicable Foreign Subsidiary shall be required by any Loan Document) and (ii) the other Collateral described in the Guarantee and Collateral Agreement (other than Excluded Collateral), when financing statements in appropriate form are filed in the offices specified on Schedule 4.17 (or, in the case of other Collateral not in existence on the Closing Date, such other offices as may be appropriate) (which financing statements have been duly completed and executed (as applicable) and delivered to the Collateral Agent) and such other filings as are specified on Schedule 3 to the Guarantee and Collateral Agreement are made (or, in the case of other Collateral not in existence on the Closing Date, such other filings as may be appropriate), the Collateral Agent shall have a fully perfected first priority Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral (including any proceeds of any item of Collateral) (to the extent a security interest in such Collateral can be perfected through the filing of financing statements in the offices specified on Schedule 4.17 (or, in the case of other Collateral not in existence on the Closing Date, such other offices as may be appropriate) and the filings specified on Schedule 3 to the Guarantee and Collateral Agreement (or, in the case of other Collateral not in existence on the Closing Date, such other filings as may be appropriate), and through the delivery of the Pledged Securities required to be delivered on the Closing Date), as security for the Obligations, in each case prior in right to the Lien of any other Person (except (i) in the case of Collateral other than Pledged Securities, Liens permitted by Section 7.3 and (ii) Liens having priority by operation of law) to the extent required by the Guarantee and Collateral Agreement.   (b)                Upon the execution and delivery of any Mortgage to be executed and delivered pursuant to Section 6.8(b), such Mortgage shall be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable Lien on the Mortgaged Property described therein and proceeds thereof, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and the implied covenants of good faith and fair dealing; and when such Mortgage is filed in the recording office designated by the Borrower, such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person (other than Liens permitted by Section 7.3 or other encumbrances or rights permitted by the relevant Mortgage).   -106-     4.18              Solvency. As of the Closing Date, Holdings and its Subsidiaries are (on a consolidated basis), and immediately after giving effect to the Transactions will be, Solvent.   4.19              Anti-Terrorism. As of the Closing Date, (a) Holdings and its Restricted Subsidiaries are in compliance with the USA Patriot Act and (b) none of Holdings and its Restricted Subsidiaries is a person on the list of “Specially Designated Nationals and Blocked Persons” or subject to the limitations and prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order, in each case, except as would not reasonably be expected to have a Material Adverse Effect.   4.20              Use of Proceeds. The Borrower will use the proceeds of the Loans solely in compliance with Section 6.9 of this Agreement.   4.21              Labor Matters. Except as, in the aggregate, would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against Holdings or its Restricted Subsidiaries pending or, to the knowledge of Holdings and the Borrower, threatened, (b) hours worked by and payment made to employees of Holdings or its Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters and (c) all payments due from Holdings or any of its Restricted Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Holdings or such Restricted Subsidiary, as applicable.   4.22              Senior Indebtedness. The Obligations constitute senior Indebtedness in accordance with the terms of the 2018 Notes, the 2020 Notes and the 2021 Notes.   4.23              OFAC. No Loan Party, nor, to the knowledge of any Loan Party, any Related Party, (i) is currently the subject of any Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction, or (iii) is or has been (within the previous five years) engaged in any transaction with any Person who is now or was then the subject of Sanctions or who is located, organized or residing in any Designated Jurisdiction. No Loan, nor the proceeds from any Loan, has been or will be used, directly or indirectly, to lend, contribute, provide or has otherwise been or will be made available to fund any activity or business in any Designated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including any Lender, Lead Arranger, Administrative Agent, Issuing Lender or Swingline Lender) of Sanctions.   4.24              FCPA. Holdings, the Borrower and each of its Subsidiaries is in compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, except as would not reasonably be expected to result in a Material Adverse Effect. No part of the proceeds of the Loans has been or will be used by Holdings or its Subsidiaries, directly or indirectly, for any payments to any Person, governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the U.S. Foreign Corrupt Practices Act of 1977, as amended, in each case, except as would not reasonably expected to have a Material Adverse Effect.   SECTION 5.            CONDITIONS PRECEDENT   5.1                Conditions to Initial Extension of Credit on the Closing Date. The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction (or waiver), prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:   -107-     (a)       Credit Agreement; Guarantee and Collateral Agreement. The Administrative Agent shall have received (i) this Agreement, executed and delivered by Holdings and the Borrower and (ii) the Guarantee and Collateral Agreement, executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor;   (b)       Representations and Warranties. All Specified Merger Agreement Representations shall be true and correct in all material respects on the Closing Date, and all Specified Representations made by any Loan Party shall be true and correct in all material respects on the Closing Date (other than the Specified Merger Agreement Representation set forth in Section 4.10(a) of the Merger Agreement, which shall be true and correct in all respects on the Closing Date);   (c)       Borrowing Notice. The Administrative Agent shall have received a notice of borrowing from the Borrower with respect to the Initial Term Loans and, if applicable, any Revolving Loans to be made on the Closing Date;   (d)       Fees. The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced at least two Business Days prior to the Closing Date, reimbursement or payment of all reasonable and documented out-of-pocket expenses (including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document;   (e)       Legal Opinions. The Administrative Agent shall have received an executed legal opinion of (i) Latham & Watkins LLP, special New York counsel to the Loan Parties, (ii) Simmons Perrine Moyer Bergman PLC, special Iowa counsel to the Loan Parties, and (iii) Lionel Sawyer & Collins, special Nevada counsel to the Loan Parties, in each case in form and substance reasonably satisfactory to the Administrative Agent;   (f)        Closing Certificate. The Administrative Agent shall have received a certificate of the Borrower and each of the other Loan Parties, dated as of the Closing Date, each substantially in the form of Exhibit C, with appropriate insertions and attachments;   (g)       USA Patriot Act. The Lenders shall have received from the Borrower and each of the Loan Parties, at least 3 Business Days prior to the Closing Date, documentation and other information requested by any Lender no less than 10 calendar days prior to the Closing Date that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act;   (h)       Filings. Subject to the last paragraph of this Section 5.1, each Uniform Commercial Code financing statement and each intellectual property security agreement required by the Security Documents to be filed in order to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a first priority perfected Lien on the Collateral described therein shall have been delivered to the Collateral Agent in proper form for filing;   (i)        Pledged Stock; Stock Powers. Subject to the last paragraph of this Section 5.1, the Collateral Agent shall have received the certificates, if any, representing the shares of Capital Stock held by a Loan Party pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof;   -108-     (j)        Solvency Certificate. The Administrative Agent shall have received a solvency certificate signed by the chief financial officer on behalf of Holdings, substantially in the form of Exhibit G, after giving effect to the Transactions;   (k)       Refinancing. The Refinancing shall have been, or shall substantially concurrently with the initial borrowing under the Facilities be, consummated, and all security interests in respect of, and Liens securing, the Indebtedness and other obligations thereunder created pursuant to the security documentation relating to the Existing Credit Agreements shall have been terminated and released (or arrangements therefor reasonably satisfactory to the Administrative Agent shall have been made), and the Administrative Agent shall have received all such releases as may have been reasonably requested by the Administrative Agent, which releases shall be in form and substance reasonably satisfactory to the Administrative Agent;   (l)        Material Adverse Effect. Since January 30, 2013, there shall not have occurred any change, effect, development or circumstance that, individually or in the aggregate, constitutes or is reasonably likely to constitute a Target Material Adverse Effect;   (m)      Merger. The Merger shall have been consummated, or substantially simultaneously with the initial borrowing under the Facilities shall be consummated, in all material respects in accordance with the terms of the Merger Agreement, without giving effect to any modifications, amendments, consents or waivers thereto or thereunder that are material and adverse to the Lenders without the prior consent of the Lead Arrangers (such consent not to be unreasonably withheld, delayed or conditioned) (it being understood and agreed that any reduction in the purchase price of less than or equal to 10% in the aggregate in connection with the Merger shall not be deemed to be material and adverse to the interests of the Lenders and the Joint Bookrunners; provided that any reduction of the purchase price shall be allocated to a reduction in any amounts to be funded under the Term Facility);   (n)       Financial Statements. The Joint Bookrunners shall have received (i) audited consolidated balance sheets of each of Holdings and the Target and related statements of income, changes in equity and cash flows of each of Holdings and the Target for each of their respective three (3) most recently completed fiscal years ended at least 90 days before the Closing Date and (ii) unaudited consolidated balance sheets and related statements of income and cash flows of each of Holdings and the Target for each subsequent fiscal quarter after the audited financial statements referred to above and ended at least 45 days before the Closing Date (other than any fiscal fourth quarter);   (o)       Pro Forma Financial Statements. The Joint Bookrunners shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of income of Holdings and its Subsidiaries (based on the financial statements of Holdings and the Target referred to in clause (n) above) as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days prior to the Closing Date (or, if the most recently completed fiscal period is the end of a fiscal year, ended at least 90 days before the Closing Date), prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such consolidated statement of income), which need not be prepared in compliance with Regulation S-X of the Securities Act, as amended, or include adjustments for purchase accounting; and   -109-     (p)       Lien Searches. The Collateral Agent shall have received the results of a recent lien search in each of the jurisdictions in which Uniform Commercial Code financing statements will be made to evidence or perfect security interests required to be evidenced or perfected, and such search shall reveal no liens on any of the assets of the Loan Parties, except for Liens permitted by Section 7.3 or liens to be discharged on or prior to the Closing Date.   Each of the requirements set forth in clauses (h) and (i) above (except (a) to the extent that a Lien on such Collateral may under applicable law be perfected on the Closing Date by the filing of financing statements under the Uniform Commercial Code and (b) the delivery of stock certificates of the Borrower and its wholly-owned Domestic Subsidiaries (including Guarantors but other than (x) Immaterial Subsidiaries and (y) Subsidiaries of the Target to the extent stock certificates issued by such entities are not delivered to the Borrower on the Closing Date) to the extent included in the Collateral, with respect to which a Lien may be perfected on the Closing Date by the delivery of a stock certificate) shall not constitute conditions precedent under this Section 5.1 after the Borrower’s use of commercially reasonable efforts to satisfy such requirements without undue burden or expense; provided that the Borrower hereby agrees to deliver, or cause to be delivered, such documents and instruments, or take or cause to be taken such other actions, in each case, as may be required to perfect such security interests within ninety (90) days after the Closing Date (subject to extensions approved by the Administrative Agent in its reasonable discretion).   5.2                Conditions to Each Revolving Loan Extension of Credit After Closing Date. The agreement of each Lender to make any Loan or to issue or participate in any Letter of Credit hereunder on any date after the Closing Date (excluding (i) the borrowing of Initial Term B-2 Loans and Revolving Loans in connection with the Bally Transactions, (ii) the borrowing of the Initial Term B-3 Loans and Revolving Loans in connection with the Amendment No. 2 Transactions, (iii) the borrowing of the Initial Term B-4 Loans in connection with the Amendment No. 3 Transactions and (iv) the borrowing of the Initial Term B-5 Loans in connection with the Amendment No. 4 Transactions) is subject to the satisfaction of the following conditions precedent:   (a)       Representations and Warranties. Subject, in the case of any borrowings in connection with a Limited Condition Acquisition, to the limitations in Section 1.2, each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality or Material Adverse Effect), in each case on and as of such date as if made on and as of such date except to the extent that such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality or Material Adverse Effect) as of such earlier date.   (b)       No Default. Subject, in the case of any borrowings in connection with a Limited Condition Acquisition, to the limitations in Section 1.2, no Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.   (c)       Borrowing Notice. In the case of a borrowing of any Loans, the Administrative Agent shall have received a notice of borrowing from the Borrower in accordance with Section 2.5 (or, in the case of a Swingline Loan, 2.6).   -110-     (d)       Financial Covenant Compliance. In the case of any borrowing of Revolving Loans or Swingline Loans or issuance, increase, extension or renewal of a Specified Letter of Credit (unless such Specified Letter of Credit has been cash collateralized in a manner reasonably satisfactory to the relevant Issuing Lender), in each case, prior to the Bally Acquisition Date, Holdings shall be in compliance with the financial covenant set forth in Section 7.1(a) as of the last day of the four-quarter period (the “Reference Date”) to which the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.2(b) relates (without giving pro forma effect to such borrowing, issuance, increase, extension or renewal or any other borrowing, issuance, increase, extension or renewal or repayment or other termination of Indebtedness occurring since the Reference Date) regardless of whether such financial covenant is then in effect; provided that this condition shall not be applicable with respect to any borrowing of Revolving Loans or Swingline Loans or issuance, increase, extension or renewal of any Letter of Credit on the Bally Acquisition Date in order to consummate the Bally Transactions or on the Amendment No. 2 Effective Date in order to consummate the Amendment No. 2 Transactions or on the Amendment No. 3 Effective Date in order to consummate the Amendment No. 3 Transactions or on the Amendment No. 4 Effective Date in order to consummate the Amendment No. 4 Transactions.   Each borrowing of a Loan by and issuance, extension or renewal of a Letter of Credit on behalf of the Borrower hereunder after the Closing Date (excluding (i) the borrowing of Initial Term B-2 Loans and Revolving Loans in connection with the Bally Transactions, (ii) the borrowing of the Initial Term B-3 Loans and Revolving Loans in connection with the Amendment No. 2 Transactions, (iii) the borrowing of the Initial Term B-4 Loans in connection with the Amendment No. 3 Transactions and (iv) the borrowing of the Initial Term B-5 Loans in connection with the Amendment No. 4 Transactions) shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.   SECTION 6.            AFFIRMATIVE COVENANTS   Each of Holdings and the Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been cash collateralized or backstopped or otherwise supported, in each case on terms agreed to by the Borrower and the applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent hereunder (other than (i) contingent or indemnification obligations not then due and (ii) obligations in respect of Specified Hedge Agreements or Cash Management Obligations), Holdings and the Borrower shall, and shall cause (except in the case of the covenants set forth in Section 6.1, Section 6.2, Section 6.7 and Section 6.11) each of the Restricted Subsidiaries to:   6.1                Financial Statements. Furnish to the Administrative Agent for delivery to each Lender (which may be delivered via posting on IntraLinks or another similar electronic platform):   (a)       within 90 days after the end of each fiscal year of Holdings, commencing with the fiscal year ending December 31, 2013, (i) a copy of the audited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth, commencing with the financial statements with respect to the fiscal year ending December 31, 2013, in comparative form the figures as of the end of and for the previous year, reported on without qualification, exception or explanatory paragraph as to “going concern” or arising out of the scope of the audit (other than any such exception or explanatory paragraph (but not qualification) that is expressly solely with respect to, or expressly resulting solely from, an upcoming maturity date of the Facilities occurring within one year from the time such report is delivered), by Deloitte & Touche LLP or other independent certified public accountants of nationally recognized standing and (ii) a management’s discussion and analysis of the important operational and financial developments during such fiscal year; and   -111-     (b)      within 45 days after the end of each of the first three quarterly periods of each fiscal year of Holdings, commencing with the fiscal quarter ending March 31, 2014, (i) the unaudited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth, in comparative form the figures as of the end of and for the corresponding period in the previous year, certified by a Responsible Officer as fairly presenting in all material respects the financial condition of Holdings and its consolidated Subsidiaries in conformity with GAAP (subject to normal year-end audit adjustments and the lack of complete footnotes) and (ii) a management’s discussion and analysis of the important operational and financial developments during such fiscal quarter;   all such financial statements to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as disclosed therein and except in the case of the financial statements referred to in clause (b), for customary year-end adjustments and the absence of complete footnotes). Any financial statements or other deliverables required to be delivered pursuant to this Section 6.1 and any financial statements or reports required to be delivered pursuant to clause (d) of Section 6.2 shall be deemed to have been furnished to the Administrative Agent on the date that (i) such financial statements or deliverable (as applicable) is posted on the SEC’s website at www.sec.gov or the website for Holdings and (ii) the Administrative Agent has been provided written notice of such posting.   Documents required to be delivered pursuant to this Section 6.1 may also be delivered by posting such documents electronically with written notice of such posting to the Administrative Agent and if so posted, shall be deemed to have been delivered on the date on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).   6.2                Certificates; Other Information. Furnish to the Administrative Agent for delivery to each Lender, or, in the case of clause (e), to the relevant Lender:   (a)       to the extent permitted by the internal policies of such independent certified public accountants, concurrently with the delivery of the financial statements referred to in Section 6.1(a), solely to the extent that the financial covenant in Section 7.1 was subject to testing during such fiscal year, a certificate of the independent certified public accountants in customary form reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default arising from a breach of Section 7.1, except as specified in such certificate;   (b)       concurrently with the delivery of any financial statements pursuant to Section 6.1, commencing with delivery of financial statements for the first period ending after the Closing Date, (i) a Compliance Certificate of a Responsible Officer on behalf of the Borrower (x) stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default that has occurred and is continuing except as specified in such certificate and (y) containing information and calculations reasonably necessary for determining, on a consolidated basis, compliance by Holdings and its Restricted Subsidiaries with the provisions of this Agreement referred to therein, to the extent then applicable, and including, in any event, the calculation of Consolidated EBITDA and Funded Debt, as of the last day of the fiscal quarter or fiscal year of Holdings, as the case may be, and, if applicable, for determining the Applicable Margin and (ii) to the extent not previously disclosed to the Administrative Agent, (x) a description of any Default or Event of Default that occurred, (y) a description of any new Subsidiary and of any change in the name or jurisdiction of organization of any Loan Party since the date of the most recent list delivered pursuant to this clause (or, in the case of the first such list so delivered, since the Closing Date) and (z) solely in the case of financial statements delivered pursuant to 6.1(a), a listing of any material registrations of or applications for United States Intellectual Property by any Loan Party;   -112-     (c)       not later than 90 days after the end of each fiscal year of Holdings, commencing with the fiscal year ending December 31, 2013, a consolidated forecast for the following fiscal year (including a projected consolidated balance sheet of Holdings and its Subsidiaries as of the end of the following fiscal year and the related consolidated statements of projected cash flow and projected income (collectively, the “Annual Operating Budget”));   (d)       promptly after the same are sent, copies of all financial statements and material reports that Holdings sends to the holders of any class of its debt securities or public equity securities (except for those provided solely to the Permitted Investors) and, promptly after the same are filed, copies of all financial statements and reports that Holdings may make to, or file with, the SEC, in each case to the extent not already provided pursuant to Section 6.1 or any other clause of this Section 6.2; and   (e)       promptly, such additional financial and other information as the Administrative Agent (for its own account or upon the request from any Lender) may from time to time reasonably request.   Notwithstanding anything to the contrary in this Section 6.2, (a) none of Holdings or any of its Restricted Subsidiaries will be required to disclose any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited or restricted by Requirements of Law or any binding agreement or obligation, (iii) is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) constitutes classified information and (b) unless such material is identified in writing by the Borrower as “Public” information, the Administrative Agent shall deliver such information only to “private-side” Lenders (i.e., Lenders that have affirmatively requested to receive information other than Public Information).   Documents required to be delivered pursuant to this Section 6.2 may be delivered by posting such documents electronically with notice of such posting to the Administrative Agent and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on Holdings’ website or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency, the SEC’s website at www.sec.gov or another relevant website, if any, to which each Lender and the Administrative Agent has access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).   6.3                Payment of Taxes. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its Taxes, governmental assessments and governmental charges (other than Indebtedness), except (a) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves required in conformity with GAAP with respect thereto have been provided on the books of Holdings or its Restricted Subsidiaries, as the case may be, or (b) to the extent that failure to pay or satisfy such obligations would not reasonably be expected to have a Material Adverse Effect.   -113-     6.4                Conduct of Business and Maintenance of Existence, etc.; Compliance. (a) Preserve and keep in full force and effect its corporate or other existence and take all reasonable action to maintain all rights, privileges and franchises necessary in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 or except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Requirements of Law (including ERISA, Environmental Laws, and the USA Patriot Act) except to the extent that failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.   6.5                Maintenance of Property; Insurance.   (a)                Keep all Property useful and necessary in its business in reasonably good working order and condition, ordinary wear and tear excepted, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.   (b)                Take all reasonable and necessary steps, including in any proceeding before the United States Patent and Trademark Office or the United States Copyright Office, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material United States Intellectual Property owned by Holdings or its Restricted Subsidiaries, including filing of applications for renewal, affidavits of use and affidavits of incontestability, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.   (c)                Maintain insurance with financially sound and reputable insurance companies on all its Property that is necessary in, and material to, the conduct of business by Holdings and its Restricted Subsidiaries, taken as a whole, in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business, and use its commercially reasonable efforts to ensure that all such material insurance policies shall, to the extent customary (but in any event, not including business interruption insurance and personal injury insurance) name the Administrative Agent as insured party or loss payee, as applicable.   (d)                With respect to any Mortgaged Properties, if any portion of any Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the Flood Insurance Laws, (i) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and shall otherwise be in form and substance satisfactory to the Collateral Agent, and (iii) deliver to the Collateral Agent evidence of such compliance in form and substance reasonably acceptable to the Collateral Agent, including, without limitation, evidence of annual renewals of such insurance.   -114-     6.6                Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and accounts in a manner to allow financial statements to be prepared in conformity with GAAP, (b) permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records upon reasonable notice and at such reasonable times during normal business hours (provided that (i) such visits shall be coordinated by the Administrative Agent, (ii) such visits shall be limited to no more than one such visit per calendar year, and (iii) such visits by any Lender shall be at the Lender’s expense, except in the case of the foregoing clauses (ii) and (iii) during the continuance of an Event of Default), (c) permit representatives of any Lender to have reasonable discussions regarding the business, operations, properties and financial and other condition of Holdings and its Restricted Subsidiaries with officers of Holdings and its Restricted Subsidiaries upon reasonable notice and at such reasonable times during normal business hours (provided that (i) a Responsible Officer of Holdings or the Borrower shall be afforded the opportunity to be present during such discussions, (ii) such discussions shall be coordinated by the Administrative Agent, and (iii) such discussions shall be limited to no more than once per calendar quarter except during the continuance of an Event of Default) and (d) permit representatives of the Administrative Agent to have reasonable discussions regarding the business, operations, properties and financial and other condition of Holdings and its Restricted Subsidiaries with its independent certified public accountants to the extent permitted by the internal policies of such independent certified public accountants upon reasonable notice and at such reasonable times during normal business hours (provided that (i) a Responsible Officer of Holdings the Borrower shall be afforded the opportunity to be present during such discussions and (ii) such discussions shall be limited to no more than once per calendar year except during the continuance of an Event of Default). Notwithstanding anything to the contrary in this Section 6.6, none of Holdings, the Borrower or any of the Restricted Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discuss, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited or restricted by Requirements of Law or any binding agreement or obligation, (iii) is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) constitutes classified information.   6.7                Notices. Promptly upon a Responsible Officer of the Borrower obtaining knowledge thereof, give notice to the Administrative Agent of:   (a)       the occurrence of any Default or Event of Default;   (b)      any litigation, investigation or proceeding which may exist at any time between Holdings or any of its Restricted Subsidiaries and any other Person, that in either case, would reasonably be expected to have a Material Adverse Effect;   (c)       the occurrence of any Reportable Event, where there is any reasonable likelihood of the imposition of liability on any Loan Party as a result thereof that would reasonably be expected to have a Material Adverse Effect; and   (d)       any other development or event that has had or would reasonably be expected to have a Material Adverse Effect.   Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth in reasonable detail the occurrence referred to therein and stating what action the Borrower or the relevant Restricted Subsidiary proposes to take with respect thereto.   6.8                Additional Collateral, etc.    (a)                With respect to any Property (other than Excluded Collateral) located in the United States having a value, individually or in the aggregate, of at least $7,500,000 acquired after the Closing Date by any Loan Party (other than (i) any interests in Real Property and any Property described in paragraph (c) or paragraph (d) of this Section 6.8, (ii) any Property subject to a Lien expressly permitted by Section 7.3(g) or 7.3(y), and (iii) Instruments, Certificated Securities, Securities and Chattel Paper, which are referred to in the last sentence of this paragraph (a)) as to which the Collateral Agent for the benefit of the Secured Parties does not have a perfected Lien, promptly (A) give notice of such Property to the Collateral Agent and execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Collateral Agent reasonably requests to grant to the Collateral Agent for the benefit of the Secured Parties a security interest in such Property and (B) take all actions reasonably requested by the Collateral Agent to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in such Property (with respect to Property of a type owned by a Loan Party as of the Closing Date to the extent the Collateral Agent, for the benefit of the Secured Parties, has a perfected security interest in such Property as of the Closing Date), including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral Agent. If any amount in excess of $7,500,000 payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security, Security or Chattel Paper (or, if more than $7,500,000 in the aggregate payable under or in connection with the Collateral shall become evidenced by Instruments, Certificated Securities, Securities or Chattel Paper), such Instrument, Certificated Security, Security or Chattel Paper shall be promptly delivered to the Collateral Agent indorsed in a manner reasonably satisfactory to the Collateral Agent to be held as Collateral pursuant to this Agreement.   -115-     (b)                With respect to any fee interest in any Material Real Property acquired after the Closing Date by any Loan Party (other than Excluded Real Property) or upon any Specified Real Property becoming a Material Real Property, (i) give notice of such acquisition to the Collateral Agent and, if requested by the Collateral Agent, promptly (but in no event prior to forty-five (45) days after notice has been given of such acquisition to the Collateral Agent and in no event prior to the Borrower receiving confirmation from the Collateral Agent that flood insurance due diligence and compliance in accordance with Section 6.5 hereof has been completed) execute and deliver a first priority Mortgage (subject to liens permitted by Section 7.3 or other encumbrances or rights permitted by the relevant Mortgage) in favor of the Collateral Agent, for the benefit of the Secured Parties, covering such Real Property (provided that no Mortgage shall be obtained if the Administrative Agent reasonably determines in consultation with the Borrower that the costs of obtaining such Mortgage are excessive in relation to the value of the security to be afforded thereby), (ii) if reasonably requested by the Collateral Agent (A) provide the Lenders with a lenders’ title insurance policy with extended coverage covering such Real Property in an amount at least equal to the purchase price of such Material Real Property (or such other amount as shall be reasonably specified by the Collateral Agent) as well as a current ALTA survey thereof, together with a surveyor’s certificate unless the title insurance policy referred to above shall not contain an exception for any matter shown by a survey (except to the extent an existing survey has been provided and specifically incorporated into such title insurance policy or if the Administrative Agent reasonably determines in consultation with the Borrower that the costs of obtaining such survey are excessive in relation to the value of the security to be afforded thereby), each in form and substance reasonably satisfactory to the Collateral Agent, and (B) provide to the Collateral Agent a life-of-loan flood hazard determination and, if such Material Real Property is located in a special flood hazard area, an acknowledged notice to borrower and evidence of flood insurance in accordance with Section 6.5 hereof, (iii) if requested by the Collateral Agent, deliver to the Collateral Agent customary legal opinions relating to the matters described above, which opinions shall be in form and substance reasonably satisfactory to the Collateral Agent.   (c)                Except as otherwise contemplated by Section 7.7(p), with respect to any new Domestic Subsidiary that is a Non-Excluded Subsidiary created or acquired after the Closing Date (which, for the purposes of this paragraph, shall include any Subsidiary that was previously an Excluded Subsidiary that becomes a Non-Excluded Subsidiary) by any Loan Party, promptly (i) give notice of such acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Collateral Agent reasonably deems necessary to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Capital Stock of such new Subsidiary that is owned by such Loan Party, (ii) deliver to the Collateral Agent the certificates, if any, representing such Capital Stock (other than Excluded Collateral), together with undated stock powers, in blank, executed and delivered by a duly authorized officer of such Loan Party, and (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such actions reasonably necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary (to the extent the Collateral Agent, for the benefit of the Secured Parties, has a perfected security interest in the same type of Collateral as of the Closing Date), including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral Agent. Without limiting the foregoing, if (i) the aggregate Consolidated Total Assets or annual consolidated revenues of all Restricted Subsidiaries designated as “Immaterial Subsidiaries” hereunder shall at any time exceed 7.5% of Consolidated Total Assets or annual consolidated revenues, respectively, of Holdings and its Restricted Subsidiaries (based on the most recent financial statements delivered pursuant to Section 6.1 prior to such time) or (ii) if any Restricted Subsidiary shall at any time cease to constitute an Immaterial Subsidiary under the definition of “Immaterial Subsidiary” (based on the most recent financial statements delivered pursuant to Section 6.1 prior to such time), the Borrower shall promptly, (x) in the case of clause (i) above, rescind the designation as “Immaterial Subsidiaries” of one or more of such Restricted Subsidiaries so that, after giving effect thereto, the aggregate Consolidated Total Assets or annual consolidated revenues, as applicable, of all Restricted Subsidiaries so designated (and which designations have not been rescinded) shall not exceed 7.5% of Consolidated Total Assets or annual consolidated revenues, respectively, of Holdings and its Restricted Subsidiaries (based on the most recent financial statements delivered pursuant to Section 6.1 prior to such time), as applicable, and (y) in the case of clauses (i) and (ii) above, to the extent not already effected, (A) cause each affected Restricted Subsidiary to take such actions to become a “Subsidiary Guarantor” hereunder and under the Guarantee and Collateral Agreement and execute and deliver the documents and other instruments referred to in this paragraph (c) to the extent such affected Subsidiary is not otherwise an Excluded Subsidiary and (B) cause the owner of the Capital Stock of such affected Restricted Subsidiary to take such actions to pledge such Capital Stock to the extent required by, and otherwise in accordance with, the Guarantee and Collateral Agreement and execute and deliver the documents and other instruments required hereby and thereby unless such Capital Stock otherwise constitutes Excluded Collateral.   -116-     (d)                Except as otherwise contemplated by Section 7.7(p), with respect to any new first-tier Foreign Subsidiary created or acquired after the Closing Date by any Loan Party, promptly (i) give notice of such acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement as the Collateral Agent reasonably deems necessary or reasonably advisable in order to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Capital Stock of such new Subsidiary (other than any Excluded Collateral) that is owned by such Loan Party and (ii) deliver to the Collateral Agent the certificates, if any, representing such Capital Stock (other than any Excluded Collateral), together with undated stock powers, in blank, executed and delivered by a duly authorized officer of such Loan Party.   (e)                Notwithstanding anything in this Section 6.8 to the contrary, neither Holdings nor any of its Restricted Subsidiaries shall be required to take any actions in order to create or perfect the security interest in the Collateral granted to the Collateral Agent for the benefit of the Secured Parties under the laws of any jurisdiction outside the United States.   (f)                 Notwithstanding the foregoing, to the extent any new Restricted Subsidiary is created solely for the purpose of consummating a merger transaction pursuant to an acquisition permitted by Section 7.7, and such new Subsidiary at no time holds any assets or liabilities other than any merger consideration contributed to it contemporaneously with the closing of such merger transaction, such new Subsidiary shall not be required to take the actions set forth in Section 6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at which time the surviving entity of the respective merger transaction shall be required to so comply within ten Business Days (or such longer period as the Administrative Agent shall agree in its sole discretion)).   -117-     (g)                From time to time the Loan Parties shall execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Collateral Agent may reasonably request for the purposes implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of renewing the rights of the Secured Parties with respect to the Collateral as to which the Collateral Agent, for the benefit of the Secured Parties, has a perfected Lien pursuant hereto or thereto, including filing any financing or continuation statements or financing statement amendments under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created thereby. Notwithstanding the foregoing, the provisions of this Section 6.8 shall not apply to assets as to which the Administrative Agent and the Borrower shall reasonably determine that the costs and burdens of obtaining a security interest therein or perfection thereof outweigh the value of the security afforded thereby.   6.9                Use of Proceeds. Use proceeds of the Initial Term B-1 Loans and any Revolving Loans borrowed on the Closing Date to effect the Transactions, to pay Transaction Costs and for other general corporate purposes of Holdings and its Subsidiaries not prohibited by this Agreement, use proceeds of the Initial Term B-2 Loans and any Revolving Loans borrowed to effect the Bally Transactions, to pay Bally Transaction Costs and for other general corporate purposes of Holdings and its Subsidiaries not prohibited by this Agreement, use proceeds of the Initial Term B-3 Loans and any Revolving Loans borrowed to effect the Amendment No. 2 Transactions, to pay Amendment No. 2 Transaction Costs and for other general corporate purposes of Holdings and its Subsidiaries not prohibited by this Agreement, use proceeds of the Initial Term B-4 Loans borrowed to effect the Amendment No. 3 Transactions and to pay Amendment No. 3 Transaction Costs, use proceeds of the Initial Term B-5 Loans borrowed to effect the Amendment No. 4 Transactions and to pay Amendment No. 4 Transaction Costs and use proceeds of the Revolving Loans and the Letters of Credit to finance Permitted Acquisitions and Investments permitted hereunder and for other purposes of Holdings and its Subsidiaries not prohibited by this Agreement.   6.10              Post Closing. Satisfy the requirements set forth on Schedule 6.10 on or before the date set forth opposite such requirements or such later date as consented to by the Administrative Agent in its sole discretion.   6.11              Credit Ratings. Use commercially reasonable efforts to maintain a corporate credit rating from S&P and a corporate family rating from Moody’s, in each case, with respect to the Borrower, and a credit rating from S&P and Moody’s with respect to the Facilities, but not, in any such case, a specific rating.   6.12              Line of Business. Continue to operate solely as a Permitted Business.   6.13              Changes in Jurisdictions of Organization; Name. Provide prompt written notice to the Collateral Agent of any change of name or change of jurisdiction of organization of any Loan Party, and deliver to the Collateral Agent all additional executed financing statements, financing statement amendments and other documents reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests to the extent provided for in the Security Documents.   -118-       SECTION 7.          NEGATIVE COVENANTS   Each of Holdings and the Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been cash collateralized or backstopped or otherwise supported, in each case on terms reasonably agreed to by the Borrower and the applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent hereunder (other than (i) contingent or indemnification obligations not then due and (ii) obligations in respect of Specified Hedge Agreements or Cash Management Obligations), each of Holdings and the Borrower shall not, and shall not permit any of the Restricted Subsidiaries to:   7.1           Financial Covenant.   (a)            As of the end of each fiscal quarter of Holdings (commencing with the first full fiscal quarter after the Closing Date until the Bally Acquisition Date occurs) and so long as the aggregate amount of L/C Obligations in respect of Specified Letters of Credit, Revolving Loans and Swingline Loans outstanding as of the end of such fiscal quarter (with respect to L/C Obligations in respect of Specified Letters of Credit, to the extent not cash collateralized by the Borrower to at least 103% of their maximum stated amount) equals or exceeds 15.0% of the aggregate amount of all Revolving Commitments, permit the Consolidated Net First Lien Leverage Ratio as of the end of such fiscal quarter of Holdings and its Restricted Subsidiaries to be greater than 5.25:1.00 or, beginning with the fourth fiscal quarter of Holdings of 2014, 5.00:1.00.   (b)           As of the end of each fiscal quarter of Holdings (commencing with the first such occurrence after the Bally Acquisition Date until the Amendment No. 2 Effective Date), permit the Consolidated Net First Lien Leverage Ratio as of the end of such fiscal quarter of Holdings and its Restricted Subsidiaries to be greater than (i) 5.75:1.00, or (ii) beginning with the first fiscal quarter of Holdings of 2016 until the last fiscal quarter of Holdings of 2016, 5.50:1.00, or (iii) beginning with the first fiscal quarter of Holdings of 2017, 5.00:1.00.(c) As of the end of each fiscal quarter of Holdings (commencing with the first such date after the Amendment No. 2 Effective Date occurs), permit the Consolidated Net First Lien Leverage Ratio as of the end of such fiscal quarter of Holdings and its Restricted Subsidiaries to be greater than (i) 6.00:1.00, or (ii) beginning with the second fiscal quarter of Holdings of 2018 until the first fiscal quarter of Holdings of 2019, 5.50:1.00, or (iii) beginning with the second fiscal quarter of Holdings of 2019, 5.00:1.00.the ratio set forth below opposite such fiscal quarter:   Fiscal Quarter Ended Consolidated Net First Lien Leverage Ratio Second fiscal quarter of Holdings of 2017 through first fiscal quarter of Holdings of 2018 6.00:1.00 Second fiscal quarter of Holdings of 2018 through the first fiscal quarter of Holdings of 2019 5.50:1.00 Second fiscal quarter of Holdings of 2019 through the third fiscal quarter of Holdings of 2020 5.00:1.00 The last fiscal quarter of Holdings of 2020 through the third fiscal quarter of Holdings of 2021 4.75:1.00 The last fiscal quarter of Holdings of 2021 and thereafter 4.50:1.00     -119-     7.2           Indebtedness. Create, issue, incur, assume, or permit to exist any Indebtedness, except:   (a)            Indebtedness of Holdings and any of its Restricted Subsidiaries pursuant to any Loan Document (including, for the avoidance of doubt, the Term B-5 Commitments and the Initial Term B-5 Loans contemplated by Amendment No. 4 and the Amendment No. 4 Transactions) or Hedge Agreement or in respect of any Cash Management Obligations;   (b)           Indebtedness of Holdings or any of its Restricted Subsidiaries owing to Holdings or any of its Restricted Subsidiaries, provided that (i) any such Indebtedness owing by a Loan Party to a Restricted Subsidiary that is not a Loan Party is expressly subordinated in right of payment to the Obligations pursuant to the Guarantee and Collateral Agreement or otherwise and (ii) any such Indebtedness owing by a non-Loan Party to a Loan Party is permitted by Section 7.7;   (c)            Indebtedness (including Capital Lease Obligations) secured by Liens in an aggregate principal amount, when combined with the aggregate principal amount of Indebtedness outstanding under clauses (t)(I) and (u) of this Section 7.2, not to exceed the greater of (i) $100,000,000 and (ii) 3.0% of Consolidated Total Assets at the time of such incurrence, at any one time outstanding;   (d)           (i) Indebtedness outstanding on the Closing Date (after giving effect to the Transactions) or on the Bally Acquisition Date (after giving effect to the Bally Transactions), as applicable, or committed to be incurred as of such date and listed on Schedule 7.2(d) (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date) and any Permitted Refinancing thereof, (ii) Indebtedness incurred in connection with transactions permitted under Section 7.10 and any Permitted Refinancing thereof and (iii) Indebtedness contemplated by or incurred in connection with the Tax Planning Transaction;   (e)           Guarantee Obligations (i) by Holdings or any of its Restricted Subsidiaries of obligations of Holdings, the Borrower or any Subsidiary Guarantor not prohibited by this Agreement to be incurred, (ii) by any Loan Party of obligations of any Non-Guarantor Subsidiary or joint venture to the extent permitted by Section 7.7, (iii) by any Non-Guarantor Subsidiary of obligations of any other Non-Guarantor Subsidiary, and (iv) incurred by Holdings or any of its Restricted Subsidiaries in respect of or constituting Specified Concession Obligations;   (f)             Indebtedness of Holdings or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn by Holdings or such Restricted Subsidiary in the ordinary course of business against insufficient funds, so long as such Indebtedness is promptly repaid;   (g)            Indebtedness in the form of New Incremental Notes and Permitted Refinancings thereof;   (h)           Indebtedness in the form of earn-outs, indemnification, incentive, non-compete, consulting, ordinary course deferred purchase price or other similar arrangements and other contingent obligations in respect of the Transactions, the Bally Transactions and other acquisitions or Investments permitted by Section 7.7 (both before or after any liability associated therewith becomes fixed), including any such obligations which may exist on the Closing Date as a result of acquisitions consummated prior to the Closing Date;   -120-     (i)             Indebtedness of Holdings and any of its Restricted Subsidiaries constituting (i) Permitted Refinancing Obligations and (ii) Permitted Refinancings in respect of Indebtedness incurred pursuant to the preceding clause (i);   (j)             additional Indebtedness of Holdings or any of its Restricted Subsidiaries in an aggregate principal amount (for Holdings, the Borrower and all Restricted Subsidiaries), not to exceed the greater of (i) $200,000,000 and (ii) 4.0% of Consolidated Total Assets at the time of such incurrence, at any time outstanding;   (k)            Indebtedness of Non-Guarantor Subsidiaries, in an aggregate principal amount, when combined with the aggregate principal amount of Indebtedness outstanding under clause (s)(iii) of this Section 7.2, not to exceed the greater of (i) $175,000,000 and (ii) 5.25% of Consolidated Total Assets at the time of such incurrence, at any time outstanding;   (l)             Indebtedness of Holdings or any of its Restricted Subsidiaries in respect of workers’ compensation claims, bank guarantees, warehouse receipts or similar facilities, property casualty or liability insurance, take-or-pay obligations in supply arrangements, self-insurance obligations, performance, bid, customs, government, VAT, duty, tariff, appeal and surety bonds, completion guarantees, and other obligations of a similar nature, in each case in the ordinary course of business;   (m)           Indebtedness incurred by Holdings or any of its Restricted Subsidiaries arising from agreements providing for indemnification related to sales, leases or other Dispositions of goods or adjustment of purchase price or similar obligations in any case incurred in connection with the acquisition or Disposition of any business, assets or Subsidiary;   (n)            Indebtedness supported by a Letter of Credit, in a principal amount not in excess of the stated amount of such Letter of Credit;   (o)           Indebtedness issued in lieu of cash payments of Restricted Payments permitted by Section 7.6;   (p)           Indebtedness of Holdings or any Restricted Subsidiary under the Existing Notes Financing, the New Unsecured Notes, the Amendment No. 4 Secured Notes and any Permitted Refinancing of any of the foregoing or of the New Secured Notes (without duplication of the Amendment No. 4 Secured Notes or the Initial Term B-5 Loans referenced in clause (a) of the definition of “Amendment No. 4 Transactions”), and, until the redemption thereof in connection with the Amendment No. 4 Transactions on or prior to March 2, 2018, the New Secured Notes;   (q)           Indebtedness of Holdings or any Restricted Subsidiary as an account party in respect of trade letters of credit issued in the ordinary course of business or otherwise consistent with industry practice;   (r)            Indebtedness (i) owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business and (ii) in the form of pension and retirement liabilities not constituting an Event of Default, to the extent constituting Indebtedness;   -121-     (s)            (i) Guarantee Obligations made in the ordinary course of business; provided that such Guarantee Obligations are not of Indebtedness for Borrowed Money, (ii) Guarantee Obligations in respect of lease obligations of Holdings and its Restricted Subsidiaries, (iii) Guarantee Obligations in respect of Indebtedness of joint ventures or Unrestricted Subsidiaries; provided that the aggregate principal amount of any such Guarantee Obligations under this sub-clause (iii), when combined with the aggregate principal amount of Indebtedness outstanding under clause (k) of this Section 7.2, shall not exceed the greater of (A) $175,000,000 and (B) 5.25% of Consolidated Total Assets at the time of such incurrence, at any time outstanding, (iv) Guarantee Obligations in respect of Indebtedness permitted by clause (r)(ii) above and (v) Guarantee Obligations by Holdings or any of its Restricted Subsidiaries of any Restricted Subsidiary’s purchase obligations under supplier agreements and in respect of obligations of or to customers, distributors, franchisees, lessors, licensees and sublicensees; provided that such Guarantee Obligations are not of Indebtedness for Borrowed Money;   (t)            (I) (x) Indebtedness of any Person that becomes a Restricted Subsidiary or is merged with or into Holdings or any of its Restricted Subsidiaries after the Closing Date (a “New Subsidiary”) or that is associated with assets being purchased or otherwise acquired, in each case, as part of an acquisition, merger or consolidation or amalgamation or other Investment not prohibited hereunder; provided that (A) such Indebtedness exists at the time such Person becomes a Restricted Subsidiary or is acquired, merged, consolidated or amalgamated by, with or into Holdings or such Restricted Subsidiary or when such assets are acquired and is not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary or with such merger (except to the extent such Indebtedness refinanced other Indebtedness to facilitate such Person becoming a Restricted Subsidiary or to facilitate such merger) or such asset acquisition, (B) the aggregate principal amount of Indebtedness permitted by this clause (t)(I) and Sections 7.2(c) and 7.2(u) shall not exceed the greater of (i) $100,000,000 and (ii) 3.0% of Consolidated Total Assets at the time of such incurrence, at any time outstanding, and (C) neither Holdings nor any of its Restricted Subsidiaries (other than the applicable New Subsidiary and its Subsidiaries) shall provide security therefor and (y) Permitted Refinancings of the Indebtedness referred to in clause (x) of this paragraph (t)(I), and (II) Indebtedness assumed or incurred in connection with the Specified Acquisition in an aggregate amount not to exceed $45,000,000 at any one time outstanding;   (u)           Indebtedness incurred to finance any acquisition or other Investment permitted under Section 7.7 in an aggregate amount for all such Indebtedness together with the aggregate principal amount of Indebtedness permitted by Sections 7.2(c) and 7.2(t)(I) not to exceed the greater of (i) $100,000,000 and (ii) 3.0% of Consolidated Total Assets at the time of such incurrence, at any one time outstanding;   -122-     (v)           (A) other Indebtedness so long as, at the time of incurrence thereof, (1) if unsecured or secured on a junior basis to the Obligations, after giving pro forma effect to the incurrence of such Indebtedness and the intended use of proceeds thereof determined as of the last day of the fiscal quarter most recently then ended for which financial statements have been delivered pursuant to Section 6.1, the Fixed Charge Coverage Ratio of Holdings and its Restricted Subsidiaries shall be no less than 2.00 to 1.00, (2) if secured on a pari passu basis with the Obligations, after giving pro forma effect to the incurrence of such Indebtedness and the intended use of proceeds thereof determined as of the last day of the fiscal quarter most recently then ended for which financial statements have been delivered pursuant to Section 6.1, the Consolidated Net First Lien Leverage Ratio of Holdings and its Restricted Subsidiaries shall be no greater than 3.25 to 1.00, (3) no Event of Default shall be continuing immediately after giving effect to the incurrence of such Indebtedness; (4) the terms of which Indebtedness do not provide for a maturity date or weighted average life to maturity earlier than the Latest Maturity Date or shorter than the weighted average life to maturity of the Latest Maturing Term Loans (other than an earlier maturity date and/or shorter weighted average life to maturity for customary bridge financings, which, subject to customary conditions, would either be automatically converted into or required to be exchanged for permanent financing which does not provide for an earlier maturity date or a shorter weighted average life to maturity than the Latest Maturity Date or the weighted average life to maturity of the Latest Maturing Term Loans, as applicable); and (5) any such Indebtedness that is secured shall be subject to an Other Intercreditor Agreement; provided that the amount of Indebtedness which may be incurred pursuant to this paragraph (v) by Non-Guarantor Subsidiaries shall not exceed, at any time outstanding, the sum of (I) the greater of $100,000,000 and 3.0% of Consolidated Total Assets at the time of such incurrence, plus (II) $400,000,000 so long as the Net Cash Proceeds of such Indebtedness incurred pursuant to this clause (II) is applied to pay or prepay the Obligations, and (B) Permitted Refinancings of any of the Indebtedness referred to in clause (A) of this paragraph (v);   (w)           (i) Indebtedness representing deferred compensation or stock-based compensation to employees of Holdings, any Parent Company, the Borrower or any Restricted Subsidiary incurred in the ordinary course of business and (ii) Indebtedness consisting of obligations of Holdings, the Borrower or any Restricted Subsidiary under deferred compensation or other similar arrangements incurred in connection with the Transactions, the Bally Transactions and any Investment permitted hereunder;   (x)            Indebtedness issued by Holdings or any of its Restricted Subsidiaries to the officers, directors and employees of Holdings, any Parent Company, the Borrower or any Restricted Subsidiary of Holdings or their respective estates, trusts, family members or former spouses, in lieu of or combined with cash payments to finance the purchase of Capital Stock of Holdings, any Parent Company or the Borrower, in each case, to the extent such purchase is permitted by Section 7.6;   (y)            Indebtedness (and Guarantee Obligations in respect thereof) in respect of overdraft facilities, employee credit card programs, netting services, automatic clearinghouse arrangements and other cash management and similar arrangements in the ordinary course of business;   (z)            (i) Indebtedness of Holdings or any of its Restricted Subsidiaries undertaken in connection with cash management and related activities with respect to any Subsidiary or joint venture in the ordinary course of business and (ii) Indebtedness of Holdings or any of its Restricted Subsidiaries to any joint venture (regardless of the form of legal entity) that is not a Subsidiary arising in the ordinary course of business in connection with the cash management operations (including in respect of intercompany self-insurance arrangements);   (aa)          to the extent constituting Indebtedness, payment and custodial obligations in respect of prize, jackpot, deposit, payment processing and player account management operations, including obligations with respect to funds that may be placed in trust accounts; and   (bb)         all premiums (if any), interest (including post-petition interest), fees, expenses, charges, accretion or amortization of original issue discount, accretion of interest paid in kind and additional or contingent interest on obligations described in clauses (a) through (aa) above.   -123-     7.3           Liens. Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except for:   (a)            Liens for Taxes not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of Holdings or its Restricted Subsidiaries, as the case may be, to the extent required by GAAP;   (b)           landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or that are being contested in good faith by appropriate proceedings;   (c)            (i) pledges, deposits or statutory trusts in connection with workers’ compensation, unemployment insurance and other social security legislation and (ii) Liens incurred in the ordinary course of business securing liability for reimbursement or indemnification obligations of insurance carriers providing property, casualty or liability insurance to Holdings or any of its Restricted Subsidiaries in respect of such obligations;   (d)           deposits and other Liens to secure the performance of bids, government, trade and other similar contracts (other than for borrowed money), leases, subleases, statutory or regulatory obligations, surety, judgment and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;   (e)            encumbrances shown as exceptions in the title insurance policies insuring the Mortgages, easements, zoning restrictions, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, do not materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of Holdings or any of its Restricted Subsidiaries;   (f)            Liens (i) in existence on the Closing Date (after giving effect to the Transactions) or on the Bally Acquisition Date (after giving effect to the Bally Transactions), as applicable, listed on Schedule 7.3(f) (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date) (or to the extent not listed on such Schedule 7.3(f), where the Fair Market Value of the Property to which such Lien is attached is less than $10,000,000), (ii) securing Indebtedness permitted by Section 7.2(d) and (iii) created after the Closing Date in connection with any refinancing, refundings, or renewals or extensions thereof permitted by Section 7.2(d); provided that no such Lien is spread to cover any additional Property of Holdings or any of its Restricted Subsidiaries after the Closing Date unless such Lien utilizes a separate basket under this Section 7.3;   (g)           (i) Liens securing Indebtedness of Holdings or any of its Restricted Subsidiaries incurred pursuant to Sections 7.2(c), 7.2(e), 7.2(g), 7.2(i), provided that no such Lien shall apply to any other Property of Holdings or any of its Restricted Subsidiaries that is not Collateral (or does not concurrently become Collateral) unless such Lien utilizes a separate basket under this Section 7.3, 7.2(j), 7.2(k), 7.2(r), 7.2(s), 7.2(t), 7.2(u), 7.2(v), 7.2(w) and 7.2(aa); provided that (A) in the case of any such Liens securing Indebtedness pursuant to Section 7.2(k), such Liens do not at any time encumber any Property of Holdings, the Borrower or any Subsidiary Guarantor, (B) in the case of any such Liens securing Indebtedness incurred pursuant to Section 7.2(r), such Liens do not encumber any Property other than cash paid to any such insurance company in respect of such insurance, (C) in the case of any such Liens securing Indebtedness pursuant to Section 7.2(t)(I), such Liens exist at the time that the relevant Person becomes a Restricted Subsidiary or such assets are acquired and are not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary or the acquisition of such assets (except to the extent such Liens secure Indebtedness which refinanced other secured Indebtedness to facilitate such Person becoming a Restricted Subsidiary or to facilitate the merger, consolidation or amalgamation or other acquisition of assets referred to in such Section 7.2(t)(I)) and (D) in the case of Liens securing Guarantee Obligations pursuant to Section 7.2(e), the underlying obligations are secured by a Lien permitted to be incurred pursuant to this Agreement and (ii) any extension, refinancing, renewal or replacement of the Liens described in clause (i) of this Section 7.3(g) in whole or in part; provided that such extension, renewal or replacement shall be limited to all or a part of the property which secured (or was permitted to secure) the Lien so extended, renewed or replaced (plus improvements on such property, if any);   -124-     (h)           Liens created pursuant to the Loan Documents;   (i)             Liens arising from judgments in circumstances not constituting an Event of Default under Section 8.1(h);   (j)             Liens on Property or assets acquired pursuant to an acquisition permitted under Section 7.7 (and the proceeds thereof) or assets of a Restricted Subsidiary in existence at the time such Restricted Subsidiary is acquired pursuant to an acquisition permitted under Section 7.7 and not created in contemplation thereof and Liens created after the Closing Date in connection with any refinancing, refundings, or renewals or extensions of the obligations secured thereby permitted hereunder, provided that no such Lien is spread to cover any additional Property (other than other Property of such Restricted Subsidiary) after the Closing Date (unless such Lien utilizes a separate basket under this Section 7.3);   (k)            (i) Liens on Property of Non-Guarantor Subsidiaries securing Indebtedness or other obligations not prohibited by this Agreement to be incurred by such Non-Guarantor Subsidiaries and (ii) Liens securing Indebtedness or other obligations of Holdings or any of its Restricted Subsidiaries in favor of any Loan Party;   (l)             receipt of progress payments and advances from customers in the ordinary course of business to the extent same creates a Lien on the related inventory and proceeds thereof;   (m)           Liens in favor of customs and revenue authorities arising as a matter of law to secure the payment of customs duties in connection with the importation of goods;   (n)           Liens arising out of consignment or similar arrangements for the sale by Holdings and its Restricted Subsidiaries of goods through third parties in the ordinary course of business or otherwise consistent with past practice;   (o)           Liens solely on any cash earnest money deposits made by Holdings or any of its Restricted Subsidiaries in connection with an Investment permitted by Section 7.7;   (p)           Liens deemed to exist in connection with Investments permitted by Section 7.7(b) that constitute repurchase obligations;   (q)           Liens upon specific items of inventory or other goods and proceeds of Holdings or any of its Restricted Subsidiaries arising in the ordinary course of business securing such Person’s obligations in respect of bankers’ acceptances and letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;   -125-     (r)            Liens on cash deposits securing any Hedge Agreements permitted hereunder in an aggregate amount not to exceed $10,000,000 at any time outstanding;   (s)            any interest or title of a lessor under any leases or subleases entered into by Holdings or any of its Restricted Subsidiaries in the ordinary course of business and any financing statement filed in connection with any such lease;   (t)            Liens on cash and Cash Equivalents used to defease or to satisfy and discharge Indebtedness, provided that such defeasance or satisfaction and discharge is not prohibited hereunder;   (u)           (i) Liens that are contractual rights of set-off (A) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (B) relating to pooled deposit or sweep accounts of Holdings or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Holdings and its Restricted Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of Holdings or any of its Restricted Subsidiaries in the ordinary course of business, (ii) other Liens securing cash management obligations in the ordinary course of business and (iii) Liens encumbering reasonable and customary initial deposits and margin deposits in respect of, and similar Liens attaching to, commodity trading accounts and other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;   (v)           Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights;   (w)           Liens on Capital Stock in joint ventures securing obligations of such joint venture;   (x)            Liens securing obligations in respect of trade-related letters of credit permitted under Section 7.2 and covering the goods (or the documents of title in respect of such goods) financed by such letters of credit and the proceeds and products thereof;   (y)           other Liens with respect to obligations that do not exceed the greater of (i) $50,000,000 and (ii) 1.5% of Consolidated Total Assets at the time of such incurrence, at any time outstanding;   (z)            licenses, sublicenses, cross-licensing or pooling of, or similar arrangements with respect to, Intellectual Property granted by Holdings or any of its Restricted Subsidiaries which do not interfere in any material respect with the ordinary conduct of the business of Holdings or such Restricted Subsidiary;   (aa)          Liens arising from precautionary UCC financing statement filings (or other similar filings in non-U.S. jurisdictions) regarding leases, subleases, licenses or consignments, in each case, entered into by Holdings or any of its Restricted Subsidiaries;   (bb)         Liens on cash and Cash Equivalents (and the related escrow accounts) in connection with the issuance into (and pending the release from) escrow of, any Permitted Refinancing Obligations, any New Incremental Notes, any Indebtedness permitted under Section 7.2(v), and, in each case, any Permitted Refinancing thereof;   -126-     (cc)          Liens on cash, Cash Equivalents or other investments in connection with the deposit of amounts necessary to satisfy payment and custodial obligations in respect of prize, jackpot, deposit, payment processing and player account management operations, including as may be placed in trust accounts;   (dd)         zoning or similar laws or rights reserved to or vested in any Governmental Authority to control or regulate the use of any real property; and   (ee)          (i) Liens securing the obligations in respect of the Amendment No. 4 Secured Notes and the documentation relating thereto, and the obligations in respect of any Permitted Refinancing of any of the foregoing and the documentation relating thereto, so long as such Liens are subject to an Other Intercreditor Agreement, and (ii) until the redemption thereof in connection with the Amendment No. 4 Transactions on or prior to March 2, 2018, Liens securing the obligations in respect of the New Secured Notes and the documentation relating thereto, so long as such Liens are subject to an Other Intercreditor Agreement.   7.4           Fundamental Changes. Consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that:   (a)            (i) any Restricted Subsidiary may be merged, amalgamated or consolidated with or into Holdings or the Borrower (provided that, except as permitted pursuant to clause (j) below, Holdings or the Borrower shall be the continuing or surviving corporation) or (ii) any Restricted Subsidiary may be merged, amalgamated or consolidated with or into any Subsidiary Guarantor (provided that (x) a Subsidiary Guarantor shall be the continuing or surviving corporation or (y) substantially simultaneously with such transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor and the Borrower shall comply with Section 6.8 in connection therewith);   (b)           any Non-Guarantor Subsidiary may be merged or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;   (c)            any Restricted Subsidiary may Dispose of all or substantially all of its assets upon voluntary liquidation or otherwise to any Loan Party;   (d)           any Non-Guarantor Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding-up or otherwise) to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;   (e)            Dispositions permitted by Section 7.5 and any merger, dissolution, liquidation, consolidation, amalgamation, investment or Disposition, the purpose of which is to effect a Disposition permitted by Section 7.5, may be consummated;   (f)            any Investment expressly permitted by Section 7.7 may be structured as a merger, consolidation or amalgamation;   (g)           Holdings and its Restricted Subsidiaries may consummate the Transactions, the Bally Transactions and the Tax Planning Transaction;   -127-     (h)           any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines in good faith that such liquidation or dissolution is in the best interest of the Borrower and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Loan Party, any assets or business of such Restricted Subsidiary not otherwise disposed of or transferred in accordance with Section 7.4 or 7.5 or, in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Loan Party after giving effect to such liquidation or dissolution;   (i)             any Escrow Entity may be merged with and into the Borrower or any Restricted Subsidiary (provided that the Borrower or such Restricted Subsidiary shall be the continuing or surviving entity); and   (j)             Holdings may merge with and into another entity solely for the purpose of the reincorporation of Holdings in another state of organization within the United States, so long as (i) such surviving entity promptly (but in no event later than thirty (30) days after such merger) becomes a Loan Party, (ii) subject to clause (i) above, the requirements of Sections 6.8 and 6.13 are complied with in connection therewith, (iii) the Borrower provides to the Administrative Agent evidence reasonably acceptable to the Administrative Agent that, after giving pro forma effect to such merger, (A) the granting, perfection, validity and priority of the security interest of the Secured Parties in the Collateral, taken as a whole, is not impaired in any material respect by such merger and (B) no security interest purported to be created by any Security Document with respect to any portion of the Collateral immediately prior to such merger shall cease to be, or shall be asserted in writing by any Loan party not to be, a valid and perfected security interest (having the same priority as immediately prior to such merger), in the securities, assets or properties covered thereby and (iv) no Default or Event of Default has occurred and is continuing or would result therefrom.   7.5           Dispositions of Property. Dispose of any of its owned Property (including receivables) whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person, except:   (a)            (i) the Disposition of surplus, obsolete or worn out Property in the ordinary course of business, Dispositions of Property no longer used or useful or economically practicable to maintain in the conduct of the business of the Borrower and other Restricted Subsidiaries in the ordinary course and Dispositions of Property necessary in order to comply with applicable Requirements of Law or licensure requirements (as determined by the Borrower in good faith), (ii) the sale of defaulted receivables in the ordinary course of business, (iii) abandonment, cancellation or disposition of any Intellectual Property in the ordinary course of business and (iv) sales, leases or other dispositions of inventory determined by the management of the Borrower to be no longer useful or necessary in the operation of the Business;   (b)           (i) the sale of inventory or other Property in the ordinary course of business, (ii) the cross-licensing, pooling, sublicensing or licensing of, or similar arrangements (including disposition of marketing rights) with respect to, Intellectual Property in the ordinary course of business or otherwise consistent with past practice or not materially disadvantageous to the Lenders, and (iii) the contemporaneous exchange, in the ordinary course of business, of Property for Property of a like kind, to the extent that the Property received in such exchange is of a Fair Market Value equivalent to the Fair Market Value of the Property exchanged (provided that after giving effect to such exchange, the Fair Market Value of the Property of any Loan Party subject to Liens in favor of the Collateral Agent under the Security Documents is not materially reduced);   -128-     (c)            Dispositions permitted by Section 7.4;   (d)           the sale or issuance of (i) any Subsidiary’s Capital Stock to any Loan Party; provided that the sale or issuance of Capital Stock of an Unrestricted Subsidiary to Holdings or any of its Restricted Subsidiaries is otherwise permitted by Section 7.7, (ii) the Capital Stock of any Non-Guarantor Subsidiary that is a Restricted Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iii) the Capital Stock of any Subsidiary that is an Unrestricted Subsidiary to any other Subsidiary that is an Unrestricted Subsidiary, in each case, including in connection with any tax restructuring activities not otherwise prohibited hereunder;   (e)            the Disposition of assets for Fair Market Value; provided that (i) at least 75% of the total consideration for any such Disposition in excess of $25,000,000 received by Holdings and its Restricted Subsidiaries is in the form of cash or Cash Equivalents, (ii) no Event of Default then exists or would result from such Disposition, and (iii) the requirements of Section 2.12(b), to the extent applicable, are complied with in connection therewith; provided, however, that for purposes of clause (i) above, the following shall be deemed to be cash: (A) any liabilities (as shown on Holdings’ or such Restricted Subsidiary’s most recent balance sheet provided hereunder or in the footnotes thereto) of Holdings or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee with respect to the applicable Disposition and for which Holdings and its Restricted Subsidiaries shall have been validly released by all applicable creditors in writing, (B) any securities received by Holdings or such Restricted Subsidiary from such transferee that are converted by Holdings or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received in the conversion) within 180 days following the closing of the applicable Disposition, and (C) any Designated Non-cash Consideration received by Holdings or any of its Restricted Subsidiaries in such Disposition having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (e) that is at that time outstanding, not to exceed the greater of (I) $70,000,000 and (II) 2.25% of Consolidated Total Assets at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value);   (f)            (i) any Recovery Event; provided that the requirements of Section 2.12(b) are complied with in connection therewith and (ii) any event that would constitute a Recovery Event but for the Dollar threshold set forth in the definition thereof;   (g)           the leasing, licensing, occupying pursuant to occupancy agreements or sub-leasing of Property that would not materially interfere with the required use of such Property by Holdings or its Restricted Subsidiaries;   (h)           the transfer for Fair Market Value of Property (including Capital Stock of Subsidiaries) to another Person in connection with a joint venture arrangement with respect to the transferred Property; provided that such transfer is permitted under Section 7.7(h), (k), (v) or (y);   (i)             the sale or discount, in each case without recourse and in the ordinary course of business, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables);   -129-     (j)             transfers of condemned Property as a result of the exercise of “eminent domain” or other similar policies to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of properties that have been subject to a casualty to the respective insurer of such Property as part of an insurance settlement;   (k)            the Disposition of any Immaterial Subsidiary or any Unrestricted Subsidiary;   (l)             the transfer of Property (including Capital Stock of Subsidiaries) of any Loan Party to any Restricted Subsidiary for Fair Market Value;   (m)           the transfer of Property (i) by any Loan Party to any other Loan Party or (ii) from a Non-Guarantor Subsidiary to (A) any Loan Party; provided that the portion (if any) of such Disposition made for more than Fair Market Value shall constitute an Investment and comply with Section 7.7 or (B) any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;   (n)           the Disposition of cash and Cash Equivalents and investments in connection with prize, jackpot, deposit, payment processing and player account management operations, in each case, in the ordinary course of business;   (o)           (i) Liens permitted by Section 7.3, (ii) Restricted Payments permitted by Section 7.6, (iii) Investments permitted by Section 7.7 and (iv) sale and leaseback transactions permitted by Section 7.10;   (p)           Dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements; provided that the requirements of Section 2.12(b), to the extent applicable, are complied with in connection therewith;   (q)           Dispositions of any interest held by Holdings or any of its Restricted Subsidiaries in any Specified Concession Vehicle to another Specified Concession Vehicle in which Holdings or any Restricted Subsidiary has (or, following such transfer, will have) an interest at least equal to such interest being transferred;   (r)            the unwinding of Hedge Agreements permitted hereunder pursuant to their terms;   (s)            the Disposition of assets acquired pursuant to or in order to effectuate a Permitted Acquisition which assets are (i) obsolete or (ii) not used or useful to the core or principal business of the Borrower and the Restricted Subsidiaries;   (t)            Dispositions made on the Closing Date to consummate the Transactions or made from and after the Closing Date in connection with or as part of the Bally Transactions or Tax Planning Transaction;   (u)           Dispositions involving the spin-off of a line of business so long as (i) after giving pro forma effect thereto, determined as of the last day of the fiscal quarter most recently then ended for which financial statements have been delivered pursuant to Section 6.1, the Consolidated Net Total Leverage Ratio of Holdings and its Restricted Subsidiaries shall be no greater than 4.50 to 1.00, and (ii) no more than 7.0% of Consolidated EBITDA in the aggregate for all such Dispositions, determined as of the last day of the fiscal quarter most recently then ended for which financial statements have been delivered pursuant to Section 6.1, is disposed pursuant to this paragraph (u);   -130-     (v)           the Specified Dispositions; provided that the requirements of Section 2.12(b), to the extent applicable, are complied with in connection therewith;   (w)           the Disposition of the Social Gaming Business, including any Unrestricted Subsidiary comprising the Social Gaming Business; and   (x)            Dispositions of Property between or among Holdings and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition in connection with a Disposition otherwise permitted pursuant to clauses (a) through (w) above.   7.6           Restricted Payments. Declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Holdings or any of its Restricted Subsidiaries, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or Property or in obligations of Holdings or such Restricted Subsidiary, or enter into any derivatives or other transaction with any financial institution, commodities or stock exchange or clearinghouse (a “Derivatives Counterparty”) obligating Holdings or any of its Restricted Subsidiaries to make payments to such Derivatives Counterparty as a result of any change in market value of any such Capital Stock (collectively, “Restricted Payments”), except that:   (a)            (i) any Restricted Subsidiary may make Restricted Payments to any Loan Party and (ii) Non-Guarantor Subsidiaries may make Restricted Payments to other Non-Guarantor Subsidiaries;   (b)           Holdings may make Restricted Payments in an aggregate amount not to exceed (i) the Base Available Amount plus (ii) the Available Amount; provided that, in the case of clause (ii), (A) no Event of Default is continuing or would result therefrom and (B) the Consolidated Net Total Leverage Ratio shall not exceed 4.50 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1 at the time of such Restricted Payment;   (c)            Holdings may make Restricted Payments to any Parent Company to permit such Parent Company to pay (i) any taxes which are due and payable by such Parent Company, Holdings and its Restricted Subsidiaries as part of a consolidated group to the extent such taxes are directly attributable to the income of Holdings and its Subsidiaries (the “Consolidated Group”), provided that the total amount of any payment pursuant to this clause for any taxable period shall not exceed the amount that the Consolidated Group would be required to pay in respect of federal, state and local income taxes for such period, determined by taking into account any available net operating loss carryovers or other tax attributes of the Consolidated Group as if the Consolidated Group filed a separate consolidated, combined, unitary or affiliated income tax return, less the amount of any such taxes payable directly by the Consolidated Group, (ii) customary fees, salary, bonus, severance and other benefits payable to, and indemnities provided on behalf of, their current and former officers and employees and members of their Board of Directors, (iii) ordinary course corporate operating expenses and other fees and expenses required to maintain its corporate existence, (iv) fees and expenses to the extent permitted under clause (i) of the second sentence of Section 7.9, (v) reasonable fees and expenses incurred in connection with any debt or equity offering by Holdings or any Parent Company, to the extent the proceeds thereof are (or, in the case of an unsuccessful offering, were intended to be) used for the benefit of Holdings and its Restricted Subsidiaries, whether or not completed and (vi) reasonable fees and expenses in connection with compliance with reporting obligations under, or in connection with compliance with, federal or state laws or under this Agreement or any other Loan Document;   -131-     (d)           Holdings may make Restricted Payments in the form of Capital Stock of Holdings;   (e)            Holdings and any of its Restricted Subsidiaries may make Restricted Payments to, directly or indirectly, purchase the Capital Stock of Holdings, the Borrower, any Parent Company or any Subsidiary from present or former officers, directors, consultants, agents or employees (or their estates, trusts, family members or former spouses) of Holdings, the Borrower, any Parent Company or any Subsidiary upon the death, disability, retirement or termination of the applicable officer, director, consultant, agent or employee or pursuant to any equity subscription agreement, stock option or equity incentive award agreement, shareholders’ or members’ agreement or similar agreement, plan or arrangement; provided that the aggregate amount of payments under this clause (e) in any fiscal year of Holdings shall not exceed the sum of (i) $20,000,000 in any fiscal year, plus (ii) any proceeds received from key man life insurance policies, plus (iii) any proceeds received by Holdings, the Borrower, or any Parent Company during such fiscal year from sales of the Capital Stock of Holdings, the Borrower or any Parent Company to directors, officers, consultants or employees of Holdings, the Borrower, any Parent Company or any Subsidiary in connection with permitted employee compensation and incentive arrangements; provided that any Restricted Payments permitted (but not made) pursuant to sub-clause (i), (ii) or (iii) of this clause (e) in any prior fiscal year may be carried forward to any subsequent fiscal year (subject to an annual cap of no greater than $40,000,000), and provided, further, that cancellation of Indebtedness owing to Holdings or any Restricted Subsidiary by any member of management of Holdings, any Parent Company, the Borrower or any Subsidiary in connection with a repurchase of the Capital Stock of the Borrower, Holdings or any Parent Company will not be deemed to constitute a Restricted Payment for purposes of this Section 7.6;   (f)            Holdings and its Restricted Subsidiaries may make Restricted Payments to make, or to allow any Parent Company to make, (i) noncash repurchases of Capital Stock deemed to occur upon exercise of stock options or similar equity incentive awards, if such Capital Stock represents a portion of the exercise price of such options or similar equity incentive awards, (ii) tax payments on behalf of present or former officers, directors, consultants, agents or employees (or their estates, trusts, family members or former spouses) of Holdings, the Borrower, any Parent Company or any Subsidiary in connection with noncash repurchases of Capital Stock pursuant to any equity subscription agreement, stock option or equity incentive award agreement, shareholders’ or members’ agreement or similar agreement, plan or arrangement of Holdings, the Borrower, any Parent Company or any Subsidiary and (iii) make whole or dividend equivalent payments to holders of vested stock options or other Capital Stock or to holders of stock options or other Capital Stock at or around the time of vesting or exercise of such options or other Capital Stock to reflect dividends previously paid in respect of Capital Stock of the Borrower, Holdings or any Parent Company;   (g)           Holdings may make Restricted Payments with the cash proceeds contributed to its common equity from the Net Cash Proceeds of any Equity Issuance Not Otherwise Applied, so long as, with respect to any such Restricted Payments, no Event of Default shall have occurred and be continuing or would result therefrom;   -132-     (h)           Holdings may make Restricted Payments to make, or to allow any Parent Company to make, payments in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of Capital Stock of any such Person;   (i)             so long as no Event of Default under Section 8.1(a) or 8.1(f) has occurred and is continuing, Holdings may make Restricted Payments to any Parent Company to enable it to make payments to the Sponsor or its Affiliates in the form of a management or consulting fee or in respect of expenses or indemnification payments on terms reasonably acceptable to the Administrative Agent;   (j)             to the extent constituting Restricted Payments, Holdings and its Restricted Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Sections 7.4, 7.5, 7.7 and 7.9;   (k)            (i) any non-wholly owned Restricted Subsidiary of Holdings may declare and pay cash dividends to its equity holders generally so long as Holdings or its respective Subsidiary which owns the equity interests in the Restricted Subsidiary paying such dividend receives at least its proportional share thereof (based upon its relative holding of the equity interests in the Restricted Subsidiary paying such dividends and taking into account the relative preferences, if any, of the various classes of equity interest of such Restricted Subsidiary), and (ii) any non-wholly owned Restricted Subsidiary of Holdings may make Restricted Payments to one or more of its equity holders (which payments need not be proportional) in lieu of or to effect an earnout so long as (x) such payment is in the form of such Restricted Subsidiary’s Capital Stock and (y) such Restricted Subsidiary continues to be a Restricted Subsidiary after giving effect thereto;   (l)             Holdings and its Restricted Subsidiaries may make Restricted Payments on or after the Closing Date to consummate the Transactions (or to comply with their obligations under the Merger Agreement), the Bally Transactions (or to comply with their obligations under the Bally Merger Agreement) or in connection with the Tax Planning Transaction, including to make payments in respect of any indemnity and other similar obligations under the Merger Agreement or the Bally Merger Agreement;   (m)           Holdings may make Restricted Payments in an aggregate amount under this clause (m) not to exceed (x) the greater of (i) $20,000,000 and (ii) 0.75% of Consolidated Total Assets at the time such Restricted Payment is made, in any fiscal year of Holdings; provided that Holdings may carry forward any unused amounts under this clause (x) to subsequent fiscal years; less (y) the sum of (i) the aggregate amount of any Investment made pursuant to Section 7.7(v)(iv) using amounts under this paragraph (m), and (ii) the aggregate amount of any prepayment, redemption, purchase, defeasement or other satisfaction prior to the scheduled maturity of any Junior Financing, Existing Notes Financing or Permitted Refinancing thereof pursuant to Section 7.8(iv)(y) during such fiscal year of Holdings;   (n)           the payment of dividends and distributions within 60 days after the date of declaration thereof, if at the date of declaration of such payment, such payment would have been permitted pursuant to another clause of this Section 7.6;   (o)           provided that no Event of Default is continuing or would result therefrom, Holdings may make other Restricted Payments in an amount not to exceed $150,000,000 less (i) the aggregate amount of any prepayment, redemption, purchase, defeasement or other satisfaction prior to the scheduled maturity of any Junior Financing, Existing Notes Financing or Permitted Refinancing thereof pursuant to Section 7.8(iv)(y) to the extent not deducted from clause (m) above and (ii) the aggregate amount of any Investment made pursuant to Section 7.7(v)(iv) using amounts under this paragraph (o); and   -133-     (p)           Holdings may make Restricted Payments (to the extent such payments would constitute Restricted Payments) pursuant to and in accordance with any Hedge Agreement in connection with a convertible debt instrument; provided that, the aggregate amount of all such Restricted Payments minus cash received from counterparties to such Hedge Agreements upon entering into such Hedge Agreements shall not exceed $50,000,000.   7.7            Investments. Make any advance, loan, extension of credit (by way of guarantee or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or all or substantially all of the assets constituting an ongoing business from, or make any other similar investment in, any other Person (all of the foregoing, “Investments”), except:   (a)            (i) extensions of trade credit in the ordinary course of business, (ii) loans and advances made to distributors, customers, vendors and suppliers in the ordinary course of business or in accordance with market practices, (iii) purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of Intellectual Property, in each case in the ordinary course of business, to the extent such purchases and acquisitions constitute Investments, and (iv) Investments among Holdings and its Restricted Subsidiaries in connection with the sale of inventory and parts in the ordinary course of business;   (b)           Investments in Cash Equivalents and Investments that were Cash Equivalents when made;   (c)            Investments arising in connection with (i) the incurrence of Indebtedness permitted by Section 7.2 to the extent arising as a result of Indebtedness among Holdings or any of its Restricted Subsidiaries and Guarantee Obligations permitted by Section 7.2 and payments made in respect of such Guarantee Obligations, (ii) the forgiveness or conversion to equity of any Indebtedness permitted by Section 7.2 and (iii) guarantees by Holdings or any of its Restricted Subsidiaries of leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;   (d)            loans and advances to employees, consultants or directors of any Parent Company, Holdings or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate amount (for Holdings and all of its Restricted Subsidiaries) not to exceed $5,000,000 (excluding (for purposes of such cap) tuition advances, travel and entertainment expenses, but including relocation expenses) at any one time outstanding;   (e)            Investments (i) (other than those relating to the incurrence of Indebtedness permitted by Section 7.7(c)) by Holdings or any of its Restricted Subsidiaries in Holdings, the Borrower or any Person that, prior to such Investment, is a Loan Party (or is a Domestic Subsidiary that becomes a Loan Party in connection with such Investment), (ii) by Loan Parties in any Non-Guarantor Subsidiaries so long as such Investment is part of a series of Investments by Restricted Subsidiaries in other Restricted Subsidiaries that result in the proceeds of the initial Investment being invested in one or more Loan Parties and (iii) comprised solely of equity purchases by Holdings or any of its Restricted Subsidiaries in any other Restricted Subsidiary made for tax purposes, so long as the Borrower provides to the Administrative Agent evidence reasonably acceptable to the Administrative Agent that, after giving pro forma effect to such Investments, the granting, perfection, validity and priority of the security interest of the Secured Parties in the Collateral, taken as a whole, is not impaired in any material respect by such Investment;   -134-     (f)            Permitted Acquisitions to the extent that any Person or Property acquired in such acquisition becomes a Restricted Subsidiary or a part of a Restricted Subsidiary; provided that immediately before and after giving effect to any such Permitted Acquisition, no Event of Default shall have occurred and be continuing; provided, further that Permitted Acquisitions of Persons that do not become Subsidiary Guarantors shall not exceed 5.0% of Consolidated Total Assets at the time of such Investment;   (g)            loans by Holdings or any of its Restricted Subsidiaries to the employees, officers or directors of any Parent Company, Holdings or any of its Restricted Subsidiaries in connection with management incentive plans; provided that such loans represent cashless transactions pursuant to which such employees, officers or directors directly (or indirectly) invest the proceeds of such loans in the Capital Stock of Holdings or a Parent Company;   (h)           Investments by Holdings and its Restricted Subsidiaries in Unrestricted Subsidiaries, joint ventures or similar arrangements in an aggregate amount at any time outstanding (for Holdings and all of its Restricted Subsidiaries), not to exceed the sum of (A) the greater of $250,000,000 and 5.0% of Consolidated Total Assets at the time of such Investment, plus (B) the amount, if any, that is then available for Investments pursuant to Section 7.7(z)(ii)(A), plus (C) an amount equal to the Base Available Amount, plus (D) an amount equal to the Available Amount; provided that no Investment may be made pursuant to this clause (h) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment unless such Investment is made using the Base Available Amount or the Available Amount (which such use in accordance with this proviso, other than with respect to usage of the Base Available Amount, shall be subject to the requirement that the Consolidated Net Total Leverage Ratio shall not exceed 4.50 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1 at the time of such Investment);   (i)             Investments (including debt obligations) received in the ordinary course of business by Holdings or any of its Restricted Subsidiaries in connection with the bankruptcy or reorganization of suppliers, customers and other Persons and in settlement of delinquent obligations of, and other disputes with, suppliers, customers and other Persons arising in the ordinary course of business;   (j)             Investments by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;   (k)            Investments in existence on, or pursuant to legally binding written commitments in existence on, the Closing Date (after giving effect to the Transactions) or on the Bally Acquisition Date (after giving effect to the Bally Transactions), as applicable, and listed on Schedule 7.7 (as supplemented pursuant to Amendment No. 1 on the Bally Acquisition and Amendment Effectiveness Date) and, in each case, any extensions or renewals thereof, so long as the amount of any Investment made pursuant to this clause (k) is not increased (other than pursuant to such legally binding commitments);   (l)             Investments of Holdings or any of its Restricted Subsidiaries under Hedge Agreements permitted hereunder;   -135-     (m)           Investments of any Person in existence at the time such Person becomes a Restricted Subsidiary; provided that such Investment was not made in connection with or in anticipation of such Person becoming a Restricted Subsidiary;   (n)           Investments made (i) on or prior to the Closing Date to consummate the Transactions, (ii) on or prior to the Bally Acquisition Date to consummate, or in connection with, the Bally Transactions (including the Bally Merger) or (iii) in connection with the Tax Planning Transaction;   (o)           to the extent constituting Investments, transactions expressly permitted (other than by reference to this Section 7.7 or any clause thereof) under Sections 7.4, 7.5, 7.6 and 7.8;   (p)           Subsidiaries of Holdings may be established or created, if (i) to the extent such new Subsidiary is a Domestic Subsidiary, Holdings and such Subsidiary comply with the provisions of Section 6.8(c) and (ii) to the extent such new Subsidiary is a Foreign Subsidiary, Holdings complies with the provisions of Section 6.8(d); provided that, in each case, to the extent such new Subsidiary is created solely for the purpose of consummating a merger, consolidation, amalgamation or similar transaction pursuant to an acquisition permitted by this Section 7.7, and such new Subsidiary at no time holds any assets or liabilities other than any consideration contributed to it contemporaneously with the closing of such transactions, such new Subsidiary shall not be required to take the actions set forth in Section 6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at which time the surviving entity of the respective transaction shall be required to so comply within ten Business Days or such longer period as the Administrative Agent shall agree);   (q)           Investments arising directly out of the receipt by Holdings or any of its Restricted Subsidiaries of non-cash consideration for any sale of assets permitted under Section 7.5;   (r)            Investments resulting from pledges and deposits referred to in Sections 7.3(c) and (d);   (s)            Investments consisting of (i) the licensing, sublicensing, cross-licensing, pooling or contribution of, or similar arrangements with respect to, Intellectual Property, and (ii) the transfer or licensing of non-U.S. Intellectual Property to a Foreign Subsidiary;   (t)             any Investment in a Non-Guarantor Subsidiary or in a joint venture to the extent such Investment is substantially contemporaneously repaid in full with a dividend or other distribution from such Non-Guarantor Subsidiary or joint venture;   (u)           Investments in the ordinary course of business consisting of UCC Article 3 endorsements for collection or deposit and UCC Article 4 customary trade arrangements with customers;   (v)           additional Investments so long as the aggregate amount thereof outstanding at no time exceeds the sum of (i) the greater of $150,000,000 and 4.5% of Consolidated Total Assets at the time of such Investment plus (ii) an amount equal to the Base Available Amount plus (iii) an amount equal to the Available Amount plus (iv) the amount, if any, that is then available for Restricted Payments pursuant to Sections 7.6(m) and 7.6(o); provided that no Investment may be made pursuant to this clause (v) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment unless such Investment is made using the Base Available Amount or the Available Amount (which such use in accordance with this proviso, other than with respect to usage of the Base Available Amount, shall be subject to the requirement that the Consolidated Net Total Leverage Ratio shall not exceed 4.50 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1 at the time of such Investment);   -136-     (w)           advances of payroll payments to employees, or fee payments to directors or consultants, in the ordinary course of business;   (x)            Investments constituting loans or advances in lieu of Restricted Payments permitted pursuant to Section 7.6;   (y)           Investments to fund or satisfy any Specified Concession Obligations, including any Investment in any Specified Concession Vehicle (or its equity holders or members) used by or on behalf of any Specified Concession Vehicle (or its equity holders or members) to fund or satisfy any Specified Concession Obligations in an aggregate amount not to exceed $200,000,000;   (z)            (i) Investments by any Loan Party in any Non-Guarantor Subsidiary of Capital Stock, Property and cash with an aggregate value not to exceed the aggregate value of any Capital Stock, Property and cash previously transferred to any Loan Party pursuant to any Investment made in, or any dividend or similar distribution paid to, any Loan Party by any Non-Guarantor Subsidiary on and after the Closing Date; provided that the aggregate amount of any such Investments made in cash by any Loan Party in any Non-Guarantor Subsidiary pursuant to this clause (i) shall not exceed the aggregate amount of Investments in cash previously made by any Non-Guarantor Subsidiary in any Loan Party and cash dividends and similar cash distributions received by any Loan Party from any Non-Guarantor Subsidiary, in each case, on and after the Closing Date; provided, further, that (x) to the extent that any such Investment by any Non-Guarantor Subsidiary in any Loan Party is made in the form of Indebtedness owing by a Loan Party to a Non-Guarantor Subsidiary, the amount of any payment of principal and interest and other amounts paid in respect of such Indebtedness shall be treated as an Investment in the applicable Non-Guarantor Subsidiary and shall be included for purposes of determining compliance with the limitations on Investments by Loan Parties in Non-Guarantor Subsidiaries, and (y) any such Investment consisting of loans or advances made by any Non-Guarantor Subsidiary to any Loan Party shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent; provided, however, that the terms of such subordination shall not provide for any restrictions on repayment of such intercompany Investments unless an Event of Default has occurred and is continuing hereunder; and (ii) other Investments by any Loan Party in any Non-Guarantor Subsidiary not to exceed the sum of (A) the greater of $150,000,000 and 3.5% of Consolidated Total Assets, plus (B) the amount, if any, that is then available for Investments pursuant to Section 7.7(h)(A), plus (C) an amount equal to the Base Available Amount, plus (D) an amount equal to the Available Amount; provided, that no Investment may be made pursuant to this clause (z) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment unless such Investment is made using the Base Available Amount or the Available Amount (which such use in accordance with this proviso, other than with respect to usage of the Base Available Amount, shall be subject to the requirement that the Consolidated Net Total Leverage Ratio shall not exceed 4.50 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1 at the time of such Investment); provided, further, that any Investment made for the purpose of funding a Permitted Acquisition permitted under Section 7.7(f) shall not be deemed a separate Investment for the purposes of this clause (z)(ii);   -137-     (aa)          Investments to the extent that payment for such Investments is made solely by the issuance of Capital Stock (other than Disqualified Capital Stock) of Holdings (or any Parent Company) to the seller of such Investments;   (bb)         Investments in respect of prize, jackpot, deposit, payment processing and player account management operations, including as may be placed in trust accounts;   (cc)          (i) the Specified Acquisition and other Investments made in connection therewith; provided that the aggregate amount of all such Investments under this clause (cc)(i) shall not exceed $15,000,000, and (ii) any Investment permitted under the Bally Merger Agreement to be made by Bally Target prior to the Bally Acquisition Date with an aggregate purchase price, in the case of this clause (cc)(ii), not to exceed $20,000,000; and   (dd)         Investments in any Escrow Entity in amounts necessary to fund any interest, fees and related obligations in respect of the New Debt.   It is further understood and agreed that for purposes of determining the value of any Investment outstanding for purposes of this Section 7.7, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired less any returns on such Investment (not to exceed the original amount invested).   7.8           Prepayments, Etc. of Indebtedness; Amendments. Prepay, redeem, purchase, defease or otherwise satisfy prior to the day that is 90 days before the scheduled maturity thereof in any manner any Indebtedness that is expressly subordinated by contract in right of payment to the Obligations (other than intercompany Indebtedness so long as no Event of Default shall have occurred and be continuing) or any Indebtedness that is secured by all or any part of the Collateral on a junior basis relative to the Obligations or any Existing Notes Financing (collectively, “Junior Financing”) (it being understood that payments of regularly scheduled interest and principal on all of the foregoing shall be permitted), or make any payment in violation of any subordination terms of any Junior Financing Documentation, except (i) a prepayment, redemption, purchase, defeasement or other satisfaction of Junior Financing or Existing Notes Financing made in an amount not to exceed the (A) the Base Available Amount plus (B) the Available Amount; provided that (x) immediately before and immediately after giving pro forma effect to such prepayment, redemption, purchase, defeasement or other satisfaction, no Event of Default shall have occurred and be continuing and (y) immediately after giving effect to any such prepayment, redemption, purchase, defeasement or other satisfaction, other than with respect to usage of the Base Available Amount, the Consolidated Net Total Leverage Ratio shall not exceed 4.50 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, (ii) the conversion of any Junior Financing or Existing Notes Financing to Capital Stock (other than Disqualified Capital Stock) or the prepayment, redemption, purchase, defeasement or other satisfaction of Junior Financing or Existing Notes Financing with the proceeds of an Equity Issuance Not Otherwise Applied (other than Disqualified Capital Stock or Cure Amounts), (iii) the refinancing of any Junior Financing or Existing Notes Financing with any Permitted Refinancing thereof, (iv) the prepayment, redemption, purchase, defeasement or other satisfaction prior to the day that is 90 days before the scheduled maturity of any Junior Financing, Existing Notes Financing or Permitted Refinancing thereof, in an aggregate amount not to exceed (x) the greater of $150,000,000 and 3.0% of Consolidated Total Assets plus (y) the amount, if any, that is then available for Restricted Payments pursuant to Section 7.6(m) or (o) (which amounts shall be reduced, without duplication, by any such amount previously utilized pursuant to this clause (y)), (v) the prepayment, redemption, purchase, defeasance or other satisfaction of any Indebtedness incurred or assumed pursuant to Section 7.2(t) or (u), and (vi) from and after the Amendment No. 2 Effective Date but on or prior to May 15, 2017 the prepayment, redemption, purchase, defeasance or other satisfaction of any Indebtedness incurred under the 2018 Notes with the exchange for, or out of the proceeds of, the Additional 2022 Secured Notes or any Permitted Refinancings thereof.   -138-     7.9           Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate thereof (other than Holdings or any of its Restricted Subsidiaries) unless such transaction is (a) otherwise not prohibited under this Agreement and (b) upon fair and reasonable terms no less favorable to Holdings or such Restricted Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, Holdings and its Restricted Subsidiaries may (i) pay to any Parent Company and its Affiliates fees, indemnities and expenses permitted by Section 7.6(i) and/or fees and expenses in connection with the Transactions and the Bally Transactions and disclosed to the Administrative Agent prior to the Closing Date or the Bally Acquisition Date, as applicable; (ii) enter into any transaction with an Affiliate that is not prohibited by the terms of this Agreement to be entered into by Holdings or such Restricted Subsidiary with an Affiliate; (iii) make any Restricted Payment permitted pursuant to Section 7.6 or any Investment permitted pursuant to Section 7.7; (iv) perform their obligations pursuant to the Transactions, including payments required to be made pursuant to the Merger Agreement, the Bally Transactions, including payments required to be made pursuant to the Bally Merger Agreement, and the Tax Planning Transaction; (v) enter into transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business; (vi) without being subject to the terms of this Section 7.9, enter into any transaction with any Person which is an Affiliate of Holdings or the Borrower only by reason of such Person and Holdings or the Borrower, as applicable, having common directors; (vii) issue Capital Stock to the Sponsor, any other direct or indirect owner of Holdings (including any Parent Company), or any director, officer, employee or consultant thereof; (viii) enter into the transactions allowed pursuant to Section 10.6; (ix) enter into transactions set forth on Schedule 7.9; and (x) enter into joint purchasing arrangements with the Sponsor in the ordinary course of business or otherwise consistent with past practice. For the avoidance of doubt, this Section 7.9 shall not apply to employment, benefits, compensation, bonus, retention and severance arrangements with, and payments of compensation or benefits (including customary fees, expenses and indemnities) to or for the benefit of, current or former employees, consultants, officers or directors of Holdings or any of its Restricted Subsidiaries in the ordinary course of business. For purposes of this Section 7.9, any transaction with any Affiliate shall be deemed to have satisfied the standard set forth in clause (b) of the first sentence hereof if such transaction is approved by a majority of the Disinterested Directors of the Board of Directors of Holdings or such Restricted Subsidiary, as applicable. “Disinterested Director” shall mean, with respect to any Person and transaction, a member of the Board of Directors of such Person who does not have any material direct or indirect financial interest in or with respect to such transaction. A member of any such Board of Directors shall not be deemed to have such a financial interest by reason of such member’s holding Capital Stock of the Borrower, Holdings or any Parent Company or any options, warrants or other rights in respect of such Capital Stock.   7.10         Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by Holdings or any of its Restricted Subsidiaries of real or personal Property which is to be sold or transferred by Holdings or any of its Restricted Subsidiaries (a) to such Person or (b) to any other Person to whom funds have been or are to be advanced by such Person on the security of such Property or rental obligations of Holdings or any of its Restricted Subsidiaries, except for (i) any such arrangement entered into in the ordinary course of business of Holdings or any of its Restricted Subsidiaries, (ii) sales or transfers by Holdings or any of its Restricted Subsidiaries to any Loan Party, (iii) sales or transfers by any Non-Guarantor Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iv) any such arrangement to the extent that the Fair Market Value of such Property does not exceed the greater of (i) $200,000,000 and (ii) 6.0% of Consolidated Total Assets at the time of such event, in the aggregate for all such arrangements.   -139-       7.11        Changes in Fiscal Periods. Permit the fiscal year of Holdings to end on a day other than December 31; provided, that Holdings may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, Holdings, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.   7.12        Negative Pledge Clauses. Enter into any agreement that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, to secure the Obligations or, in the case of any Subsidiary Guarantor, its obligations under the Guarantee and Collateral Agreement, other than:   (a)         this Agreement, the other Loan Documents and any Other Intercreditor Agreement;   (b)        any agreements governing Indebtedness and/or other obligations secured by a Lien permitted by this Agreement (in which case, any prohibition or limitation shall only be effective against the assets subject to such Liens permitted by this Agreement);   (c)         software and other Intellectual Property licenses pursuant to which such Loan Party is the licensee of the relevant software or Intellectual Property, as the case may be (in which case, any prohibition or limitation shall relate only to the assets subject to the applicable license);   (d)        Contractual Obligations incurred in the ordinary course of business which (i) limit Liens on the assets that are the subject of the applicable Contractual Obligation or (ii) contain customary provisions restricting the assignment, transfer or pledge of such agreements;   (e)         any agreements regarding Indebtedness or other obligations of any Non-Guarantor Subsidiary not prohibited under Section 7.2 (in which case, any prohibition or limitation shall only be effective against the assets of such Non-Guarantor Subsidiary and its Subsidiaries);   (f)         prohibitions and limitations in effect on the Closing Date and listed on Schedule 7.12;   (g)        customary provisions contained in joint venture agreements and other similar agreements applicable to joint ventures not prohibited by this Agreement;   (h)        customary provisions restricting the subletting, assignment, pledge or other transfer of any lease governing a leasehold interest;   (i)         customary restrictions and conditions contained in any agreement relating to any Disposition of Property, leases, subleases, licenses, sublicenses, cross license, pooling and similar agreements not prohibited hereunder;   (j)         any agreement in effect at the time any Person becomes a Subsidiary of Holdings or is merged with or into Holdings, so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary of Holdings or of such merger;   (k)        restrictions imposed by applicable law or regulation or license requirements;   -140-     (l)         restrictions in any agreements or instruments relating to any Indebtedness permitted to be incurred by this Agreement (including indentures, instruments or agreements governing any New Incremental Notes, indentures, instruments or agreements governing any Permitted Refinancing Obligations and indentures, instruments or agreements governing any Permitted Refinancings of each of the foregoing) (i) if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially more restrictive on the Restricted Subsidiaries than the encumbrances contained in this Agreement (as determined in good faith by the Borrower) or (ii) if such encumbrances and restrictions are customary for similar financings in light of prevailing market conditions at the time of incurrence thereof (as determined in good faith by the Borrower) and the Borrower determines in good faith that such encumbrances and restrictions would not reasonably be expected to materially impair the Borrower’s ability to create and maintain the Liens on the Collateral pursuant to the Security Documents;   (m)       restrictions in respect of Indebtedness secured by Liens permitted by Sections 7.3(g) and 7.3(y) relating solely to the assets or proceeds thereof secured by such Indebtedness;   (n)        customary provisions restricting assignment of any agreement entered into in the ordinary course of business; and   (o)        restrictions arising in connection with cash or other deposits not prohibited hereunder and limited to such cash or other deposit.   7.13        Clauses Restricting Subsidiary Distributions. Enter into any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) make Restricted Payments in respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed to, Holdings or any of its Restricted Subsidiaries or (b) make Investments in Holdings or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of or consisting of (i) this Agreement or any other Loan Documents and under any Other Intercreditor Agreement, (ii) an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary, (iii) customary net worth provisions contained in Real Property leases entered into by Holdings and its Restricted Subsidiaries, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower to meet its ongoing payment obligations hereunder or, in the case of any Subsidiary Guarantor, its obligations under the Guarantee and Collateral Agreement, (iv) agreements related to Indebtedness permitted by this Agreement (including indentures, instruments or agreements governing any New Incremental Notes, indentures, instruments or agreements governing any Permitted Refinancing Obligations and indentures, instruments or agreements governing any Permitted Refinancings of each of the foregoing) to the extent that (x) the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially more restrictive on the Restricted Subsidiaries than the encumbrances and restrictions contained in this Agreement (as determined in good faith by the Borrower) or (y) such encumbrances and restrictions are customary for similar financings in light of prevailing market conditions at the time of incurrence thereof (as determined in good faith by the Borrower) and the Borrower determines in good faith that such encumbrances and restrictions would not reasonably be expected to materially impair the Borrower’s ability to pay the Obligations when due, (v) licenses, sublicenses, cross-licensing or pooling by Holdings and its Restricted Subsidiaries of, or similar arrangements with respect to, Intellectual Property in the ordinary course of business (in which case such restriction shall relate only to such Intellectual Property), (vi) Contractual Obligations incurred in the ordinary course of business which include customary provisions restricting the assignment, transfer or pledge thereof, (vii) customary provisions contained in joint venture agreements and other similar agreements applicable to joint ventures not prohibited by this Agreement, (viii) customary provisions restricting the subletting or assignment of any lease governing a leasehold interest, (ix) customary restrictions and conditions contained in any agreement relating to any Disposition of Property, leases, subleases, licenses and similar agreements not prohibited hereunder, (x) any agreement in effect at the time any Person becomes a Restricted Subsidiary, so long as such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary, (xi) encumbrances or restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (xii) encumbrances or restrictions imposed by applicable law, regulation or customary license requirements, (xiii) restrictions contained in the documentation governing the Existing Notes Financing, the 2022 Notes, the 2025 Secured Notes, the 2026 Secured Notes, the 2026 Notes and/or the New Unsecured Notes, and any Permitted Refinancing of any of the foregoing, and (xiv) any agreement in effect on the Closing Date and described on Schedule 7.13.   -141-     7.14         Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge Agreements entered into in the ordinary course of business, and not for speculative purposes.   SECTION 8.            EVENTS OF DEFAULT   8.1           Events of Default. If any of the following events shall occur and be continuing:   (a)         The Borrower shall fail to pay (i) any principal of any Loan when due in accordance with the terms hereof, (ii) any principal of any Reimbursement Obligation within three Business Days after any such Reimbursement Obligation becomes due in accordance with the terms hereof or (iii) any interest owed by it on any Loan or Reimbursement Obligation, or any other amount payable by it hereunder or under any other Loan Document, within five Business Days after any such interest or other amount becomes due in accordance with the terms hereof; or   (b)         Any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate or other document furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall in either case prove to have been inaccurate in any material respect and such inaccuracy is adverse to the Lenders on or as of the date made or deemed made or furnished; or   (c)         Any Loan Party shall default in the observance or performance of any agreement contained in Section 7; provided, that, notwithstanding anything to the contrary herein, an Event of Default by the Borrower under Section 7.1 shall (i) be subject to the cure rights set forth in Section 8.2, and (ii) not constitute an Event of Default with respect to the Term Facility and any Term Loans unless and until the Required Revolving Lenders shall have terminated their Revolving Commitments and declared all amounts outstanding under the Revolving Facilities to be due and payable; or   (d)         Any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section 8.1), and such default shall continue unremedied for a period of 30 days after the earlier of the date that (x) such Loan Party receives from the Administrative Agent or the Required Lenders notice of the existence of such default or (y) a Responsible Officer of such Loan Party has knowledge thereof; or   -142-     (e)         Holdings or any of its Restricted Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness for Borrowed Money (excluding the Loans and Reimbursement Obligations) on the scheduled or original due date with respect thereto beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness for Borrowed Money was created; or (ii) default in making any payment of any interest on any such Indebtedness for Borrowed Money beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness for Borrowed Money was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness for Borrowed Money or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event of default shall occur, the effect of which payment or other default or other event of default is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness for Borrowed Money to become due prior to its Stated Maturity or to become subject to a mandatory offer to purchase by the obligor thereunder; provided that (A) a default, event or condition described in this paragraph shall not at any time constitute an Event of Default unless, at such time, one or more defaults or events of default of the type described in this paragraph shall have occurred and be continuing with respect to Indebtedness for Borrowed Money the outstanding principal amount of which individually exceeds $50,000,000, and in the case of Indebtedness for Borrowed Money of the types described in clauses (i) and (ii) of the definition thereof, with respect to such Indebtedness which exceeds such amount either individually or in the aggregate and (B) this paragraph (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer, destruction or other disposition of the Property or assets securing such Indebtedness for Borrowed Money if such sale, transfer, destruction or other disposition is not prohibited hereunder and under the documents providing for such Indebtedness, or (ii) any Guarantee Obligations except to the extent such Guarantee Obligations shall become due and payable by any Loan Party and remain unpaid after any applicable grace period or period permitted following demand for the payment thereof; provided, further, that no Event of Default under this clause (e) shall arise or result from any change of control (or similar event) under any other Indebtedness for Borrowed Money that is triggered due to the Permitted Investors (as defined herein) obtaining the requisite percentage contemplated by such change of control provision, unless both (x) such Indebtedness for Borrowed Money shall become due and payable or shall otherwise be required to be repaid, repurchased, redeemed or defeased, whether at the option of any holder thereof or otherwise and (y) at such time, Holdings and/or its Restricted Subsidiaries would not be permitted to repay such Indebtedness for Borrowed Money in accordance with the terms of this Agreement, or   (f)         (i) Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization 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, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) any case, proceeding or other action of a nature referred to in clause (i) above that (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; or (iii) there shall be commenced against Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against substantially all of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) shall consent to or approve of, or acquiesce in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or   -143-     (g)        (i) Holdings or any of its Restricted Subsidiaries shall incur any liability in connection with any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) a failure to meet the minimum funding standards (as defined in Section 302(a) of ERISA), whether or not waived, shall exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Lien shall arise on the assets of Holdings or any of its Restricted Subsidiaries, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is reasonably likely to result in the termination of such Single Employer Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate in a distress termination under Section 4041(c) of ERISA or in an involuntary termination by the PBGC under Section 4042 of ERISA, (v) Holdings or any of its Restricted Subsidiaries shall, or is reasonably likely to, incur any liability as a result of a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan or a Commonly Controlled Plan; and in each case in clauses (i) through (vi) above, which event or condition, together with all other such events or conditions, if any, would reasonably be expected to result in a direct obligation of Holdings or any of its Restricted Subsidiaries to pay money that would reasonably be expected to have a Material Adverse Effect; or   (h)        Other than with respect to the Colombia Matter, one or more final judgments or decrees shall be entered against Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary (whether or not then designated as such)) pursuant to which Holdings and any such Restricted Subsidiaries taken as a whole has a liability (not paid or fully covered by third-party insurance or effective indemnity) of $50,000,000 or more (net of any amounts which are covered by insurance or an effective indemnity), and all such judgments or decrees shall not have been vacated, discharged, dismissed, stayed or bonded within 60 days from the entry thereof; or   (i)         (i) Any of the Security Documents shall cease, for any reason (other than by reason of the express release thereof in accordance with the terms thereof or hereof) to be in full force and effect or shall be asserted in writing by the Borrower or any Guarantor not to be a legal, valid and binding obligation of any party thereto, (ii) any security interest purported to be created by any Security Document with respect to any material portion of the Collateral of the Loan Parties on a consolidated basis shall cease to be, or shall be asserted in writing by any Loan Party not to be, a valid and perfected security interest (having the priority required by this Agreement or the relevant Security Document) in the securities, assets or properties covered thereby, except to the extent that (x) any such loss of perfection or priority results from limitations of foreign laws, rules and regulations as they apply to pledges of Capital Stock in Foreign Subsidiaries or the application thereof, or from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Guarantee and Collateral Agreement or otherwise or to file UCC continuation statements, (y) such loss is covered by a lender’s title insurance policy and the Administrative Agent shall be reasonably satisfied with the credit of such insurer or (z) any such loss of validity, perfection or priority is the result of any failure by the Collateral Agent to take any action necessary to secure the validity, perfection or priority of the security interests or (iii) the Guarantee Obligations pursuant to the Security Documents by any Loan Party of any of the Obligations shall cease to be in full force and effect (other than in accordance with the terms hereof or thereof), or such Guarantee Obligations shall be asserted in writing by any Loan Party not to be in effect or not to be legal, valid and binding obligations; or   -144-     (j)         (i) Holdings shall cease to own, directly or indirectly, 100% of the Capital Stock of the Borrower; or (ii) for any reason whatsoever, any “person” or “group” (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Investors) shall become the “beneficial owner” (within the meaning of Rule 13d-3 and 13d-5 of the Exchange Act as in effect on the Closing Date), directly or indirectly, of more than the greater of (x) 35% of the then outstanding voting securities having ordinary voting power of Holdings and (y) the percentage of the then outstanding voting securities having ordinary voting power of Holdings owned, directly or indirectly, beneficially (within the meaning of Rule 13d-3 and 13d-5 of the Exchange Act as in effect on the Closing Date) by the Permitted Investors (it being understood that if any such person or group includes one or more Permitted Investors, the outstanding voting securities having ordinary voting power of Holdings directly or indirectly owned by the Permitted Investors that are part of such person or group shall not be treated as being owned by such person or group for purposes of determining whether this clause (y) is triggered) (any of the foregoing, a “Change of Control”);   then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable. In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been backstopped or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower then due and owing hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section 8.1 or otherwise in any Loan Document, presentment, demand and protest of any kind are hereby expressly waived by the Borrower.   -145-     8.2                Right to Cure.   (a)                Notwithstanding anything to the contrary contained in Section 8.1, in the event that Holdings fails to comply with the requirements of the financial covenant set forth in Section 7.1 at any time when Holdings is required to comply with such financial covenant pursuant to the terms thereof, then (A) after the end of the most recently ended fiscal quarter of Holdings until the expiration of the tenth Business Day subsequent to the date the relevant financial statements are required to be delivered pursuant to Section 6.1(a) or (b) (the last day of such period being the “Anticipated Cure Deadline”), Holdings shall have the right to issue common Capital Stock for cash and contribute the proceeds therefrom in the form of common Capital Stock or in another form reasonably acceptable to the Administrative Agent to the Borrower or obtain a contribution to its equity (which shall be in the form of common equity or otherwise in a form reasonably acceptable to the Administrative Agent) (the “Cure Right”), and upon the receipt by the Borrower of such cash (the “Cure Amount”), pursuant to the exercise by Holdings of such Cure Right, the calculation of Consolidated EBITDA as used in the financial covenant set forth in Section 7.1 shall be recalculated giving effect to the following pro forma adjustments:   (i)               Consolidated EBITDA for such fiscal quarter (and for any subsequent period that includes such fiscal quarter) shall be increased, solely for the purpose of measuring the financial covenant set forth in Section 7.1 and not for any other purpose under this Agreement (including but not limited to determining the availability or amount of any covenant baskets or carve-outs (including the determination of Available Amount) or determining the Applicable Commitment Fee Rate or Applicable Margin), by an amount equal to the Cure Amount; provided that no Cure Amount shall reduce Indebtedness on an actual or pro forma basis for any Test Period including the applicable period for purposes of calculating the financial covenant set forth in Section 7.1, nor shall any Cure Amount held by the Borrower qualify as cash or Cash Equivalents for the purposes of calculating any net obligations or liabilities under the terms of this Agreement; and   (ii)               If, after giving effect to the foregoing recalculations, Holdings shall then be in compliance with the requirements of the financial covenant set forth in Section 7.1, Holdings shall be deemed to have satisfied the requirements of the financial covenant set forth in Section 7.1 as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the financial covenant set forth in Section 7.1 that had occurred shall be deemed cured for all purposes of this Agreement; and   (B) upon receipt by the Administrative Agent of written notice, on or prior to the Anticipated Cure Deadline, that Holdings intends to exercise the Cure Right in respect of a fiscal quarter, the Lenders shall not be permitted to accelerate Loans held by them, to terminate the Revolving Commitments held by them or to exercise remedies against the Collateral or any other remedies on the basis of a failure to comply with the requirements of the financial covenant set forth in Section 7.1, unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Anticipated Cure Deadline.   (b)                Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal-quarter period there shall be at least two fiscal quarters in respect of which the Cure Right is not exercised, (ii) there can be no more than five fiscal quarters in respect of which the Cure Right is exercised during the term of the Facilities and (iii) for purposes of this Section 8.2, the Cure Amount utilized shall be no greater than the minimum amount required to remedy the applicable failure to comply with the financial covenant set forth in Section 7.1.   -146-     SECTION 9.            THE AGENTS   9.1                  Appointment. Each Lender, Issuing Lender and Swingline Lender hereby irrevocably designates and appoints each Agent as the agent of such Lender under the Loan Documents and each such Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of the applicable Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of the applicable Loan Documents, together with such other powers as are reasonably incidental thereto, including the authority to enter into any Other Intercreditor Agreement, any Joinder Agreement, Increase Supplement, Lender Joinder Agreement and any Extension Amendment. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Agents shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agents.   9.2                  Delegation of Duties. Each Agent may execute any of its duties under the applicable Loan Documents by or through any of its branches, agents or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Neither Agent shall be responsible for the negligence or misconduct of any agents or attorneys in fact selected by it with reasonable care. Each Agent and any such agent or attorney-in-fact may perform any and all of its duties by or through their respective Related Persons. The exculpatory provisions of this Article shall apply to any such agent or attorney-in-fact and to the Related Persons of each Agent and any such agent or attorney-in-fact, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.   9.3                  Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys in fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder or the creation, perfection or priority of any Lien purported to be created by the Security Documents or the value or the sufficiency of any Collateral. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party, nor shall any Agent be required to take any action that, in its opinion or the opinion of its counsel, may expose it to liability that is not subject to indemnification under Section 10.5 or that is contrary to any Loan Document or applicable law.   -147-     9.4                  Reliance by the Agents. The Agents shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Agents. Each Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. Each Agent shall be fully justified in failing or refusing to take any action under the applicable Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under the applicable Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. In determining compliance with any conditions hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender, an Issuing Lender or Swingline Lender, the Agents may presume that such condition is satisfactory to such Lender, Issuing Lender or Swingline Lender unless the Administrative Agent shall have received notice to the contrary from such Lender, Issuing Lender, or Swingline Lender prior to the making of such Loan or the issuance of such Letter of Credit.   9.5                  Notice of Default. Neither Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless such Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that an Agent receives such a notice, such Agent shall give notice thereof to the Lenders. The Agents shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility); provided that unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.   9.6                  Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys in fact or Affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any Affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their Affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the applicable Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their Affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agents hereunder, the Agents shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, Property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any Affiliate of a Loan Party that may come into the possession of either Agent or any of its officers, directors, employees, agents, attorneys in fact or Affiliates.   -148-     9.7                Indemnification. The Lenders severally agree to indemnify each Agent, any Issuing Lender and Swingline Lender in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section 9.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent, any Issuing Lender or Swingline Lender in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent, any Issuing Lender or Swingline Lender under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s, Issuing Lender’s or Swingline Lender’s gross negligence or willful misconduct. The agreements in this Section 9.7 shall survive the payment of the Loans and all other amounts payable hereunder.   9.8                Agent in Its Individual Capacity. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans or Swingline Loan made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under the applicable Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.   9.9                Successor Agents.   (a)                Subject to the appointment of a successor as set forth herein, any Agent may resign upon 30 days’ notice to the Lenders, the Borrower and the other Agent effective upon appointment of a successor Agent. Upon receipt of any such notice of resignation, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8.1(a) or Section 8.1(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of such retiring Agent, and the retiring Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such retiring Agent or any of the parties to this Agreement or any holders of the Loans. If no successor Agent shall have been so appointed by the Required Lenders with such consent of the Borrower and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders and with the consent of the Borrower (such consent not to be unreasonably withheld or delayed), appoint a successor Agent, that shall be a bank that has an office in New York, New York with a combined capital and surplus of at least $500,000,000. After any retiring Agent’s resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.   (b)                If at any time either the Borrower or the Required Lenders determine that any Person serving as an Agent is a Defaulting Lender, the Borrower by notice to the Lenders and such Person or the Required Lenders by notice to the Borrower and such Person may, subject to the appointment of a successor as set forth herein, remove such Person as an Agent. If such Person is removed as an Agent, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8.1(a) or Section 8.1(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of such retiring Agent, and the retiring Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such retiring Agent or any of the parties to this Agreement or any holders of the Loans. Such removal will, to the fullest extent permitted by applicable law, be effective on the date a replacement Agent is appointed.   -149-     (c)                Any resignation by the Administrative Agent pursuant to this Section 9 shall also constitute its resignation as Issuing Lender and Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Lender and Swingline Lender, provided that, to the extent such successor Administrative Agent is not capable of becoming an Issuing Lender such successor shall not so succeed and become vested and another Issuing Lender may be appointed in accordance with clause (c) of the definitions of “Dollar Issuing Lender” and “Multi-Currency Issuing Lender,” (ii) the retiring Issuing Lender and Swingline Lender shall be discharged from all of its respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Lender shall issue letters of credit in substitution for or to backstop the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Lender to effectively assume the obligations of the retiring Issuing Lender with respect to such Letters of Credit.   9.10              Authorization to Release Liens and Guarantees. The Agents are hereby irrevocably authorized by each of the Lenders to effect any release or subordination of Liens or Guarantee Obligations contemplated by Section 10.15.   9.11              Agents May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, to the maximum extent permitted by applicable law, each Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether either Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise,        (a)         to file a proof of claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Lenders, the Swingline Lender and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Lenders, the Swingline Lender and the Agents and their respective agents and counsel and all other amounts due the Lenders, the Issuing Lenders, the Swingline Lender and the Agents under Sections 2.9, 3.3 and 10.5) allowed in such judicial proceeding; and        (b)        to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;   and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender, each Issuing Lender and the Swingline Lender to make such payments to the Agents and, if either Agent shall consent to the making of such payments directly to the Lenders, Issuing Lenders and Swingline Lender, to pay to such Agent any amount due for the reasonable compensation, expenses, disbursements and advances of such Agent and its agents and counsel, and any other amounts due to such Agent under Sections 2.9 and 10.5.   -150-     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender, Issuing Lender or Swingline Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender, Issuing Lender or Swingline Lender to authorize such Agent to vote in respect of the claim of any Lender, Issuing Lender or Swingline Lender or in any such proceeding.   9.12              Specified Hedge Agreements and Cash Management Obligations. Except as otherwise expressly set forth herein or in any Security Documents, to the maximum extent permitted by applicable law, no Person that obtains the benefits of any guarantee by any Guarantor of the Obligations or any Collateral with respect to any Specified Hedge Agreement entered into by it and Holdings, the Borrower or any Subsidiary Guarantor or with respect to any Cash Management Obligations owed by Holdings, the Borrower or any Subsidiary Guarantor to such Person shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than, if applicable, in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Section 9 to the contrary, neither Agent shall be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under any Specified Hedge Agreement or with respect to Cash Management Obligations unless such Agent has received written notice of such Obligations, together with such supporting documentation as it may request, from the applicable Person to whom such Obligations are owed.   9.13              Joint Bookrunners and Co-Documentation Agents. None of the Joint Bookrunners, the Syndication Agent or the Co-Documentation Agents shall have any duties or responsibilities hereunder in their respective capacities as such.   9.14              Certain ERISA Matters.        (a)               Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and each other Agent and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:   (i)            such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments;   (ii)           the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement;   (iii)           (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement; or   -151-     (iv)          such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.        (b)               In addition, unless clause (i) in the immediately preceding paragraph (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in clause (iv) in the immediately preceding paragraph (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and each other Agent and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that:   (i)            none of the Administrative Agent or any other Agent or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto);   (ii)           the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E);   (iii)          the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations);   (iv)          the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder; and   (v)           no fee or other compensation is being paid directly to the Administrative Agent any other Agent or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.   -152-          (c)                The Administrative Agent and each other Agent hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.   -153-     SECTION 10.         MISCELLANEOUS   10.1             Amendments and Waivers.   (a)                Except to the extent otherwise expressly set forth in this Agreement (including Sections 2.25, 2.26, 7.11 and 10.16), neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, subject to the acknowledgment of the Administrative Agent, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding, deleting or otherwise modifying any provisions to this Agreement or the other Loan Documents or changing in any manner the rights or obligations of the Agents, the Issuing Lenders, the Swingline Lender or the Lenders or of the Loan Parties or their Subsidiaries hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive or reduce the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date or reduce the amount of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest, fee or premium payable hereunder (except (x) in connection with the waiver of applicability of any post-default increase in interest rates (which waiver shall be effective with the consent of the Required Lenders) and (y) that any amendment or modification of defined terms used in the financial ratios in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (A)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Commitment, in each case without the written consent of each Lender directly and adversely affected thereby; (B) amend, modify or waive any provision of paragraph (a) of this Section 10.1 without the written consent of all Lenders; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release all or substantially all of the Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all Lenders (except as expressly permitted hereby (including pursuant to Section 7.4 or 7.5) or by any Security Document); (D) amend, modify or waive any provision of paragraph (a) or (c) of Section 2.18 or Section 6.6 of the Guarantee and Collateral Agreement without the written consent of all Lenders directly and adversely affected thereby; (E) amend, modify or waive any provision of paragraph (b) of Section 2.18 without the written consent of the Majority Facility Lenders in respect of each Facility directly and adversely affected thereby; (F) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; (G) amend, modify or waive any provision of Section 9 without the written consent of the Agents; (H) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Lenders; (I) with respect to the making of any Revolving Loan or Swingline Loan or the issuance, extension or renewal of a Letter of Credit after the Closing Date under a Revolving Facility, waive any of the conditions precedent set forth in Section 5.2 without the consent of the Majority Facility Lenders with respect to such Revolving Facility (it being understood and agreed that the waiver of any Default or Event of Default effected with the requisite percentage of Lenders under the other provisions of this Section 10.1 shall be effective to waive such Default or Event of Default, despite the provisions of this clause (I) and following such waiver such Default or Event of Default shall be treated as cured for all purposes hereunder, including under Section 5.2 and this clause (I)); (J) reduce any percentage specified in the definition of Required Revolving Lenders without the written consent of all Revolving Lenders; (K) (i) amend or otherwise modify Section 7.1 (or for the purposes of determining compliance with Section 7.1, any defined terms used therein), or (ii) waive or consent to any Default or Event of Default resulting from a breach of Section 7.1 or (iii) alter the rights or remedies of the Required Revolving Lenders arising pursuant to Article VIII as a result of a breach of Section 7.1, in each case, without the written consent of the Required Revolving Lenders; provided, however, that the amendments, modifications, waivers and consents described in this clause (K) shall not require the consent of any Lenders other than the Required Revolving Lenders; or (L) amend, modify or waive any provision of Section 2.6 without the written consent of the Swingline Lender; provided, further, that the consent of the applicable Majority Facility Lenders shall be required with respect to any amendment that by its terms adversely affects the rights of Lenders under such Facility in respect of payments hereunder in a manner different from such amendment that affects other Facilities. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing unless limited by the terms of such waiver; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding anything to the contrary herein, any amendment, modification, waiver or other action which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders or Other Affiliates (other than Debt Fund Affiliates)), except that (x) the Commitment of any such Defaulting Lender or any such Other Affiliate may not be increased or extended, the maturity of the Loans of any such Defaulting Lender or any such Other Affiliate may not be extended, the rate of interest on any of such Loans may not be reduced and the principal amount of any of such Loans may not be forgiven, in each case without the consent of such Defaulting Lender or such Other Affiliate and (y) any amendment, modification, waiver or other action that by its terms adversely affects any such Defaulting Lender or such Other Affiliate in its capacity as a Lender in a manner that differs in any material respect from, and is more adverse to such Defaulting Lender or such Other Affiliate than it is to, other affected Lenders shall require the consent of such Defaulting Lender or such Other Affiliate.   (b)                Notwithstanding the foregoing, this Agreement may be amended with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one or more additional credit facilities to this Agreement (it being understood that no Lender shall have any obligation to provide or to commit to provide all or any portion of any such additional credit facility) and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (ii) to include appropriately, after the effectiveness of any such amendment (or amendment and restatement), the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders, as applicable.   -154-     (c)                In addition, notwithstanding the foregoing, this Agreement may be amended, with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant Refinancing Term Loans (as defined below), as may be necessary or appropriate, in the opinion of the Borrower and the Administrative Agent, to provide for the incurrence of Permitted Refinancing Obligations under this Agreement in the form of a new tranche of Term Loans hereunder (“Refinancing Term Loans”), which Refinancing Term Loans will be used to refinance all or any portion of the outstanding Term Loans of any Tranche (“Refinanced Term Loans”); provided that (i) the aggregate principal amount of such Refinancing Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans (plus accrued interest, fees, discounts, premiums and expenses) and (ii) except as otherwise permitted by the definition of the term “Permitted Refinancing Obligations” (including with respect to maturity and amortization), all terms (other than with respect to pricing, fees and optional prepayments, which terms shall be as agreed by the Borrower and the applicable Lenders) applicable to such Refinancing Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Refinancing Term Loans than, those applicable to such Refinanced Term Loans, other than for any covenants and other terms applicable solely to any period after the Latest Maturity Date. The Borrower shall notify the Administrative Agent of the date on which the Borrower proposes that such Refinancing Term Loans shall be made, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent; provided that no such Refinancing Term Loans shall be made, and no amendments relating thereto shall become effective, unless the Borrower shall deliver or cause to be delivered documents of a type comparable to those described under clause (vii) of Section 2.25(b).   (d)                In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the relevant Refinancing Revolving Commitments (as defined below), as may be necessary or appropriate, in the opinion of the Borrower and the Administrative Agent, to provide for the incurrence of Permitted Refinancing Obligations under this Agreement in the form of a new tranche of Revolving Commitments hereunder (“Refinancing Revolving Commitments”), which Refinancing Revolving Commitments will be used to refinance all or any portion of the Revolving Commitments hereunder (“Refinanced Revolving Commitments”); provided that (i) the aggregate amount of such Refinancing Revolving Commitments shall not exceed the aggregate amount of such Refinanced Revolving Commitments (plus accrued interest, fees, discounts, premiums and expenses) and (ii) except as otherwise permitted by the definition of the term “Permitted Refinancing Obligations” (including with respect to maturity), all terms (other than with respect to pricing and fees, which terms shall be as agreed by the Borrower and the applicable Lenders) applicable to such Refinancing Revolving Commitments shall be substantially identical to, or less favorable to the Lenders providing such Refinancing Revolving Commitments than, those applicable to such Refinanced Revolving Commitments, other than for any covenants and other terms applicable solely to any period after the Latest Maturity Date. Any Refinancing Revolving Commitments that have the same terms shall constitute a single Tranche hereunder. The Borrower shall notify the Administrative Agent of the date on which the Borrower proposes that such Refinancing Revolving Commitments shall become effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent; provided that no such Refinancing Revolving Commitments, and no amendments relating thereto, shall become effective, unless the Borrower shall deliver or cause to be delivered documents of a type comparable to those described under clause (vii) of Section 2.25(b).   (e)                Furthermore, notwithstanding the foregoing, if following the Closing Date, the Administrative Agent and the Borrower shall have jointly identified an ambiguity, mistake, omission, defect, or inconsistency, in each case, in any provision of this Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to this Agreement or any other Loan Document if the same is not objected to in writing by the Required Lenders within five Business Days following receipt of notice thereof; it being understood that posting such amendment electronically on IntraLinks/IntraAgency or another relevant website with notice of such posting by the Administrative Agent to the Required Lenders shall be deemed adequate receipt of notice of such amendment.   -155-     (f)                 Furthermore, notwithstanding the foregoing, this Agreement may be amended, supplemented or otherwise modified in accordance with Section 10.16.   (g)                Notwithstanding anything to the contrary herein, in connection with any amendment, modification, waiver or other action requiring the consent or approval of the Required Lenders, Lenders that are Debt Fund Affiliates shall not be permitted, in the aggregate, to account for more than 49% of the amounts actually included in determining whether the threshold in the definition of Required Lenders has been satisfied. The voting power of each Lender that is a Debt Fund Affiliate shall be reduced, pro rata, to the extent necessary in order to comply with the immediately preceding sentence.   10.2              Notices; Electronic Communications.   (a)                All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when sent (except in the case of a telecopy notice not given during normal business hours (New York time) for the recipient, which shall be deemed to have been given at the opening of business on the next Business Day for the recipient), addressed as follows in the case of the Borrower or the Agents, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such Person or at such other address as may be hereafter notified by the respective parties hereto:     The Borrower:   Scientific Games International, Inc.       c/o Scientific Games Corporation       6601 Bermuda Road       Las Vegas, Nevada 89119       Attention: Michael Quartieri, EVP & CFO       Telecopy: (702) 532-7699       Telephone: (702) 532-5936       Email: michael.quartieri@scientificgames.com               Attention: David Smail, EVP & CLO       Telephone: (702) 532-7010       Email: david.smail@scientificgames.com           With a copy (which shall not constitute notice) to:   Latham & Watkins LLP       555 11th Street Northwest       Suite 1000       Washington, DC 20016       Attention: Scott Forchheimer       Telecopy: (202) 637-2201       Telephone: (202) 637-3372   -156-       Agents and Swingline Lender:   For Loan Borrowing Notices, Continuations, Conversions, and Payments:               Bank of America, N.A.       Building C, 2380 Performance Dr.       Richardson, TX 75082       Mail Code: TX2-984-03-23       Attention: Nora J. Taylor       Telecopy: 214-290-9673       Telephone: 469-201-9149       Email: nora.j.taylor@baml.com               For Financial Statements, Certificates, Other Information:               Bank of America, N.A.       901 Main Street       Dallas, Texas 75202       Mail Code: TX1-492-14-11       Attention: Ronaldo Naval       Telecopy: 877-511-6124       Telephone: 214-209-1162       Email: ronaldo.naval@baml.com           With a copy (which shall not constitute notice) to:   Cahill Gordon & Reindel LLP       80 Pine Street       New York, New York 10005       Attention: Oleg Rezzy       Telecopy: (212) 378-2724       Telephone: (212) 701-3490       Email: orezzy@cahill.com           Issuing Lender:   Bank of America, N.A.       Mail Code TX1-492-64-01       901 Main, 64th Floor       Dallas, Texas 75202       Attention: Diane Dycus       Telecopy: 214.290.9468       Telephone: 214.209.0935       Email: diane.dycus@baml.com   provided that any notice, request or demand to or upon the Agents, the Lenders or the Borrower shall not be effective until received.   (b)                Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. Any Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.   -157-     (c)                The Borrower hereby acknowledges that (i) the Administrative Agent and/or the Lead Arrangers will make available to the Lenders, the Issuing Lenders and the Swingline Lender materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (ii) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive information other than information that is publicly available, or not material with respect to Holdings, the Borrower or its Subsidiaries, or their respective securities, for purposes of the United States Federal and state securities laws (collectively, “Public Information”). The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that is Public Information and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Issuing Lenders, the Swingline Lender and the Lenders to treat such Borrower Materials as containing only Public Information (although it may be sensitive and proprietary) (provided, however, that to the extent such Borrower Materials constitute Confidential Information, they shall be treated as set forth in Section 10.14); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”; provided that there is no requirement that the Borrower identify any such information as “PUBLIC.”   (d)                THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Persons (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, any Issuing Lender, the Swingline Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Agent Party or any of its Related Persons; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender, any Issuing Lender, the Swingline Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).   (e)                Each of the Borrower, the Administrative Agent, each Issuing Lender and the Swingline Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to such other Persons. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, each Issuing Lender and the Swingline Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal securities laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain information other than Public Information.   -158-       (f)            The Administrative Agent, the Issuing Lenders, the Swingline Lender and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices of borrowing) believed in good faith by the Administrative Agent to be given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.   10.3         No Waiver; Cumulative Remedies.   (a)           No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.   (b)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.1 for the benefit of all the Lenders, the Issuing Lenders and the Swingline Lender; provided, however, that the foregoing shall not prohibit (i) each Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (ii) each Issuing Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Lender, as the case may be) hereunder and under the other Loan Documents and the Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Swingline Lender, as the case may be) hereunder and under the other Loan Documents, (iii) any Lender from exercising setoff rights in accordance with 10.7(b) (subject to the terms of Section 10.7(a)), or (iv) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law.   10.4         Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.   -159-      10.5         Payment of Expenses; Indemnification. Except with respect to Taxes (other than any Taxes that represent losses, claims or damages arising from any non-Tax claim), the Borrower agrees (a) to pay or reimburse each Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (other than fees payable to syndicate members) and the development, preparation, execution and delivery of this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith and any amendment, supplement or modification hereto or thereto, and, as to the Agents only, the administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements and other charges of a single firm of counsel to the Agents (plus one firm of special regulatory counsel and one firm of local counsel per material jurisdiction as may reasonably be necessary in connection with collateral matters) in connection with all of the foregoing, (b) to pay or reimburse each Lender and each Agent for all their reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights under this Agreement, the other Loan Documents and any such other documents referred to in Section 10.5(a) above (including all such costs and expenses incurred in connection with any legal proceeding, including any proceeding under any Debtor Relief Law or in connection with any workout or restructuring), including the documented fees and disbursements of a single firm of counsel and, if necessary, a single firm of special regulatory counsel and a single firm of local counsel per material jurisdiction as may reasonably be necessary, for the Agents and the Lenders, taken as a whole and, in the event of an actual or perceived conflict of interest, where the Agent or Lender affected by such conflict informs the Borrower and thereafter retains its own counsel, one additional counsel for each Lender or Agent or group of Lenders or Agents subject to such conflict and (c) to pay, indemnify or reimburse each Lender, each Agent, each Issuing Lender, the Swingline Lender, each Lead Arranger, each Joint Bookrunner and their respective Affiliates, and their respective partners that are natural persons, members that are natural persons, officers, directors, employees, trustees, advisors, agents and controlling Persons (each, an “Indemnitee”) for, and hold each Indemnitee harmless from and against any and all other liabilities, obligations, losses, damages, penalties, costs, expenses or disbursements arising out of any actions, judgments or suits of any kind or nature whatsoever, arising out of or in connection with any claim, action or proceeding relating to or otherwise with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents referred to in Section 10.5(a) above and the transactions contemplated hereby and thereby, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against the Borrower hereunder (all the foregoing in this clause (c), collectively, the “Indemnified Liabilities”); provided that, the Borrower shall not have any obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities have resulted from (i) the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Persons as determined by a court of competent jurisdiction in a final non-appealable decision (or settlement tantamount thereto), (ii) a material breach of the Loan Documents by such Indemnitee or its Related Persons as determined by a court of competent jurisdiction in a final non-appealable decision (or settlement tantamount thereto) or (iii) disputes solely among Indemnitees or their Related Persons (it being understood that this clause (iii) shall not apply to the indemnification of an Agent or Lead Arranger in a suit involving an Agent or Lead Arranger in its capacity as such that does not involve an act or omission by any Parent Company, Holdings, Borrower or any of its Subsidiaries as determined by a court of competent jurisdiction in a final non-appealable decision (or settlement tantamount thereto)). For purposes hereof, a “Related Person” of an Indemnitee means (i) if the Indemnitee is any Agent or any of its Affiliates or their respective partners that are natural persons, members that are natural persons, officers, directors, employees, agents and controlling Persons, any of such Agent and its Affiliates and their respective officers, directors, employees, agents and controlling Persons; provided that solely for purposes of Section 9, references to each Agent’s Related Persons shall also include such Agent’s trustees and advisors, and (ii) if the Indemnitee is any Lender or any of its Affiliates or their respective partners that are natural persons, members that are natural persons, officers, directors, employees, agents and controlling Persons, any of such Lender and its Affiliates and their respective officers, directors, employees, agents and controlling Persons. All amounts due under this Section 10.5 shall be payable promptly after receipt of a reasonably detailed invoice therefor. Statements payable by the Borrower pursuant to this Section 10.5 shall be submitted to the Borrower at the address thereof set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section 10.5 shall survive repayment of the Obligations.   -160-      10.6         Successors and Assigns; Participations and Assignments.   (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 (including any Affiliate of any Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) subject to Sections 2.24 and 2.26(e), no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 10.6.   (b)           (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may, in compliance with applicable law, assign (other than to any Disqualified Institution or a natural person) to one or more assignees (each, an “Assignee”), all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed, it being understood that it shall be deemed reasonable for the Borrower to withhold such consent in respect of a prospective Lender if the Borrower reasonably believes such prospective Lender would constitute a Disqualified Institution) of:   (A)           the Borrower; provided that no consent of the Borrower shall be required for an assignment of (x) Term Loans to a Lender, an Affiliate of a Lender, or an Approved Fund (other than a Defaulting Lender), (y) Revolving Loans to a Revolving Lender, an Affiliate of a Revolving Lender, or an Approved Fund of a Revolving Lender (other than a Defaulting Lender) or (z) any Loan or Commitment if an Event of Default under Section 8.1(a) or 8.1(f) has occurred and is continuing, any other Person and provided further, that a consent under this clause (A) shall be deemed given if the Borrower shall not have objected in writing to a proposed assignment within ten Business Days after receipt by it of a written notice thereof from the Administrative Agent; and   (B)           the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment to a Lender, an Affiliate of a Lender or an Approved Fund;   (C)           in the case of an assignment under the Dollar Revolving Facility, each Dollar Issuing Lender and the Swingline Lender; and   (D)           in the case of an assignment under the Multi-Currency Revolving Facility, each Multi-Currency Issuing Lender.   (ii)          Subject to Sections 2.24 and 2.26(e), assignments shall be subject to the following additional conditions:   (A)           except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of (I) the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or (II) if earlier, the “trade date” (if any) specified in such Assignment and Assumption) shall not be less than (x) $5,000,000, in the case of the Revolving Facilities or (y) $1,000,000, in the case of the Term Facility, unless the Borrower and the Administrative Agent otherwise consent; provided that (1) no such consent of the Borrower shall be required if an Event of Default under Section 8.1(a) or 8.1(f) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any;   -161-      (B)           the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, via an electronic settlement system acceptable to the Administrative Agent and the Borrower (or, at the Borrower’s request, manually) together with a processing and recordation fee of $3,500 to be paid by either the applicable assignor or assignee (which fee may be waived or reduced in the sole discretion of the Administrative Agent); provided that only one such fee shall be payable in the case of contemporaneous assignments to or by two or more related Approved Funds; and   (C)           the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire and all applicable tax forms.   For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered or managed by (I) a Lender, (II) an Affiliate of a Lender, (III) an entity or an Affiliate of an entity that administers or manages a Lender or (IV) an entity or an Affiliate of an entity that is the investment advisor to a Lender. Notwithstanding the foregoing, no Lender shall be permitted to make assignments under this Agreement to any Disqualified Institutions without the written consent of the Borrower.   (iii)          Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be subject to the obligations under and entitled to the benefits of Sections 2.19, 2.20, 2.21, 10.5 and 10.14). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section 10.6 (and will be required to comply therewith), other than any sale to a Disqualified Institution, which shall be null and void.   (iv)          The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The Borrower, the Administrative Agent, the Issuing Lenders, the Swingline Lender and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement (and the entries in the Register shall be conclusive absent demonstrable error for such purposes), notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lenders, the Swingline Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice.   -162-      (v)           Upon its receipt of a duly completed Assignment and Assumption or Affiliate Lender Assignment and Assumption, as applicable, executed by an assigning Lender and an Assignee (except as contemplated by Sections 2.24 and 2.26(e)), the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder) and all applicable tax forms, the processing and recordation fee referred to in paragraph (b) of this Section 10.6 (unless waived by the Administrative Agent) and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and promptly record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.   (c)           (i) Any Lender may, without the consent of any Person, in compliance with applicable law, sell participations (other than to any Disqualified Institution) to one or more banks or other entities (a “Participant”), in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Lenders, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly and adversely affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section 10.6, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 (if such Participant agrees to have related obligations thereunder) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.6. Notwithstanding the foregoing, no Lender shall be permitted to sell participations under this Agreement to any Disqualified Institutions without the written consent of the Borrower.   (ii)           A Participant shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent to such greater amounts. No Participant shall be entitled to the benefits of Section 2.20 unless such Participant complies with Section 2.20(d), (e) or (g), as (and to the extent) applicable, as if such Participant were a Lender.   (iii)          Each Lender that sells a participation, acting solely for U.S. federal income tax purposes as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a register on which it enters the name and addresses of each Participant, and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under this Agreement) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the Treasury Regulations and Section 1.163-5(b) of the Proposed Treasury Regulations (or any amended or successor version). Unless otherwise required by the Internal Revenue Service, any disclosure required by the foregoing sentence shall be made by the relevant Lender directly and solely to the Internal Revenue Service. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement, notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (it its capacity as such) shall have no responsibility for maintaining a Participant Register.   -163-      (d)           Any Lender may, without the consent of or notice to the Administrative Agent or the Borrower, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority, and this Section 10.6 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.   (e)           The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring the same (in the case of an assignment, following surrender by the assigning Lender of all Notes representing its assigned interests).   (f)            The Borrower may prohibit any assignment if it would require the Borrower to make any filing with any Governmental Authority or qualify any Loan or Note under the laws of any jurisdiction and the Borrower shall be entitled to request and receive such information and assurances as it may reasonably request from any Lender or any Assignee to determine whether any such filing or qualification is required or whether any assignment is otherwise in accordance with applicable law.   (g)           Notwithstanding anything to the contrary herein, any Lender may assign all or any portion of its Term Loans hereunder to any Other Affiliate (including any Debt Fund Affiliate), but only if:   (i)           no Default has occurred and is continuing or would result therefrom;   (ii)          the assigning Lender and Other Affiliate purchasing such Lender’s Term Loans, shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit E hereto (an “Affiliate Lender Assignment and Assumption”) in lieu of an Assignment and Assumption;   (iii)         after giving effect to such assignment, Other Affiliates (other than Debt Fund Affiliates) shall not, in the aggregate, own or hold Term Loans with an aggregate principal amount in excess of 20% of the principal amount of all Term Loans then outstanding (calculated as of the date of such purchase); and   (iv)         such Other Affiliate (other than Debt Fund Affiliates) shall (A) at the time of such assignment affirm the No Undisclosed Information Representation, (B) at all times thereafter be subject to the voting restrictions specified in Section 10.1 and (C) at the time of any sale by it of any portion of such Term Loans, Refinancing Term Loans or New Term Loans (other than a sale to another Other Affiliate), affirm the No Undisclosed Information Representation.   -164-      (h)           Notwithstanding anything to the contrary herein, any Lender may assign all or any portion of its Term Loans hereunder to Holdings or any of its Subsidiaries, but only if:   (i)            (A) such assignment is made pursuant to a Dutch Auction open to all Term Lenders on a pro rata basis or (B) such assignment is made as an Open Market Purchase;   (ii)           no Default has occurred and is continuing or would result therefrom;   (iii)          Holdings or its Subsidiary, as applicable, shall at the time of such assignment affirm the No Undisclosed Information Representation;   (iv)          any such Term Loans shall be automatically and permanently cancelled immediately upon acquisition thereof by Holdings or any of its Subsidiaries; and   (v)          Holdings and its Subsidiaries do not use the proceeds of the Revolving Facilities (whether or not the Revolving Facilities have been increased pursuant to Section 2.25 or refinanced pursuant to Section 10.1) to acquire such Term Loans.   (i)            Except as provided in Sections 10.6(g) and (h), none of the Sponsor, any Other Affiliate, Holdings or any of its Subsidiaries may acquire by assignment, participation or otherwise any right to or interest in any of the Commitments or Loans hereunder (and any such attempted acquisition shall be null and void).   (j)            Notwithstanding anything to the contrary herein, (i) Other Affiliates (other than Debt Fund Affiliates) shall not have any right to attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any other Lender to which representatives of the Borrower are not then present, (ii) Other Affiliates (other than Debt Fund Affiliates) shall not have any right to receive any information or material prepared by the Administrative Agent or any other Lender or any communication by or among the Administrative Agent and one or more other Lenders, except to the extent such information or materials have been made available to the Borrower or their representatives, (iii) no assignments in respect of the Revolving Facilities may be made to the Sponsor or any Affiliate of the Sponsor and (iv) neither the Sponsor nor any Affiliate of the Sponsor (other than Debt Fund Affiliates) may be entitled to receive advice of counsel to the Agents or other Lenders and none of them shall challenge any assertion of attorney-client privilege by any Agent or other Lender.   (k)           Notwithstanding anything to the contrary contained herein, the replacement of any Lender pursuant to Section 2.24 or 2.26(e) shall be deemed an assignment pursuant to Section 10.6(b) and shall be valid and in full force and effect for all purposes under this Agreement.   (l)            Any assignor of a Loan or Commitment or seller of a participation hereunder shall be entitled to rely conclusively on a representation of the assignee Lender or purchaser of such participation in the relevant Assignment and Assumption or participation agreement, as applicable, that such assignee or purchaser is not a Disqualified Institution. None of the Lead Arrangers, the Joint Bookrunners or the Agents shall have any responsibility or liability for monitoring the list or identities of, or enforcing provisions relating to, Disqualified Institutions.   10.7         Adjustments; Set off.   (a)           Except to the extent that this Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a “Benefited Lender”) shall at any time receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to events or proceedings of the nature referred to in Section 8.1(f), or otherwise) in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Obligations, such Benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Obligations, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.   -165-      (b)           In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) after the expiration of any cure or grace periods, to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but excluding trust accounts), 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 such Lender or any Affiliate, branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application.   10.8         Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or electronic (i.e., “pdf” or “tiff”) transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.   10.9         Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.   10.10       Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof.   10.11       GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.   -166-      10.12      Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:   (a)         submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents and any Letter of Credit to which it is a party to the exclusive general jurisdiction of the Supreme Court of the State of New York for the County of New York (the “New York Supreme Court”), and the United States District Court for the Southern District of New York (the “Federal District Court” and, together with the New York Supreme Court, the “New York Courts”), and appellate courts from either of them; provided that nothing in this Agreement shall be deemed or operate to preclude (i) any Agent from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations (in which case any party shall be entitled to assert any claim or defense, including any claim or defense that this Section 10.12 would otherwise require to be asserted in a legal action or proceeding in a New York Court), or to enforce a judgment or other court order in favor of the Administrative Agent or the Collateral Agent, (ii) any party from bringing any legal action or proceeding in any jurisdiction for the recognition and enforcement of any judgment and (iii) if all such New York Courts decline jurisdiction over any person, or decline (or in the case of the Federal District Court, lack) jurisdiction over any subject matter of such action or proceeding, a legal action or proceeding may be brought with respect thereto in another court having jurisdiction;   (b)         consents that any such action or proceeding may be brought in the New York Courts and appellate courts from either of them, 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 court and agrees not to plead or claim the same;   (c)         agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;   (d)         agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law; and   (e)         waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 10.12 any special, exemplary, punitive or consequential damages (provided that such waiver shall not limit the indemnification obligations of the Loan Parties to the extent such special, exemplary, punitive or consequential damages are included in any third party claim with respect to which the applicable Indemnitee is entitled to indemnification under Section 10.5).   10.13      Acknowledgments. The Borrower hereby acknowledges that:   (a)          it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;   (b)         neither the Agents nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agents and Lenders, on the one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor;   -167-      (c)          no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders;   (d)         no advisory or agency relationship between it and any Agent or Lender (in their capacities as such) is intended to be or has been created in respect of any of the transactions contemplated hereby,   (e)         the Agents and the Lenders, on the one hand, and the Borrower, on the other hand, have an arms-length business relationship,   (f)          the Borrower is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents,   (g)         each of the Agents and the Lenders is engaged in a broad range of transactions that may involve interests that differ from the interests of the Borrower and none of the Agents or the Lenders has any obligation to disclose such interests and transactions to the Borrower by virtue of any advisory or agency relationship, and   (h)         none of the Agents or the Lenders (in their capacities as such) has advised the Borrower as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction (including the validity, enforceability, perfection or avoidability of any aspect of any of the transactions contemplated hereby under applicable law, including the U.S. Bankruptcy Code or any consents needed in connection therewith), and none of the Agents or the Lenders (in their capacities as such) shall have any responsibility or liability to the Borrower with respect thereto and the Borrower has consulted with its own advisors regarding the foregoing to the extent it has deemed appropriate.   To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Agents and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.   -168-      10.14       Confidentiality. Each of the Agents and the Lenders agree to treat any and all information, regardless of the medium or form of communication, that is disclosed, provided or furnished, directly or indirectly, by or on behalf of the Borrower or any of its Affiliates in connection with this Agreement or the transactions contemplated hereby (including any potential amendments, modifications or waivers, or any request therefor), whether furnished before or after the Closing Date (“Confidential Information”), as strictly confidential and not to use Confidential Information for any purpose other than evaluating the Transactions, the Bally Transactions, the Amendment No. 2 Transactions, the Amendment No. 3 Transactions or the Amendment No. 4 Transactions (as applicable) and negotiating, making available, syndicating and administering this Agreement (the “Agreed Purposes”). Without limiting the foregoing, each Agent and each Lender agrees to treat any and all Confidential Information with adequate means to preserve its confidentiality, and each Agent and each Lender agrees not to disclose Confidential Information, at any time, in any manner whatsoever, directly or indirectly, to any other Person whomsoever, except (1) to its partners that are natural persons, members that are natural persons, directors, officers, employees, counsel, advisors, trustees and Affiliates (collectively, the “Representatives”), to the extent necessary to permit such Representatives to assist in connection with the Agreed Purposes (it being understood that the Representatives to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential, with the applicable Agent or Lender responsible for the breach of this Section 10.14 by such Representatives as if they were party hereto), (2) to any pledgee referred to in Section 10.6(d) and prospective Lenders and participants in connection with the syndication (including secondary trading) of the Facilities and Commitments and Loans hereunder (excluding any Disqualified Institution), in each case who are informed of the confidential nature of the information and agree to observe and be bound by standard confidentiality terms at least as favorable to the Borrower and its Affiliates as those contained in this Section 10.14, (3) to any party or prospective party (or their advisors) to any swap, derivative or similar transaction under which payments are made by reference to the Borrower and the Obligations, this Agreement or payments hereunder, in each case who are informed of the confidential nature of the information and agree to observe and be bound by standard confidentiality terms at least as favorable to the Borrower and its Affiliates as those contained in this Section 10.14, (4) upon the request or demand of any Governmental Authority having or purporting to have jurisdiction over it, (5) in response to any order of any Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, provided, that in the case of clauses (4) and (5), the disclosing Agent or Lender, as applicable, agrees, to the extent practicable and not prohibited by applicable Law, to notify the Borrower prior to such disclosure and cooperate with the Borrower in obtaining an appropriate protective order, (6) to the extent reasonably required or necessary, in connection with any litigation or similar proceeding relating to the Facilities, (7) information that has been publicly disclosed other than in breach of this Section 10.14, (8) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or in connection with examinations or audits of such Lender, (9) to the extent reasonably required or necessary, in connection with the exercise of any remedy under the Loan Documents, (10) to the extent the Borrower has consented to such disclosure in writing, (11) to any other party to this Agreement, or (12) by the Administrative Agent to the extent reasonably required or necessary to obtain a CUSIP for any Loans or Commitment hereunder, to the CUSIP Service Bureau. Each Agent and each Lender acknowledges that (i) Confidential Information includes information that is not otherwise publicly available and that such non-public information may constitute confidential business information which is proprietary to the Borrower and/or its Affiliates and (ii) the Borrower has advised the Agents and the Lenders that it is relying on the Confidential Information for its success and would not disclose the Confidential Information to the Agents and the Lenders without the confidentiality provisions of this Agreement. All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws. Notwithstanding any other provision of this Agreement, any other Loan Document or any Assignment and Assumption, the provisions of this Section 10.14 shall survive with respect to each Agent and Lender until the second anniversary of such Agent or Lender ceasing to be an Agent or a Lender, respectively.   -169-      10.15       Release of Collateral and Guarantee Obligations; Subordination of Liens.   (a)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with any Disposition of Property permitted by the Loan Documents or any Loan Party becoming an Excluded Subsidiary, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any Affiliate of any Lender that is a party to any Specified Hedge Agreement or documentation in respect of Cash Management Obligations) execute and deliver all releases reasonably necessary or desirable to evidence the release of Liens created in any Collateral being Disposed of in such Disposition (including any assets of any Loan Party that becomes an Excluded Subsidiary) or of such Excluded Subsidiary, as applicable, and to provide notices of the termination of the assignment of any Property for which an assignment had been made pursuant to any of the Loan Documents which is being Disposed of in such Disposition or of such Excluded Subsidiary, as applicable, and to release any Guarantee Obligations under any Loan Document of any Person being Disposed of in such Disposition or which becomes an Excluded Subsidiary, as applicable. Any representation, warranty or covenant contained in any Loan Document relating to any such Property so Disposed of (other than Property Disposed of Holdings or any of its Restricted Subsidiaries) or of a Loan Party which becomes an Excluded Subsidiary, as applicable, shall no longer be deemed to be repeated once such Property is so Disposed of.   (b)           Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than (x) obligations in respect of any Specified Hedge Agreement or Cash Management Obligations and (y) any contingent or indemnification obligations not then due) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding that is not cash collateralized or backstopped or otherwise supported in a manner reasonably satisfactory to the Issuing Lender thereof, upon the request of the Borrower, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any Affiliate of any Lender that is a party to any Specified Hedge Agreement or documentation in respect of Cash Management Obligations) take such actions as shall be required to release its security interest in all Collateral, and to release all Guarantee Obligations under any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements or Cash Management Obligations or contingent or indemnification obligations not then due. Any such release of Guarantee Obligations shall be deemed subject to the provision that such Guarantee Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its Property, or otherwise, all as though such payment had not been made.   (c)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with any Liens permitted by the Loan Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to subordinate the Lien on any Collateral to any Lien permitted under Section 7.3.   10.16       Accounting Changes. In the event that any Accounting Change (as defined below) shall occur and such change results in a change in the method of calculation of financial ratios, covenants, standards or terms in this Agreement, then following notice either from the Borrower to the Administrative Agent or from the Administrative Agent to the Borrower (which the Administrative Agent shall give at the request of the Required Lenders), the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating Holdings’ financial condition and covenant capacities shall be the same after such Accounting Changes as if such Accounting Changes had not been made. If any such notices are given then, regardless of whether such notice is given prior to or following such Accounting Change, until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders and have become effective, all financial ratios, covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. Any amendment contemplated by the prior sentence shall become effective upon the consent of the Required Lenders, it being understood that a Lender shall be deemed to have consented to and executed such amendment if such Lender has not objected in writing within five Business Days following receipt of notice of execution of the applicable amendment by the Borrower and the Administrative Agent, it being understood that the posting of an amendment referred to in the preceding sentence electronically on IntraLinks/IntraAgency or another relevant website with notice of such posting by the Administrative Agent to the Lenders shall be deemed adequate receipt of notice of such amendment. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC, in each case, occurring after the Closing Date, including any change to IFRS contemplated by the definition of “GAAP.” Without limiting the foregoing, for purposes of determining compliance with any provision of this Agreement, the determination of whether a lease is to be treated as an operating lease or capital lease shall be made without giving effect to any change in accounting for leases pursuant to GAAP resulting from the implementation of proposed Accounting Standards Update (ASU) Leases (Topic 840) issued August 17, 2010, or any successor proposal.   -170-      10.17       WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND FOR ANY COUNTERCLAIM THEREIN.   10.18       USA PATRIOT ACT. Each Lender hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Publ. 107 56 (signed into law October 26, 2001)) (the “USA Patriot Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of such Loan Parties and other information that will allow such Lender to identify the Loan Parties in accordance with the USA Patriot Act, and the Borrower agrees to provide such information from time to time to any Lender or Agent reasonably promptly upon request from such Lender or Agent.   10.19       Effect of Certain Inaccuracies. In the event that any financial statement delivered pursuant to Section 6.1(a) or (b) or any Compliance Certificate delivered pursuant to Section 6.2(b) is inaccurate, and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin or Applicable Commitment Fee Rate for any period (an “Applicable Period”) than the Applicable Margin or Applicable Commitment Fee Rate for such Applicable Period, then (i) promptly following the correction of such financial statement by the Borrower, the Borrower shall deliver to the Administrative Agent a corrected financial statement and a corrected Compliance Certificate for such Applicable Period, (ii) the Applicable Margin and Applicable Commitment Fee Rate for the Test Period preceding the delivery of such corrected financial statement and Compliance Certificate shall be determined based on the corrected Compliance Certificate for such Applicable Period and (iii) the Borrower shall promptly pay to the Administrative Agent the accrued additional interest or commitment fees owing as a result of such increased Applicable Margin or Applicable Commitment Fee Rate for such Test Period. This Section 10.19 shall not limit the rights of the Administrative Agent or the Lenders hereunder, including under Section 8.1.   10.20       Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 10.20 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.   -171-      10.21       Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any Issuing Lender, the Swingline Lender or any Lender, or the Administrative Agent, any Issuing Lender, the Swingline Lender or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Issuing Lender, Swingline Lender or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender, each Issuing Lender and the Swingline Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect. The obligations of the Lenders, the Issuing Lenders and the Swingline Lender under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.   10.22       Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “execute,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other notices of borrowing, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.   10.23       Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:   (a)         the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution; and   (b)         the effects of any Bail-In Action on any such liability, including, if applicable:   (i)        a reduction in full or in part or cancellation of any such liability;   -172-      (ii)       a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or   (iii)       the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.   10.24       Flood Matters. Each of the parties hereto acknowledges and agrees that, any increase, extension, or renewal of any of the Loans or Commitments shall be subject to (and conditioned upon) the prior delivery of “life-of-loan” Federal Emergency Management Agency standard flood hazard determinations with respect to each Mortgaged Property, and, to the extent any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (i) a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and (ii) evidence of flood insurance as required by Section 6.5 hereof.   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   -173-      IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.     SCIENTIFIC GAMES INTERNATIONAL, INC., as Borrower               By:       Name:     Title:           SCIENTIFIC GAMES CORPORATION, as Holdings               By:       Name:     Title:             BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent               By:       Name:     Title:           BANK OF AMERICA, N.A., as Issuing Lender, Swingline Lender and a Lender               By:       Name:     Title:             [●], as a Lender               By:       Name:     Title:
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